EU pledges fairer shares for all in its aid effort

Andrew Marshall, continuing a series, explains why members must shed post-colonial loyalties if the cash is to go on flowing

The European Commission is planning to reform its development aid programme as part of an effort to persuade member- states to continue paying for it.

A long-running argument over the European Development Fund is unlikely to be settled for several weeks, officials and diplomats believe. A short- term fix may be possible, but in the longer term, the Commission is preparing new ways of dealing with aid that focus it more on the poorest countries and ensure that the cash is better spent.

''We must prove that it is worthwhile for the taxpayer,'' says Joao de Deus Pinheiro, Development Commissioner. ''If we don't deliver in the next few years, we will have a problem.''

The EDF is the aid component of the Lome convention. Lome, the EU's main development instrument, is an aid and trade agreement with 70 countries from Africa, the Caribbean and the Pacific, most which are former European colonies. Africa gets the lion's share of the aid.

There is increasing pressure for change to Lome, because the former colonial powers increasingly feel it is outdated, and because many EU members which were never major colonial powers feel it is not the most appropriate means for delivering assistance. Though Lome contains many of the world's poorest countries, the selection is arbitrary and many other aid recipients are not members.

The present dispute over EDF stems partly from the ad hoc way contributions are calculated. The EDF is not part of the European Union budget and contributions are calculated so that a few member states bear the brunt. The Commission, backed by France, has argued that the next five-year slice of aid should increase to 14.3bn ecus (pounds 11.7bn) from 10.8bn, reflecting inflation and the increase in EU membership.

Several member states have expressed doubts over increasing the EDF, foremost among them Britain and Germany. The latest proposal from the Commission was 13.3bn ecus, about the same in real terms as the last package. But Britain and Germany have continued to resist this. A solution is only likely to be reached as the Cannes summit next month approaches.

The answer to the current problem probably lies in a short- term fix, diplomats and Commission officials say. One option is to reach a deal for a shorter period, with another review in perhaps three years. At that point, the scheme could be renegotiated and perhaps brought within the EU budget.

There are deeper concerns about aid, however, which go beyond the amounts involved. Britain is particularly concerned that an increasing amount of its cash is going through multilateral institutions.

More conditions are likely to be set. ''Those who make the greatest effort should be rewarded; those who don't should be penalised,'' says Mr Pinheiro. Aid is also likely to be increasingly tied to good government, a controversial practice, as aid agencies say it is not entirely clear what it is and that different donors use different definitions.

On his recent visit to Mozambique, Mr Pinheiro said the EU would increasingly take a tough line with countries not keeping to the rules. ''We can't finance a country that is spending huge amounts for the military, or that is not proceeding with democracy, nor can we finance corrupt governments.''

But there are are other problems with EU aid, according to officials on the ground and representatives of non-government organisations. They complain that the EU is too bureaucratic, that policy is driven too much from Brussels and that frequently it overlaps or conflicts with member- state priorities.

The EU is already experimenting with closer on-the-ground co-ordination of aid between member states in a number of countries including Mozambique. But critics say that the EU will have to confront a very basic issue over the next few years: what is EU aid for?

The Lome scheme is almost certainly dead in the longer term, officials said.

''Sooner or later we would have to abandon this idea of a fund,'' said one senior official. Few defend the targeting of assistance on 70 rather arbitrarily chosen countries.

''There are signs that the new EU member states, in particular Sweden, will support a global development policy allocating EU aid on a poverty basis rather than in terms of the past colonial links of some member states,'' the Overseas Development Institute says in its latest briefing paper. But given the present climate for aid in the EU, it may be that this means a reduction in the total volume of assistance. Mr Pinheiro, who wants to reorientate aid to ensure that it survives, contests this. But, he acknowledges, ''In the future, much more important than the quantity of aid will be the quality.''