EU Multiannual Financial Framework. Elise Vanormelingen September 2011

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1 EU Multiannual Financial Framework Elise Vanormelingen September 2011

2 Outline of the presentation What is the MFF? Three fundamental questions about future EU funding How does it currently work? Current EU external action instruments What has the EC proposed for the next MFF? What to be expected for external action? Timeline of MFF negotiations CONCORD positions on the MFF CONCORD 4 key demands What can CONCORD members do?

3 What is the MFF? The Multiannual Financial Framework MFF (a.k.a. the Financial Perspectives), will define the EU budget from 2014 to 2020 This exercise is of particular importance as it will lock-in the EU main policy priorities from 2014 for 7 years. All aspects of the EU budget are up for negotiation It is not only the EU budget and the instruments to implement it that are at stake but more broadly the EU integration process and ambitions and the future role of EU in a variety of policy areas including foreign policy, development and climate change It will shape the future of EU development assistance

4 Questions about future EU funding - 1 How much? Own resources ceiling Level 1 What for? Budget Headings Level 2 How managed? Financial Instruments and regulations Level 3

5 Questions about future EU funding - 2 Level 1: How much funding is there overall for the EU budget? It relates to EU own resources ceiling, or transfers made by MS to the EU budget to cover EU expenditure. The EU budget is financed mainly through a uniform % rate applied to the total GNI of all MS - presently 1.24% of GNI maximum and 1.07% in reality. Level 2: What should it be spent on? It relates to the EU political priorities and how to distribute resources among the different budget Headings. How much will go for external action, how much for development? Level 3: How should it be managed? It relates to the financial instruments under each heading and the regulations that govern the spending of the instruments.

6 How does it currently work? Heading 1 Heading 5 Heading 4 Heading 3 Heading 2 Heading 2 EU Budget for 2010

7 Current EU external action instruments - 1 Not including the European Development Fund (EDF) Macro -financial Assistance Instrument for Democracy and Human Rights Stability Instrument Humanitarian Aid Instrument Global level DCI ENPI IPA Non -State Actors Food Security Investing in People Environment Asylum and Migration Industrialised countries

8 Current EU external action instruments - 2 Budget distribution for

9 What has the EC proposed for the MFF? - 1 On 29 June 2011, the EC published its proposal for the EU budget. The EC proposal is now up to negotiation with the MS and the EP until end of EC proposals for the general EU budget: Total EU budget = billion, 1,05% of GNI (in commitments). This proposal would cut the size of the budget measured as a proportion of the EU s wealth (from 1,11% currently to 1,05%) Heading 2, including CAP budget = 382 billion, proportion of Heading 2 to be reduced from 42% to 37% of total EU budget Spending items outside EU budget = minimum 58 billion, including EDF ( 30 billion) and a Global Climate and Biodiversity Fund

10 What has the EC proposed for the MFF? - 2 EC proposals for the External Action budget (Heading 4): Total External Action budget = 70 billion, increasing from 5,7% to 6,8% of total EU budget Clear commitment to reach 0,7% GNI for ODA and achieving the MDGs No big change in the instruments architecture Development Cooperation Instrument (DCI) = 20,6 billion, representing 29% of Heading 4 European Neighborhood Instrument (ENI) = 16,1 billion (it was 11,3 billion in ), representing 23% of Heading 4 European Instrument for Democracy and Human Rights (EIDHR) = 6,4 billion, representing 9,1% of Heading 4 Creation of a pan-african instrument under the DCI to support to implementation of the Joint Africa-Europe Strategy Creation of a new Partnership Instrument ( 1 billion) for cooperation with industrialized and emerging countries

11 What to be expected for external action? - 1 Position of some strong MS regarding total EU budget: no increase of EU budget, possible decrease, «Do more with less» General trend for external action = projecting EU values and interests with a focus on growth, neighboring countries, crisis and emergency management, security and regulating migration flows. Using development as a tool to boost economic and foreign affairs objectives is not taboo anymore MS general message is «Value for Money»: focusing EC action (less countries, less sectors) and differentiate between countries use ODA to leverage more money more aid for countries making expected political reforms (e.g. neighborhood countries) private sector and growth are key for development less general budget support

12 What to be expected for external action? - 2 More ODA used for blending loans and grants to support EU interests: EU private sector, access to raw material and markets (competing with emerging economies), leveraging money without disbursing more ODA, more control on implementation, impact on business climate and constraints, outsourcing administrative work to banks Increased role for EIB in developing countries. Funding for climate mitigation and adaptation in developing countries: new, additional? What role for EU budget? Differentiation of countries recipient of aid: less aid to MICs? No aid to BRICS? Focus aid on LDCs? What kind of thematic instruments, what role for thematic instruments, what access for CS? MS questioning systematic recourse to Budget Support

13 Timeline of MFF negotiations June: EC proposal for next MFF (overall budget, headings and priorities) Nov-Dec: EC legislation proposal for new financial instruments and regulations Unanimity vote by the Council and subsequent assent by the Parliament 1 Jan: Entry into force of the MFF ( ) Co-decision (EP and Council) on regulations for delivery instruments July: Polish Presidency 1 Jan: Danish Presidency 1 July: Cypriot Presidency 1 Jan: Irish Presidency 1 July: Lithuanian Presidency 1 July: Greek Presidency

14 CONCORD positions on the MFF What has CONCORD done so far? Background document on the MFF for CONCORD members Principles Paper on MFF 4 key deliverables Press release reacting to the EC proposal on MFF of 29 June CONCORD 4 pager on the MFF To be worked out before end of 2011: Detailed position and recommendations on instruments and aid delivery Paper on country differentiation Lobbying tools for EU and national levels

15 CONCORD 4 key demands 1. ODA and Heading 4 must be increased and protected, seeking to eradicate poverty and to fight inequalities, with a Human Rights Based Approach (HRBA) 2. EU foreign policy and economic interests should not interfere with the objectives of development co-operation in any circumstances. Development and humanitarian aid must be fully independent 3. Climate financing must be additional to ODA commitments already made, and separate accounting for climate finance is needed 4. The recognition of CSOs in development as actors in their own right must be translated into concrete political space and subsequent funding

16 What can CONCORD members do? MFF is a CONCORD priority in 2011 MS are / will be crucial to the MFF negotiations With support of MFF taskforce, members are expected to: Make sure MS support EC proposal on EU budget, and specifically increase in Heading 4 Gather intelligence from national level on process and MS positions Spread common NGO positions and analysis Organize lobby at national level with National Governments and National Parliaments Facilitate contacts between CONCORD and MEPs Facilitate contacts between CONCORD and permanent representations in Brussels

17 Thank you!