Draft Speech Institute of Diplomacy and Foreign Trade Workshop on The European Development Fund (La Petite Canelle, Domaine les Pailles, 24 February 2011) 1
Ambassador Alessandro Mariani, Head of the EU Delegation Ambassadors and Heads of Directorates/Divisions Ambassador Dwarka-Canabady, Head of the Economic Directorate and of the Institute of Diplomacy and Foreign Trade, Distinguished Resource Persons Distinguished Guests and Participants, I am pleased to have the opportunity to address this workshop on The European Development Fund which is being organized by the Institute of Diplomacy and Foreign Trade with the support of the EU Delegation in Mauritius. This joint effort reflects the excellent relations which my Ministry shares with the Delegation of the European Union in Mauritius and, on a broader level, the collaborative and constructive spirit that has always prevailed between Mauritius and the EU. I may confidently say that both sides take pride in this relationship and in particular, in the concrete outcomes thereof. The preferential market access granted to the ACP Group of countries since 1964 under various agreements from Yaounde to Lome to Cotonou has no doubt contributed to the robust trade between Mauritius and the EU. Exports to the EU account for over half of our total exports, representing some MuR 37 billion out of a total value of exports amounting to MuR 56 billion. To-day, the EU remains the main commercial partner of our country in terms of total trade flows and sourcing of Foreign Direct Investment. 2
The European Union is also the most important market, by far, for the Mauritius tourism industry, bringing in almost 600,000 tourists yearly particularly from France, the United Kingdom, Italy and Germany but also increasingly from countries like Poland, Sweden, Slovakia, Slovenia and Latvia. We are conscious that we still need to do more both within Europe and outside Europe. The difficulties in the Euro-zone highlighted the need for Mauritius to make more significant efforts to diversify its markets, in keeping with what has always been advocated by the EU itself. This must however be placed in a medium term perspective. Whilst we must engage in finding alternate markets, we must also acknowledge that our historical tradition of trading pattern with Europe has induced a high comfort level between the two sides. Thus diversification into a broadening Europe is likely to occur alongside our attempts to seek markets in other parts of the world. Secondly, it should be recalled that our relations with the European Union go beyond a mere trading relationship. Over the years, the EU has nurtured a strong development cooperation relationship with Mauritius starting with project support and moving to sector support. To-day cooperation spans various economic spheres ranging from sugar, fisheries, tourism, education, energy and waste management. It also covers financing of the private sector and civil society. The partnership with the EU encompasses our regional integration agenda. 3
The main intervention instruments used by the EU to support development in the ACP countries including Mauritius are the European Development Fund (EDF) and EU budget lines such as the Sugar Accompanying Measures, the FLEX Mechanism and other facilities specific to ACP countries. The resources available under these instruments are in the form of grants. Under the last EDF, the 10 th EDF, which covers the period 2008-2013, Mauritius obtained Euros 63.4 million from the EU of which, Euros 43.5 million in terms of General Budget Support. Mauritius is one of the few countries that receives the bulk of EU assistance via general budget support, a sign of the trust which the EU places in our governance structure. Mauritius also obtained under the 10 th EDF, Euros 5.5 million for the Decentralised Cooperation Programme (DCP); Euros 2 million under the Technical Cooperation Facility and Euros12.4 million under the B envelope meant to cover emergency/unforeseen needs. The media coverage that surrounds the announcement of the first and second tranche allocations reflects well the importance that Mauritius attaches to these contributions. A case in point is the EU Sugar Accompanying Measures which were put in place to support the ACP Sugar Protocol countries restructure their sugar sector following the reform of the EU sugar regime and consequent cuts to the EU guaranteed sugar prices. Mauritius has already embarked on an ambitious 4
program of its sugar sector and EU support to the tune of Euro 267.14 million have been committed to the Mauritius envelope (2007-2010: Euros M 127.541 /2011-2013: Euros 139.6 million). These commitments were obtained in recognition of the serious economic reforms being pursued by Mauritius including the transformation of the sugar industry into a sugarcane cluster, the democratic and good governance principles which our country adheres to as borne out by various world indexes such as the Mo Ibrahim index and our inclusive approach to development. The EU has highlighted on several occasions the transparent and consultative manner in which all stakeholders participated in the preparation of the Multi-Annual Indicative Programme, described as an all inclusive approach. Whilst all these factors are no doubt important, let me underscore that these allocations would have been lower without the personal intervention of the Hon. Prime Minister who pressed for the waiving of the 15% cap on such allocations. Ladies and Gentleman, Beyond, the EDF, the EU Sugar Accompanying Measures or FLEX, the European Investment Bank which is the commercial arm of the EU, supports development through a mix of concessional loans linked to the level of 5
development of the country. I understand that the workshop to-day will provide you with a full briefing on the support provided by the EIB in Mauritius. Let me simply add that the negotiation of the volume of development assistance from the EU by ACP countries is a very important element as it ensures predictability on the provision of development support and thus allows for concrete planning. The European Development Fund (EDF) which was created in the 1957 Treaty of Rome and launched in1959 as the main instrument for providing EEC development aid has been instrumental in channelling pluriannual support to ACP countries. Mauritius has made effective use of the support provided under various EDF s to help build economic resilience and motivate development. As I mentioned earlier, the National Indicative Programme for Mauritius under the 10 th European Development Fund, as outlined in the Country Strategy Paper (CSP) signed in December 2007, is to the tune of Euros 63.4 million Prior to the negotiations of the 10th EDF, some EU Member States, the European Parliament and the European Commission, increasingly advocated for the budgetisation of the EDF to ensure political oversight. Divergent opinions on this issue led to the adoption of the 10 th EDF as is but it is understood that discussions are already underway on its successor arrangement. It would appear that the Dutch and German Governments are envisaging fundamental reforms to 6
their development policy and that this would likely lead to the application of strict measures on budget support in the future. This may affect the next EDF or its successor instrument. Ladies and Gentlemen, In order to help you in your deliberations, I wish to underline certain salient political factors which in 1957 guided the founding fathers of the EU to adopt the EDF as a development tool. Indeed, political developments in 1957 in both the colonies and metropolitan States were a defining moment of history. The Founding Fathers of the former EEC, and above all General De Gaulle in their political judgments sensed that after decolonization for the new African States to become viable actors they would need assistance not conditioned by political considerations of a by-gone colonial era. Led by leaders like General De Gaulle who had the vision of State building before giving their African colonies independence, the European Heads of States, made the necessary legal provisions in the Treaty of Rome for continued support to their former African Colonies. It is the EU, as a nascent political structure, which allied the concept of sustainable development with the idea of State-building. This linkage I believe remain true even today. Furthermore, in 1957, the European leaders also agreed that the aid 7
provided by the EU would complement and not substitute itself to bilateral aid provided by the EU Member-States to ACP States. The idea of plus-value, I believe should remain a cardinal element guiding the EU Member States while determining the quantum of EU aid to ACP States. An additional element guiding EU development aid and which should remain a fundamental principle is the requirement to ensure coherence between the different policies of the EU like fisheries and agriculture. Indeed, in this regard, the EU should be flexible in its approach so that its development aid brings an incremental benefit and through this external added dimension the ACP national development Strategies in achieving food security, seen as a pre-requisite to successfully address the scourge of poverty, are achieved. Therefore, the development cooperation policy of the EU as it has evolved since the Treaty of Rome has stood the test of time and has over the past 40 years of ACP-EU Cooperation been strengthened. The three elements namely state-building, the idea of plus value and poverty eradication remain challenges which ACP States are today grappling with. In these circumstances, the subject for today's workshop is both opportune and topical. The acquis of more than 40 years of tested relations, I would urge, should be preserved and enhanced. This is also because: Firstly, the Lisbon Treaty, which came into force in December 2009, does not specifically mention EDF/ACP as was the case under the previous EU 8
Treaty. It has created new institutions, like the EEAS*, which would enable the EU to play a major role at the global level. There might however be a temptation to politicise development cooperation policy. Secondly, the European Commission had recently opened consultations on a Green Paper on the Future of EU Budget Support to third countries, and another one on Development Cooperation Policy. They reflect the new thinking and priorities of the EU in its external relations and how to address new challenges like climate change but also those posed by emerging economies. Thirdly, discussions have started on the next EU Financial Perspectives post 2013. Already some quarters are arguing for the budgetisation of the EDF. The ACP Group, through its Working Group on the Future Perspectives of the ACP, is reflecting on this issue as this may have serious impact on resources to be provided to the ACP. Since there is no legal and political basis to negotiate the 11th EDF or its successor, there is growing concern among the ACP States. Fourthly, it has been decided to convene a special meeting of the ACP National and Regional Authorising Officers in April, in Brussels, which will, inter alia, discuss the implication of the budgetisation of the EDF. *European External Action Service (EEAS) 9
Fifthly, there is need for more resources to finance new needs like the impact of climate change; but on the other hand, there is mounting pressure on EU Member States to contain and reduce expenditure, and Sixthly, against the backdrop of the financial crisis, euro-crisis and economic downturn, some EU Member States have taken drastic austerity measures. The capacity of some EU member States to commit resources for the next EDF or its successor thus becomes critical. From my perspective, the EDF, in its current form, suffers from the following important weaknesses: Firstly, its implementation procedures are cumbersome and time consuming exception made when assistance is delivered via budget support. Cumbersome procedures delay disbursement. Secondly, the volume of resources allocated to the EDF depends on the political choice of each EU Member States. This requires protracted negotiations at political level and could further delays outcomes. Thirdly, we regret the low involvement of the European Parliament on EDF matters. 10
Ladies and Gentlemen, The challenge, therefore, both for the ACP and EU, is to ensure that the 11 th EDF or its successor is provided with adequate resources building on the 10th EDF and to aim at the simplification and streamlining of the cumbersome procedures in order to expedite commitment and disbursement. These resources have to be provided on a multi-annual basis in order to continue ensuring predictability and sustainability. Further, we should be weary of attempts to use the GDP per capita criterion which often targets Middle Income countries to restrict assistance delivered in form of budget support to countries. Such a criterion often conceals the real vulnerability of a country. Mauritius is well placed to know that. It may be better, in view of recent increases in the frequency and intensity of natural disasters, to adopt an environment vulnerability index rather than a per capita approach. This criterion has to be in addition to the need to take into account the structural handicaps due to smallness, remoteness and lack of natural resources of some small and vulnerable ACP States, particularly Island ACP States. Mauritius will continue to put forward these considerations and will continue to press for countries which make good use of EDF funds not to be penalized. 11
Ladies and Gentlemen, I would like to seize this opportunity to underscore the appreciation of Mauritius for the benefits it has been deriving from the EDFs under the successive Lomé Conventions and the Cotonou Partnership Agreement. For us, the provision of resources on a predictable basis, through General Budget Support, is the best vehicle to channel resources in a timely and effective manner. It promotes ownership, transparency and accountability which both the ACP and EU advocate, in line with the principles of the 2005 Paris Declaration on Aid Effectiveness. Mauritius has a good track record on performance. This has enabled us to secure additional resources. We must continue to improve on our performance and we are fully committed to this. As you know Mauritius is a small, vulnerable island state far from its main markets. We need to make massive investment in infrastructure of the next 20 years or so to sustain our development agenda. This includes investing in safer roads to reduce congestion, improve electricity supply with a focus on renewable energy, guarantee a 24/7 supply of water for domestic consumption, mitigating the negative impact of development on the environment and ensuring a good network for waste water disposal. These will require innovative ways of financing such public goods including through Public Private Partnerships to avoid a high level of 12
indebtedness. Further support would also be required to bring down the costs of such projects and at the same time ensure a sustainable level of debt. In this context, we are willing to engage the EU on innovative financial engineering so that our mutual objectives are achieved. To conclude, I would like to make a plea for this workshop to come up with concrete ideas to help us put forward the case for adequate resources to be provided for a Multi-Annual Financial Framework which is predictable and sustainable to meet the objectives jointly agreed in the second revised Cotonou Agreement, as well as other commitments under climate change and the fight against piracy. We expect, in this regard, the EU member States to translate in real terms their commitments to provide 0.7% of their Gross National Income as Overseas Development Assistance (ODA) by 2015. This has been reiterated at the 2005 G8 Gleneagles Summit and also at last September High Level Meeting on the Millennium Development Goals (MDGs). Ladies and gentlemen, It is now my pleasure to declare this workshop open and to wish you fruitful deliberations. Domaine Les Pailles, 24 February 2011 13
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