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DRN Evaluation of ALA regulation 443/92 – Final Report page i

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The evaluation study was carried out by Enzo Caputo (team leader), Jesus Carlos Corral Fuen-tes, Paola Gosparini and Willem Van der Geest. The team was assisted by Mari Carmen BuenoBarriga and Lala Rafamatanantsoa.


DRN Evaluation of ALA regulation 443/92 – Final Report page ii

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�� ([HFXWLYH�VXPPDU\ ��0.1. Origins of the EC-ALA co-operation...........................................................................10.2. Context evolution .........................................................................................................1

0.2.1. Diversity and dynamics ...........................................................................................10.2.2. Relations with the EU..............................................................................................1

0.3. Multifaceted strategies and diversified goals ...............................................................20.3.1. ALA specific approaches and strategies ..................................................................20.3.2. Regulation 443/92....................................................................................................20.3.3. Other financial and regulatory instruments..............................................................3

0.4. Overview of the planned intervention (commitments).................................................30.4.1. The use of different financial instruments ...............................................................30.4.2. Global allocations ....................................................................................................30.4.3. Sectoral priorities.....................................................................................................30.4.4. Geographic priorities ...............................................................................................40.4.5. Commitments and expenditure ................................................................................5

0.5. Findings from the country case studies ........................................................................50.5.1. Planning and co-ordination......................................................................................50.5.2. Programme types, criteria and approaches for aid management .............................60.5.3. Management inefficiencies ......................................................................................6

0.6. Summary of the recommendations...............................................................................6

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2.1. The organisation of the work .......................................................................................72.2. The desk phase .............................................................................................................8

2.2.1. The main steps .........................................................................................................82.2.2. The inclusion of horizontal budgetary lines.............................................................82.2.3. Building the inventory .............................................................................................92.2.4. The sector classification.........................................................................................10

2.3. The field visit phase ...................................................................................................112.3.1. Definition of the evaluation questions ...................................................................122.3.2. Selection of the countries.......................................................................................132.3.3. Visits to the countries ............................................................................................142.3.4. The case studies .....................................................................................................14

2.4. The synthesis report phase .........................................................................................14

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3.1. Asia and Latin America: income and social indicators..............................................153.2. Economy and trade.....................................................................................................16

3.2.1. An overview...........................................................................................................163.2.2. Sub-regional and bilateral trade partners ...............................................................17

3.3. The other global players in Asia and Latin America .................................................18�� (8�$/$�OHJDO�DQG�SROLF\�IUDPHZRUN ��

4.1. Asia and Latin America as non-associated countries.................................................204.1.1. Co-operation with non associated countries ..........................................................204.1.2. Legal and political framework: ALA Council regulation......................................20


DRN Evaluation of ALA regulation 443/92 – Final Report page iii

4.2. Asia ............................................................................................................................204.2.1. Communications, agreements, and other texts ......................................................204.2.2. Strategic framework...............................................................................................21

4.3. Latin America ............................................................................................................224.3.1. Communications, agreements, and other texts ......................................................224.3.2. The strategic framework ........................................................................................22

�� $/$�5HJLRQDO�LQVWLWXWLRQV�DQG�IRUD�IRU�SDUWQHUVKLS�DQG�SROLF\�GLDORJXH ��5.1. EU-Asia regional relations.........................................................................................24

5.1.1. Sub-regional partners.............................................................................................245.1.2. EU inter-regional co-operation and political dialogue with Asia: the ASEM. ......25

5.2. EU-LA regional relations...........................................................................................275.2.1. Sub-regional partners.............................................................................................275.2.2. The interregional political dialogue .......................................................................28

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6.1. Asia programme .........................................................................................................306.1.1. Overall aggregate assessment ................................................................................306.1.2. Relevance to the objective of poverty reduction in less-developed Asian countr..326.1.3. Relevance to the objective of strengthening good governance, democracy andhuman rights ........................................................................................................................356.1.4. Relevance to the objective of enhancing trade and economic relations ................376.1.5. Relevance to the objective of enhancing cultural and scientific exchanges ..........396.1.6. Conclusions on the overall relevance and coherence of the Asia programme.......40

6.2. Latin America programme .........................................................................................426.2.1. Overall aggregate assessment ................................................................................426.2.2. Relevance to the poverty reduction and human and social development objectiv 446.2.3. Relevance to the objective of environment protection ..........................................456.2.4. Relevance to the objectives of promoting private sector development, increasingthe enterprises competitiveness and their participation in the world economy ...................466.2.5. Relevance to the objective of consolidating the democratic process, goodgovernance and respect for human rights ............................................................................476.2.6. Relevance to the objective of regional integration and consolidation of theeconomic and political relations between the two regions ..................................................486.2.7. Conclusions on the overall relevance and coherence of the Latin Americaprogramme...........................................................................................................................496.2.8. Conclusions on the overall relevance and coherence of the Latin Americaprogramme...........................................................................................................................49

�� &DVH�VWXGLHV ��7.1. India ...........................................................................................................................51

7.1.1. Context...................................................................................................................517.1.2. EC programme.......................................................................................................527.1.3. Evaluation issues ...................................................................................................52

7.2. Cambodia ...................................................................................................................547.2.1. Context...................................................................................................................547.2.2. EC programme.......................................................................................................547.2.3. Evaluation issues ...................................................................................................55

7.3. Thailand .....................................................................................................................577.3.1. Context...................................................................................................................577.3.2. EC programme.......................................................................................................577.3.3. Evaluation issues ...................................................................................................58

7.4. Brazil ..........................................................................................................................607.4.1. Context...................................................................................................................607.4.2. EC programme.......................................................................................................60


DRN Evaluation of ALA regulation 443/92 – Final Report page iv

7.4.3. Evaluation issues ...................................................................................................617.5. Nicaragua ...................................................................................................................63

7.5.1. Context...................................................................................................................637.5.2. EC programme.......................................................................................................647.5.3. Evaluation issues ...................................................................................................64

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DRN Evaluation of ALA regulation 443/92 – Final Report page v

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AC Andean CommunityACP Africa, Caribbean, Pacific countries (Lomé Convention)AEBF Asia-Europe Business ForumAEMM ASEAN-EC Ministerial MeetingAFTA Asian Free Trade AreaALA Asia and Latin AmericaALADI Asociación Latinoamericana de IntegraciónALFA EU-Latin America Higher Education ProgrammeAL-Invest EU-Latin America Programme for Investment promotionAP Action Plan (part of the programming procedures of EC aid)APEC Asia-Pacific economic co-operationASEAN Association of South-eastern Asian StatesASEM Asia Europe MeetingAsia-Urbs EU-Asia Urban Twinning ProgrammeBCIE Banco Centroamericano de Integraciòn EconomicaBL Budget linesCA Central AmericaCACM Central America Common MarketCARERE Cambodian Resettlement And RehabilitationCARICOM Caribbean Community and Common MarketCBI Caribbean Basin InitiativeCEPAL Comisión Económica para América Latina y CaribeCET Common External TariffCGIAR Consultative group on international agricultural researchCOM EU CommunicationCSCAP Council for Security Co-operation in the Asia-PacificCSP Country Strategy PaperEC European CommissionEc - Eco Economic co-operation budget lineECI Education, Culture and InformationECIP European Community Investment PartnerEDF European Development Fund (ACP countries)EIB European Investment BankEIDHR European Initiative for Democracy and Human RightsEP European ParliamentERCERP Nicaraguan Strengthened growth and poverty reduction strategyEU European UnionFDI Foreign Direct InvestmentFTAA Free Trade Area of the AmericasGDP Gross Domestic ProductGNP Gross National ProductGSP Generalized System of PreferencesHBL Horizontal budget linesHIPC Highly Indebt Poor CountriesHR Human RightsHSD Human and Social DevelopmentIDB Inter-American Development BankIFI International Financing Institutions


DRN Evaluation of ALA regulation 443/92 – Final Report page vi

IP Indicative Programme (part of the programming procedures of EC aid)IPAP Investment Promotion Action PlanJC Joint CommitteeJUNAC Junta del Acuerdo de CartagenaLA Latin AmericaLAC Latin America and CaribbeanLDCs Least Developed CountriesMCCA Central American Common MarketMERCOSUR Mercado Común del SurMOAC Ministry of Agriculture and Cooperatives, ThailandMoU Memorandum of UnderstandingMS Member StateNAFTA North America Free Trade AgreementNGO Non Governmental OrganizationODA Official Development AssistanceODECA Organisation of Central American StatesODI Overseas Development InstituteOECD Organization for Economic Co-operation and DevelopmentOJEC Official Journal of the European CommunitiesPASAC Support Programme for Basic Education in Cambodiapc per capitaPPG7 G7 Pilot Programme for the Amazonian ForestPPP Purchasing Parity PricesPRASAC Support Programme for Cambodia Agricultural SectorPVD Pays en Voie de DéveloppementRTG Royal Thai Government??SAARC South Asian Association for Regional Co-operationSAPTA SAARC Preferential Trading ArrangementSICA Central America Integration SystemSME Small and Medium EnterpriseSOM Senior Officials MeetingSPG System of Generalised PreferenceT&F Technical and financialTFAP Trade Facilitation Action PlanTNAS Towards a New Asia StrategyToR Terms of ReferenceUN United NationsUrb-AL EU-Latin America Programme of Urban TwinningWCO World Customs OrganisationWIPO World Intellectual Property OrganisationWTO World Trade Organization


DRN Evaluation of ALA regulation 443/92 – Final Report page vii

&RXQWU\�$EEUHYLDWLRQVAR Argentina ES El Salvador Ne Nepal R-SE ASEAN

Ba Bangladesh GU Guatemala NI Nicaragua Si SingapourBh Bhutan HH Hong Kong Pa Pakistan SL Sri LankaBO Bolivia HO Honduras PA Paraguay Th ThailandBR Brazil Ia Indonesia PE Peru UR Uruguay

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0DFUR�VHFWRU�DEEUHYLDWLRQV�S Social I&S, Rural development, Local development, Food Aid (as programme aid)H Humanitarian, Rehabilitation, Aid to NGOsG Governance, Women and DevelopmentE Economic I&S, Other product services, Tourism, S&TR Trade (including regional integration)U Unallocable by sectorN Natural resources, Environment


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Bottom-up ap-proach

Using this approach, a project proposal is formulated by the beneficiary institution, ac-cording to guidelines and principles that are the same for all potential participants, butbased on the beneficiary’s specific objective, activities and budget. Under this ap-proach it is not possible to know D�SULRUL the number of proposals, which will be sub-mitted or the number of projects that will be financed per country as result of the se-lection procedure.

Budgetary sup-port

This is an implementation and disbursement modality. It foresees that funds are in-jected directly into a recipient country’s budget. With budgetary support, the funds be-come fungible with the national ones and therefore can contribute also to financing re-current costs. Budgetary support is the disbursement modality associated with pro-grammes of macro-economic stabilisation (structural adjustment programmes) or withSWAp. Typically the use of budgetary support is associated to conditionalities and/orperformance targets, and requires a good level of transparency in public expendituremanagement as well as close donor co-ordination. Budgetary support may be more orless tied to specific sectors and actions, though the practical effectiveness of such tyingis questionable, due to the fungibility of the financial resources.

Demand-drivenapproach

This is that same as the ERWWRP�XS�DSSURDFK�(see above)�

Economic co-operation

Economic co-operation identifies two different concepts.On the one hand, it identifies a specific budgetary line and a specific form of EC co-operation (written with a capital “E” in the text). It aims at improving the economicrelations between the recipient country and the EU (PXWXDO� LQWHUHVW) and –in thisframework– should aim at strengthening the ALA countries’ institutional capacities topromote investment and profit better from the opening of the international markets(Art. 7 of the 443/92 regulation). It should specifically cover three sectors: improve-ment of scientific and technological potential; institutional development; and supportto enterprises.On the other hand, it identifies the co-operation in specific economic areas, such astrade, industrial, scientific and technological, macro-economic co-operation (writtenwith a small “e” in the text).

Horizontalbudgetary lines

They are those lines, which are not ALA-specific asthey are thematic and, therefore, cut across the differ-ent regions. Until 1996, many of these lines had theirlegal basis in the ALA regulation, but are now regu-lated by ad hoc regulations. This study considers onlythose horizontal budgetary lines, which have beenused in the ALA countries, as shown by the list in the'HWDLOV¶ column.

� Refugees (uprooted): B7-312(AL); B7-302 (Asia)

� Refugees and displaced: B7-217

� Rehabilitation : B7-313(AL) ; B7-6410 (Asia)

� Disaster prevention: B7-219� Democracy and HR: B7-703

(AL); B7-707 (Asia)� ECIP: B7-8720� Environment: B7-6200� Tropical Forest: B7-6201� Fight against drugs: B7-6210� Victims of disasters (emer-

gency aid): B7-210� NGO co-financing: B7-6000� Food Aid: B7-200


DRN Evaluation of ALA regulation 443/92 – Final Report page ix

Horizontal pro-grammes

These are programmes financed under the ALA budgetary lines (i.e. T&F co-operationand Economic co-operation), which cover either the Latin America or the Asia coun-tries. They differ from regional programmes, which are defined for a number of coun-tries in LA or Asia, but do not include all of the countries in a region. They also differfrom the projects covering all countries in a region, because they are conceived of asprogrammes financing individual projects selected through a ERWWRP�XS�DSSURDFK.

Mutual interest

According to regulation 443/92, mutual interest refers only to actions financed underthe Economic co-operation budget line. 0XWXDO�LQWHUHVW�means that both parties couldbenefit from an initiative, and not only the ALA countries, as in the case of the T&Fco-operation. In the case of these actions, the initiative for the submission of projectproposal was either of the EU or the ALA countries or institutions.

Non-programmableaid

Non-programmable aid is represented by those in-struments whose use and budget are defined globallyi.e. per programme or per budgetary line and not atthe country level. Their allocation is not considered inthe Indicative Programmes. Horizontal budgetarylines are typically non-programmable. Among thoseconsidered, the only exception is the Food Aid budg-etary line. Within the T&F co-operation and Eco-nomic co-operation budgetary lines, the funds allo-cated to the programmes ALFA, Al-Invest, and Urb-Al are not programmable at the country level.

Non-programmable horizontalbudgetary lines, included inthe evaluation:� Refugees (uprooted)� Refugees and displaced;� Rehabilitation ;� Disaster prevention;� Democracy and HR;� ECIP;� Environment;� Tropical Forest;� Fight against drugs;� Emergency Aid;� NGO co-financing�

Poverty reduc-tion

During the nineties, poverty reduction has been defined as the overarching objective ofthe ODA (see 1995 “Social Summit” in Copenhagen; OECD-DAC “Shaping the 21stCentury”-1996; UNDP’s “Overcoming Human Poverty”-1998, and Human Develop-ment Report - 2001; and EC COMM-2000-212). A set of relevant International Devel-opment Goals has been agreed upon to monitor the progress in poverty reductionworldwide. These include:

3RYHUW\� Reducing by half the proportion of people in extreme poverty by 2015.

0RUWDOLW\� Reducing by two-thirds the mortality rates for infants and children under 5 and by three-fourthsthe mortality rates for mothers by 2015.

(GXFDWLRQ� Achieving universal primary education in all countries by 2015.+HDOWK� Providing access to reproductive health services for all individuals of appropriate age no later than2015.

*HQGHU� Demonstrating progress toward gender equality and the empowerment of women by eliminatinggender disparities in primary and secondary education by 2005.

(QYLURQPHQW� Implementing national strategies for sustainable development by 2005 to ensure that the cur-rent loss of environmental resources is reversed globally and nationally by 2015.

There is a general consensus on linking poverty reduction and sustained growth. TheEC development policy stresses such a linkage, by emphasising the importance ofmacro-economic stabilisation, competition framework for private sector development,and trade.

Programmableaid

It is represented by those budgetary lines, whose in-dicative allocation is included in the country pro-gramming documents (&RXQWU\� 6WUDWHJ\� 3DSHUV�� ,Q�GLFDWLYH� 3URJUDPPHV�� $FWLRQ� 3ODQV) and for whichthe indicative overall country allocation is defined atthe moment of the programming exercise. Typically,these resources are T&F and Economic budget lines.One horizontal budgetary line –Food Aid– though notincluded in the CSP process, is programmed accord-ing to the CSP because of its specific nature and ap-proach.

� T&F cooperation: B7-310(AL); B7-300 (Asia)

� Economic cooperation: B7-311; B7- 301 (Asia)


DRN Evaluation of ALA regulation 443/92 – Final Report page x

Sector WideApproach

It is a funding arrangement where the government of the recipient country “… designsan overall strategy and the donors sign on to fund the sector, not individual projects”(World Bank, World Development Report 2000/2001, p. 196). Additional characteris-tics are: the participation of the donors in the policy dialogue to better tune the strategyand monitor its results; the participation of all the stakeholders in both identificationand management of the strategy’s components; and the use of budgetary support com-bined with ad hoc assistance aimed at strengthening the existing institutional frame-work for implementation.

Technical andfinancial aid

This is one of the forms of EC development aid. According to regulation 443/92 itstarget groups are the poorest countries and the poorest people of the two regions(Art.4). Its scope embraces rural and local development, food security, environmentalprotection as a long term priority, human development as an horizontal objective, andregional co-operation (Art.5).

Top-down ap-proach

The donor formulates the project proposal in all its parts eventually in collaborationwith the beneficiary or the national/local authority of reference and its financing isagreed a priori in the framework of the programming exercise.

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Co-operation with Asian and Latin America (ALA) countries, QRQ�DVVRFLDWHG countries, startedin 1976, after the enlargement of the European Community (EC) to include the United King-dom. In 1981, the first regulation was established with emphasis on development support in-cluding agricultural and rural development, and other social sectors.

In 1992, a new regulation was established. The main difference between the 1992 regulation andthe previous one is that the former launched economic co-operation –for which a new specialbudget line was established– and had an explicit concern for issues such as democracy, humanrights, gender equality, and the environment.

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Asia is far more densely populated1 than Latin America and shows extreme intra-regional dif-ferences2. Such disparity is less striking in Latin America, where, most of the countries haveeconomies with intermediate incomes. Nevertheless, in Latin America more than in Asia, largeinequalities characterise income distribution in the various countries3. Political differences areparticularly extreme in Asia, where the various countries range from the harshest dictatorship tolong-standing and consolidated democracies.

Huge changes occurred in the regional as well as global contexts during the ‘90s, for instance:in Asia, the economic emergence of China, the political changes in Cambodia and Indonesia,and the complex political crisis in Central and South Asia; and, in Latin America, peacemakingand stabilisation in Central America, the integration of Mexico into the NAFTA, and the eco-nomic integration and democratisation processes in the Mercosur area (including their recentupsets and crises).

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The trade flows between the EU and the two regions have increased tremendously. The EU pro-vision of foreign direct investment (FDI), particularly in the Mercosur countries and China, hasbecome very significant4. EU political influence has grown, particularly in Latin America,through a leading role played, since 1984, in the peace process in Central America and high-level dialogue with the Group of Rio. In Asia, EU influence is lower, though there was signifi-cant progress during the 1997-98 financial crisis, when the EU demonstrated its capacity forpartnership and strategic vision. In Asia, the Asia Europe Meeting (ASEM) is a high level in-stitutional forum for interregional policy dialogue at the continental level. In LA, apart from theaforementioned Group of Rio, the EU relies on a number of sub-regional interlocutors, which 1 56 per cent of the world population.2 The 1999 GNP per capita ranged from US$32,230 and US$29,610 in Japan and Singapore re-spectively, to a mere US$220 in Nepal and US$260 in Cambodia.3 Indeed, the average Gini Index in Latin America is 0.53, while in Asia is 0,364 The European Union is the second largest importer from Asia. The Asian continent has becomethe third largest exporter to the EU accounting for 21 percent of EU imports. In Latin America, the EUshare in foreign trade decreased –while the US share increased– despite a strong growth of the Europeanexports and a strong presence of EU FDI in the region, especially in the Mercosur during the nineties. In1999-2000, EU FDI in Mercosur has reached almost 10 percent of the total EU FDI.



are both direct beneficiaries of its co-operation and counterparts in policy dialogue and strategicpartnership. Since June 1999 the EU-LAC Head of State Summit, which was held for the firsttime in Rio, has become a strategic forum of political dialogue between the two regions. A newmeeting will take place in Madrid in May 2002.

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Due to the complexity of the beneficiary regions and the amplitude of their politico-economicrelations with the EU, at the end of the 1980s the European Commission started building a mul-tifaceted approach to ALA co-operation.

One of the challenges faced by EC decision makers has been the optimisation of the impact ofthe relatively scarce resources available. The comparison, as shown in the table below, betweenthe per capita volume of EC aid in different regions highlights the problem of scarce resources.

The basic per capita allocations5 for Latin America areten times less than for ACP countries and for Asia theyare about 40 times less.

The COM(1990)0176 is the first exhaustive document inwhich a twofold perspective of the EC-ALA co-operationis stressed featuring development aid, and economic co-operation. A third perspective, co-operation for environ-mental conservation, is mentioned. A number of hori-

zontal communications and position papers directly affecting ALA co-operation were estab-lished on several crucial horizontal themes, particularly democracy and human rights.

After the aforementioned COM(1990), the EU Council adopted and updated regional strategiesfor Asia and Latin America, to take into account regional diversity and the different goals of EUco-operation. The main difference between the two areas appears to be that in LA, the EC haspursued a goal of global partnership at the continental level, with a possible DVVRFLDWLRQ per-spective at the sub-regional level whereas, in Asia the quest for increased influence and the es-tablishment of sectoral partnerships have been the key concerns.

In parallel with the definition of regional strategies, country level and some sub-regional strate-gies have been set up in almost all of the partner countries according to the planning proceduresestablished by the Commission. Though such an exercise has had weak results in the past, themore recent country strategy papers have grown in comprehensiveness and accuracy to becomean important reference framework for the improvement of both aid programming and global co-operation7.

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Regulation 443/92 establishes a complete strategic framework, including:R� the three sectors mentioned in the communication, development aid, economic co-

operation, and the environment;R� a strong reference to democracy and human rights; andR� some new areas of action such as, science & technology, institutional reform to speed

private sector development, and support to enterprises.

5 Including only T&F and economic co-operation budget lines6 Including only T&F and economic co-operation budget lines7 The difference between the country strategy papers just completed or still under preparation forthe period 2001-2006 and previous papers in some of the most important countries visited by the evalua-tion team (e.g. Brazil) was striking.

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The regulation builds particularly on the distinction between Technical and financial (T&F) andEconomic co-operation. Their respective definitions do present many overlapping themes,however, such as regional co-operation, good governance, macro-economic and sectoral poli-cies, the private sector and SMEs. In general, regulation 443/92 stands in for the poor strategicinstruments available at the time, and is not just a regulatory (i.e. legal and operational) tool.

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Throughout the 1990s, beyond the core ODA allocations (PVD-ALA, and others), a multitudeof financial instruments was introduced to respond to the diversification of the areas and priori-ties of EC co-operation in different regions. All these have affected the ALA countries. Theseare the so-called horizontal budget lines (HBL) introduced by the European Parliament to com-plement the main co-operation activities of the EC. Many of these horizontal budgetary lines aregoverned by their own regulations, while a few of them fall under the ALA regulation. In manycountries –especially in Latin America– the horizontal budgetary lines came to outweigh themain ALA financing, highlighting co-ordination problems and needs not perceived at the timeof the writing of regulation 443/92.

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As seen above, two basic financial instruments have been provided under regulation 443/92,T&F and Economic co-operation, and a multitude of other instruments have been made avail-able through other Commission decisions, namely the horizontal budget lines. In some cases,the horizontal budgetary lines have been used as a coherent complement to the ALA pro-gramme, whilst in others they have supported actions and programmes that have globallychanged the country priorities established by the planned intervention. Since the first period ofthe decade, the significance of the horizontal budget lines has been much higher in LA than inAsia.

The relationship between T&F and Economic co-operation, on the other hand, has been rela-tively stable over the years, with a slight increase in the share of Economic co-operation to bothregions. In the spirit of the regulation, the statistical analysis of the inventory indicates thatthere has been a certain sectoral complementarity between the two tools, albeit with several ex-ceptions.

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In the period 1993-2000, the global ALA allocation (including only T&F and Economic co-operation) has been more than ¼��ELOOLRQ��RI�ZKLFK�DERXW��LQ�/$�DQG��LQ�$VLD��,Qthe same period, the horizontal budget lines have allocated ¼��ELOOLRQ�LQ�/$�DQG�¼ 770 mil-lion in Asia. Therefore, the global EC aid allocation in the considered period has been ¼��billion in LA and ¼ 3.796 billion in Asia.

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The global EC aid allocations have focused the fight against poverty, including humanitarianinterventions and social development programmes. These two broad areas (or macro-sectors)have absorbed about 65 percent of the total resource allocation in both the regions. In Asia,more than 50 percent of the resources have been allocated to social development programmes,and less than 15 percent to humanitarian interventions. In LA, the latter absorb slightly less than30 percent, while social development absorbs about 35 percent. Such a difference is almost ex-clusively due to the stronger weight of the horizontal budgetary lines in LA, as compared toAsia.



Co-operation in the economic fields stands at a comparable level in the two regions with ap-proximately 10 percent of the total allocation. A significant difference appears in the area ofgovernance, in which LA has more than 12 percent of the allocations, while Asia has less than 5percent. Allocations to natural resources and the environment are higher in Asia (14 percent),than in LA (9 percent). Allocations for regional integration are higher in LA than in Asia (3.2and 1.5 percent).

The sectoral distribution changes a lot in LA –where the horizontal budget lines represent ap-prox. 50 percent of the total allocation– if we consider only the ALA budget lines. Therefore,the final results and impact of the programmes will very much depend on how programmableand non-programmable aid have been co-ordinated and if they are coherent and complementary.

The sectoral distribution has changed over time as shown below.

Latin America

The main changes in the sectoral priorities of the SURJUDPPDEOH� DLG (T&F and Ec) in LatinAmerica, from 1993-96 to 1997-2000 can be summarised as follows:

a. a strong decrease in the areas of UXUDO�GHYHORSPHQW, and XUEDQ SRYHUW\ combined with asignificant increase in funds to ZDWHU�VXSSO\� the HQYLURQPHQW and ORFDO�GHYHORSPHQW8, anda global stability of commitments to the education sector;

b. a strong shift away from traditional 60(V and SULYDWH�VHFWRU direct support, towards LQ�YHVWPHQW�SURPRWLRQ��L�H��60(�LQWHUQDWLRQDOLVDWLRQ�� and an increase in the LQGXVWU\�sectorthough not remarkable in absolute terms;

c. a significant decrease was seen in aid to UHJLRQDO� DQG� LQWHUQDWLRQDO� WUDGH, but a stablecommitment was made to LQWHUUHJLRQDO�HFRQRPLF�DQG�SROLWLFDO�LVVXHV;

d. a significant increase was seen in LQVWLWXWLRQDO�UHIRUP DQG LQVWLWXWLRQDO�VWUHQJWKHQLQJ, GH�PRFUDF\, and XUEDQ�WZLQQLQJ.

Asia

In Asia, the sectoral allocation is more stable, also because the weight of QRQ�SURJUDPPDEOH aidis not so high as in LA. (GXFDWLRQ is by and large the main sector in global terms, and alloca-tions increased particularly in the second period. 5XUDO�GHYHORSPHQW was the main sector in thefirst period and decreased significantly in the second one. Aid to DJULFXOWXUDO and WKH�HQYLURQ�PHQW also decreased in the second period, whilst funds to SDUWLFLSDWRU\� ORFDO�GHYHORSPHQW in-creased. Allocations to KHDOWK and 1*2V remained a stable and important share. Among thesectors that increased considerably in the second period compared to the first one, GHPRFUDF\�WUDQVSRUW��FRPPXQLFDWLRQ and VFLHQFH��WHFKQRORJ\ are the most significant.

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In Asia, the FRXQWU\�DOORFDWLRQ of the resources remained relatively stable in the two periodsconsidered, with India in the lead position, followed by Bangladesh, then China and Vietnam. InPakistan, co-operation ceased after the degradation of the democratic situation, and the sharegoing to the Philippines increased.

The UHJLRQDO�GLPHQVLRQ is mainly used for some horizontal programmes and initiatives, such as:Asia Links, Asia Invest, the environmental initiative, the health initiative, and science and tech-nology. A particular emphasis has been given to interregional dialogue, through ASEM. At the 8 Local development programmes have often replaced the traditional rural development projects,with a new emphasis on institutional building, good governance and participation, and the diversificationof economic activities. Water & sanitation programmes as well have replaced some more general inter-ventions against urban poverty.9 The evolution corresponds to the introduction in the second period of Al-Invest, which has beenclassified, according to its main objective, within the ,QYHVWPHQW�3URPRWLRQ sector though it is addressedmostly to SMEs. Therefore, the SME remain the target group of economic co-operation .



sub-regional level, co-operation with the Association of South-eastern Asian States (ASEAN)aims at increasing EU links with the sub-region, through large initiatives in the fields of energy,trade facilitation, high level training, university exchanges, etc.

In Latin America, the FRXQWU\�DOORFDWLRQ, as the sectoral one, is affected by the importance ofQRQ�SURJUDPPDEOH aid and the country priorities are more difficult to understand. Consideringthe global allocation, Nicaragua is the number one beneficiary followed by Peru. Consideringonly the ALA budgetary lines, however, Guatemala and Bolivia are first in funds allocated. Inboth cases, Nicaragua, Peru, Bolivia and Guatemala occupy the first four positions. A strongconcentration goes to Central America, with the inclusion of UHJLRQDO�FR�RSHUDWLRQ, due to theparticular political and social sensitivity of the area.

The UHJLRQDO�GLPHQVLRQ –apart from the horizontal programmes and the interregional dialogue,as in Asia– focuses on the consolidation of sub-regional integration processes, among whichMercosur seems the most significant one.

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The data on expenditure in the inventories is not yet complete nor is it completely reliable, andmust be integrated. For example, no data on expenditures for NGOs, disaster, and food aid hasbeen available. Based on the data available, it appears that in LA expenditures are 42 percent ofthe commitments, while in Asia they are 44 percent. As in most EC programmes, the averagedelay between commitments and expenditures is about three to four years. Such delays jeop-ardise the overall programme performance and reduce the credibility of EC co-operation in theregions.

�� )LQGLQJV�IURP�WKH�FRXQWU\�FDVH�VWXGLHV

Five country case studies have been carried out in India, Thailand, Cambodia, Brazil and Nica-ragua. The main findings are as follows.

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Planning with a long-term perspective may be difficult. The funds allocation criteria are notevident. Though the planning procedure includes medium and short-term horizons (CSP andIP), the actual budgetary allocation of funds is still done on a yearly basis, according to the ECbudgetary procedure.

When the horizontal budgetary lines represent a large share of the co-operation programme,there is a risk of great incoherence and inefficiency. In such cases, the ALA programmes re-main marginalised and weak, while the horizontal budgetary lines are often dispersed and notsuitable to building long-term partnership relations.

There is a disproportion between the large scope of the country strategy papers that would re-quire a broad policy mix, of which aid is only a component, and the actual aid allocations.

The relationship between poverty reduction and other strategic goals, such as security, democ-racy, industrial co-operation, etc. is not clear as far as financial aid allocations are concerned.

Especially in Asia, among the EC co-operation stakeholders, there is the widespread idea thatthe funds allocated are inadequate in comparison with: (i) the needs and importance of the EC’strade and political relations; and (ii) the amounts allocated to other areas in the world. In LatinAmerica this idea is prevalent as well. There is also the awareness that a better allocation wouldhelp eliminate some major imbalances.



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Under regulation 443/92 budgetary support is not considered, thus hampering the use of onevery important means of co-operation.

The selection of the programme types and approaches is still left to the practical experience andthe capacity of the individuals. There are no guidelines and skills to help in the use of the sectorwide approach (SWAp), consultative processes, cluster programmes, etc.

The horizontal programmes’ performances are very diverse according to the capacity of thebeneficiaries and their specific conditions. A standard formula, without a clear focus on the spe-cific contexts does not seem to work10.

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One of the most pervasive limiting factors of ALA co-operation, which hampers the overall per-formance of the programmes, is the cumbersome decision making process and implementationprocedures, which contribute to enormous delays, rigidities and wastes of human resources.

Monitoring is still focused on administrative matters and the compliance of projects with re-porting and other pre-defined deliveries.

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Based on the findings of both the desk and the case studies, the key recommendations of theevaluation refer to the whole regulatory framework of ALA co-operation, and aim at identifyingthe issues that should be addressed to improve it. Which issues should be addressed within thenew ALA regulation and which ones should be addressed through the improvement of otherregulatory instruments, such as aid policies –including aid management policies– is also dis-cussed and specific recommendations are made.

The recommendations are organised in two main blocks:1. conclusions and recommendations for consideration in the new regulation; and2. conclusions and recommendations to improve aid management in the ALA regions

Block 1 includes only one main issue:R� Keeping the regulation as a simple legal document, with the inclusion of some basic princi-

ples.

Block 2, includes the following set of main issues:R� Improving planning and co-ordination;R� Improving aid management through diversifying and adapting tools, criteria and ap-

proaches;R� Improving sectoral policy management;R� Improving the horizontal programmes and networking approach;R� Improving aid management efficiency and accountability; andR� Other specific issues raised at the country level.

10 For instance, in Latin America, where horizontal programmes are globally considered to beworking well, they achieved limited results in less developed situations, as in the case of Nicaragua, or inthe least advanced areas of Brazil. In Asia, the horizontal programme formula does not yet seem to haveachieved significant results.



,1752'8&7,21

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This evaluation reviews co-operation between the EC and the Asian and Latin American coun-tries based on regulation 443/9211, and was commissioned with a view towards the preparationof a new regulation. It aims at providing conclusions on the co-operation experience for the pe-riod 1993-2000 in terms of relevance and coherence at the regional level with regard to theregulation’s objectives, the several strategy documents that have characterised the evolution ofthe relations with the concerned geographical areas during the nineties, and the national andother donors policies. The study also provides a general overview of the development impact,effectiveness and efficiency of the processes at the country level in those countries included inthe field visits. Finally, this study should produce recommendations contributing to the futureshape of the co-operation with the two regions.

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The study has been structured according to the typical division in three phases: (i) desk review;(ii) field visits; and (iii) Synthesis report writing. The overall evaluation took place betweenAugust 2001 and April 2002.

Given the evaluation objective and its strategic focus, the desk phase was the most importantand longest phase of this study. It concluded in December 2001 with a report presenting thepreliminary conclusions and recommendations and the inventory of EC co-operation in the tworegions for the evaluated period. The field visit phase took place during the months of Novem-ber and December. The field visits were more of a consultation process with key respondents atthe local level on certain basic issues rather than an evaluation of project or programmes. Theirobjective was to validate preliminary findings from the desk study with key respondents and tobuild case studies illustrating specific aspects of EC co-operation in the two regions in theframework of the overall strategic objective of the evaluation. Five country case reports weresubmitted at the end of February 2001. The third phase concentrates on the preparation of theSynthesis report and the formulation of the final recommendations and conclusions.

A broad consultative process with all key stakeholders within the Commission has been carriedout during the evaluation. The methodological approach for each phase and the subsequent pre-liminary findings have been discussed with an ad hoc Working Group (WG). This gathered to-gether representatives of the different units of DG RELEX and Aid-Co involved in the pro-gramming and implementation of the co-operation with ALA countries. Additional meetingswere organised with key respondents within the Commission during the desk phase to re-construct the background and rationale of the regulation 443/92 and during the third phase inorder to take fully into account the current reform process of the management of the EC externalassistance.

11 This is the aid provided through the Technical and financial co-operation budgetary line ( B7-3000 for Asia and B7-3100 for Latin America ) and Economic co-operation budgetary line ( B7 3010 forAsia and B7-3110 for Latin America)



The Evaluation Team was regionally structured with a development economist, a specialist ininternational relation and a junior assistant for each of the two regions. The Team was led by anevaluation expert on policy analysis and development aid.

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According to the Terms of Reference and the methodology agreed upon by the evaluation teamand the Commission’s working group, the main tasks of the Desk phase may be summarised asfollows:

1. Identifying the main dynamics and features of the context, in order to get the necessary elements for the rele-vance and coherence evaluation, and to establish the framework for the assessment of the global impact of co-operation. The context includes:a. the political, economic, and social framework of the relevant countries;b. the strategic and legal framework of EU relations with these countries;c. the regional IRUD� which the EU has promoted and/or identified as the main counterparts.

2. Establishing a detailed inventory of the programmes and projects planned and implemented, including all thenecessary information (sector, type of action, country, year, etc.) to allow an H[�SRVW reconstruction of the logic(or the strategy) of EC co-operation with the relevant countries. This step includes:a. the building and classification of an inventory of all the actions both planned and implemented; andb. a strategic analysis of the totality of such actions, identifying clusters, priorities, and trends at both the sec-

tor and geographic levels.

3. Comparing the H[�SRVW strategy with the actual scenarios in their evolution and the H[�DQWH assumptions to iden-tify some of the main evaluation issues and preliminary conclusions to be double-checked in the following stepsof the work. Based on the overview of the programmes financed in the two regions, the analysis focused on ageneral evaluation of the coherence and relevance of the programmes with the regulation objectives and thestrategies developed at regional levels. In this framework, the analysis has paid attention to the evolution ofcommitments and sector priorities to assess their coherence with the changes that occurred around mid-ninetieswith the elaboration of region-specific strategies12. Therefore, the period considered is divided into two parts:1993-1996 and 1997-2000.

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At the beginning of the analysis of the strategic co-operation framework with the two regions itbecame evident that the evaluation of the aid provided under regulation 443/92 could not avoidconsidering the aid provided to the regions through the horizontal budgetary lines (HBL), sincethe latter intervenes on the same matters as the former and they influence each other in terms ofrelevance, coherence, co-ordination and effectiveness. In agreement with the WG it was decidedto consider a number of horizontal budgetary lines without entering into the analysis of individ-ual projects. The horizontal budgetary lines were chosen based on their relevance with the ob-jectives of the 92 regulation and for their importance in terms of amounts committed in theALA countries. These lines are13:

R� Cooperation agreements (B7-8700)14

R� Refugees (uprooted people) (B7-312 for LA and 302 for Asia)R� Refugees and displaced people (B7-217)R� Rehabilitation (B7-313 for LA and 6410 for Asia)R� Prevention of disasters (B7-219)R� Democracy and Human Rights (B7-703 for LA and 707 for Asia)R� ECIP (B7-8720)R� The Environment (B7-6200) 12 For Latin America, in 1995 with the Communication: 7KH�(XURSHDQ�8QLRQ�DQG�/DWLQ�$PHULFD�WKH� SUHVHQW� VLWXDWLRQ� DQG� WKH� SURVSHFWV� IRU� FORVHU� SDUWQHUVKLS��. For Asia, in 1994 with theCommunication: 7RZDUGV�D�QHZ�$VLD�VWUDWHJ\.13 The reference number of the budgetary lines has changed in the course of the nineties. The onehere reported corresponds to the current numbering.14 Only for Latin America



R� Tropical Forests (B7-6201)R� Drugs (B7-6210)R� Food Aid (B7-200)R� Victims of disasters (emergency aid) (B7-210)R� NGOs co-financing (B7-6000)

As a result, the total number of projects classified has been 917 (about ¼��ELOOLRQ��IRU�$VLDand 1454 (about ¼��ELllion) for Latin America for the period 1993-2000.

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The main complex task of the desk phase was to build an inventory as there were several prob-lems met in data collection, namely, the limited structured information available on projects andthe high number of projects to classify and treat statistically.

As the Commission services do not have a unique database for the period of time covered by the evaluation for thetwo regions, several sources of documentation were used to collect the data for the Inventory:R� Annual reports (available only for Latin America from 1993 to 2000);R� Financial reports (available from 1993 to 1999 for Latin America and from 1993 to 1997 for Asia);R� List of projects financed under the two main BL managed by Europe Aid, Contractual and Financial Manage-

ment Unit – D/6 (for Asia);R� EC data base CRIS, MIS, SINCOM 1 and 2 (for Latin America and Asia)15; andR� List of projects financed under the NGOs BL managed by Europe Aid, NGOs Unit (F/2).

Taking into consideration the number of sources of data and the differences in information available, it was decidedto gather the needed facts in the following manner.

Latin America

7)�DQG�(FRQRPLF%/1. The title, total commitment, year of approval, beneficiary country or region, and budgetary line were taken from

the Annual reports1993 to 2000.2. The amounts of the payments were identified in the following ways:

R� T&F Co-operation: (a) Financial reports till 1999; (b) EC database CRIS and MIS for 2000. Several verifi-cations of the amounts available till 1999 were also made with those databases; (c) the data base Sincom 1& 2 for those projects, which were neither in the financial reports nor in CRIS & MIS.

R� Economic co-operation: (a) EC data base CRIS and MIS for all period: 1993-2000; (b) the data base SIM-COM 1 & 2 for those projects neither in the financial reports nor in CRIS & MIS, Random verificationsfor the other projects were also made using Sincom 1 & 2.

+RUL]RQWDO�EXGJHW�OLQHVThe BL and the total commitment per BL by year and by country were taken from the Annual Reports. Random veri-fications were made with SINCOM 1 & 2.

Asia:

(FRQRPLF�DQG�7)�EXGJHW�OLQHVThe title, total commitment, total payment, year of approval, beneficiary country or region, and budgetary line weretaken from SINCOM 1&2 and from Aidco Unit D/6 (Financial and Contractual Management Unit). SINCOM 1&2has been used as the primary source, while information from Unit D/6 has been used where not provided by SIN-COM.

+RUL]RQWDO�EXGJHW�OLQHVThe inventory was built on SINCOM 1&2 data, according to the following steps:a. selection of projects financed under each budgetary line by country in a given year using country codes;b. for projects classified under the “country and territory not identified” grouping ( code 958), those with the name “

Asia” in the title were selected as regional projects;c. Estimation of the number of projects under code 958, which could not be allocated to a specific country or region

in order to assess the possible underestimation resulting from (b). For each budgetary line the median of individ-ual project budget was taken as a threshold. For all projects above the median the responsible units in AidCo andRelex were contacted in order to check in which country they had been implemented. The results showed that lessthan 20% of these projects are allocated to Asia.

15 CRIS : &RPPRQ�5HOH[�,QIRUPDWLRQ�6\VWHP, MIS : 0DQDJHPHQW�,QIRUPDWLRQ�6\VWHP��SINCOM:6\VWqPH�,QIRUPDWLVp�GH�&RQWDELOLWp� These are all different data base on financed projects in LA and Asiaavailable at AidCo.



d. For projects under the NGOs BL, given their exceptional number another approach has been taken to assess thegroup under code 958. The list of projects financed in Asia given by the AidCo F/2 Unit has been compared withthe list produced according to the method described above in (b). The results showed a discrepancy of 15%. Thispercentage has been considered to be the NGOs projects financed in Asia and falling under the code 958. There-fore, the project list produced by AidCo F/2 is considered the final one.

Based on the data made available by various EC services (DG Relex and EuropeAid), the Inventory structure com-prises:a. a detailed list of projects and programmes for the two main BL, (Economic and Technical and financial co-

operation) including the amounts committed and paid16 by year and by country and region and by sector;b. the total amounts committed, classified by year and by country and sector, for the each of the above indicated

HBL;c. the total country and (sub-)region committed amounts per year and by budgetary line and sector.

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Sector classification has been made following two main purposes: (a) to allow the comparisonof the ex-post strategy with the ex-ante assumptions and objectives; and (b) to conform to theDAC sectors’ classification.

Each sector corresponds –either directly or as a sub-sector– to the DAC classification as shown in table 2.1. Sub-sectors have been created, when the DAC classification has been considered too large to represent the contents of theEC aid. In such cases, the DAC sector is mentioned, followed by a colon, and by the specification of the sub-sector.

Then the sectors have been aggregated in macro-sectors, to facilitate the analysis, with two sectors related to directinterventions for poverty reduction and social development (Social and Humanitarian), one to economic infrastruc-ture and service as well as enterprise support (Economic), one to non renewable resource management (Natural Re-sources), one to regional integration and international trade (Regional), and a last one related to the general support toprogramme management (Unallocable by sector).

The limitation of this approach is that certain cross-cutting projects might be classified in different sectors dependingupon which aspect that is taken into consideration. The most relevant example is represented by a number of projectsin Central America that have been classified within the macro-sector “'HPRFUDF\�DQG�+XPDQ�5LJKWV´. These proj-ects were eventually integrated local/rural development projects in poor areas, but because they were implemented inthe areas of the conflict with the purpose of consolidating the peace process, it was agreed to privilege this aspect,which corresponded also to the main feature of the EC co-operation in the region. Another example is given by theprojects included under the “5HJLRQDO” macro-sector. The DAC classification does not include regional integration,which is so important in the ALA programme. The most similar sector in the DAC classification is WUDGH. So the teamhas decided to consider four sub-sectors, under the DAC WUDGH label: LQWHUQDWLRQDO�WUDGH (e.g. support to countries toaccess to WTO); LQWHUUHJLRQDO�SROLWLFDO�DQG�HFRQRPLF�UHODWLRQV (e.g. support to ASEM); LQWUD�UHJLRQDO�WUDGH (e.g.,support to intra-regional customs’, infrastructures, or trade agreements), and regional institutions development (e.g.support to the Mercosur secretariat).

16 Contracted amounts have not been taken into account due to lack of complete and reliable infor-mation



7DEOH��VHFWRU�FODVVLILFDWLRQ'$&�6(&7256�$1'�$/$�68%�6(&7256�� 0$&52�6(&7256

Education, Culture and Information

Health and PopulationWater Supply

Rural Development SOCIAL ISSUES

Other social issues: urban poverty and degradationOther multisector: local developmentOther multisector: miscellaneousFood Aid

Investment Promotion

Banking, F&BS: Private sectorIndustry, M&C: SMEs

Industry, M&C: Miscellaneous ECONOMIC ISSUES

EnergyTransport & CommunicationTourismOther multisector: science & technology

Environment

Agriculture NATURAL RESOURCES

Fisheries

Governance &CS: Democracy and HR

Governance &CS: Indigenous people GOVERNANCE & DEMOCRACY

Governance & CS: Institutional BuildingGovernance & CS: Urban twinning

Trade: regional institution development

Trade: Interregional (political and economic relations) REGIONAL ISSUES AND TRADE

Trade: intra-regionalTrade: international

Aid to NGOs

Rehabilitation HUMANITARIAN

Humanitarian: refugeesUnallocable by sector: framework contract

Unallocable by sector: framework contract UNALLOCABLE

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The field visit phase was structured in four steps:

17 In the column below, when there is no colon, the DAC sector is considered as such in the ALAevaluation. When there is a colon, the DAC sector is mentioned on the left side of the colon, while anALA sub-sector is considered and mentioned on the right side of the colon.



1. Definition of the evaluation questions on the basis of the first findings of the deskphase;

2. Selection of the countries to be visited and analysis of the relevant documentation;3. Visits to the countries; and4. Preparation of case studies.

�� 'HILQLWLRQ�RI�WKH�HYDOXDWLRQ�TXHVWLRQVThe time allocated to field visits was limited due to the need to produce the conclusions and recommendations ac-cording to the work plan of the preparation of the new regulation (to be submitted to the Council by the end of April2002). Considering this constraint, the evaluation tools for the country visits were exclusively interviews and meet-ings/workshops with the country level stakeholders based on a common list of evaluation questions established takinginto account the suggestions of the WG to validate the first findings and working hypothesis of the desk phase, and tocollect local expectations for the eventual new regulatory framework.

The questions were developed in three main areas, strategy, processes and regulation, with a focus on one or two keytopics based on the first findings within each of these, as follows.18

Strategy0XOWLSOLFLW\� RI� REMHFWLYHV: The evolution of the strategies in the two regions indicated that the goals of EC co-operation are multiple: poverty alleviation, disaster relief, democracy and peace, trade and business development, etc.

5HODWHG�4XHVWLRQVa. Was there a dilemma between multiplicity and concentration?b. If yes, how was it addressed?c. How does the multiplicity of objectives work in the presence of a multiplicity of donors?d. How does the multiplicity of objectives relate to national objectives?e. How has coherence been preserved in the presence of multiplicity of objectives?f. Was there any prioritisation of objectives?

0D[LPLVLQJ�LQIOXHQFH��In the ALA region, in general, the per-capita ratio of EC aid is very low (about ¼0.1 per year,

per capita, in Asia, and ¼0.50 in LA). The issue of maximising the impact of such a small amount of aid becomescrucial.

5HODWHG�4XHVWLRQVa. What kind of influence was sought?b. How were the plans to maximise the EC influence established (co-financing key programmes; taking the lead of

a sector, etc.)?c. How was the EC influence perceived by the country decision makers and beneficiaries in selected sectors?

Processes3URJUDPPLQJ� DQG� LQWHUYHQWLRQ�PRGDOLWLHV��The programming procedures and mechanisms include different in-struments and several trade-offs, e.g.: co-operation agreements and country strategies; mixed commissions and in-dicative programmes; government and non-government partners; planned and unplanned programmes; top-down andbottom up approach; horizontal budgetary lines and regulation budgetary lines; Economic co-operation versus Tech-nical and financial co-operation.

5HODWHG�4XHVWLRQVa. How have the different procedures and mechanisms been used and which trade-offs were noticed-faced-

resolved?b. How has policy dialogue and co-ordination with MS been incorporated in the planning process?c. What has been the dialogue with the different categories of beneficiaries in the planning process?d. How has the evolution of co-operation instruments and development aid been incorporated in the planning proc-

ess?e. How was the possible use/intervention of different budgetary lines taken into account in the planning process?f. How has the multiplicity of instruments and planning procedures been perceived locally?g. What benefits/limits can be associated to the different planning procedures and mechanisms?

,PSOHPHQWDWLRQ��Backlog disbursements, over-centralisation in Brussels, lack of staff to instruct and monitor theprogrammes are mentioned as the main bottlenecks in the implementation process.

18 A full detailed list of questions that have been used as check list during the field visits is pro-vided in Annex. It further details the above illustrated questions and includes the specific issues suggestedby the WG.



5HODWHG�4XHVWLRQVa. Which of the mentioned bottlenecks has been noticed in the country?b. How has it affected the specific effectiveness of the programme, and the image-credibility of the whole EC co-

operation?c. In which measures are some of the main bottlenecks, linked to multiplicity of objectives and budgetary lines?

Regulation&RQWHQWV��OLPLWV��The regulation may help in addressing the problems mentioned above, but they should be consid-ered as a tool among others. They should avoid replacing the strategic planning exercise, and should allow an adapta-tion to possible changes of priorities and instruments over the time.

5HODWHG�4XHVWLRQVa. How can a new regulation help in reducing the problems mentioned above?b. Which would be the necessary measures to improve the process, that cannot be included in the regulations, but

should be provided elsewhere?c. What kind of aspects of the process should be controlled by the regulation?

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The selection of the countries took into consideration three sets of criteria: (a) HQGRJHQRXV�onesrelating to the countries; (b) H[RJHQRXV ones relating to the EU programmes and the EU’s eco-nomic interactions with the country; and (c) criteria relating to JHRJUDSKLFDO�EDODQFH.

Given the time constraint, two countries per regions were originally selected. In Asia a third one was added by the re-quest of the WG. The countries selected were Brazil and Nicaragua for Latin America, and Thailand, India and Cam-bodia for Asia. These countries were selected as they are considered to be particularly illustrative case studies of thedifferent aspects of the EC co-operation in the two regions.

%UD]LO�� a. This is the country that better represents the complexity of the goals of EC co-operation in LA,for the presence of extensive use of horizontal budgetary lines (it is the number one recipient inLA) against a limited use of the two lines for Economic and Technical and financial co-operation(is the 10th in all LA)

b. Brazil has a high level participation in the horizontal programmesc. It represents the difficulties of maximising EC co-operation influence in the given conditions.d. It is the most important country in the Mercosur, which represents the newest and probably the

most prominent sub-regional priority of the EU in LA.e. It has a national Mixed Commission, and as part of Mercosur it enters also in the regional Mixed

Commissionf. It is in the process of negotiating the 0HPRUDQGXP�RI�8QGHUVWDQGLQJ and the framework conven-

tion1LFDUDJXD� a. There is an EC delegation and a country evaluation has been made.

b. The delegation has regional responsibility and is one of those in the process of decentralisation.c. There is a Mixed regional Commissiond. The country is representative of Central America, where specific sub-regional priorities charac-

terise EC co-operation.e. All possible different instruments and budgetary lines are used in Nicaragua, including Food Aid

and HIPC.f. The country has already signed the 0HPRUDQGXP�RI�8QGHUVWDQGLQJ and has an identified Na-

tional Coordinator.g. The country is the number one recipient of EC aid in all of Latin America.h. It is possible to include the visit to a further country (e.g. El Salvador) from Nicaragua, profiting

from the know how of the delegation.,QGLD� a. It is one of the two largest countries in the region.

b. The country programme has a long history, which is representative of some of the recurrent diffi-culties of the EC co-operation in the region, especially weak influence.

c. The country programme recently shifted from a more traditional approach, based on local povertyalleviation to a sectoral approach that seems promising.

d. The internal administrative structure of the country represents a major challenge for co-ordinationpurposes with the national priorities and other donors.

7KDLODQG� a. This Delegation deals with most South-East Asia countries.b. A visit there allows an overview of the only relevant sub-regional co-operation in Asia;c. From Thailand, it is possible to make a trip to Cambodia.

&DPERGLD� a. Represents a relatively successful story for one of the poorest and smallest countries of the re-gion.

b. The EC is the biggest donor and has contributed to the peace and reconstruction processes.



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Country visits included on average a 10-day stay in the country. The key respondents wereidentified taking into account the following:R� Key Delegation staff in charge of the co-operation programmes;R� Key government bodies/staff in charge of the co-operation with the EU;R� Main member states staff in charge of the country/sub-regional co-operation;R� Main international/sub-regional organisations playing a very significant role in the country/sub-region;R� Civil society organisations (chambers of commerce and groups of entrepreneurs; human rights’ foundations;

university boards and groups of researchers/teachers) having been (or being) significantly involved in some ECfunded programmes. Such meetings should take the form of short workshops for focus group discussions in-volving about 10-15 persons for approximately 3 hours;

R� Project execution staff, including both national and international experts involved in the execution of one sig-nificant ongoing programme. Here, it should be clear that the team will not try to evaluate the programme, butthere will be a focus group featuring free discussion of the issues mentioned above, in the context of their appli-cation to the specific programme.

The number of people eventually met during the visit depended on availability at that time, on the geographical dis-tribution of projects, especially in large countries, and on the process of decentralisation underway in some of thedelegations, which made more complicated the organisation and meeting all the relevant staff.

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The field visits resulted in 5 case studies, which are not to be considered country evaluations,given the limited time allocated to each visit, but rather a review of past experiences in order tohighlight lessons learned that could help in the formulation of recommendations for the futureregulation and eventually other recommendations.

The reports are structured around five main issues:a. the strategic relevance of the aid programme in the country—a comparison between the strategic Partnership &

Co-operation framework and the aid programmes committed/implemented, including the criteria for financialallocations;

b. the internal coherence of the aid programme--co-ordination and coherence among the various financial instru-ments, particularly among programmable and non programmable aid;

c. a brief assessment of the impact and sustainability of the main sectoral programmes;d. a brief assessment of efficiency and the effectiveness of different intervention modalities;e. a brief assessment of the influence of the sub-Regional integration process and the relevant EU policies on the

bilateral co-operation programmes; andf. recommendations related to the regulatory framework of co-operation.

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The Synthesis report aims to provide recommendations for the future regulation on the basis ofthe findings of the previous two phases.

The reports includes:R� a summary of the analyses related to the context and strategic framework of the EU in the two regions;R� an assessment of the overall strategic relevance and coherence of the two regional programmes, as they have

been UHFRQVWUXFWHG ex-post on the basis of the inventory;R� a synthesis of the case studies, including the assessments related to the country relevance and coherence and the

effectiveness, impact, sustainability, and efficiency of the main programmes; andR� conclusions and recommendations to be taken into account for a review of the regulatory framework of the co-

operation in the two regions, and –specifically– for the establishment of a new legal regulatory instrument.



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Asia and Latin America are both large continents with ethnically, linguistically, culturally andreligiously heterogeneous populations. However, Asia is far more densely populated than LatinAmerica. It accommodates 56 percent of the world’s population as compared to 8 percent inLatin America.

Both contain large and small economies with significant economic disparity. However, whileAsia experiences a wide margin of difference between the richest and poorest countries19, thedisparity between countries is less striking in Latin America. Here, most of the countries haveeconomies with intermediate incomes.

Considering the PPP/GDP20, in Asia, the GDP per capita (PPP) in 1999 ranged from as high asUS$20,767 in Singapore, to a low of US$1,237 in Nepal. On the other hand, in Latin America,the range is more modest, with Argentina featuring the highest income of US$12,277 and Nica-ragua the lowest with a GDP per capita (PPP) of $2,279 in 199921.

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� SHU�FDSLWD��333 ��RI�*13 ��DJH�!�� &RXQWU\ � &RXQWU\ �� &RXQWU\ �� &RXQWU\ ��/DWLQ$PHULFD � Lowest Uruguay 0,42 Ecuador 115 Guatemala 1,7 Guatemala 68,1Middle Mexico 0,52 Panama 410 Paraguay 4,0 Bolivia 85,0Highest Nicaragua 0,60 Argentina 1.291 Costa Rica 5,4 Argentina 96,7/$�DYHUDJH � 0,53 522,8 6,6 88,4$VLD � Lowest Pakistan 0,31 Lao PDR 35 Myanmar 1,2 Bhutan 42,0Middle Thailand 0,41 Thailand 349 Pakistan 2,7 China 83,5Highest Malaysia 0,49 Singapore 777 Maldives 6,4 Maldives 96,2$VLD�DYHUDJH ** 0,36 * 276,7 3,3 * 72,8Sources: United Nations Human Development Report 2001; World Development Report 2001; Asian Development Outlook 2001* excluding Japan, Hong Kong and Korea Rep** excluding Hong Kong and Mongolia

MERGEFORMAT

19 In Asia, the 1999 GNP per capita at market prices ranged from US$32,230 and US$29,610 in Ja-pan and Singapore respectively, to a mere US$220 in Nepal and US$260 in Cambodia. In the same yearin Latin America, GNP per capita at market prices ranged from US$7,700 in Argentina, to US$385 inNicaragua. The average country level income distribution, instead, in Latin America is the worst in theword (Gini index=0.53), while in Asia is much less unequal (Gini index=0.36).20 Gross Domestic Product expressed in terms of Purchasing Power Parity21 Source: World Development Report 2001



Poverty is an important concern for both continents. The impact of the various HFRQRPLF�FUL�VHV��which occurred in the considered period, was felt strongly in some regions of Asia andLatin America, exacerbating the hardships of the poorest, although both regions have shownnew capacities for recovery. It is important to note that unlike Asia, in Latin America –with 380million people living in towns and 127 million in rural areas– poverty is mostly an urban phe-nomenon. Furthermore, Latin America, differently from Asia, experiences one of the most ineq-uitable income distributions in the world with the poorest 20% of the population earning just4.5% of the total income23.

The regional contexts experienced huge changes during the nineties. Some major processescharacterise the evolution of the two regions, specifically:R� in Asia, the economic emergence of China, the significant political changes in Cambodia

and Indonesia, and the complex political crisis in Central and South Asia; andR� in Latin America, peacemaking and stabilisation in Central America, the integration of

Mexico into the North American Free Trade Area (NAFTA), the economic reform, the inte-gration and the political stabilisation processes in the Mercosur countries (including the re-cent upsets and crises).

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Asia and Latin America are important trading partners of the EU for different reasons. Asia,with its large population, market and growing volume of trade, carries tremendous potential forEU investment and trade. Latin America has had significant historical, political and culturallinks with Europe, which play a strong facilitation role for investment and trade, as shown bythe large flows of the EU’s foreign direct investment (FDI) in the nineties, particularly in theMercosur area24.

Figure 3-1: Trade indexes by region (1992=100)

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22 I.e. the 1998 financial crisis in South East Asia, the 1995 crisis in Mexico (the WHTXLOD�HIIHFW), the1998 financial crisis in Brazil and the most recent one of 2001 in Argentina.23 Source: World Bank, September 200124 EU FDI in non-EU countries was about ¼��ELOOLRQ�LQ��DQG�¼��LQ��VRXUFH��HXURs-tat/no.742001.htm). The US received the largest share (63% in 1999, and 48% in 2000) and the Mercosurcountries were the second destination of the EU FDI, with about 10 percent in 1999 and 8 percent in2000, with Brazil playing the role of the main recipient. In the year 2000, China (despite a spectacular in-crease) received less than 1.5 percent, and Mexico less than 1 percent.

92 93 94 95 96 97 98 99

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The European Union is the second largest importer from Asia, after the USA, and slightly aheadof Japan. The Asian continent is the third largest exporter to the EU accounting for 21 percent ofEU imports. In the future, foreign direct investment may play an important role in the new EUstrategy of investment promotion in Asia25.

Latin America, on the other hand, is a valuable partner for co-operation because it is rich in rawmaterial, has successfully attracted large amounts of FDI, and has strong sub-regional institu-tions in the making, such as Mercosur. During the 1990s, the EU has faced stiff competition inthe regional market, particularly from the US. The EU share in foreign trade with LA countriesdecreased despite a strong increase in European exports (see Figure 3-1)26.

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Latin America

As a� sub-regional group, 0HUFRVXU is the main trading partner of the EU in Latin America.0HUFRVXU produces more than 50 percent of Latin American exports to the EU and it absorbsmore than half of European exports to the sub-region. Mercosur absorbed 1/3 of EU exports toLA in 1990, which increased to 50 percent in 1999. During the same period, the EU decreasedfrom 32 to 26 percent as a market for Mercosur goods. The unfavourable balance of trade withMercosur started to change after 1999, as its exports to the EU began to increase along with adecline in imports. European investment in Mercosur is the highest for any single sub-regionand represents 52 percent of total European investments in Latin America. In particular, thelarge privatisation process occurred in the Mercosur area attracted the direct investment of EUfirms in Brazil and Argentina.

Other sub-regional groupings in LA are: (i) the $QGHDQ�&RPPXQLW\ which is the second mostimportant EU trading partner in LA, though since 1997, EU/AC exchanges shrank; (ii) the&$&0 in Central America which has a traditional trade surplus with the EU.

In addition to the countries included in these sub-regional groups, the EU has significant bilat-eral trade flows and trading arrangements with 0H[LFR and &KLOH.

0H[LFDQ imports from the EU increased during the decade of the 1990s, with the trade balancein favour of the EU. Between 1990 and 1999, Mexico’s exports increased by 58 percent,whereas imports of European goods tripled. In relative terms, association with the NAFTA hasdetermined a steady decline in the EU share of Mexican export. In the late 90s, however, therewere dramatic changes: Mexican exports to the EU increased by 36 percent and 16 percent in1998 and 1999, respectively. EU exports also rose sharply between 1997 and 1999, from ¼��WR¼��ELOOLRQ��7KH�(8�0H[LFR�H[FKDQJHV�KDYH�EHHQ�IXUWKHU�VWUHQJWKHQHG�ZLWK�WKH�HQWHULQJ�LQWRforce of a free trade agreement, on July 1st 2000. This agreement should allow a direct trade linkbetween the EU countries and a NAFTA member. From Mexico’s perspective, the accordmeans that it could soon have free trade relations with the two largest world trade blocs.

&KLOH. The EU’s share of Chilean foreign trade decreased during the nineties. In 1990, 40 per-cent of Chilean exports went to the European market, while in 1999 it was only 26 percent. TheEU’s share of Chilean imports also decreased during the same period, from 27 percent to 20percent. The EU is in the process of negotiating an agreement with Chile similar to the one withMercosur. 25 EU investment in China has grown very fast in the last four years, increasing from about ¼��million in 1998, to more than ¼��ELOOLRQ�LQ��(8�'*�7UDGH�.26 The relative diminution of the trade is explained by two factors: the intra LAC exchanges takingadvantage of the intra-regional liberalisation through the integration process; and the strong progressionof the USA-LAC exchanges, in particular through the dynamic trade between the USA and Mexico, afterthe launch of the North American Free Trade Agreement (NAFTA).



Asia

Despite national disparities, $6($1 has a combined GDP of ¼��ELOOLRQ�DQG�D�SRSXODWLRQ�RI400 million. It is, therefore, one of the largest sub-regional markets in the world27. By the year2000, the ASEAN countries had constituted the second largest EU export market and its thirdlargest trading partner accounting for 5.6 percent of EU external trade.

The $VLD�(XURSH�0HHWLQJV��$6(0� have a strong impact on trade policies and agreements, butcannot be considered as a sub-regional organisation.

In South Asia, 6$$5&� the South Asian Association of Regional Co-operation does not have asignificant impact on trade. SAARC external trade accounts for only 0.8 percent of the worldexports and 1.3 percent of the world imports, where the larger share is with the non-EU world.,QGLD�is the largest trading partner of the EU in South Asia while &KLQD is the single most im-portant trading partner in East Asia.

,QGLD¶s trade relations with the EU have been expanding in the last few years, although Indiahad a negative balance in 1990. In 1999 EU exports to India were worth ¼��ELOOLRQ�DQG�Dc-counted for 24 percent of India’s total imports. EU imports from India were worth ¼��ELl-lion; this was 28 percent of all Indian exports. EU-India trade increased further in 2000. Withthe exception of 1998, EU investments in India between 1991 and 1999 have been higher thanthose of the United States. Both sides have therefore agreed to establish a Technical WorkingGroup on Trade Defence. &KLQD is now the EU’s third most important non-European trading partner, after the US and Ja-pan. China’s trade relations with the EU and the world have grown in recent years. It hasachieved a favourable surplus balance with the EU during the last decades. It has had a tradeturnover rising from ¼��ELOOLRQ� LQ�� WR�¼��ELOOLRQ� LQ��:LWK� UHVSHFW� WR� WKH�ZRUOG�China had a total trade flow of ¼�� ELOOLRQ� LQ��+RZHYHU�� LW� JUHZ� VLJQLILFDQWO\� LQ� WKHyears 1990 and 2000 to ¼��ELOOLRQ�DQG�¼��ELOOLRQ�UHVSHFWLYHO\��7KH�(8�VWURQJO\�VXp-ports China’s economic and trade reforms to encourage it to have a more open trade market.The EU also favours China’s recent accession to the WTO in order to foster the integration ofthis country into the world economy.

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In Asia, -DSDQ has played a key role in the development of the region through aid, trade and in-vestment. This has been particularly pronounced in East Asia. Its relations with South Koreaand China are continuously intensifying, while Southeast Asia is one of its major suppliers ofraw material, energy and food in particular. Its presence in South Asia is also increasing--Indiaand Bangladesh have become significant recipients of Japanese official development assistance(ODA)--as well as an increasingly important destination of Japanese direct investment. Unlikethe USA or EU, Japan appears to be less threatening to Asia as it tends to be less assertive abouthuman rights and the rule of law. In 1999, Japan committed $15.32 billion through its Overseas Development Assistance. Of this,the largest recipient was Asia with 63.2 percent, followed by Africa with 9.5 percent, Centraland South America with 7.8 percent and the Middle East receiving only 5.2 percent. The presence of the 86$ in Asia is primarily to guarantee security to maintain regional stabilityand trade flows. Its policy objectives are: to prevent the emergence of regional hegemony; tokeep open the sea and air routes that transit the area; to maintain commercial access to theeconomies of the region and the peace and stability required for commerce; and to preserve and

27 ‘The EU & the Association of South East Asian Nations (ASEAN)’, External Relations, theEuropean Commission, 23/07/01.



strengthen security ties with allies and friends in the region28. Its strong economic and trade po-sitions in the region are strictly linked with its political influence.

In Latin America, the 86$ plays a major role, both in trade and security relations. Except forMercosur, the USA is the main supplier and outlet for the three other sub-regional groups.

After the launch of the North American Free Trade Agreement (NAFTA), in 1994, the USstarted the Initiative for the Americas, aiming at creating a free trade area )7$$ at the conti-nental level. The negotiation process with 34 countries is to be concluded in 2005. Given thatthe participants are many and the asymmetries between their economies are pronounced, it willbe difficult to reach an agreement. However, the influence of the US is overwhelming, since itsGDP is three times that of the other 33 negotiating countries. The smaller economies like theCaribbean and the Central American, favour the creation of a free trade area. Not so the Merco-sur, as it is the second largest regional market after NAFTA. It has therefore begun a bilateralnegotiation 4+1 with the USA, following the precedent of its negotiations with the EU.

The consequences of such a competitive framework for the EU are particularly strong in bothregions. In LA, they have been very visible in the case of Mexico’s access to NAFTA, and ingeneral with the slight decline of the EU share in the LA trade.

28 Marvin Ott, ‘East Asia: Security and Complexity’, &XUUHQW�+LVWRU\, April 2001, p. 152



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Following the accession of the United Kingdom to the European Community in 1973, co-operation with non-associated countries was initiated in 1976. The UK’s accession had been ne-gotiated without extending trade preferences to India and Southeast Asia – with whom the UKhad close links through the Commonwealth. In response, Southeast Asian countries (and others)sought to obtain trade preferences from the EC. Then the EC opened a window for co-operation, and this was subsequently formalised through the Council regulation of 1981, whichincludes Latin America, replacing earlier ad-hoc annual guidelines.

With respect to Asia and Latin America, a first attempt at formulating a coherent strategy of co-operation from the European Union’s External Relations was the 1990 Guidelines from theCommission29, promulgated at the same time that it adopted the Lomé IV agreement with theACP countries. The guidelines offer a two-axis strategy to promote GHYHORSPHQW and HFRQRPLFco-operation, in recognition of the economic and growth potential of ALA countries, particu-larly through the strengthening of IRUD for sub-regional co-operation.

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The &RXQFLO� UHJXODWLRQ��30replaced the previous regulation� �� on Technical and fi-nancial aid to non-associated developing countries. It identifies three strategic axes of co-operation: (i) promotion of development in the poorest countries; (ii) expansion of trade withthe recipient countries and integration into the multi-lateral trading system, mainly through thepromotion of PXWXDOO\�DGYDQWDJHRXV economic co-operation; and (iii) co-operation in the areaof environmental conservation. The new regulation marks a fundamental departure from theearlier regulation in that clauses on human rights were included in co-operation agreements withthe aim of encouraging non-discrimination and the participation of women.

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EU policies in Asia were refined through Communications outlining specific priorities. TheseCommunications are as follows:R� 1994, 7RZDUGV�D�QHZ�$VLD�6WUDWHJ\R� 1996, (XURSH�$VLD�&R�RSHUDWLRQ�6WUDWHJ\�IRU�(QHUJ\R� 1997, (XURSH�$VLD�&R�RSHUDWLRQ�6WUDWHJ\�IRU�(QYLURQPHQWR� 2001, 7KH�(8¶V�UROH�LQ�SURPRWLQJ�KXPDQ�ULJKWV�DQG�GHPRFUDWLVDWLRQ�LQ�WKLUG�FRXQWULHVR� 2001, (XURSH�DQG�$VLD��$�6WUDWHJ\�)UDPHZRUN�IRU�(QKDQFHG�3DUWQHUVKLS.

29 COM(1990)017630 Council regulation (EEC) No 443/92 of 25 February 1992 on Technical and financial assistanceto, and Economic co-operation with, the developing countries in Asia and Latin America (Règlement n°443/92, relatif à l'aide financière et technique et à la coopération économique avec les pays en dévelop-pement d'Asie et d'Amérique Latine) 31992R0443. The preceeding regulation was Council regulation(EEC) No 442/81 of 17 February 1981 on Technical and financial aid to non-associated developingcountries.



Communications on new priorities were produced regarding the environment, energy and hu-man rights. In 1997, the Commission recognized with an ad hoc document, that the environmentis a ‘new priority’ in Asia. It acknowledged that environmental degradation in Asia takes theform of air and water pollution, waste management, soil degradation, deforestation, and loss ofbiodiversity31. In the energy32 sector, the EC wants to encourage ELODWHUDO� WUHDWLHV on cuttingdown CO2 emissions, EHWWHU�FR�RUGLQDWLRQ with OECD member states, and promotion of Euro-

pean technologies. The EU seeks to play a more strategic role in promoting human rights anddemocracy in Asia, through various regional IRUD and ad hoc bilateral political dialogue, asstated in the specific Communication33, and in the new regional strategy.

During the period from January 1994 to September 2001, 116 resolutions of the European Par-liament were passed relating to Asian countries. The vast majority (58) dealt with human rightsissues and democracy. A smaller number dealt with trade and Economic co-operation (22) andfewer still concerned T&F co-operation (5).

EU external co-operation policies are legally formulated and administered through co-operationagreements, protocols, administrative arrangements, and memoranda of understanding. Theseprovide the basis for the implementation of programmes and for incurring budgetary expendi-tures.

In the context of Asia, the first generation agreements were signed in the 70s and early 80s.These focused on development co-operation. The second generation agreements of the 80s em-phasised trade and commercial relations, intellectual property, economic co-operation in thefields of science and technology, energy and environment. The third generation agreements,signed in the early 1990s, placed a much greater emphasis on issues of adherence to the UnitedNations charter, respect for democratic principles and human rights. These are the most com-prehensive. Such new agreements have been signed with a ‘non execution’ clause with Pakistan,Bangladesh, South Korea, Cambodia, Lao PDR and Nepal. Agreements without such a clausehave been signed with India, Mongolia, Sri Lanka, Vietnam and Macao. At the regional level, ageneral co-operation agreement with ASEAN was signed in 1980.

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In 1994, the document 7RZDUGV�D�1HZ�$VLD�6WUDWHJ\ (TNAS) highlights the need for a multi-faceted strategic approach to Asia co-operation. Trade and development are the main pillars ofthis approach, while respect for human rights, environmentally sustainable growth and concernsfor security and peace are the templates for EC co-operation. The strategy also stresses that EU-Asia relations should be built on a ground of intensified reciprocal knowledge and understand-ing in terms of both information and cultural exchanges.

A comprehensive strategic framework has been outlined in the recently approved Communica-tion (XURSH�DQG�$VLD��$�6WUDWHJLF�)UDPHZRUN�IRU�(QKDQFHG�3DUWQHUVKLS34. The document fur-ther develops and systematises the multifaceted approach of the previous TNAS. The priorityareas envisaged by the framework are summarised as follows:R� regional and global political and security relations;R� mutual trade and investment flows;R� the development of less prosperous countries, addressing the root causes of poverty;R� the spread of democracy, good governance and rule of law; and

31 The Communication titled"Sur une stratégie de coopération Europe - Asie dans le domaine del'environnement", 13/10/199732 Communication “Europe-Asia co-operation strategy for energy”, (COM (96) 0308 C4 –0495/96)33 Communication “The European Union’s role in promoting human rights and democratisation inthird countries” (COM/2001/0252 final)34 COM (2001) 469 final, Brussels, 4/9



R� building global partnerships and alliances with Asia.

The framework extends beyond Asia into Australasia for the first time. It places greater empha-sis on regional and global political and security relations, proposing a pro-active role for the EUin inter-regional IRUD and security dialogues with, in particular, the ASEM and the ASEAN.Further references in this sector include conflict prevention as well as a dialogue on justice anddomestic issues to combat trans-national crime.

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EU policies in Latin America were refined through specific communications and declarations,and since, the EU-LAC Head of State Summit in 1999, through a specific high level politicaldialogue. The basic documents are:R� 1995, 7KH�(XURSHDQ�8QLRQ�DQG�/DWLQ�$PHULFD��7KH�SUHVHQW�VLWXDWLRQ�DQG�WKH�SURVSHFWV�IRU

FORVHU�SDUWQHUVKLS�±��35�R� 1995, 5HQRYDWLRQ�RI�WKH�'LDORJXH�RI�6DQ�-RVH�EHWZHHQ�WKH�(8�DQG�&HQWUDO�$PHULFD36�R� 1995, 'HFODUDWLRQ�RI�WKH�0DGULG�(XURSHDQ�&RXQFLO�R� 1999, $�QHZ�(8�/DWLQ�$PHULFD�SDUWQHUVKLS�DW�WKH�HYH�RI�WKH��VW�&HQWXU\37�R� 1999, 'HFODUDWLRQ�RI�WKH�5LR�GH�-DQHLUR�(8�/$&�6XPPLW�R� 2000, )ROORZ�XS�WR� WKH� ILUVW�VXPPLW�EHWZHHQ�/DWLQ�$PHULFD�� WKH�&DULEEHDQ�DQG� WKH�(XUR�

SHDQ�8QLRQ38��DQGR� 2002, ,QIRUPH�(VWUDWpJLFR�5HJLRQDO�VREUH�$PpULFD�/DWLQD��

Historically, the EU-LA relationship evolved through some main phases during the 60s, the 80sand the 90s. In the early stages, community relations with LA centred almost exclusively ontrade. From the mid-70s until the end of the 80s, Technical and financial (T&F) co-operation,especially for food security and regional integration were the main concerns, with the addition –during the ‘80s– of humanitarian aid and support to peace efforts in Central America. Councilregulation N° 443/92 added Economic co-operation to support activities other than developmentaid, and opened the way for third generation agreements including a ‘democratic clause’ that putconditions on EU support. Since then bilateral and regional co-operation agreements, which in-cludes an ‘evolutionary clause’ have been signed with all the LA countries, and the three sub-regional organisations, except Cuba.

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EU-Latin America co-operation in the 90s has developed a particularly advanced idea of part-nership, as reflected in the mentioned documents, especially with Mercosur, Chile and Mexico.Such a partnership includes a perspective of interregional association, which becomes more andmore operational, including the establishment of DG�KRF working groups with sub-regional or-ganisations (e.g. Mercosur), as well as bilateral free trade agreements (e.g. Mexico). In coher-ence with such a global partnership new themes have been included in co-operation, e.g. in-vestment promotion, science and technology, etc.

35 COM(95) 495 final, Brussels, 23/10 1995: “The European Union and Latin America- The pres-ent situation and the prospects for closer partnership –1996-2000”.36 COM (1995)600: “Renovation of the dialogue of San José between the European Union andCentral America”.37 COM (99)105: “A new EU/Latin America partnership at the eve of the 21st Century”38 COM (00) 670: “Follow-up to the first summit between Latin America, the Caribbean and theEuropean Union”.39 AIDCO/0021/2002. Such a document was approved after the finalisation of the present evalua-tion.



EU engagement remains very strong with the poorest countries in Central America, with a focuson building a democratic and socially balanced society, a strategy that combines developmentand trade with important financial transfers to face natural and humanitarian emergencies.

In the Andean context, development and trade, the consolidation of a democratic society and re-gional integration are combined with a strong focus on fighting against drugs.

During the 90s, the EU has strengthened its regional approach through the establishment ofhorizontal programs and decentralised co-operation, to enhance the participation of projectsfrom actors emerging from Latin American civil society. Following some initiatives of theEuropean Parliament, new budgetary lines were created, particularly in support of the process ofdemocratisation and human rights in LA. Increased attention has been paid to the sub-regionalintegration processes, through the establishment of three specific co-operation agreements andby putting the issue at the centre of the Rio dialogue.

Presently, regional co-operation with Latin America has put an emphasis on three broad priorityareas, as stated in the abovementioned &RPPXQLFDWLRQ�RQ�WKH�)ROORZ�XS�RI�WKH�6XPPLW«40. Thepriorities are:R� the promotion and consolidation of human rights;R� the promotion of an information-based society; andR� the reduction of social imbalances.

Human rights and the reduction of social imbalances were major priorities during the 90s, whilstthe promotion of an information-based society was relatively new. It is strongly connected withthe other two areas, and implies a very wide range of fields of co-operation, from policies andregulations, to human resource development, science and technologies, and the establishment ofinterregional networks between the EU and LA. A new regional strategy was approved by theCommission on 22 April 2002. The emphasis placed on bi-regional co-operation, especiallywith Mercosur, and the goal of an association agreement at the sub-regional level give EU co-operation with Latin America a far-reaching perspective compared to other areas.

With respect to Mercosur and Chile, an association agreement is seen as a near prospect41. Inaddition to the three areas mentioned above, such an agreement should include a reinforced co-operation to enhance: joint positions in the relevant international IRUD; macro-economic dia-logue and co-ordination; and joint civil society and enterprise initiatives.

40 op. cit.41 ibidem



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For reasons related to its nature and historical experience, the promotion and search for regionalpartners is a characteristic of EU external relations.

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With regard to Asia the most recent attempt at inter-regional co-operation is the Asia EuropeMeeting process (ASEM). Before the launch of ASEM in 1996, external co-operation by the EUhad focused particularly on the sub-regional levels: ASEAN for South East Asia and theSAARC for South Asia42.

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Some general considerations of the regional processes in Asia provide a context for EC externalrelations. There are several issues of relevance.

ASEAN

At the sub-regional level, the EU has a strong interest in Southeast Asia. The Vientiane declara-tion of December 2000, reiterated that EU-ASEAN was ‘the cornerstone of EU-ASIA relations’.

ASEAN’s success as a regional group is recorded in its political and economic achievementsnamely: enlargement to include other neighbouring nations as well as a rapid increase in GDP,in economic growth and in purchasing power since 1985. In ASEAN, there is a group of com-paratively advanced countries, Singapore, Malaysia and Thailand, which share some basic char-acteristics. These are relatively small, export led, and have strong economies; these are the driv-ers of the ASEAN integration process, whereas, Indonesia and the poorer member countrieshave tended to slow down the process.

At the 8th ASEAN-EC ministerial meeting (AEMM) held on the 16th and 17th of February 1990in Kuching, the EC and ASEAN set out to redefine the orientations of their relationship for the1990s and beyond. First, the focus was to shift from Technical and financial co-operation toEconomic co-operation, with a particular focus on trade and investment. Second, the environ-ment was to become a much more prominent area of collaboration. Overall, the relationship wasto be one of partnership between equals, moving irreversibly away from the donor-recipient re-lationship43 of the past.

However, at the General Affairs Council on the 20th of July 1992, the Portuguese Minister ofForeign Affairs opposed a directive to authorise the Commission to negotiate a new co-operation agreement. This refusal was prompted by persistent human rights violations in EastTimor.

SAARC

In South Asia, the push for regional co-operation has come from the smaller and poorer coun-tries, such as Bangladesh. The major players, India and Pakistan, are neither particularly dy-namic nor interested. Their economies are relatively ‘introverted’; moreover, they are in con-flict. Thus, achieving the long-term objective of economic integration in the region throughSAARC is likely to be a slow process.

42 Another attempt of regional co-operation, not including development co-operation had beenlaunched with the Gulf states in 1986.43 See EP Resolution on EEC-ASEAN economic and trade relations, 10 April 1992.



The restrictive decision making process of SAARC, geo-political tensions, the asymmetricaldegree of development and resources, have limited its capacity to act as a significant forum forregional co-operation44. SAARC excludes areas of disagreement from the agenda. It is not al-lowed to pursue a multilateral approach to bilateral problems because of the condition set by In-dia for its membership. Intra regional exchanges depend on political decisions about opening orclosing the frontiers and transport corridors. There are member states who direct commercialdiscrimination against the closest neighbours. These factors account for SAARC’s low share ininternational and regional trade.

However, since its inception in 1985, SAARC’s strategic thinking has been reformulated to takeaccount of regional and local interests in the face of globalisation. SAARC now acts as a bodythat represents the collective interests of the region in international IRUD. Thus, althoughSAARC is still a long way from achieving a common market it has been relatively successful invoicing the concerns of developing countries. In their joint statement on the Fourth MinisterialConference at Doha, SAARC ministers raised suchconcerns45.

In its dialogue with SAARC, through the Ministerial Troika meetings, the EU has affirmed itsinterests in stronger relations with SAARC46, to strengthen the trade relations and support theintegration process, through its economic influence and historical experience of dealing with di-versity and crisis prevention.

East Asia

East Asia has Japan, Korea and China, plus some satellite countries. For the moment, there isstrong competition for the growing Chinese market. Prospects of regional integration in EastAsia remain a distant future.

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The Asia Europe Meeting (ASEM) process is an informal inter-regional process for dialoguebetween the EU member states and ten Asian countries. From within Asia, seven of the partici-pating countries are also members of ASEAN, i.e. Brunei, Indonesia, Malaysia, the Philippines,Singapore, Thailand and Vietnam. The three other East Asian countries involved are China,South Korea and Japan. The European Commission is a member of ASEM in its own right andcontributes to the co-ordination and financing of the ASEM process. To date, three summitshave been convened at the level of Heads of Government. The next meeting, ASEM IV, is to beheld in Copenhagen, in September 200247.

The ASEM dialogue process covers political, economic and cultural issues and is held in an at-mosphere of mutual respect and equal partnership. It was agreed that the process was to remain

44 SAARC decision-making process follows the cumbersome rule of unanimity. The asymmetry isdue to India’s large size and economy; it has 76 percent of the region’s population and 77 percent of re-gional GNP, see ‘The EU & South Asian Association of Regional Co-operation’, The European Commis-sion External Relations, 19/07/01. The political tensions in the region arise from several factors: in SouthAsia, tensions between India and Pakistan continue over the disputed Kashmir area, resulting in the pur-suit of nuclear power by the two countries. The region is likely to be greatly destabilised by the US-ledwar on Afghanistan aimed to end terrorism. Ethnic conflict between the Sinhala and Tamil continue in SriLanka.45 -RLQW�6WDWHPHQW�E\�WKH�6$$5&�&RPPHUFH�0LQLVWHUV�RQ� WKH�)RUWKFRPLQJ�)RXUWK�:72�0LQLVWH�ULDO�0HHWLQJ�DW�'RKD, New Delhi, India, 23rd August 200146 After the signature of the EU-SARC Memorandum of Understanding on Administrative Co-operation (1996), SAARC was included in the GSP Cumulative Clause of the Rules of Origin.47 The inaugural summit was held in Bangkok, March 1996, the ASEM II in London, April 1998and the ASEM III in Seoul in October 2000.



informal and would not create new institutions48. Biennial meetings at the Ministerial level ,supported by semiannual meetings of senior officials49 were established.

The Commission noted, in its April 2000 Communication on the ‘Perspectives and Priorities forthe ASEM process into the New Decade’ that ASEM’s

WUXH�DGYDQWDJH�OLHV�LQ�LWV�LQIRUPDOLW\��GLDORJXH�UDWKHU�WKDQ�QHJRWLDWLRQ��LQ�LWV�PXOWL�GLPHQVLRQDOLW\��WRXFKLQJ�HTXDOO\�RQ�SROLWLFDO��HFRQRPLF�DQG�FXOWXUDO�DVSHFWV��DQG�LQLWV�KLJK�OHYHO��WKH�RQO\�KHDGV�RI�JRYHUQPHQW�IRUXP�OLQNLQJ�RXU�WZR�UHJLRQV��50

For instance, the ASEM II held in April 1998 in London, was dominated by the discussion onappropriate response to the Asian Financial Crisis51. The EU responded by pledging to keep itsmarkets open, and to stay strictly within the discipline of the WTO. The meeting also initiatedthe ASEM Trust Fund; it was to provide technical advice on mitigating the social costs of thecrisis52. The ASEM III held in Korea in October 2000, focused largely on the regional contextof inter-Korean reconciliation, and also covered a number of highly sensitive security issues.The ASEM role on trade matters has been highlighted above.

ASEM priorities include trade matters, two-way trade and investment flow between regions,consolidation of business-to business dialogue through the reinforcement of the central role ofthe Asia-Europe Business Forum (AEBF), dialogue on trade and investment, socio-economicpolicy, and regional macro-economic co-operation, as well as trade liberalisation and strength-ening of WTO rules53. ASEM has established some trade mechanisms: for example, the Asia-Europe Business Forum, the Trade Facilitation Action Plan (TFAP) and the Investment Promo-tion Action Plan (IPAP)54.

The European Parliament adopted a resolution in its Committee on Foreign Affairs that sup-ported the Commission’s view of the ASEM process as a constructive, though informal, processof engagement55. However, a minority opinion was tabled which strongly disagreed with thisviewpoint56. It argued that the present ‘critical dialogue’ on human rights had remained whollyineffectual. This minority opinion noted that the present focus of the Commission’s external re-lations, with its emphasis on China, should be switched to India and other countries with astrong track record of democratic governance. In summary, the ASEM process is emerging asthe new inter-regional cornerstone of EU-Asia relations, though its present membership stilllimits its scope and potential for development.

48 However, it was resolved to set up the Asia Europe Foundation with funding from both theMember States and the European Commission. The latter provided a grant of ¼��PLOOLRQ�LQ��IRU�Dthree-year period from its Economic co-operation Budget line.49 Senior Officials Meetings (SOM) cover foreign affairs issues, whereas the senior officials meet-ing on trade and investment (SOM TI ) reports to the economic ministers50 COM 2000(241, 18 April 2000, p. 5.51 For a comprehensive discussion about the outcomes of the ASEM II see Paul Lim (1999), TheUnfolding Asia-Europe Meeting (ASEM) Process: Issues for ASEM III. (European Institute for AsianStudied, Brussels).52 Funding from the European Commission’s Economic co-operation budget has been made avail-able to the tune of ¼��PLOOLRQ��IRU�WKH�$6(0�7UXVW�)XQG��DW�WKH�$6(0�,,,�6HRXO�6XPPLW�D�VHc-ond phase to this programme was agreed.53 Perspectives and Priorities for the ASEM process into the New Decade, working document, 18April 2000, COM 2000 (241). p.854 Adopted at the ASEM II in London. These ideas have also been included in the bilateral co-operation agreements signed between the EU and some of the Asian countries.55 For example see Chong-wha Lee, ‘Testing the ‘Subsidiarity Question’ for ASEM’ in Chong-wha Lee (ed) (2000), The Seoul 2000 Summit: The Way Ahead for the Asia-Europe Partnership, KoreaInstitute for International Economic Policy, Seoul.56 A5-0207/2001 adopted on 31 May 2001, tabled by Mr Brok, President of the Committee.



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Mercosur

Mercosur includes Argentina, Brazil, Colombia, Ecuador, Peru and Venezuela. As seen above, aglobal partnership is envisaged with Mercosur, with a near prospect of association, possibly ex-tended to Chile. An inter-institutional agreement between EU and Mercosur in 1992 providedthe technical and institutional support to launch this regional organisation. A EU-Mercosur in-ter-regional framework co-operation agreement signed in Madrid in December 1995 is the cur-rent basis for the continued relationship57. A joint committee and a sub-committee on trade havebeen established. In July 1998, the Commission recommended the Council Ministers to allowthe negotiation of an agreement of inter-regional association between the EU, MERCOSUR andChile. The agreement should include: partnership for political and security matters; strength-ened co-operation in economic and institutional fields; a free trade area, according to WTOprinciples.

Relations with Mercosur imply a wider prospect too, since Mercosur has pursued an open re-gionalism approach, linking up with neighbouring countries (Chile, Bolivia, Perou). IdentifyingMercosur as a privileged partner reflects the strategic interest of the EU member states in thesub-region, and their strong historical, cultural, economical and commercial links. Furthermore–together with the bilateral free trade agreements with Mexico– a strong partnership with Mer-cosur helps the EU build a strong position in the region, where the US is pushing for the crea-tion of a free trade area of America (FTAA), from which the EU should not be marginalised.

The current Mercosur economic difficulties, which hit particularly Argentina since 1998, aremainly due to the strong and persistent asymmetries in the sub-regional market, with particularregard to the monetary and macro-economic policies. Despite the policy incoherencies and thecurrent crisis, , the Mercosur member states have set up a strong common position on DJULFXO�WXUDO�WUDGH. This is the main area of dispute with the EU. Mercosur is a net exporter in agribusi-ness. Exports of agricultural raw materials are 63 percent of the total.

As a final remark, it is worth noting, that the EU emphasis on Mercosur, could slow down andeven jeopardise –especially in the present conditions of economic crisis– the bilateral dialogueand partnership with the most important players of the area, particularly Brazil and Argentina58.

Andean Community

The Andean Group, created on 26 May 1969 includes Bolivia, Colombia, Ecuador, Peru, andVenezuela, and has received the EC support since 1970. After almost thirty years of co-operation, the Act of Sucre (Bolivia, 1997) and the V meeting of the Andean-European jointCommittee (Cartagena, 1999) identified the main areas of co-operation as follows: a- institutional strengthening of the Andean community; b- the reinforcement of trade; c- fightagainst drugs; and d- environment management and preservation.

The EU appears strongly committed in supporting the social and economic stabilisation proc-esses in the Andean community, including the reinforcement of the trade at regional and inter-national level, and considers the fight against the drugs as a key issue in such processes. A spe-cial dialogue on drugs, accompanied by a number of trade agreements (GSP-Drugs) has beenestablished between the EU and the Andean community since 1990. Linked to the drug issue,the environmental protection has been recently introduced as a priority.

57 O.J.E.C. L 69 of 19.03.9658 The lack of an updated global agreement with Brazil, since 1992, notwithstanding the highestimportance of this country in LA, might be an example of such a risk



Central America

The current structure of the Central America integration process started in 1991 with the signa-ture of the Tegucigalpa Protocol and with the entering into force of the Central America Inte-gration System (SICA) in 1993. With respect to the previous forms of sub-regional integration,SICA proposes itself as an organisation oriented towards the future needs of the region, able torepresent a more open, stable and democratic area. SICA openness is qualified not only by itslinks with international entities (i.e., UN and OAS) but also by a wide dialogue with civil soci-ety, its commitment on the respect of the human rights, and its willingness for stronger partici-pation in the world economy.

The political dialogue with the sub-region goes back to 1984 with the San José ministerial con-ference. The EU involvement is a special successful case as it originated with a political and se-curity objective, to promote the peace process, in an area where the interest of the Communitywere not so important, but the possible confrontation between the main world powers could en-gender a stability risk also for Europe59.

Based on the Memorandum of Understanding, signed in March 2001 at the end of the XVIIth

ministerial conference of the San Jose Dialogue, the sub-regional co-operation in the next sixyears will be focused on support for economic integration and introduction of common policies.It will have the consolidation of the sub-regional institutions and their functioning, as well asthe promotion of civil society participation in the integration process as complimentary areas.

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The Rio Group

The level and the ambition of the interregional dialogue probably represent the main distin-guishing character of the EU relations with LA, compared to the relations with other non-associated countries. The 5LR�*URXS is the main forum for such a dialogue.

The Rio Group is a permanent mechanism of consultation and political dialogue between Headof States and Ministers of Foreign Affairs of Latin America, which includes all Latin Americanand Caribbean countries, with the exception of Cuba. It was created in December 1986 by 8countries following the success of the political co-operation within the Contadora Group in thepeace process in Central America.

In December 1990 the Declaration of Rome, institutionalised the dialogue between the Euro-pean Community and the Rio Group through annual meetings at Ministerial and experts leveland in occasion of the UN General Assembly meetings. At the last Ministerial meeting with theEuropean Union held in March 2001in Chile, the secretariat of the Group recognised the crucialrole played by the Rio Group and the interregional co-operation with the EU in the democrati-sation process of the region and its economic achievements.

At the meeting the two parts focused on WZR� FUXFLDO� LVVXHV: on the one hand, new economy,technological divide and employment; and on the other hand, the sustainability of democracy,good government and poverty reduction. The importance and commitment to Rio principles andAgenda 21 for Environment, and the shared responsibility and support to the “Global ActionPlan” in the fight against drugs, were also confirmed.

Heads of State Summit

In 1996 at the Ibero-American Summit the idea of a summit at the highest level was launchedas a reaction to the pan-American Summits of 1994 and 1998 in which were set the bases for anFTTA. The first (8�/DWLQ�$PHULFDQ�DQG�&DULEEHDQ�6XPPLW� RI�+HDG�RI� 6WDWHV was held in

59 COM (1995)600: Renovation of the dialogue of San José between the European Union and Cen-tral America



1999 in Rio de Janeiro and opened a new channel for the political dialogue at the highest levelwith the objective to create a VWUDWHJLF�SDUWQHUVKLS�RI�D�SROLWLFDO��HFRQRPLF��FXOWXUDO�DQG�VRFLDODQG�FR�RSHUDWLYH�FKDUDFWHU between the two regions”60.

60 Declaration of Rio de Janiero, 29 June 1999



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Aggregate Resource Commitments to Asia

The aggregate resources committed to external co-operation with Asia during the period 1993-2000, including T&F, Economic and the main horizontal budget lines, amounted to ¼��ELl-lion. Although the absolute amounts involved are by no means trivial, when compared to thepopulation of Asia the per capita commitment amounts to no more than ¼��RYHU�WKH��\HDUperiod, a paltry ¼��SHU�FDpita per year61�

Some considerations should be taken into account:R� the use of these limited resources needs to be carefully targeted. Spreading the limited re-

sources over a wide range of different activities across vastly differing countries is likely togreatly reduce their impact;

R� EU co-operation funds, however, are 100 per cent grant resources and hence they do notcreate a future repayment liability for the recipient. They may be usefully employed as pro-cess catalysts, or for co-financing, etc.

Commitments over time

The period 1993-2000 has been divided into two sub-periods, 1993-1996 and 1997-2000, in or-der to identify the types of programmes for which increased commitments have been under-taken. The first four-year period coincides with the widespread ‘optimism’ characterising theperception of an ‘East Asian miracle’ and accelerating growth throughout the Asian region.However, the second period brought to the fore the harsh realities of East and Southeast Asia inthe aftermath of the Asian Financial Crisis, including excess volatility of financial markets andnegative growth of production and employment opportunities.

The commitments for thefirst four years 1993-1996amounted to ¼� �� ELl-lion, which was 50.3 per-cent of the total (see Figure6.1, 6.3 and 6.5). Com-paring pre-crisis and post-crisis co-operation withAsia we find that each ofthe two sub-periods at-tracted nearly an equal sumof commitments though

there have been considerable shifts in the focus of the total commitments.

61 Including the main budget lines.

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Overall sectoral relevance of commitments

Figure 6.2 presents the distribution of resources committed across these sub-sectors consideredby the methodology.

The aggregation of activities by sector (Figure 6.2) reveals that seven out of twenty nine sub-sectors each attracted more than five percent of the total resources. In total these sub-sectors ac-counted for 67 percent of the EU’s Asia programme commitments (or ¼��ELOOLRQ��

These sub-sectors, in order of size, are education, rural development, health, the environment,aid to NGOs, agricultural development, and aid to refugees. This shows an absolute predomi-

nance of the social objectives in the globalallocations of the programme.

The share of the programmes having asignificant social relevance increases to 82percent of the total commitments, if foodaid, local development, humanitariansupport for disaster relief and rehabilitation,support to democracy and miscellaneoussocial interventions are included.

Figure 6.3 shows the global allocations bymacro-sector. The commitments in both theeconomic and the regional macro-sector,reach slightly more than eight percent of thetotal.

Such priorities are only partly related to theuse of specific financial instruments. As amatter of fact the allocations originated onlyfrom the Economic co-operation budget lineare more than thirteen percent of the total.This means that in the planning exercisegreat emphasis has been given to socialobjectives.

A specific relevance analysis against themain objectives of the EU-Asia co-operation will be carried out in thefollowing pages. The analysis considers the

most important individual commitments by sub-sector (see the methodology), according to thedeclared scope of the project/programme’s documents. The projects and programmes consid-ered individually involve not less than 90 percent of each sub-sector allocation.

To strengthen the relevance assessment, the consideration of actual expenditure compared to thecommitments is introduced as well. One finds that the actual expenditure capacity directly af-fects the programme’s relevance and not only its efficiency (Figure 6.4).



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Priority of the objective, and assessment criteria

The EU strategy for Asia strongly emphasises the importance of addressing the persistence ofpoverty and the EU is explicitly committed to the Millennium Development Goals62.

As regards South Asia, an explicit reference is madeabout the importance of health and education resourceson sectoral support and policy modernisation. ForSoutheast Asia it is stated that resources will be chan-nelled towards those governments, which are FRPPLW�WHG� WR� UHGXFLQJ�SRYHUW\. Moreover, the negative feed-back linkages between urban and environmental prob-lems and poverty incidence are also emphasized.

To assess the relevance of the Asia programme to di-rect64 poverty reduction a number of factors will beconsidered (Table 5.1):a. the relative priority of sectoral programmes with acomparatively large number of direct and indirectbeneficiaries drawn from amongst low-income house-

holds;b. the possible linkages to EU-funded programmes with poverty reduction –including indirect

linkages through SUR�SRRU�policy advocacy and policy reform; andc. the country-focus in the use of EU resources.

Any authoritative as-sessment of the numberand type of beneficiariesand their socio-economicstatus will require in-depth programmeevaluations. This is be-yond the scope of thisoverall evaluation. How-ever the criteria adoptedhelp in establishing anoverall assessment as re-quired in the present ex-ercise65.

62 The Millennium Declaration’s Goals for Development and Poverty Eradication included thecommitment to achieve, inter alia, the following by 2015: halving of the number of the world’s peopleliving on less that $1 a day; halving the proportion of the world’s people suffering from hunger; toachieve universal completion of primary schooling; and to reduce maternal mortality ratios by threequarters. For a full discussion see UNDP Human Development Report 2001, pp 21-25.63 Based on the consideration of the individual projects/programmes in each sub-sector.64 Programmes in which the poor social groups are targeted as the final beneficiaries65 Most of the environmental or agricultural programmes considered do not have many direct bene-ficiaries among low-income households, and it is unlikely that these programmes directly address thecauses of poverty. Humanitarian programmes tend to provide direct benefits to many low-income house-holds, but their development impact is often seen to be limited. However, in contrast, education (mainlyprimary), rural development and health & population programmes generally have many low-incomebeneficiaries and address, albeit only to a limited extent, the causes of poverty.

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Sector % of thetotal

Direct low-incomebeneficiaries

Addressing causes ofpoverty

Education, culture and infor. 17.8 Many Directly (approx 70 %) (1)Rural development 13.7 Many Directly (approx 100 %) (2)Health and population 11.5 Many Directly (approx 100 %) (3)Environment 8.6 Few Indirectly only (4)Humanitarian assistance:NGOs 5.3 Many Directly (approx 70 %) (5)Refugees & Disaster relief 7.3 Many Indirectly onlyAgriculture 5.4 Few Indirectly onlyTotal 69.6(1) Also includes Economic co-operation programmes.(2) Rural primary education, agrarian reform, integrated rural development.(3) Health and population sector programmes, family welfare development.(4) Environmental management, industry conversion.(5) Includes only the NGO budget line

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Education, Culture and Information (ECI)

A first observation about this largest EU sectoral commitment is that some of its major actionshad not yet led to any payments by the end of 2000. Payments for this key-sector amounted to ¼213.4 million, which is only 31.9 per cent of commitments. Of eleven programmes with com-mitments in excess of ¼��PLOOLRQ�� RQO\� WKUHH� KDG� EHHQ� FRPPLWWHG� GXULQJ� WKH� SHULRG� ��1996. In particular, the (second) multi-annual support programme for 8QLYHUVDO� HOHPHQWDU\HGXFDWLRQ (SSA) in India has been approved in 2000. It has a price tag of ¼��PLOOLRQ��KRw-ever, no expenditure had yet been incurred by the end of 2000.

Primary education in low-income countries, such as, India tends to have many beneficiariesamong low-income households. Moreover, the skills-enhancing character of primary education

tends to address some of the causes of pov-erty.

The sources of financing for the HGXFDWLRQ�FXOWXUH�� LQIRUPDWLRQ sub-sector differ. Thelion’s share is committed in the Technical andfinancial co-operation budget line. However,approximately one-sixth of the sector’s com-mitments come from Economic co-operation.Economic co-operation tends to include quitea few small activities with budgets below ¼��million66. Beneficiaries of this part of the pro-gramme tend to be (i) higher education insti-

tutions with a focus on business and management; (ii) European studies centres; (iii) journalistexchanges; and (iv) legal, cultural, and security fora, etc.

Beneficiaries of these activities tend not to be drawn from low-income households, nor do theactivities have any direct impact on addressing the causes of poverty. The programmes, whichare directly relevant to poverty reduction, represent approximately 70 percent of the sub-sectorcommitments.

Rural development

Total commitments amounted to ¼��PLOOLRQ��ZLWK�GLVEXUVHPHQW�E\�WKH�HQG�RI��RQO\�DW�¼251.9 million (i.e. 48.9 per cent). A large share of the resources was committed and disbursed toCambodia. The inventory confirms a substantial allocation to rural primary education as havingbeen executed and disbursed in full. In particular, the PRASAC support programme for the ag-ricultural sector and primary education amounted to commitments of ¼� ��PLOOLRQ� DQG� GLs-bursements of ¼��PLOOLRQ��)RU��WKH�VXE�VHFWRUDO�FRPPLWPHQWV�WR�&DPERGLD�DPRXQWHGto more than half of the total for Southeast Asia.

The choice of countries appears to be consistent with the poverty reduction objectives. In addi-tion to Cambodia, beneficiaries include Bangladesh, Pakistan, the Philippines, Vietnam, India,Nepal, Bhutan and Laos. One RXWOLHU may be the 1998 social support programme in the contextof the Asian Financial Crisis with Thailand. A disbursement of just two per cent had been madeagainst a commitment of ¼��PLOOLRQ��E\�WKH�HQG�RI��,Q�VXPPDU\��LW�DSSHDUV�SODXVLEOH�WKDWmany beneficiaries are drawn from low-income households and that the skill-enhancing natureof the programme tends to address the causes of poverty. All programmes in this category werefinanced from the T&F budget-line.

66 Out of 77 projects in this sub-sector some 52 were financed from the Economic co-operationBudget line. The total commitments for these programmes amounted to ¼��,1 million. For the majorityof these programmes, expenditures have closely matched the commitments.

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Health and population

A total of 33 actions, financed in all but two cases from the T&F budget-line, amounted to acommitment of ¼��PLOOLRQ�DQG�D�GLVEXUVHPHQW�RI�¼��PLOOLRQ�E\��SHUFHQW�67.The largest programme was for India with ¼��PLOOLRQ�FRPPLWWHG�LQ�WZR�SKDVHV�RI�ZKLFK�¼153.9 million had been disbursed. The Bangladesh +HDOWK�DQG�3RSXODWLRQ�6HFWRU�SURJUDPPH of1999, however, with a commitment of ¼��PLOOLRQ�GLG�QRW�UHSRUW�DQ\�GLVEXUVHPHQW�E\�WKH�HQGof 2000. A large component of the programme focused on the provision of contraceptive sup-plies.

A regional facility was included for the provision of expertise and some of the programmeswere set in the context of the Asian Financial Crisis, with the apparent aim of securing some ba-sic social expenditures. For example, in 1999, Indonesia’s ¼��PLOOLRQ�SURJUDPPH�IRU�FRQWUa-ceptive supplies began and 85 per cent of committed funds had already been disbursed by 2000.Beneficiary countries were mainly those with comparatively low incomes as well as low publichealth expenditures, such as India, Bangladesh, Vietnam, the Philippines, Indonesia, Laos, Ne-pal, and Yemen.

The environment

A total of 35 programme actions resulted in a commitment of ¼��PLOOLRQ��RI�ZKLFK�RQO\�¼93.1 million had been disbursed by end of 2000 (28.8 per cent). Of these, 20 actions had beencommitted during the period 1993-96, and the remainder during the period, 1997-2000. Activi-ties in China figure prominently with one commitment in 1996, two in 1997, four in 1998 andone in 1999, amounting to a total commitment of ¼��PLOOLRQ��%\�WKH�HQG�RI�WKH�\HDU��only ¼��PLOOLRQ�KDG�EHHQ� GLVEXUVHG� HYHQ� WKRXJK� WKH� DYHUDJH� VKHOI�OLIH�RI� WKH� SURMHFWV� KDGbeen well over three years. For example, ¼��PLOOLRQ�ZDV�FRPPLWWHG�WR�WKH�/LDRQLQJ�,QWHJUDWHG(QYLURQPHQW�3URJUDPPH in 1997 and ¼��PLOOLRQ�KDG�EHHQ�GLVEXUVHG�E\�WKH�HQG�RI��per cent). The other seven projects with a commitment of ¼��PLOOLRQ�KDG�VHHQ�D�GLVEXUVe-ment of only 2.2 million (13.9 per cent). For India, the +DU\DQD�DIIRUHVWDWLRQ�SURJUDPPH wasawarded a commitment of ¼��PLOOLRQ�LQ��EXW�LWV�GLVEXUVHPHQW�VWRRG�DW�D�SDOWU\�¼��million by the end of 2000 (12.4 per cent).

These programmes are absolutely relevant to the objectives set out by the 443/92 regulation, forwhich the environment is one of the three high priority areas. They mainly help the establish-ment of environmental management systems and policies in those countries, which have signifi-cant natural resources (e.g. tropical forests in Indonesia) under threat of serious degradation.

With respect to poverty reduction, however –apart from some exceptions, like the social- andagro-forestry programmes in India, Indonesia and Vietnam– the direct beneficiaries of most en-vironmental programmes tend not to be drawn from low-income households, but rather fromamongst the administration specialists and advisers, as well as suppliers of new technologies.The indirect beneficiaries undoubtedly will include all socio-economic strata, but it would nev-ertheless be difficult to argue that the actions address the causes of poverty directly.

Humanitarian assistance: refugees and disasters

The total commitments for humanitarian assistance to refugees, to remedy disasters and enhancedisaster-preparedness arise from several budget lines, including the T&F line. However, thelatter is primarily intended to complement the commitment from the DG�KRF budget lines (e.g.,B7 – 3020). For refugee rehabilitation, the Vietnamese returnee assistance programme was par-ticularly significant, whereas the Afghan refugee technical assistance has been an importantform of support to Pakistan. It is incontrovertible that the beneficiaries of humanitarian assis-tance tend to be amongst the lowest income groups in poor societies. Nevertheless, this type ofassistance provided in the context of disaster and refuge cannot claim to address the causes ofpoverty.

67 A two-phase health reform programme in Thailand was financed for ¼��PLllion.



Agriculture

A total of 46 actions committed ¼��PLOOLRQ�IRU�WKLV�VXE�VHFWRU��ZLWK�GLVEXUVHPHQW�GXULQJthe period 1993-2000 amounting to ¼��PLOOLRQ��SHU�FHQW��$OO�SURMHFWV��VDYH�RQH��DUHfinanced from the T&F budget line. The programmes in this sub-sector are of an exceptionallyheterogeneous character including: GDLU\�DQG�IRRG�SURFHVVLQJ (China); LUULJDWLRQ�GHYHORSPHQW(Nepal, Yemen, Sri Lanka, China, Laos); VXSSRUW�IRU�OLYHVWRFN�GLVHDVH�FRQWURO�DQG�GHYHORSPHQW(Vietnam; Nepal; SAARC; Laos, China, Bangladesh, Cambodia); SRWDWR��VXJDU�EHHW�DQG�PDL]HGHYHORSPHQW (China); PHGLFLQDO�SODQW (Bhutan); LQWHJUDWHG�SHVW�PDQDJHPHQW (regional, Bangla-desh); ZDWHU�EXIIDOR�GHYHORSPHQW (China); ODQG�UHFODPDWLRQ (China); VXSSRUW�IRU�DJULFXOWXUDO�VFLHQWLILF�UHVHDUFK (CGIAR).

Nearly 25 percent of such projects represent contributions to CGIAR. Among the others, manyseem more suitable for specialised agencies, such as the Food and Agricultural Organisation ofthe UN, while no specific priority is given to agricultural development in the EU strategicframework.

Smaller sectors

A further 13 out of the 35 sectors attracted between one and five per cent of the total resourceswith a total of 31.2 per cent of the commitments. The remaining sectors attracted only 6.7 percent of the funding (see Inventory). Of these smaller commitments, quite a few seek to contrib-ute to poverty reduction. For example, the multi-sectoral local development programmes of3URVKLND in Bangladesh and the $JD� .KDQ� GHYHORSPHQW� QHWZRUN in Pakistan are focused onpoverty reduction.

In such sectors there is a virtual absence of ZRPHQ�LQ�GHYHORSPHQW projects. The EU committedfunds to merely three programmes for only ¼��PLOOLRQ��SHUFHQW�RI�LWV�WRWDO��7KHVH�WKUHHprojects were committed prior to 1997 and implemented only in three South Asian countries.

Sectoral shifts of commitments over time: declining and emerging poverty-related themes

The sector, which has increased most when comparing the 1997-2000 period to the previousone, is education, culture and information, the top-priority of the EU’s programme with 17.8percent of all its resources committed. Out of this, about 62 percent has been committed duringthe period 1997-2000. Another significant increase has been that of multi-sectoral local devel-opment�with an aggregate commitment of ¼��PLOOLRQ��VHYHQWK�RQ�WKH�RYHUDOO�OLVW�EXW�LQ�IRXUWKplace for the period 1996-2000. In many cases the traditional rural development programmeshave changed by adopting a local development approach, giving more attention to local levelgovernance and participation issues.

The sectors whose resources decreased most are; rural development, largely in favour of localdevelopment, down from 8.7 per cent of the aggregate total pre-1997 to 5.0 per cent post-1996;agriculture and the environment.

Concluding remarks on relevance to poverty reduction

The objective of poverty reduction in less developed parts of Asia has remained a major targetof Technical and financial co-operation with Asia over the considered period.There has been a shift in sectoral priorities, with an increased emphasis on primary educationand local development. Some sectoral development (SWAp) programmes have been financed,particularly in India (education and health) and Cambodia (education and rural development).

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�VWUHQJWKHQLQJ�JRRG�JRYHUQDQFH��GHPRFUDF\�DQGKXPDQ�ULJKWV

Priority of the objective

The European Commission, in its EU-Asia strategic framework document of 2001, identifiescontributing to the VSUHDG�RI�GHPRFUDF\��JRRG�JRYHUQDQFH�DQG�WKH�UXOH�RI�ODZ in Asia as one of



the five priority areas for its regional co-operation and partnership. The same priority was in-cluded in the TNAS (1994) and in the 443/92 regulation. Several analysts have addressed thequestion as to whether the focus should be on JRRG�JRYHUQPHQW or on the broader issue of JRRGJRYHUQDQFH, including transparency, accountability, rule of law, etc. It is pointed out that

*LYLQJ� UHZDUGV�� UDWKHU� WKDQ� LPSRVLQJ� VDQFWLRQV� DQG� FRQGLWLRQDOLWLHV�� LV� PRUHOLNHO\�WR�\LHOG�UHVXOWV��$LG�SROLFLHV�IRU�GHPRFUDWLVDWLRQ�DUH�JRLQJ�WR�EH�OLPLWHG�LQHIIHFW��LQ�WKH�EHVW�RI�FLUFXPVWDQFHV��«�0RVW�ORQJ�WHUP�EHQHILW�LV�OLNHO\�WR�FRPH�LIUHFLSLHQWV� IHHO� WKDW� WKH� SROLFLHV� DUH� VXSSRUWLYH� RI� µRZQ¶� LQLWLDWLYHV� UDWKHU� WKDQWKRVH�RI�H[WHUQDO�DJHQFLHV�DQG�GRQRUV68�

The five principles of good governance for the European Commission itself combine bothmanagerial and social change oriented elements69. It is increasingly accepted to define govern-ance as a process leading towards co-operative actions. It follows that programmes relevant toJRRG�JRYHUQDQFH may include a wide range of different actions. Some of these are direct com-plements to economic co-operation. However, others aim to support processes of socio-politicalchange towards democracy and participation, as well as towards the protection of human andminority rights.

In Asia, such programmes involve five sub-sectors, and have a commitment of ¼��PLOOLRQ�which is 4.7 percent of the total programme. It should be noted that many local developmentprogrammes, which have been considered under the poverty objective above, include good gov-ernance components. A brief review follows.

Democracy and human rights

These programmes include commitments of ¼��PLOOLRQ��WKH�PDMRU�VKDUH�RI�which (77 per-cent), has been completed during the last four years. Two large programmes with China focuson: (i) legal and judicial co-operation; and (ii) village level governance. Of the total commit-ments of ¼��PLOOLRQ�RQO\�¼��PLOOLRQ�KDG�EHHQ�GLsbursed. Other programmes in this sub-sector include election monitoring (Indonesia 1997, Cambodia 1999, Bangladesh 2001), as wellas support to the UN Trust Fund for East Timor. The list of projects appears to indicate that thefocus is on support for democracy--only the programme on judicial co-operation and a one-timeseminar on human rights in China in 1997 could be said to include a KXPDQ�ULJKWV angle.

Indigenous peoples

To date, this consists of only one tribal empowerment project in Andhra Pradesh, India. It wasinitiated in 1998 with a commitment of ¼��PLOOLRQ� �� SHUFHQW� RI� WRWDO� FRPPLWPHQWV�� RIwhich only ¼��PLOOLRQ�KDG�EHHQ�GLVEXUVHG�E\��

Women in development

Four actions in South Asia (India, Maldives and Bangladesh), all agreed upon during 1995-96,as a direct follow-up of the Beijing Conference70, account for the total of the Commission’s ac-tions on ZRPHQ� LQ� GHYHORSPHQW. Gender training in India and direct support programmes in

68 Peter Ferdinand, (1999), ‘Democratisation, Good Governance and Good Government in Asia’,(XURSHDQ�,QVWLWXWH�IRU�$VLDQ�6WXGLHV�%ULHILQJ�3DSHU 1999/05 (EIAS, Brussels). This paper presents someof the insights from this an inter-disciplinary informal research network on governance involving Asianand European scholars.69 European Commission, 2001, :KLWH�3DSHU�RQ�(XURSHDQ�*RYHUQDQFH (Com July 2001) points to

R� RSHQQHVV (communicate about what EU does and what decisions are taken)R� SDUWLFLSDWLRQ (throughout the policy chain from conception to implementation)R� DFFRXQWDELOLW\ (take responsibility for what EU does)R� HIIHFWLYHQHVV (policies must be timely and their impact must be evaluated)R� FRKHUHQFH (actions are to be coherent and easily understood).

70 IV UN World Conference on Women - Beijing 1995



Maldives and Bangladesh received a paltry commitment of just under ¼��PLOOLRQ��SHUFHQWof total commitment.

Institutional strengthening and reform

Some 42 programmes in twelve countries were initiated with a total commitment of ¼57.6 mil-lion, but no disbursements were recorded for twelve of these projects till the end of the year2000. Many comparatively small projects cover a wide range of issues, including urban plan-ning; public administration; supporting statistical agencies; standards and quality management;legal co-operation; single market workshops; public procurement; and assistance in transitionprocesses.

Urban twinning

In order to bring EU and non-EU towns into closer contact, a grant system is operated with acommitment of ¼��PLOOLRQ��ILQDQFHG�KDOI�IURP�(FRQRPLF�FR�RSHUDWLRQ��DQG�KDOI� IURP�7UDGHand Financial Co-operation. It facilitates collaboration between towns and municipal authoritiesin the EU and Asia. Initiated in 1996 as a regional programme, its recorded disbursement by2000 was only ¼��PLOOLRQ��+RZHYHU��UHFHQW�FDOOV�IRU�SURSRVDOV�KDYH�UHVXOWHG�LQ�QHZ�SURMHFWVbeing awarded to Asian countries. For example, in Thailand four such projects were granted in2001 with a total value of ¼��PLOOLRQ�

Concluding remarks

It may be said that� the JRYHUQDQFH� VHFWRU includes a disparate and wide-ranging set of pro-grammes, many of which are small with commitments of less than ¼��PLOOLRQ��7KH� VWUDWHJLFpriorities set by the EC and the political signals emanating from the European Parliament aboutthe importance of the promotion of human and minority rights in Asia are clearly reflected inthe EU-Asia programme.

The governance, democracy and human rights agenda, however, appears to have been inter-preted in a narrow sense with a short-term perspective. In the majority of cases the programmeshave aimed to support electoral processes and address local level governance issues. In contrast,rather limited commitments have been made to support comprehensive and sector-wide pro-grammes for institutional reforms and/or for the protection of human and minority rights.

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�HQKDQFLQJ�WUDGH�DQG�HFRQRPLF�UHODWLRQV

Priority of the objective

The EC strategic framework for Asia includes HQKDQFLQJ�PXWXDO�WUDGH�DQG�LQYHVWPHQW�IORZV asone of its five priority areas. The concepts of Economic co-operation and PXWXDO�LQWHUHVW�withAsia, which had been introduced in the guidelines of 1990, were for the first time introduced inEU ALA regulation 443/92. The distinction between 7HFKQLFDO�DQG�ILQDQFLDO co-operation and(FRQRPLF co-operation reflected the EU’s institutional objective to move beyond developmentassistance as the only instrument of external relations.

The inventory data for the period 1993-2000, indicate that the EU programmes in the economicand trade related sectors (including trade development, regional integration, support to enter-prises, and investment promotion) in Asia account for about 13 percent of the EU total com-mitments. This figure covers a bit less than the total commitments of the Economic co-operationbudget line, which is used also for other programmes included in the education-culture-information and governance sub-sectors. On the other hand, the T&F budget line is used forsome programmes in the economic and trade related sectors. Disbursements as a percentage ofcommitments stand at only 27.17 percent for the period 1993-2000.

Business environment and management training

There are five main programmes of business training for a total of about ¼��PLOOLRQ��RI�ZKLFKalmost 75 percent regard China. Two additional large commitments in China regard the im-



provement of the business environment for a total amount of ¼��PLOOLRQ��6XFK�SURJUDPPHVappear very relevant, since they create permanent linkages between the European and Asian (orChinese) business schools and aim at building sustainable local capacities.

Investment promotion

There are five main programmes of investment promotion for a total of approximately ¼��PLl-lion, of which almost 42 percent regard the horizontal programme Asia-Invest, and 33 percentregard China. These programmes aim mainly at facilitating the establishment of business rela-tionships among European and Asian enterprises, which is a very relevant scope.

The actual design of the projects, however, does not seem to take into account the specific Asianconstraints. Asia-Invest seems less relevant than its brother-programme in Latin America, sincethe EU-Asia linkages among the enterprises are more volatile and –with some significant ex-ceptions– it is difficult to ensure the financial participation of the Asian enterprises to maintainthe national and sub-regional networks on which the programme should rely. More creativeforms should be envisaged. Non-grant-based policy work should also be carried out to facilitatesuch business linkages.

Energy

In the energy sector, programmes are concentrated on support to ASEAN for Cogenerationtechnologies. This is a typical intervention aimed at providing specific support to the spreadingof European technologies. There are four such programmes for an amount of approximately ¼50 million. Further analyses would be needed to assess the actual interest and participation ofASEAN countries, in order to limit the risk that such projects result in unilateral commercialpromotions.

Trade standards and rules

There are four programmes, mainly with ASEAN, and partly with China on such matters, with acommitment of ¼� ��PLOOLRQ��7KHVH� DUH� DEVROXWHO\� UHOHYDQW� WR� HQVXUH� WKH� GHYHlopment of bi-regional trade relations and access to international markets of QHZ countries like China, Vietnamand others.

Transport (civil aviation)

There is a package of civil aviation support programmes, aimed at strengthening the Europeancivil aviation industry and standards in the region, through the facilitation of regulatory and in-dustrial agreements. These projects account for about ¼� ��PLOOLRQ�� RQO\� LQ� ,QGLD� DQG�&KLQD�with a small regional component. A maritime transport project in India of ¼��PLOOLRQ�PRUH�IDOOVinto the same category. A discussion on whether such projects are coherent with the establishedpriorities and/or their objectives should be pursued through specific tools different from the ECco-operation funds is ongoing.

Other programmes

In this category, some important individual programmes should be considered too. A singlemain project for regional integration has been financed at the ASEAN level, which shows thecomplexity of the regional integration processes in Asia compared to Latin America. An infor-mation centre on European business was financed in Indonesia in 1994, without any particularsuccess. By 2000, only eight percent of the allocated amount of ¼��PLOOLRQ�KDG� EHHQ� GLs-bursed.

Concluding remarks

Some general issues may be pointed out:R� the programmes aimed at improving the business environment in the recipient countries–

either through human resource building, or through supporting the regulatory reforms–are ab-solutely relevant. They may help in significant progress toward the creation of a soundcompetitive framework–including solid links with the EU know-how–in those countrieswhich are reform-committed;



R� the programmes aimed at helping in the adoption of new trade standards and rules are alsoabsolutely relevant, since they create the conditions to enhance trade capacity and tradelinks with the EU in the recipient countries;

R� the programmes aimed at facilitating inter-enterprise linkages are relevant, but should bebetter designed to fit the different specific constraints and dynamics;

R� the programmes aimed at facilitating the adoption of European technologies and industrialproducts seem very expensive and not really suitable for a grant-based co-operation. Creat-ing IRUD to foster industrial co-operation and facilitate investment by the enterprises who aredirectly interested may be more appropriate; and

R� in general, much more non grant-related policy work should be done to enhance economicrelationships between Europe and Asia.

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�HQKDQFLQJ�FXOWXUDO�DQG�VFLHQWLILF�H[FKDQJHV

EU priority of the objective

Enhancing PXWXDO�XQGHUVWDQGLQJ is one of the key objectives of the TNAS (1994) and has beenexpanded towards EXLOGLQJ�D�JOREDO�SDUWQHUVKLS�DQG�DOOLDQFH in the 2001 (8�VWUDWHJLF�IUDPH�ZRUN for Asia. In this sense, cultural and scientific co-operation is one of the most relevant pil-lars. Europe is not yet well acquainted with Asia, and vice versa. Cultural and scientific co-operation,therefore, has to be based on mutual knowledge and understanding. For this reason, programs ofcultural and scientific exchanges, such as scholarships between European and Asian universi-ties, research centres and institutions are very relevant to augmenting this mutual knowledge.

Cultural and scientific co-operation programmes

The global amount devoted to this category is absolutely considerable, more than ¼��PLOOLRQ�The establishment of inter-university links (including scholarships) absorbs about 50 percent ofthe total, while an important share (about 20 percent) is for cross cultural exchanges (India), an-other 18 percent is for information technologies (regional), the rest being for European studies(India) and higher education reform in China. The relevance of the inter-university networks and programmes appears very high, especiallywhen permanent scientific relationships and long-term methodological exchanges are ensured.The relevance of the information technology programmes seems relatively high too within theperspective of building a bi-regional advanced partnership, with multi-faceted objectives. TheIndia cross-cultural programme seems very ambitious.

Concluding remarks

The sectoral interventions appear very relevant from a strategic point of view, though they seemhardly able to produce a significant impact on the attainment of the strategic objectives, giventheir reduced quantity compared to the size of the problems. Indeed, the effort to concentratesuch activities in India and China and in ASEAN at a sub-regional level shows that the decisionmakers are aware of the problems that could be determined by an excessive dispersal of the in-tervention. This need to better focus and concentrate scarce resources, however, suggests a verycareful use of some very general programmes, like the EU-India cross-cultural one.

In general EC co-operation programmes in this field should be complemented through the es-tablishment of mutual regulatory agreements on intellectual property, free movement of artistsand scientists, mutual recognition of titles, and so on, with the participation of other DGs fromwithin the European Commission.



�� &RQFOXVLRQV�RQ�WKH�RYHUDOO�UHOHYDQFH�DQG�FRKHUHQFH�RI�WKH�$VLD�SURJUDPPH

Relevance and coherence

The EU-Asia co-operation programme is highly relevant against the main priorities set up byregulation 443/92 and developed by the TANS (1994), namely with respect to poverty reduc-tion, trade and business development, the environment, and mutual knowledge and understand-ing.

The internal coherence of the programme appears satisfactory. The country-level programma-ble budget lines –those regulated by regulation 443/92– have ensured a basic strategic and ne-gotiated approach, while the horizontal budget lines have complemented the main programme inspecific fields. This is different from what happened in Latin America.

The distribution by macro-sector (Figure6.3) or key priority shows that approxi-mately 50 percent of the total resourceshave been committed to programmes witha strong poverty reduction scope, whileabout 15 percent have been committed tohumanitarian programmes, 15 percent tonatural resource and environment, 11 per-cent to economic and trade development,less than 5 percent to governance and de-mocracy, and less than 5 percent to culturaland scientific co-operation.

Since no allocation guidelines exist, it isdifficult to say how this distribution re-sponds to the strategic framework and thepolicy emphases defined by the EU.Probably the governance and democracysector would have merited more emphasis,with more attention to local governance,institutional reforms, gender issues andminority rights. Indeed, some of these ar-eas have received more attention in thesecond period (see Figure 6.5).Apart from the governance area, financialresources seem to have focused on thesectors in which grant-based co-operationis more relevant and may be more effec-tive.

Changes of emphasis over the time

As shown in the Figure 6.5, education-culture-information, local development, multi-sector(poverty reduction programmes), transport and communications, governance and democracy,and energy have increased significantly more in the second period. Commitments to rural de-velopment, the environment, agriculture, refugees, investment promotion, have decreased.Funding to health, food aid, and private sector shares did not change much. As seen above, suchchanges are due to changes in approach and the shift away from some traditional areas of co-operation, such as agriculture & rural development.

- 200 400 600

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Geographic priorities

The FRXQWU\�GLVWULEXWLRQ (Fig. 6.671) of the re-sources remained relatively stable in the twoperiods considered, with India in the lead posi-tion, followed by Bangladesh, then China andVietnam. In Pakistan, co-operation ceased afterthe degradation of the democratic situation, andthe share going to the Philippines increased.

The UHJLRQDO� GLPHQVLRQ is mainly used forsome horizontal programmes and initiatives,such as: Asia Links, Asia Invest, the environ-mental initiative, the health initiative, and sci-ence and technology. A particular emphasis hasbeen given to interregional dialogue, throughASEM. At the sub-regional level, the Associa-tion of South-eastern Asian States (ASEAN) isby far the main partner.

71 Ba=Bangladesh, Bh=Bhutan, Ca=Cambodia, Ch=China, HH=Hong Kong, Ia=Indonesia,In=India, La=Laos, Ma=Malaysia, Mc=Macao, Md=Maldives, Mo=Mongolia, Ne=Nepal, Pa=Pakistan,Ph=Philippines, R-Ge=Regional general, R-SA=Reg S-Asia, R-SE=ASEAN, Si=Singapour, SL=SriLanka, Th=Thailand, Vi=Vietnam, Ye=Yemen

- 200 400 600 800

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During the period 1993-2000 Latin America received ¼��ELOOLRQ72 in funds, corresponding toan annual average allocation of ¼��PLOOLRQ��7KH�RYHUDOO�YROXPH�RI�DLG�ZDV�JOREDOO\�VWDEOHduring the nineties, with a slight increase (4.7 percent) in the last part of the decade (97-2000) as

compared to the first period (93-96).Therefore, the approval of a new strat-egy for Latin America in 1995 is notnoticeable in terms of higher commit-ments, but rather in the fact that thesewere secured despite a decrease in thefunds available through the T&F co-operation BL. This stability was se-cured by an extensive use of the hori-zontal budgetary lines (HBL), asshown by the Figure 6.7.

The use of HBLs also guaranteed thatLA’s yearly allocation was not toomuch smaller than Asia’s (¼��PLl-lion). This resulted in HBLs repre-senting 48 percent of the total com-

mitments in the first period and 53 percent in the second, thus exceeding the assistance providedin the framework of regulation 443/92. The main characteristic of HBLs is that they are not pro-grammable aid, in contrast to the regulation budgetary lines, which are programmable73.

With reference to the use of the T&F and Economic co-operation BL, the 1992 regulation indi-cated that the former was to be employed for development purposes74 and the latter to financeactions of “ mutualinterest”75 in the fieldof economic and re-gional co-operation.An analysis of thecommitments showsthat the distinction issometimes blurred, de-spite a global coher-ence in the utilisationof a budgetary line ac-cording to the above-mentioned objectives.The availability of

72 This includes the Economic co-operation, the Technical and financial co-operation budgetarylines and the selected 13 HBL (Co-operation Agreements; refugees; refugees and displaced people; reha-bilitation; prevention of disasters; democracy and HR; ECIP, environment; tropical forests; drugs; foodaid, victims of disasters; and NGOs).73 For definition of programmable and not programmable aid, please refer to the glossary in theAnnex.74 I.e. in sectors such as rural development, local development, social services, institutional build-ing and the environment75 See the Glossary at the beginning of the report

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funds under one or the other budgetary line in a spe-cific year was at times the prevailing criterion inchoosing how to finance a project76. On other occa-sions, the concept of mutual interest linked to theEconomic co-operation BL gave the Commissionmore freedom to initiate a project and this was used tofinance pilot or innovative projects in various fields.At the country level, though T&F co-operation BLwas primarily used in the poorest countries, there aresome exceptions, such as Cuba, which received 99percent of the bi-lateral funds from the Economic co-operation BL, or Brazil, Argentina and Chile, whichreceived more from the T&F co-operation than fromthe Economic BL.

An important difference in the projects financed under the two budgetary lines is their size.Those financed under Economic co-operation had an average budget of ¼�� DQG� ZHUHmore than ¼400,000 while those under the T&F co-operation BL totalled ¼238,000 and had an

average budget of ¼�� PLOOLRQ�� 7KH� H[e-cution rate is nevertheless very similar forthe types of projects. Disbursements com-pared to commitments have been 31 per-cent for Economic co-operation projectsand 40 percent for those financed by theT&F co-operation BL.

The second part of the evaluated periodsaw a growing use of horizontal pro-grammes77 (ALFA, AL-Invest and Urb-AL) based on the concept of partnershipbetween European and Latin American in-stitutions around thematic networks. Theseprogrammes became the primary modalityof intervention in the related areas (tertiaryeducation for ALFA, internationalisationand investment promotion for AL-Invest,local government development for Urb-Al), which streamlined the EC strategy inthe respective areas and fully satisfied thesearch for an intensified partnership as en-visaged by the 1996-2000 guidelines.

The projects funded by the T&F and Eco-nomic BL can be classified according totheir main objective into 30 different sec-tors. Out of these, the first 10 sectors78 rep-resent only 30 percent of the global com-mitments, indicating a strong dispersion oflimited programmable resources and thelack of a focused strategy. Nevertheless a

76 See for instance Brazil case study or the financing of Urb-AL in 1996 and AL-Invest in 1999.77 See the Glossary in Annex for a definition78 Education, Rural Development, Urban poverty, Health and Population, Local development, In-vestment Promotion, Democracy and Institutional building

0 250 500 750 1,000 1,250

S

H

G

E

N

R

U

1993-1996 1997-2000

)LJ��/$��FRPPLWPHQWV��DQG��LQFOXGLQJ�DOO�EXGJHWDU\OLQHV��E\�PDFUR�VHFWRUV��0�¼�

0 100 200 300 400

NGOsFood AidEnviron.Disaster

Democr.Edu etc.

Rehab.Rural dev.

InvestmentRefugees

HealthUrban pov.

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UnallocableSMEs

Water supplyAgric

EnergyMultisec. misch

Private secRegional inst.

Indigen.Women

InterregionalRegional trade

Intern tradeDrugs

FisheriesIndustry

Trans.&Com.S&Tech.Tourism

1993-1996 1997-2000

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good part of these actions are coherent with the main objectives of the EU-LA co-operation:poverty reduction and social and human development; support to democracy; support to inte-gration into the world economy by means of trade liberalisation and increased competitiveness;and support to regional integration. The high number of areas covered, however, made it diffi-cult to seek co-ordination and synergies from one to the next.

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The budget allocated to projects directly aimed at social and human development and povertyreduction81 represents 50 percent (i.e. ¼��0��RI�WKH�SURJUDPPDEOH�DLG�FRPPLWPHQWV�IRU�WKHperiod 1993-2000, though it decreased to 22 percent in the second part of the nineties. The proj-ects financed by the food aid and the NGO82 horizontal budgetary lines, correspond to ¼��M, also directly contribute to the above-indicated objectives. Therefore the overall budget is ¼1.6 billion or nearly half (46 percent) of all aid to Latin America. The poorest countries of theregion, Nicaragua, El Salvador, Honduras, Guatemala, Peru, Bolivia and Ecuador, received 66percent of this budget.

The extensive use of the food aid andNGOs BLs compensated for the decreaseof funds to the T&F BL registered in thesecond period. While food aid also targetedthe poorest countries of the region, NGOsfunds, was also allowed to provide re-sources for HSD and poverty reductionoutside the poorest countries. This was thecase of Brazil in particular, which has thehighest number of poor in LA and was alsothe first beneficiary of NGO financed proj-ects.

The bulk of the assistance was provided ineducation and rural and local development.Education was the first sector in terms ofcommitments (¼��PLOOLRQ�� :LWKLQ� WKHsector, basic education (primary and adulteducation) was targeted in those countrieswith the lowest literacy rate records (Bo-livia, Nicaragua, Guatemala, Honduras andPeru), but it received only 33 percent of thetotal education budget despite the recog-nised positive link between basic educationand poverty reduction. Professional andvocational education and training receivedin total about 27 percent of funds and wentboth to middle level and poor countries.Tertiary education, which does not con-tribute to a poverty reduction objective, re-ceived the highest allocation, representing39 percent of total funds, mostly financedby the Economic co-operation BL, under

79 See the glossary for a definition80 This finding was confirmed by the field visits. See § ,QWHUYHQWLRQ�PRGDOLWLHV in the Nicaraguaand Brazil country reports�81 In the Inventory grouped under the 6RFLDO�,VVXHV macro-sector82 Based on the analysis carried out in the two country visited

0 50 100 150 200 250

Edu. Etc.Rural d.Health

Urban pov.Local dev.

InvestmentDemocr.

Inst. buildUrban twin.

EnvirUnallocable

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Agric.Energy

Multisect.Private sec.

RegionalIndigen.

Rehab.Women

RegionalIntern. Trade

RefugeesInterregional

FisheriesIndustry

Tra.&CommS&TechTourism

1993-96 1997-2000

Fig. 6.11 - LA: Commitments by sector,1993-96 and 1997-2000, including onlyT&F and Ec co-operation (M )



the ALFA programme. Only 6 out of 24 projects in education have a sectoral/sub-sectoral ap-proach.

Rural and local development projects targeted the poorest countries, mostly the Andean andCentral American countries. With a global budget of ¼��PLOOLRQ� WKH\� UHSUHVHQW� WKH�(&�SUe-ferred modality for supporting poverty reduction in Latin America together with food aid (¼��million) during the nineties. But in Latin America poverty, unlike in Asia, has become mostlyan urban phenomenon.

Actions in favour of urban poverty reduction received 11 percent of the funds, making it thethird priority item in terms of committed funds. However, despite the increasing dimensions ofurban poverty in LA, the funds to this area decreased in the second period. Reduction of urbanpoverty was also indirectly pursued with actions in the field of human rights, such as the one in-volving street children in Brazil, and in support to the development of urban planning and de-velopment, which increased in the last part of the decade. In this sense a qualitative more thanquantitative contribution, came from the Urb-Al programme.

Eighteen projects were financed in the area of health and population and twelve were in poorcountries, but only six projects out of the eighteen had a sectoral approach. The 97-2000 periodregistered a shift in favour of major involvement in the water supply sector both in rural and ur-ban areas.

Finally, poverty reduction objective was indirectly pursued through:R� Increased commitments under the 9LFWLPV�RI�'LVDVWHU��5HKDELOLWDWLRQ�DQG�'LVDVWHU�3UHYHQ�

WLRQ�BL. However, projects under these lines do not necessarily remove the structural causesof poverty.

R� Support to the informal sector, micro-enterprises and craftsmen development. These initia-tives were funded under the regulation 443/92 as addenda or second phases of projectslaunched at the end of the eighties and in 1991-92 to compensate the negative effects ofstructural adjustment programmes on the poorest. This strategy was abandoned at the com-pletion of these projects.

Concluding remarks

Poverty reduction and HSD was the overriding objective of EC co-operation in Latin Americafor the entire evaluated period. The majority of the actions targeted the poorest countries and thepoorest groups of the population directly. However, the multiplicity of instruments, the strongcomponent of non programmable aid, the focus on rural and local development, the limited at-tention to sectoral approach in basic services and a reduced commitment to urban poverty lim-ited the global relevance of the interventions with respect to the structural causes of poverty.

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�HQYLURQPHQW�SURWHFWLRQ

Total commitments to this objective represent 8 percent of all commitments in the region,slightly less than what was foreseen by the regulation (10 percent). However the 73 percent ofthe funds committed for environmental protection (¼��PLOOLRQ�� FDPH� IURP�7URSLFDO� )RUHVWand (QYLURQPHQW HBLs, which are not specific for Latin America and are not covered by theregulation. Their annual available amount is established globally at world level, and during thenineties they were managed outside the DGs in charge of the co-operation with the region (DGRelex and SCR).

The 10 percent target could be considered achieved globally and without differentiating thesource of financing if we take into account that most of the rural development projects have anenvironmental component and that also projects in other areas such as prevention of disasters ornatural resources management have an impact on the environment.

Direct concern for environmental protection has been different in the three main sub-regions.



7DEOH��/$��&RPPLWPHQWV�LQ�WKH�(QYLURQPHQW�VHFWRUCentral America Mercosur and Chile Andean Community

Total Commitments ( ¼� 1 266 537 399 572 565 003 957 623 591Environment (¼� 52 703 359 125 789 023 76 189 508Environment as % of total Com. 4.16 22 7.9

Source: ,QYHQWRU\�GDWD��1RY��

Concluding remarks

During the nineties the objective of environmental protection escaped a country-based interven-tion strategy83 and an ex-ante coherence and co-ordination with intervention in related or com-plementary areas. Furthermore, the fact that the funds came primarily from the 7URSLFDO�)RUHVWDQG�(QYLURQPHQW HBLs, which have specific global objectives did not allow taking into accountenvironmental problems linked to urban pollution, which are increasingly relevant in LatinAmerica and have an important relation to urban poverty.

�� 5HOHYDQFH�WR�WKH�REMHFWLYHV�RI�SURPRWLQJ�SULYDWH�VHFWRU�GHYHORSPHQW��LQFUHDVLQJWKH�HQWHUSULVHV�FRPSHWLWLYHQHVV�DQG�WKHLU�SDUWLFLSDWLRQ�LQ�WKH�ZRUOG�HFRQRP\

The actions financed with reference to the above objectives can be distinguished in four maincategories: a) interventions in the energy sector (¼��PLOOLRQ��SULPDULO\�UHODWHG�WR�WKH�SULYDWi-sation process of national energy industries (with the ALURE programme); b) industry promo-tion to increase competitiveness and product quality and standards (¼��PLOOLRQ��F��60(�Ge-velopment, which includes support to micro-enterprises, the informal sector and craftsmen (¼53.4 million)84; and d) investment promotion (¼��PLOOLRQ��PDLQO\�HQWHUSULVHV�LQWHUQDWLRQDOi-sation (Al-invest) and export promotion (¼��PLOOLRQ��

The main characteristics of the actions in the above areas, is their reduced size and scope. Onlyfour out of 28 projects financed in the energy sector and eight out of 56 projects in the SME andinvestment promotion sector were above ¼�085. Punctual, ad hoc initiatives rather than struc-tural interventions at the sector level are, therefore, the majority.

In terms of the target group, the small and medium sized enterprises were the principal benefici-aries of EC assistance, which evolved significantly from the first to the second period of thedecade. Initially, assistance concentrated on several small projects on export promotion with themajority of actions related to participation in or organisation of international exhibition. EC aidalso went to promoting SMEs in the poorest countries86. The second period saw two importantchanges. Assistance went primarily to the most developed countries of the region to increasetheir enterprises’ competitiveness87. The AL-Invest programme for internationalisation of enter-

83 The only exception is represented by Brazil where the co-financing of the GGP7 project84 This group includes projects that are the continuation of initiatives linked to poverty reduction inthe early nineties (see above 6.2.2) and a major programme (¼� ��PLOOLRQ�� IXQGHG� LQ� �� DW� UHJLRQDOlevel (the micro-enterprises development funds).85 It should be noted that, during the considered period, two large projects of direct support toSMEs, to enhance their export capacities, have been implemented, based on a commitment made underthe former 442/81 Regulation. These projects are FOEXA and FOPEXA, both managed through theBCIE, for a total amount of about ¼��PLOOLRQ�86 Apart from the initiatives completing the projects initiated in the early nineties to compensate theeffects of SAP, two specific initiatives can be mentioned: the PLFUR�HQWHUSULVHV�GHYHORSPHQW�IXQG (¼��M) implemented through a trust fund managed by the IDB, in 1995; and the support to small mining sec-tor in Bolivia (¼��0��LQ��DLPHG�DW�SURPRWLQJ�60(�GHYHORSPHQW�OLQNHG�WR�PLQHUDO�UHVRXUFHV�H[SORi-tation in one of the poorest areas of the countries in the attempt to reduce immigration towards coca pro-duction areas.87 For instance: Chile: ,QWHOOHFWXDO� SURSHUW\� V\VWHP�PRGHUQLVDWLRQ� GHYHORSPHQW� SODQ (1997); Co-lombia: ,QGXVWULDO� WHFKQRORJ\�FR�RSHUDWLRQ� (1995),�&R�RSHUDWLRQ� LQ� LQGXVWULDO� WHFKQRORJLHV (1997); Ar-



prises became the most important intervention in this field; the programme is based on the crea-tion of an EU-LA network of internationalisation services providers and the organisation of adhoc business meetings. Launched in 1993, the programme received a total of ¼ 95.8 million, outof which ¼ 40.07 million were from the 1999 Economic co-operation budget, representing 64percent of the total Economic co-operation budgetary line in that year.

Concluding remarks

The areas of concentration of EC assistance to promote the above indicated objectives did ad-dress relevant problems for the Latin American economies in the nineties, but the prevalence ofsmall projects reveals a strategy based on a short term approach primarily focused on increasingexport capacity through the participation in exhibitions and the organisation of business fora.More structural factors hampering the development, diversification, and internationalisation ofprivate enterprises were addressed in very limited cases. The growing importance of AL-Investconfirms this approach, while raising the question of how to guarantee and increase the partici-pation of the less developed countries and enterprises for which the programme is highly rele-vant.

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�FRQVROLGDWLQJ�WKH�GHPRFUDWLF�SURFHVV��JRRG�JRYHUQ�DQFH�DQG�UHVSHFW�IRU�KXPDQ�ULJKWV

The commitment to democratisation and good governance, and respect for human rights is at thebase of the political dialogue between the EU and Latin America. It is one of the first principlesof the 92 regulation and the following co-operation framework agreements of the third genera-tion signed with the Latin American sub-regions and countries.

However, this is only partially reflected in the implemented strategy. Taking the actions in thiscategory as a whole they stand in third place in terms of commitments (see Figure 6.9), and thetotal commitments (¼��PLOOLRQ��UHSUHVHQW�OHVV�WKDQ�RQH�ILIWK�RI�ZKDW�ZDV�DOORFDWHG�WR�WKH�Ku-man and social development and poverty reduction objective88.

Despite the fact that the proportion of democracy and HR was central in the regulation, half ofthe committed funds came from the GHPRFUDF\ HBL(¼��PLllion).

On the positive side, the commitments related to the pursuit of the above objectives increasedby more than 10 percent in the second half of the nineties, more than what was registered in theglobal commitments89. The major increase was in projects involving institution building andpublic sector reform, and in particular the launching of the Urb-al programme.

The difference in approach in the two periods of the nineties is quite significant. The years1993-96 saw a concentration of the main interventions in Central America going in support ofthe peace process and for the creation of a more democratic society with assistance to unions,land reform process and indigenous populations. The period 1997-2000 is characterised by a fo-cus on the public administration reform and development, in particular to the institutions incharge of the administration of justice and public security and, with Urb-Al, of the local admini-stration in areas such as to urban development, urban poverty and social marginalisation.

gentina: 0RGHUQLVDWLRQ� RI� WKH� LQWHOOHFWXDO� SURSHUW\� V\VWHP (1997); (QWHUSULVH� GHYHORSPHQW (1998); ,P�SURYHPHQW�RI�WKH�FRPSHWLWLYHQHVV�DQG�HIIHFWLYHQHVV�RI�WKH�HFRQRP\ (2000).88 It is important to notice that many projects falling in this sector had Democracy and HumanRights as general objectives rather than as specific objectives. This is, for instance, the case of the proj-ects in Central America in the first half of the nineties in the areas of reinsertion of the refugees in thepost- conflicts years.89 Important projects in this period have been in the area of strengthening of police services (Gua-temala, San Salvador, Brazil, Argentina) and public administration strengthening ( Brazil, Nicaragua,Guatemala).



Concluding remarks

Interventions in the area of the promotion of democracy and human rights have been particu-larly important, especially in Central America, to guaranteeing the consolidation of democraticregimes and to promote a more democratic society. The move towards institution building andsupport of public administration is also relevant with the increasing importance of good govern-ance and the decentralisation process in the region. At the same time, global relevance was af-fected by the dispersion in many different actions and by the extensive use of non programma-ble aid in relation to the promotion of democracy and respect for human rights.

�� 5HOHYDQFH�WR�WKH�REMHFWLYH�RI�UHJLRQDO�LQWHJUDWLRQ�DQG�FRQVROLGDWLRQ�RI�WKH�HFR�QRPLF�DQG�SROLWLFDO�UHODWLRQV�EHWZHHQ�WKH�WZR�UHJLRQV

The funds committed at the regional and sub-regional levels are ¼��PLOOLRQ��UHSUHVHQWLQJ��percent of total commitments for the T&F and Economic co-operation BLs. 77 percent is ac-counted for by co-operation at the region level and was used primarily to finance the horizontalprogrammes ALFA, URB-Al, Al-Invest and ALURE.

To support regional integration in the LA sub-regions, the Commission used the lessons learntfrom its own experience. Promotion of sub-regional integration was done by means of support-ing the development and consolidation of the sub- regional institutions and administrations (i.e.the Secretariats, or the interim Presidencies) and of a number of projects facilitating intra-regional trade and communications such as customs, standards and norms, statistics, river androad transportation90. Within the first category the bulk of the commitments (68 percent) went toa single project, the CEFIR, a training centre on regional integration related issues established inUruguay and providing j�OD�FDUWH short term courses to public administration officials. Another10 percent of commitments went to providing financial support to the secretariats of sub-regional organisations.

Among the sub-regions, the primary beneficiary of EC assistance for regional integration wasthe Mercosur with which in 1995 the EU entered into negotiations for a FTA to be eventuallyachieved in 2005. In this region, funds committed to regional integration are more than 85 per-cent of the total sub-regional commitments. The most important projects aim at facilitating in-tra-regional trade and communication: integrated management of the river Plicomayo, co-operation in statistics, in technical norms and in customs procedures. Outside of these four proj-ects, which represent 74 percent of the budget, the remaining funds are distributed among 40small projects, though about 10 percent of these funds went to support the Mercosur secretariat.

Only in the Andean communities are there projects aiming at strengthening the regional inte-gration process. In Central America, though more oriented to consolidating the democratisationand peace process, the EC regional co-operation was instrumental in setting up the basis for fu-ture integration.

An important part of the regional budgets went to the consolidation of economic, political andcultural relations between Europe and Latin America91, as the traditional historical and culturallinks need to be reinforced to balance North American influence in the zone. A myriad of ac-tions can be found in this area, going from seminars, to meetings of entrepreneurs, trainingcourses, publications, sponsoring of events, scholarships, visit tours and so on. However, themost important modality of pursuing the above objectives has become the three main horizontal

90 Among these, the most important ones are in the Andean Community in the field of customs (¼2.5 M), quality norms (¼��0��FRPSHWLWLRQ�ODZ��¼�0��DQG�UHJLRQDO�URDG�D[HV��¼��0��DQG� LQ�ILVKHU\(¼��0��LQ�&HQWUDO�$PHULFD�LQ�WKH�ILHOG�RI� ILVKHU\��¼��0��DQG�UHJLRQDO�DQG�ERUGHU�DUHDV�GHYHORSPHQW(¼��0��LQ�0HUFRVXU�LQ�WKH�ILHOG�RI�WHFKQLFDO�QRUPV��¼��0��DJULFXOWXUH��¼��0��VWDWLVWLFV��¼��DQGriver transport communication (¼��91 Among these, the Latin American Forum (IEEI), the EU-Latin American Parliament meetings(PARLACEN).



programmes based on the concept of network in three key strategic areas: higher education; lo-cal governments and administrations; and small and medium size business sector.

Concluding remarks

The actions identified in support to the regional integration process addressed some of the keyproblems. However, the limited number of projects in these areas and in general the reducedfunds allocated to the integration process put in question the adopted strategy. On the other side,the consolidation of the economic, cultural and political relations between Europe and LatinAmerica benefited from the introduction of the horizontal programmes92, which streamlined theEC effort avoiding the dispersion of a myriad of small actions with different –when not contra-dictory– strategic approaches.

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Relevance and coherence

The desk analysis shows a general coherence of the ex-post strategy with the objectives definedin the Regulation and in the following regional strategy, namely with respect to poverty reduc-tion, trade and business development and building a stronger partnership between the two re-gions. Like in Asia, the programme focused on the poverty reduction and social developmentpriorities. The relevance of the programme to the Regulation priorities varies according to thesector and the degree of development of the countries. Relevance increased in the second periodwith the introduction of the horizontal programmes with respect to the objective of strengthen-ing the partnership, but this mainly benefited relations with the most advanced countries of theregion. In the other countries, the relevance of the programme was affected by a limited evolu-tion in the intervention strategy, particularly with respect to the poverty reduction objective(e.g.: no use of budgetary support and/or SWAp). Regarding the democracy and human rightspriority, the relevance of the programme was limited by the fact that half of the committedfunds were provided by the 'HPRFUDF\ horizontal budgetary line rather than in the frameworkof agreed upon bi-lateral strategies.

Achieving internal coherence for the programme was made difficult by the high number of fi-nanced projects (in total more than 700) in 30 different sectors, and by the extensive use of hori-zontal budgetary lines. First, this corresponded to a multiplicity of programming centres andprocedures, which jeopardised the effectiveness and efficiency of the country programming ex-ercise. Second, in certain countries (as in Brazil) it introduced a multiplicity of objectives, andin others a multiplicity of instruments for similar objectives (as it is the case in Nicaragua andBolivia). In all cases it favoured interventions of limited impact on structural developmentproblems. Third, it was difficult to guarantee the effective monitoring, coordination and coher-ence of the high number of interventions. Finally, the demand-driven and bottom-up ap-proaches93 used to finance the projects under the horizontal budgetary line affected the predict-ability of the indicative total country allocation, which is particularly important for countrieshighly dependent on foreign aid (i.e. Nicaragua).

The instruments foreseen by the Regulation, Technical and financial aid and Economic co-operation, were not always used coherently within the context of their objective. This confirmsthe growing difficulty in linking project intervention logic to one or another budgetary line. Atthe same time, the existence of two objectives expressed by the two budgetary lines meant thatlittle attention was paid to the possible synergies between interventions financed by them.

92 Aimed at establishing regional and interregional networks for Universities (Alfa), SMEs (Alin-vest), Urban management (Urb-AL), etc.93 See the glossary for a definition



Changes in emphasis over time

The most important change from the first to the second period is the introduction of horizontalprogrammes, ALFA, Urb-AL and AL-Invest. The commitments through the regional pro-grammes more than doubled as compared to the bilateral ones. This was coherent with the questfor a stronger partnership as indicated in the new strategy for Latin America and represents aninnovative approach. Nevertheless the way the programmes are conceived did not permit takingfully into account country GLYHUVLW\� which was at the basis of the guidelines for the 1996-2000and did not favour the equal participation of all countries and institutions94 especially the disad-vantaged.

such as justice and public security, and to public administration reform. The starting of Urb-AL opened up the way to a more network-based type of cooperation with local administra-tions in strategic areas, such as urban poverty, urban planning and social marginalization.On the other hand, interventions in areas such as ZRPHQ� LQ� GHYHORSPHQW and LQGLJHQRXVSRSXODWLRQ nearly stopped in the period 1997-2000 (see Figure 6.10);

countries, with Nicaragua, Peru, Bolivia and Guatemala being the top recipients in terms ofglobal commitments. Among these, Bolivia is the only one which registered an increase inglobal commitments in the second period, due to the increased funds from the horizontal budg-etary lines. In terms of T&F and Economic cooperation budgetary lines, all four countries expe-rienced a decrease in funding during the period 1997-2000.

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The relations between the European Union and the government of India (GoI) have becomecloser and more intense in recent years. The decision to hold an annual EU-India summit in-volving the Indian Prime Minister and the Prime Minister of the country holding the EU Presi-dency is the most tangible manifestation of this change. EU-India trade and investment relationsshould be placed in this wider context of EU-India political relations – with both experiencingan upswing.

Out of a population exceeding one billion people by 2001 some 35 percent have incomes belowthe nationally defined poverty line, whereas 44 per cent do not realise a 1 dollar per day income.India ranks 115 out of 162 countries included in the Human Development Index, well belowlarge South East Asian countries such as Thailand (66), the Philippines (70), Indonesia (102)and also below the People’s Republic of China (87). Of the population aged 15 and above only56.5 per cent meets the literacy standards. In the health and family welfare field maternal andinfant mortality stand at respectively 410 per 100,000 live births and 70 per 1000 live births.These social indicators remain considerably above the averages realised for South East Asia (re-spectively 246 and 38) as well as China (55 and 33).

India counts approximately 360 million poor persons today. All international donors, includingthose with substantial lending programmes such as the World Bank are concerned about thelimited impact of their programmes in India. The government of India has consistently advo-cated that the way forward to address this problem is through ‘trade–not aid’ and in that senseimproving access to the EU market is the overriding aim of the GOI.

The first ever EU-India summit in Lisbon in 2000 developed a 22 point ‘Agenda for Action’ in-cluding joint initiatives for enhancing trade and investment. The EU-India summit in New Delhi(23 November 2001) was attended by the European Commission President Mr Romano Prodiand Commissioner for Trade Mr Pascal Lamy as well as by the Belgian and Indian Prime Min-isters. The summit’s agenda for action seeks to move the EU-India co-operation into new do-mains, such as scientific and technological, energy, customs co-operation and maritime trans-port.

EU-India trade has been increasing steadily with EU imports concentrated in “textile-clothing-shoes”. Engineering goods and gems and jewellery account for the lion share of EU exports toIndia. India is the second largest beneficiary of the Generalised System of Preferences, afterChina, with an utilisation rate exceeding 70 per cent. Nevertheless, EU exports to India grewmore than imports from India, except during 1998 and, in contrast with other Asian countries,for example China and Thailand, the EU does QRW have a substantial trade deficit with India. TheUS used to be the largest source of inward FDI to India during 1993 to 1997, but in 1998, 1999



and 2001 the EU became the largest investor with an amount of US$ 1.59 billion in the most re-cent year – although substantial it is still much below EU FDI into China.

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First and foremost the India programme of co-operation is the largest country programme withinthe ALA region. Resources committed during 1993-2000 amounted to Euro 837 million, whilefor the period 2000 to 2006, the budget is ¼430 million. Such amounts are very small comparedto the size of the problems, and even if all of the funds were to contribute to poverty reductiondirectly or indirectly, the expenditure would still just be on average ¼0.19 per year per poor per-son96. It should be considered however that the availability of 100 per cent grant resources tocash-strapped public authorities is nevertheless of great relevance. Moreover, apart from budgetresources, the availability of specialist expertise to social sector agencies tends to be very lim-ited and EC assistance addresses such weaknesses directly.

The EC-India programme is mainly funded through the Technical and financial budget line(80.5 per cent of the total); Economic co-operation represents only 10.3 per cent and the NGObudget line only 6.3 per cent. The commitments of EC co-operation in India during the period

1993-2000 has been ensured through twelvedifferent budget lines – a cause of some confu-sion to other donors, including EU MembersStates, working in India.

EC co-operation activities in India have beenclassified into seven PDFUR�VHFWRUV and this in-dicates that the major action, i.e. 80.6 per centof programmes and projects, are in the socialsector. Two other sectors respectively: hu-manitarian (including rehabilitation andNGOs), and economic (including industrial co-operation and science & technology) represent7 per cent of the total.

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The India programme could be described as a two-pronged programme with a ‘core’ of socialdevelopment and a second main cluster of economic and technological co-operation. The two‘themes’ are both very relevant to India’s needs and potentials. However, the coherence be-tween the two themes is limited –each one has very different objectives, constituents and bene-ficiaries. Moreover, the coherence within the main social sector core-programme is also wantingdue to a lack of ‘horizontal integration’ with other programmes.

The relevance of the India programme of co-operation may be considered to be quite satisfac-tory both in terms of priorities and approaches, because it addresses directly the essential needsof low income households in India, in particular through the two large education sector pro-gramme, through the health and family programme but also through the activities in the fields ofrural and natural resource development. The EC strategy with its focus on social sector devel-opment is consistent with the objective of poverty reduction.

96) A comparison with the ACP countries may be interesting, though the very different nature ofEDF and ALA programmes should be kept in mind: the indicative programme signed in 2002 for a threeyear period with RDC (50 million inhabitants) was ¼120 million and the one signed with Rwanda (8 mil-lion inhabitants) was 110.

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The adoption of a sort of SWAp in both education (since 1993) and health (since 1996) is theresult of a gradual shift of the India programme from dispersed, though significant, interven-tions of rural and local development, towards sectoral development. The sectoral programmeshave ensured better policy dialogue with the GoI and co-ordination with the other donors, aswell as easier disbursements: technically the latter are done in the form of budgetary support,though they are not actually classified as such. There is uncertainty, however, about the EC ca-pacity to keep a long term commitment, which alone would be able to ensure the desired im-pact.

The impact of the HGXFDWLRQ sectoral programme has been widely recognised as very importantat the grass-root level. In the poorest states one can easily link the improvement of education tothe DPEP programme97. In these states, the whole educational planning has changed and thequality of education is now much better. The project has done several thousands of new formaland alternative schools at the basic level. It is managed and controlled by Indian institutionsand, in this sense, is truly indigenous and nationally ‘owned’. The government establishes therules and plans and international donors provide part of the resources.

A major challenge for the KHDOWK sector programme has been how to link health policy, whichare the responsibilities of states, to the broader issues of family welfare –which are concurrentresponsibilities of the states and the central level of government. It took time to find the appro-priate operational formula because of the decentralized health structures at the state level. Dis-trict health agencies were set up in 20 districts as a pilot project. Weak co-ordination character-ises this sector and attempts to form a health policy forum initially met with resistance from thegovernment’s side. However, health policy has become more prominent in the 10th five-yearplan and a draft health plan has been initiated – testifying to tangible impact in the policy reformprocess.

5XUDO�DQG�QDWXUDO�UHVRXUFHV�GHYHORSPHQW�has been important especially in the past. The projectshave produced some visible impacts and had poverty reduction as their central focal point,though their relative dispersion has limited sectoral policy impact. The EC rural programme inIndia include projects in (i) land reclamation (ii) forestry (iii) integrated watershed development(iv) irrigation, and (v) agricultural production and marketing�

The early EC (FRQRPLF�FR�RSHUDWLRQ in India started with the issues of standards and qualitymanagement. Subsequent Economic co-operation activities focused on various kinds of semi-nars and workshops and other small programmes. In a second phase, sector programmes wereinitiated in civil aviation and maritime transportation. These are presently the most importantEconomic co-operation projects with India. Though the appreciation of these programmes bythe government seems to be substantial and this generates considerable visibility for the EC, theevaluation expressed some doubts about the relevance of these types of project.

Sustainability.�A ‘narrow’ criterion for sustainability is that the externally funded project inter-ventions lead to their integration into national structures with domestic public or private finance.However, in the case of Economic co-operation, the aim tends to be the delivery of a specificservice-package to a client organisation. If the selected organisation adopts a new technology ormanagement innovation, then the service may be deemed as having had a sustained impact. Fora sector wide programme in India, sustainability critically depends on the specific contextswithin each state, its involvement in the project and the degree of support that it needs from thecentral government.

97 Moreover, recent budgets of the government of India are slowly increasing the allocations tothese sectors.



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The Paris Peace Agreement of 1991 ended almost 30 years of armed conflict and paved the wayfor the election of a new government in May 1993. Cambodia’s political situation began to bemore stable, but its democratisation process remains fragile and political power remains in a fewhands with the military continuing to exert a strong influence in the country’s political process. Cambodia’s 11.4 million inhabitants realise an average income per capita of US$826 (usingPPP). Cambodia’s public administration has suffered from a lack of economic resources. Alarge percentage of the civil servants receive a salary of less than US$25 a month. Cambodiahas weak governmental structures in which the national budget depends to a large extent on do-nor’s contributions. Cambodia is in position 153 on the UNDP human development index, which makes it one of thepoorest Southeast Asian countries with one of the lowest living standards. Some 40 per cent ofthe people live below the poverty line and inequality is high with a 40.4 Gini coefficient score.The level of unemployment is high and the number of young people looking for jobs is growing.There is a constant migratory flow of young people from the rural areas to the suburbs ofPhnom Penh. Many young girls are working in the textile or sport garments sector on sub-contracts for multinational enterprises, sleeping on the floor and living in precarious condi-tions98.

Cambodia’s global exports amounted to $1.38 billion and imports to $1.75 billion during 2000 –a deficit sustained largely by external aid inflows. The US is the main recipient country of

Cambodia’s domestic exports (67 percent) followed by the EU, which ab-sorbs 21 per cent. The remainder isdestined for ASEAN and China, Japanreceives only 1 per cent of Cambodia’sexports. The EC signed a 7H[WLOH�7UDGH$JUHHPHQW� with the Royal Govern-ment of Cambodia, which allows theCambodian textile sector to have dutyand quota free access to the Europeanmarket. This agreement has been verybeneficial for the improvement of thetextile sector in Cambodia, but willcome to an end in 2002.


The EC programme is one of the most important international contributions to the rehabilitationprocess of Cambodia – it is sometimes said that the country has two parents: the EU and Japan.The first phase (1991-1994) focussed on emergency relief when the EU worked with the United 98 Estimates suggest that more than 50,000 people are working around Phnom Penh in this produc-tion system.

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Nations, the Cambodian Resettlement and Rehabilitation (CARERE) and local NGOs. The sec-ond phase started with the creation of the Technical Co-operation Office in Cambodia, andended in 1999 with the bilateral Co-operation Agreement and the start of the second phase ofsome of the main EC projects, like the Support Programme for Cambodia’s Agricultural Sector(PRASAC) aimed at supporting poverty reduction in rural areas. The�6XSSRUW�3URJUDPPH�IRU�&DPERGLD¶V�$JULFXOWXUDO�6HFWRU��35$6$&� is the most importantEC programme in Cambodia, which aims at strengthening the rural development sector. After afirst five-year phase (1994-99), the second phase (1999-2003) seeks to consolidate a compre-hensive integrated rural development programme for six Cambodian provinces. PRASAC fivemain goals are to improve (i) water supply for domestic use (ii) agricultural production (iii) ac-cess to rural credit (iv) development of the rural economy, and (v) capacity building in localgovernment. EC assistance to the Cambodian education sector�started in 1993 with the 6XSSRUW�3URJUDPPHIRU� %DVLF� (GXFDWLRQ� LQ�&DPERGLD� �3$6(&�� PASEC had two phases: the first from 1993 to1997 and the second from 1997 to 2001. PASEC was created to strengthen the capacity andskills of the education institutions at the provincial and district levels and to improve the qualityof basic education. In order to improve the quality of the education system, the authorities pre-pared a provisional Education Strategy for 2001-2005, followed by another more detailed plan,entitled “Education Sector Support Programme for 2001-2005”. EC budget expenditures on health projects in Cambodia from September 1995 to January 2002stood at ¼��99. HIV/AIDS is a major concern in Cambodia along with other sexuallytransmitted diseases (STDs). In order to diminish this problem, the EU has created a &DUH�DQG3UHYHQWLRQ�RI�67'�SURJUDPPH��working with the Ministry of Public Health. Health expenditureper capita is low at only US$36 per year in 2000, of which 81 percent comes from the patient’spockets, and only 5 percent (US$ 2) from the government. The EC co-operation in Cambodia is funded mainly through the Technical and financial budgetline (59.36 per cent of the total), with special attention to the rehabilitation processes. There isno funding from the Economic co-operation budget line, while the importance of horizontalbudgetary line is significant (40 percent). The EC co-operation in Cambodia during the period1993-2000 has regarded seven different macro-sectors, but most of the programmes and projectsare focused in two sectors: social, including rural and local development with 46.03 per cent ofthe total; and humanitarian, including NGOs co-financing and other rehabilitation actions (39.28per cent of the total). Of the remaining 15 per cent nearly all is for supporting the Cambodiangovernment’s institutional strengthening as well as women in development, under the govern-ance macro-sector.


The relevance and impact of the EC Programmes in Cambodia are assessed as positive, with theprogrammes focusing on rehabilitation, poverty reduction and the creation of local capabilitiesand skills. PRASAC is seen as very beneficial for poverty reduction in the rural areas; it covers six prov-inces and, indirectly, some 60 per cent of the rural population with specific actions respondingto local needs. The programme has contributed to rural infrastructure but also to the reinforce-ment of people’s participation and knowledge of human rights issues. There is uncertainty aboutthe future government’s capacity to internalise the project activities and institutional framework.

99 For more information, see: European Commission (2000): “The European Union and The King-dom of Cambodia…”p.21.



A recent PASEC Evaluation Mission confirmed that PASEC was a successful project with aSRVLWLYH�LPSDFW in the basic education system of Cambodia100, though the short duration of theproject, compared to its ambitions, was criticised. The main outputs achieved were important:teacher training, institutional strengthening and introduction of a credit system for teachers.PASEC is seen to have had enough flexibility to adapt itself to the circumstances, to answer thereal needs and to strengthen the Ministry of Education’s capabilities and skills. Other significant EC programme areas are in the fields of humanitarian assistance as well as de-mining. Sustainability. The future strategy of PRASAC has to be adapted to enable integration with thestructure of the Ministry of Agriculture. The PRASAC structure is presently seen as tooautonomous – during 2002 many of the present 650 programme staff shall be integrated as staffof the Ministry. The extent of success in this regard will be indicative of the sustainability of theprogramme. PASEC has had a positive effect in the education system, but the needs are still enormous, forexample, to build 5000 new schools and to create a National School for Teachers. There exists acertain degree of concern for a possible future deterioration of the education system, now thatPASEC is finished, given the weaknesses of the authorities to handle this project by themselves.Thus, doubts were expressed with respect to its future sustainability. It is considered that at the atime frame of five to ten years is needed in order to have any real sector development impactand to achieve integration of project interventions into the education system of Cambodia. In thepresent situation, opportunities exist for a long-term sector-wide approach in education in Cam-bodia, with the EC in a strong position to provide leadership for such a programme. The present challenge across the sectors of the EC programme is how to build on the existingresults in Cambodia and how to shift towards a long-term perspective to ensure a sustainabledevelopment process in the coming decades. New resources and approaches are needed par-ticularly in sectors, such as (i) education (ii) health (iii)good governance at the local level, and(iv) trade and private sector development. Sustainability can not be ensured because the political and administrative capabilities of thegovernment of Cambodia remain very weak. The forthcoming general elections of 2003 arevery crucial for the consolidation of the democratisation process of Cambodia, more so than thecommune elections of February 2002.

100 This opinion was repeatedly expressed by national authorities consulted during the field mission.



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This country case study has sampled the views of the actors involved in the European Commis-sion’s programmes with Thailand for (i) development and monitoring; (ii) execution and im-plementation, as well as (iii) representing beneficiary organisations.

After� the Asian Financial Crisis, a substantial trade deficit with Thailand emerged, whichreached ¼��ELOOLRQ�LQ��7KDL�H[SRUWV�WR�WKH�(8¶V�PDUNHWV�FRQWULEXWHG�FRQVLGHUDEO\�WR�VWa-bilizing the economy. EU-Thai trade has been increasing steadily with EU imports being con-centrated in agriculture, machinery and textile and clothing (62 per cent of total). After Japanand the US, the EU plays an increasingly significant role with regard to investments into Thai-land in recent years, although the global slowdown during 2000 and 2001 is reducing invest-ment applications drastically. The tapering off of FDI into the region and Thailand would repre-sent a great threat to national and regional development. Investment facilitation should remain avery major component of the co-operation, to be addressed with both aid and QRQ�DLG instru-ments.


During the period 1993-2000 a total of ¼� �� PLOOLRQ� ZDV� FRPPLWWHG� RQ� D� ELODWHUDO� basisthrough 50 programmes or projects. Furthermore, resources for EU-Thailand co-operation werecommitted through sub-regional as well as inter-regional programmes and projects. EU-ASEANprojects during the same period committed an amount of ¼��PLOOLRQ��DFWLRQV��ZKHUHDVprojects under several umbrellas with an Asia-wide focus committed further resources. A pre-liminary assessment of the activities with an ASEAN-wide coverage indicates that a substantialnumber of these had involved activities and project components within Thailand, for example,the EU-ASEAN Junior Manager Programme, the postgraduate technological studies programmewith the Bangkok-based Asian Institute of Technology, etc.

The EC co-operation with Thailandduring the period 1993-2000 was ap-propriated from ten different budgetlines with the lion share (65 per cent)of the total commitments financedfrom the horizontal budget lines andonly 24.7 per cent from the Technicaland financial budget line and 12.9 percent from the Economic co-operationbudget line. However, nearly all of theEC-ASEAN inter-regional co-operation is also financed from the

Economic co-operation budget line. The amounts appropriated from the budget lines for ‘refu-gees’ and ‘uprooted peoples’ are very considerable, not only in relation to the total programme

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(in total 22.5 per cent of the total bilateral commitments) but also when compared with othercountries in Asia101.

Four PDFUR�VHFWRUV utilise nearly equal shares of the overall programme (Figure 6.3), with thehumanitarian sector being the largest (29.7 per cent), followed by the social sector with 25.0 percent, the economic one in the third place (24.3 per cent) and the natural resources and environ-ment utilising just below 20 per cent. Main features are that:

R� humanitarian (H) assistance focuses on the politically sensitive issue of Myan-mar/Burma refugees on the Thai-Burma border;

R� the social sector (S) comprisse different components, including health sector reformaiming to improve the quality and accessibility of primary health care;

R� economic co-operation (E) includes a wide range of small projects such as technologyworkshops, commercial information, urban planning, with a focus on trade facilitationas well as research and development; and

R� natural resource management (N) involves the rehabilitation of coastal habitats and in-terventions to shore up agricultural productivity, mainly in the poorest northeasternprovinces.


Bi-lateral programme

The bi-lateral EC-Thai programme is perceived as relevant since it addresses relevant needs ofThai society, but its internal coherence is limited because the programme consists mainly ofcomparatively small and not co-ordinated projects, implemented in an DG�KRF fashion. Given thelimited size of the EC bilateral programme, a limited impact may be expected, though muchmore is demanded by interlocutors from the Thai government as well as from beneficiary or-ganisations.

The reasons for a weak impact are to be found in the dispersion of the co-operation resourcesand instruments, which reduces the coherence and the internal co-ordination of the programmeas a whole. Allocating the comparatively small programme across four macro-sectors limits re-sources and impact, therewith also reducing the relevance. The weak internal coherence of theThai programme is also partly a consequence of the comparatively large share of the resourcescoming from the horizontal budget lines designated for highly specific types of interventions.

Last but not least, the impact is also perceived as weak because of a lack of efficiency in projectcycle management, in particular the long time lag between project identification and the signa-ture of the financial memorandum102.

Sustainability. The sustainability of the bilateral Thai programme as a whole should be rated aslow, although the different macro-sectors would need to be looked at within their specific con-texts. A ‘narrow’ criterion for sustainability is that the externally funded project interventionslead to their integration into national structures with domestic public or private finance. A clear-cut example is the EC support for the European Studies programme, which has led to self-sustaining programmes funded by the RTG’s Ministry of University Affairs.

101 For example, in Cambodia this is the 15.11 percent of the total budget lines and in India it is only0.03 per cent.102 A MOAC workshop in 1995 had already identified that the average time requirement for identi-fication was 22 months, followed by yet a further 14 months to proceed from formulation to a financialmemorandum. The average lag for the fielding of the technical assistance was a further 19 months – im-plying that to move from the project idea to the project reality, the time required was on average as longas 55 months or four-and-a-half-year. In many cases, the elapsed time had meant that the circumstanceshad changed, requiring changes in the work plan, the financial agreement, etc.



However, for humanitarian assistance–which by definition is never self-financing–the appropri-ate criteria may be to what extent institutional capability is being created in order to bring to-gether and bundle skills and capabilities. One positive example of this approach has been theKaren Refugee Committee (KRC) formed to address issues of both ownership andsustainability.

Regional Programmes

With respect to relevance and coherence, the regional programmes address the concerns of bothThai and EU actors directly facilitating trade and investment, as well as addressing issues oftechnological co-operation and development. The regional programmes, with a strong focus oneconomic co-operation, seem well matched to the objectives of the regional emerging econo-mies, which are shifting from industrial growth to the provision of post-industrial trade in serv-ices.

The sustainability of the regional programmes is more difficult to realise than in the case of thebilateral programmes, because the ‘narrow’ criteria of integration into national structures cannotreadily apply. In the presence of weakly integrated national structures without regional budgets,the likelihood of public or private funding for sub-regional projects from regional resources re-mains very low.



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Brazil is the largest country of South America with a total population of 168 million and repre-sents over the half of the region’s GDP and is the ninth largest world economy. Nevertheless,Brazilian economy is still characterised by a productive sector dominated by a limited numberof competitive enterprises and a small size enterprise sector still highly fragile and inwardslooking. Brazil still has areas of high poverty and one of the biggest income distribution ine-qualities in the world. A recent document by the World Bank103 indicates that 26 percent of Bra-zilian, nearly 35 millions of people, leave with less than 1 USD per day. This is combined withthe wealthiest quintile of the population holding the 67 percent of the national wealth, while thepoorest quintile only the 2.1 percent.

Brazil is the number one trade partnerfor the EU in Latin America and ranksamong the EU’s top 15 trade partners atthe world level. The EU is the first tradepartner for Brazil--even before Merco-sur. The strategic importance of thecountry for the EU within the Latin-American region is reflected in a bilat-eral agreement adopted in 1995, towhich a new dimension was added bythe regional agreement with Mercosur ofDecember 99 that sets the basis for the

negotiation of a free-trade area between the two regions to be completed by 2005. However, theimportance of the existing relation with the country, contrasts with the structure of the aid pro-gramme and with its limited political visibility.

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The total bilateral commitments for the period 93-2000 are ¼��PLOOLRQ��$Q�DGGLWLRQDO�¼��PLl-lion can be added to take into account the participation in horizontal programmes104 (Al-invest,ALFA and Urb-AL). Therefore the average yearly allocation was about ¼��PLOOLRQ��ZKLFK� LVabout 76 percent of what the EC yearly committed in Nicaragua.

103 $WWDFNLQJ�%UD]LO¶V�3RYHUW\��$�3RYHUW\�5HSRUW�ZLWK�D�)RFXV�RQ�8UEDQ�3RYHUW\�5HGXFWLRQ�3ROLFLHV,WB, March 2001104 Total commitments for the three programmes over the period considered was 223 million euro.In the case of Al-invest, the amount of subventions signed with Brazil between 96 and 2001 is 1.9 millioneuro. This would correspond to about ¼300.000 per year leading to an estimated amount of ¼2.5 millionfor the period 93-2000, which represents about the 2.6 percent of total AL Invest funds. This percentagehas been used as proxy also for estimating the funds going to Brazil from the other horizontal pro-grammes ( Urb-AL and ALFA).

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The main feature of EC co-operation in Brazil is that 83 percent of total commitments camefrom horizontal budgetary lines not covered by the ALA regulation. The first source of financ-ing is the budgetary line B7-6000 (NGO co-financing) which accounted for ¼��PLOOLRQ��L�H�the 40.3 percent). With an average size of ¼��WKH��KXQGUHG�1*2�SURMHFWV�ZHUH�FRn-centrated (71.3 percent) in the poorest region of the countries, and covered mostly the areas ofeducation and professional training, rural development and poverty alleviation and human rightsissues. The second most important budgetary line is the tropical forest (i.e. 30.47 percent),which has been largely used to finance the Pilot Programme for the conservation of the Brazil-ian tropical forest (PPG7). This is a quite unique initiative where the EC represents one of themain donors and which finances different kinds of initiatives in the framework of a global ap-proach to the rain forest conservation problem.

T&F co-operation amounted to a total of ¼��PLOOLRQ�WDUJHWLQJ�LVVXHV�UHODWHG�WR�XUEDQ�SRYHUW\�disadvantaged groups and in the most recent years to public administration reform and promo-tion of human rights. Economic co-operation received only ¼��PLOOLRQ�DW�EL�ODWHUDO�OHYHO��7KHmajority of the initiatives financed by this budgetary line came from horizontal programmes(ALFA, Urb-AL and AL- Invest). In terms of total commitments, the social sector and the envi-ronmental sector are the most important ones, with ¼��PLOOLRQ105 and ¼��PLOOLRQ�UHVSHc-tively. They are followed by the economy sector with about ¼��PLOOLRQ106 and governance withabout ¼��PLOOLRQ107.


The relevance, coherence, co-ordination and effectiveness of the aid programme are evaluatedin this section. The strategy implicit in the framework agreements and strategy documents isglobal but very ambitious, considering the financial means available and the related implemen-tation mechanisms. The extensive use of demand driven projects and programmes and the re-duced scope of the programming exercise make the strategic objectives difficult to achieve.Furthermore, the instruments and implementation modalities are the same as for all other LatinAmerican countries, neglecting the quite significant specificity of Brazil, which would require amore tailored approach.fIn the social development and good governance sectors an important factor of dispersion is rep-resented by the use of NGOs as the main instrument/agent for co-operation aid. Their contribu-tion, though is in areas not overlapping with the T&F co-operation projects, occurs outside theagreed strategic framework and their strategic relevance is questionable as they operate in areaswhere more structural or sector approaches are necessary to obtain sustainable results.

On the other side, within the programmable aid, the recent commitments in the public admini-stration reform are seen as particularly relevant to foster a strategic partnership between EC andthe Brazil federation, especially considering the EC experience in inter- and intra-state cohesionpolicies, harmonisation, subsidiarity, fiscal harmonisation, regional integration. In the field ofenvironment and tropical forest, the link between the strategy and the operational practice ap-pears more coherent. The contribution to a strong partnership could be further enhanced by in-clusion of additional financial instruments such as EIB loans.

The use of the budgetary lines foreseen by regulation 443/92 appears as having been dictatedmore by the availability of funds rather than by a strategic analysis. This and the fact that thehorizontal budgetary lines and horizontal programmes are under the responsibility of different

105 This includes also 74 percent of NGOs funded projects and 2.6 percent of the total budget allo-cated to ALFA106 This includes Economic co-operation, ECIP and 2.6 percent of the total budget allocated to AL-Invest107 This includes also 26 percent of NGOs funded projects and 2.6 percent of the total budget allo-cated to Urb-AL



services at the headquarter offices in Brussels, affects the overall internal coherence and co-ordination. In the case of NGOs the high number of projects compared to the Delegation staffreduced the effectiveness of co-ordination and monitoring and this could be further worsened bythe introduction in 2001 of a global call of proposals. In the case of Economic co-operation,given the predominance of the decentralised or horizontal programmes directly managed fromBrussels, the coordinating-facilitating role of the Delegation was limited.

The limited funds available, the size of the country’s problems and its economic resources affectfrom the beginning the potential impact and the political visibility of the EC co-operation.Therefore, it is clear that the aid programme may have an impact and produce sustainable resultsonly where there are already favourable conditions, or when it can act as leverage, or the EC canaccount on a specific value added.

The best results so far achieved have been: (a) in locally defined projects (such as the pro-grammes in support of disadvantaged people in major urban areas); (b) when a project was im-plemented as a pilot initiative with a counterpart which could play as multiplicative factor; or(c) when the value added of the aid provided was higher compared to other donors or experienceavailable locally. This is the case of training in regional integration and fiscal harmonisation(ESAF) where the EC direct experience is considered highly relevant for Brazil, or in the caseof a programme like AL-Invest.

The value added of AL-Invest is recognised not so much in the engendered volume of invest-ments, which is quite difficult to estimate, but in offering local enterprises the opportunity ofbusiness meetings and improved information on external markets and practises, while ensuringa powerful international network and a source of learning-by-doing-together to institutions of-fering internationalisation services to enterprises. However, as for the other horizontal pro-grammes, the current participation mechanisms based on a bottom up approach do not favourthe involvement of the least progressed organisations/enterprises, thus increasing instead of re-ducing the development gap. The limited role of the Delegation and the fact that the pro-grammes are centrally controlled in Brussels, affect the sense of ownership and the considera-tion of the country specificities. Furthermore, these programmes represent only a first step to-wards an effective structural change leading to long term impact. More focused measures arenot foreseen, thus limiting the sustainability and replicability of the results.

The situation of the NGOs co-financed projects is similar. In spite of their important role inpoverty alleviation and human rights, their impact is more at an individual level and often notsustainable in the long term. In all cases, the complex aid management procedures and theweaknesses of current project design process have been indicated as sources of serious risk forany impact and sustainable results.



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Nicaragua is one of the poorest countries of Latin America with almost 48 percent of the popu-lation falling below the poverty line and with a fertility rate that is twice the average of the re-gion. Its economy is based on export of agricultural commodities, and the country is thereforevery sensitive to the international commodity prices fluctuations. Nicaragua is still highly de-

pendent on foreign aid--in 1999 the 31.4 percent ofGDP. Among the donors, the EC is one of the top ten(7th). In December 2000, Nicaragua became eligiblefor the HIPC initiative, which will reduce its currentdebt by around 70 percent. In July 2001 the govern-ment published the "6WUHQJWKHQHG� JURZWK� DQG� SRY�HUW\� UHGXFWLRQ� VWUDWHJ\" (ERCERP) based of fourpillars: a) Economic growth and structural reform,mainly based on agricultural and rural development;b) investment in social services, focused on healthand education; c) protection of disadvantaged groupsthrough a major access to public services enhancedwith a decentralisation process at local level; and d)good governance and institutional strengthening.However, for many donors and the civil society thisdocument is still to be considered as a draft strategy.

Nicaragua’s main trading partners are North Americaand the Central American Common Market. The EU is third, and the long-term trend inEurope’s commercial presence is downwards108. The importance of the EC in Nicaragua is moreof a political nature and is historically linked to the EU contribution to the peace process in theframework of the San José Dialogue. Nicaragua benefits from the GSP including the anti-drugclause, which has been recently extended until December 2004. In March 2001 the EC signed a0HPRUDQGXP�RI�8QGHUVWDQGLQJ with the government, indicating the total amount of aid fore-seen for the period 2000-06, for the bi-lateral T&F and Economic co-operation. For the nationalgovernment the Memorandum represents an important contribution to predictability of externalaid and to better efforts at co-ordinating external assistance. A Country Strategy Paper (CSP)has been also produced, according to the new EC programming guidelines of September 2001.The existence of the Memorandum and of the CSP, both covering the same period (2000-2006),may create ambiguity over which is the document of reference, especially because the Memo-randum is a shared document, which is not the case for the CSP.

108 Source: Country Strategy, DG RELEX, Draft December 2001

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Nicaragua is the number one EC aid recipient in Latin America. For the period considered (93-2000), it received in total ¼��PLOOLRQ��LQFOXGLQJ�7)�FR�RSHUDWLRQ�DQG�WKH�KRUL]RQWDO�EXGJHt-ary lines, which is about ¼��PLOOLRQ�SHU�\HDU�

Bilateral co-operation with Nicaragua only entails development co-operation and humanitarianaid. The main feature of EC aid in Nicaragua is the multiplicity of the intervening budgetarylines (11 different budgetary lines) and of implementation mechanisms and approaches whilethe beneficiary target group is relatively stable and small. T&F budgetary line is the most im-portant one, totalling ¼��PLOOLRQ�RI�FRPPLWPHQWV��EXW�UHSUHVHQWLQJ�RQO\��SHUFHQW�RI�WKHtotal funds received by the country. T&F co-operation focused on the social sector and democ-racy coherently with the main objective of EC aid in the country in the nineties, which was toconsolidate the results of the peace process and to support the poorest population. The secondmost important source of funds is represented by food aid (¼��PLOOLRQ��6LQFH��WKH�EXONof food aid is provided in terms of budgetary support and through projects implemented byNGOs based on call for proposals and a national food security strategy. The programme is ad-ministered by a local technical Unit (UESA: Unidad Estratégica de Seguridad Alimentaria).Refugees�(uprooted people) represent the third budgetary line in term of commitments (¼��millions) and was mostly used in the first period of the nineties. NGO co-financing budgetaryline is the fourth one with total of ¼��PLOOLRQV��7KHVH�SURMHFWV��LQ�WRWDO��ZLWK�DQ�DYHUDJHbudget of ¼��FRYHU�SULPDULO\�DUHDV�VXFK�DV�ORFDO�GHYHORSPHQW�DQG�FDSDFLW\�VWUHQJWKHn-ing; rural development and productive sector, health, water and environment. Participation inhorizontal programmes (ALFA, Urb-AL and AL-Invest) was minimal.


In terms of targeted sectors, EC aid was relevant for Nicaragua in early nineties as it supportedthe peace process and avoided and contained tensions in extremely poor areas that could havedestabilised the just created democracy. However, the aid strategy presents several weaknesses.First, aid was poured into the country through different instruments regardless of the existenceor satisfaction of pre-conditions, such as existence of sectoral policies, or ability to sustain theaid results, and the effective absorption capacity. Secondly, the different instruments coveredthe same sectors and the same target groups of beneficiaries. This affected the overall EC inter-nal coherence –high potential for overlapping, duplication and the sometime use of contradic-tory approaches– and contributed to create an excess of aid offerings with negative effects onthe local institution strengthening process. Thirdly, the strategy shows a very limited capacity ofevolving from one of a short-term post-war scenario to another based on a long-term sustainabledevelopment perspective. The recent move towards projects in support to public administrationdevelopment and local institutions strengthening, in fact are still strongly focused on buildinginfrastructures with little institutional strengthening and development content109. The fact that inthe nineties there was no Economic co-operation within the bi-lateral programme indicates alsoan underestimation of the link between private sector development, trade and poverty reductionin a sustainable development perspective.

The fact that the Delegation was set up only recently and had limited technical staff availablereduced its capacity of monitoring, coordinating and participating in the discussion with thegovernment and the other donors over future development policy, despite the EC’s importantrank among donors. The extensive use of EU NGOs and the fact that decision were taken morein Brussels than locally limited the sense of ownership of the programme and the dialogue withthe local civil society and the other local respondent.

The EC is recognised as having had an important role in the consolidation of the peace processin early nineties. Despite this and the significant budget allocated to the country, the EC is not

109 This was also the conclusions of the Public Expenditure Review



playing a leading role within the donor community. Outside the institutions directly involved inthe EC projects, the knowledge of the EC’s projects in Nicaragua is minimal. Foreign aid inNicaragua, is generally considered not having achieved significant results in the nineties, espe-cially in terms of sustainability. This applies also to EC aid.

The preference for the “project” approach, though often dictated by the lack of a strong institu-tional framework, has emphasised the small/local dimension of the interventions, resulting insolutions not supported by sector policies or in a limited institutional strengthening not suffi-cient to produce a change and to consolidate it. In the case of rural development projects the“integrated” approach showed to be very complex and difficult to manage: too many differentset of activities and sub-objectives; a time frame not corresponding to the difficulty of the taskand to the concept of development as a long term process.

The horizontal programmes (ALFA, AL-Invest and Urb-AL) had limited or zero impact inNicaragua as they require skills and a level of development in local organisations that are notyet present in the country. The programmes capacity to contribute to the creation of such condi-tions is in doubt.

The EC has a good opportunity to play a more incisive role within the donor communitythrough the food security programme, which combines different instruments around a coherentnational strategy agreed upon with the government (FOXVWHU�SURJUDPPH). Though progress hasbeen slow and there have been setbacks, food security represents the first attempt to apply asector-wide approach in Nicaragua, based on a dialogue with the government, an informationmanagement system and an agreed set of indicators for performance monitoring. In a momentwhen these issues are discussion topics among the donors and within the government with aview towards improving the effectiveness of international aid within the implementation of theagreed strategy for poverty reduction (ECERP), the EC experience appears particularly relevantand with a specific value added.



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Based on the findings of both the desk and the case studies, the key conclusions and recommen-dations of this evaluation are summarised below.

The conclusions and recommendations refer to the whole regulatory matter of ALA co-operation, and aim at identifying the gaps and weaknesses that should be addressed within theregulatory framework of ALA co-operation.

Those issues which should be addressed in the new ALA regulation and those which should beaddressed through the improvement of other regulatory instruments, such as aid policies and aidmanagement, are also identified and specific recommendations are made.

The conclusions and recommendations below are organised in two main blocks:

1. conclusions and recommendations for consideration in the new regulation; and2. conclusions and recommendations to enhance the ongoing reform of aid management

and external co-operation, particularly in the ALA regions.

Block 1 contains only one main issue,R� Keeping the regulation as a simple legal document, with the inclusion of some basic princi-

ples.

Block 2, contains the following set of main issues:R� Improving planning and co-ordination;R� Improving aid management through diversifying and adapting tools, criteria and ap-

proaches;R� Improving the horizontal programmes and networking approach;R� Improving sectoral policy management;R� Improving aid management efficiency and accountability; andR� Other specific issues raised at the country level.


DRN Evaluation of ALA regulation 443/92 – Final Report page 67 PAGE

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1.1

Regulation 443/92 included both strategic and legalissues. As a strategy document, though relativelydetailed, it soon became insufficient, since a fewyears later (Asia 1994, and Latin America 1995)more comprehensive strategies were adopted by theEU and then updated several times.

The new regulation should not include any important strategic or methodological statement, since the EU inthe last decade has started adopting comprehensive and continuously updated documents on its regional strate-gies, and more recently on the aid policies and management. The existence of such documents allows theregulation to emphasise its legal dimension, including clear references to existing and future strategic andmanagement documents.

1.2

On the other hand the regulation did not stresssome important principles related to the coherenceand other basic criteria to which the use of ALA re-sources should conform. Weak compliance withsuch criteria may jeopardise proper usage of the co-operation funds.

Among the important references the new regulation has to include, some principles should be clearly stated, inthe preamble110:R� strategy and policy coherence. The resources allocated should be employed according to the strategies, the

aid policies, and the planning procedures established and periodically updated by the EC;R� effectiveness. Their use should be subject to constant monitoring of actual results;R� accountability. Exhaustive, continuous and specialised information about the programmes and their results

should be disseminated for consideration by the EU member states and the relevant institutions of the re-cipient countries and sub-regions;

R� efficiency. There is a need to increase the efficiency of the resources employed, reducing wastes, delays,and overlapping of functions, ensuring the respect of a principle of subsidiarity, with full responsibilitygoing to the EC field representatives in instances in which they are nearer to the beneficiaries (decentrali-sation);

R� co-ordination of the instruments. There is a need to avoid the overlapping and dispersion of resources,which could result from a possible lack of co-ordination between the ALA and horizontal budget lines. Asfar as it is within the responsibility of the DG Relex, there should be a decision to include under the newALA regulation as many of the existing budget lines as operate in the ALA regions. With respect to theothers, the statement should take the form of a principle, stressing the need for a common reference to theCSP.

110 The Regulations normally include a preamble, such as “Having regard to…. whereas:…….”. See the box at the end of this chapter.



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2.1.1

Planning over a long-term perspective may be difficult.The funds allocation criteria are not evident. Though theplanning procedure includes medium and short-term ho-rizons (CSP, IP, and AP), the actual allocation of funds isstill done each year, according to the EC budgetary pro-cedure.

The allocation mechanism should ensure a minimum of predictability for longer term planning,including the main budget lines as well as those, which are planned at the horizontal level. In theEC’s aid policies the allocation criteria should be spelled out. As far as the amounts to be allo-cated are concerned, not only the levels and indicators but also the size of the developmentproblems, absorption capacity and the commitment of the recipient governments should be con-sidered (e.g., the number of poor, and not only the GDP per capita).

2.1.2

The EC’s co-operation programme at the country andsub-regional level, includes two components:R� the ALA component (T&F and Economic Bgl),

which is programmed through the established plan-ning procedure; and

R� the horizontal budget line, most of which are plannedworld-wide or are completely demand-driven, withvery poor links with the country and sub-regionalplanning procedures.

When the horizontal budgetary lines represent a largeshare of the co-operation programme, like in Brazil, thereis a great risk of incoherence and inefficiencies. TheALA programmes remain marginalised and weak, whilethe horizontal budgetary lines are often dispersed and notsuitable for building long-term partnership relations.

The co-ordination capacity of the CSP towards the multitude of the budgetary lines and the enti-tlement of the Delegation and DG Relex to adopt a final decision on the country relevance ofany EC funded programme should be ensured.For some budget lines, it is possible to make a country allocation to include in the CSP. For all,the relevant Delegation and the DG Relex should express their priorities, before project selec-tion, and their agreements on the projects, which are selected.This could be done by foreseeing that projects are funded by horizontal budgetary lines withincluster programmes included in the IP, or to carry out specific initiatives foreseen by the IP,where their approach is considered the most appropriate. In any case, it is necessary to ensurethat the results from demand-driven projects are translated into policy initiatives to increase thesustainability of results and the potential impact.



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2.2.1

Under the 443/92 regulation budgetary support is not con-sidered, thus hampering the use of one of the most importantmeans of building co-operation on a sound base of policydialogue and donors’ co-ordination

Budgetary support should be specifically foreseen and its use encouraged, for the macro- and secto-ral impact it can ensure:R� in small countries with poor budgetary resources like Cambodia, macro-economic stabilisation

with focus on key sectoral reforms could be pursued;R� in larger countries, such as India (where it actually takes place) or Brazil, sector-wide ap-

proaches with other donors should be sought; andR� strategic performance indicators and appropriate accompanying measures to be adequately

monitored, should be included.

2.2.2

The selection of the programme types and approaches is stillleft to the practical experience and capacity of individuals.Many international co-operation agencies have definedguidelines for the selection of diversified approaches ac-cording to the country and sub-regional specific conditions.The sector-wide approach as a means to optimise the scarceresources and enhance partnership relationships is not wellknown in the EC. Sometimes horizontal (local) integrationis seen as the opposite of SWAp, when it should be a neces-sary complement to building successful sector reform sto-ries. Consultative processes for planning and monitoring areconsidered too difficult especially in the large countries.

Aid management approaches and guidelines should be outlined and continuously updated, to in-crease the coherence of the country level programmes and maximise their impact, e.g.:R� the need to concentrate on a number of key sector/areas to foster the impact of limited re-

sources;R� the preference for sector wide approaches, wherever possible;R� the need to integrate sector approaches with horizontal support to governance, institution

building and strengthening of the civil society; andR� the need to undertake large consultative processes to support CSP and programme design and

monitoring.

2.2.3

In the CSP process, a key weakness is due to the fact thatthe CSP should consider all the aspects of the EC co-operation strategies, while presently it focuses on planningthe allocation of aid. For such a reason all the non-aid in-struments –such as trade and other agreements, security andother regulatory negotiations, that should ensure a widepolicy mix in the CSP– are overlooked.

The CSP process should gradually acquire more autonomy vis à vis aid management and allocation,to become a global strategic exercise to found the mix of EC Relex policies.

2.2.4 With respect to the allocation of aid, in practice, a sectoralSectoral priority criteria. No distinction should be made among the different budget lines, but some



and/or thematic prioritisation exists, but its criteria are notspelled out and may cause confusion if not mistakes. Regu-lation 443/92 stressed the difference between T&F and Eco-nomic co-operation. Though it has played an important rolein the past, such a distinction should be reconsidered. Ac-cording to various interviews, the definition of PXWXDO�LQWHU�HVW, to identify the Economic co-operation, may seem eitherobvious (any kind of co-operation should be based on mu-tual interests), or ambiguous (for example using co-operation as a sort of 7URMDQ�KRUVH).

essential criteria for the prioritisation of grant-based aid allocation by sector and combination ofdifferent objectives as set out by the existing multi-faceted strategies should be spelled out in theaid management policy of the EC:R� focus on poverty reduction and good governance, as the areas in which grant-based aid is more

effective;R� importance of actions aimed at enhancing trade, including grant-based and non-grant policy in-

struments (agreements and treaties, etc.);R� importance of actions aimed at the establishment of competition policies;R� promotion of inter-institutional partnership and twinning, through the use of existing facilities.

2.2.5

The relation between poverty reduction and other strategicgoals, such as security, democracy, industrial co-operation,etc. is not clear where financial aid allocation is concerned.Can grant-based aid be equally appropriate in all thesefields? If not, what are the criteria for prioritizing?

In a few cases there are industrial co-operation projects,which do not seem appropriate for ALA funding.

Grant-based aid and catalyst initiatives.

Saying that ALA financial resources should be used only in a framework of poverty reductionwould be reductive and could seriously hamper the global EC role in the two regions. Indeed, ECRelex only has the ALA funds to act in response to the complex strategic tasks set out by the Coun-cil.

On the other hand, according to the UN and OECD guidelines and principles for the use of theODA, it should be stressed that the bulk of the JUDQW�EDVHG�aid should be used to secure resourcesfor the poor, as well as to support the advocacy of groups with limited access to the decision mak-ing processes (e.g. the women). By its very nature, a grant should be used where there is little pos-sibility that significant private or public resources would otherwise be allocated.

In the EC strategies, however, there are goals that –though related to poverty reduction– are not es-sential components of a poverty reduction strategy. These are: industrial co-operation, scientific ex-changes, inter-institutional partnerships, reciprocal understanding, etc. To approach such goals, theEC must draw on the ALA funds. Such funds, however do not intend to UHSODFH the relevant privateor public financing, but to IDFLOLWDWH matching interests and scopes, and to launch new self-sustainedinitiatives.

2.2.6Often the lack of appropriate aid policies and managementis due to the limited skills and the reduced capacity of ana-lysing and learning from the lessons of experience.

Internal capacities for applied research on policies and programme impact should be created and/orstrengthened.



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2.3.1

The environment programmes overlook the new dimensionof urban pollution, which is strictly interlinked with the ur-ban poverty issue.

Increasing the scope and the instruments for co-operation in the field of environment. In increas-ingly developed and urbanised economies, the EC commitment to environmental protection shouldgo beyond concern for the preservation of the rain forests or ensuring a better link between naturalresources management and natural catastrophes prevention. It should include urban pollution andurban planning, with a strong focus on urban poverty. Given the limited resources, this could bedone by facilitating the participation of the EIB in financing projects in the main urban areas,through providing funds for pre-feasibility studies (as for example the Bangkok facility under TA-CIS) or for reduction of interest rates (as in EDF or MEDA programmes).

2.3.2

Lack of specific skills in the EC and the Delegations jeop-ardise the EC’s leading role in the conception and monitor-ing of sector development programmes in education, healthand other complex sectors.

Education, health and other sector development programmes, which absorb a substantial part of theALA resources would need more qualified internal support in the relevant Delegations and theheadquarters to enhance EC participation.

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2.4.1

The horizontal programmes work better in Latin Americathan in Asia, and perform better in countries where a dy-namic and strong private sector exists, which has a clear in-terest in the establishment of business relationships with EUenterprises. A standard formula, without a clear focus on thespecific contexts does not seem to work.

Horizontal programmes should be country-relevant. The bottom up approach is not sufficient toensure ownership. This could be guaranteed by strengthening the Delegation’s involvement in hori-zontal programmes, and/or by creating national focal points for horizontal programmes with thefunction of networking, matching, facilitating, providing information and promoting more fair par-ticipation for all potential beneficiaries.

The potential of ALFA should be better exploited to consolidate the cultural, political and eco-nomic links between Europe and Latin America. The programme at the moment does not havevalue added compared to other bi-lateral exchange programmes. Including provision for curriculadevelopment/restructuring in key areas relevant to the EU and each LA country, and foreseeingmobility of students and professors in both directions, it would increase its capacity to strengthenthe links between the two regions and to promote structural changes within higher education.



2.4.2

In the horizontal programmes, networking at the intra-regional and inter-regional level is overlooked and is noteven mentioned in most programmes. Indeed such an ap-proach is not really known and is not widespread in eitherthe horizontal, or in the sub-regional programmes.

Networking should be the main output as well as the working method of the horizontal pro-grammes. Establishing intra-regional and inter-regional networks of private and/or public actorsshould enhance the learning process among the beneficiaries and facilitate the development of self-sustained initiatives. Networking is a key instrument in strengthening the impact and visibility (i.e.the influence) of the limited ALA resources.

Networking among sectoral or sub-sectoral stakeholders is a way to enable substantial participation.Networking with European institutions and economic operators at different levels of civil societyand public administration is also a way to promote EU values and heighten awareness of Europe. Inparticular, the current programmes of decentralised co-operation could be enriched by new formsand/or components promoting and facilitating institutional exchanges.

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2.5.1

One of the most pervasive limiting factors of ALA co-operation, which hampers its overall performance is thecumbersome decision making and management process, thatcontributes to enormous delays, rigidities and wastes of hu-man resources.

Decentralisation and simplification of the management process, to:R� speed up the project instruction phase and increase beneficiary participation, by the introduc-

tion of easily accessible small projects to start up and test immediate actions, and associatebeneficiaries in project preparation;

R� increase the flexibility of the financial agreements, to avoid rigid planning and allow periodicalworking programmes to update priorities, plans and inputs;

R� allow the Delegations quick access to local resources (NGOs, Consultants), and/or locallyknown expertises (Consultants), through ad hoc facilities.

2.5.2

Monitoring is still focused on administrative matters and thecompliance of the projects with reporting and other pre-defined deliveries. Such monitoring is not able to enhanceprogrammes’ policy driving.

Strengthening strategic and performance monitoring capacities and systems. Responsibility formonitoring should be primarily at the country level as part of the effort to increase coherence andco-ordination among the different actions and to promote transparency and easy access to informa-tion. It should be stressed:R� that all the projects should make reference/be based on a set of indicators coherent with those

fixed at the national level by sector policies;R� that for all the projects the progress evaluated based on such a set of indicators and the quality

of the results (not the compliance of the activities) should be monitored; andR� when support takes the form of a sector programme, indicators could be used to monitor per-

formance both of the government in complying with policy commitments and the programmes



2.5.3

Even in the countries benefiting from substantial EC finan-cial flows, the awareness of EC priorities and actions is lowcompared to awareness of other big co-operation agencies.

More awareness of the EC’s programme. The importance of information to the general public to in-crease transparency and accountability of the processes, should be stressed. A number of publica-tions in the EU and in the recipient countries should be made available, not to enhance popularvisibility, but to inform people who are interested about the ends, the financing volumes, and theoperations of the EC. The following are suggested:R� An Annual report on EC co-operation by country with an indication of total commitments and

expenditure for the programming period and new commitments, title of projects and beneficiaryinstitutions and counterpart, name of the principal responsible people and their position in theproject, name of contractors;

R� Indicative programmes by country and region; andR� Best practices publications.

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2.6.1

Especially in Asia, among the EC co-operation stakeholders,there is the widespread idea that the funds allocated are dis-proportionately limited, in comparison with (i) the needsand the importance of the EC trade and political relations;and (ii) the amounts allocated to other areas of the world.

In Latin America such an idea is also widely shared. Thereis also the awareness that a better allocation would helpeliminate some major unbalances.

In Asia, the size of the financial resources should be increased to reflect the increased ambitions ofthe EC goals and strategies.

In Latin America, before increasing the global resources, better allocation criteria should be set upand stronger co-ordination of the horizontal budgetary lines should be ensured. In small countrieswith low absorption capacity the global allocations should be reduced and better co-ordinated. Inlarger countries, with tremendous poverty problems the basic allocation should be increase and im-proved co-ordination of the horizontal budgetary line should be ensured to start a few significantinitiatives for sectoral reform.

2.6.2

Some Asian stakeholders have complained that the exis-tence of a unique regulation for Asia and Latin America, ac-cording to them, may weaken the consideration of the spe-cific regional problems and issues.

The “two regulations concern” would be absolutely justified if the new regulation had to includestrategic considerations, as was the case for 443/92. If –as recommended– the regulation has toprovide only a legal base, with references to the existing strategic document, then two regulationsare no longer justified.


DRN Evaluation of ALA regulation 443/92 – Final Report page 74PAGE

Suggestions for a possible inclusion of the relevant principles in the new Regulation

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community……..,

Having regard to the proposal from the Commission…….,

Having regard to the Opinion of the European Parliament…………

Whereas:……………………………………….

(n1) the overall objective of the Community co-operation with Asia and Latin America coun-tries and sub-regions is the establishment of sectoral and global partnerships to support theirsocial and democratic development, to expand and consolidate their trade relations with theEU, and to improve the political dialogue for security and peace (see CARDS regulationwhereas N. 3).

(n2) the co-operation programmes should be: strategically relevant, complying with the secto-ral and regional strategies established by the Community; and internally coherent, ensuring acommon framework and the necessary synergies for all the Community co-operation pro-grammes in each country/region. To ensure relevance and coherence, all the Community pro-grammes, with the exception of the emergency interventions, should fit in the established aidmanagement process, which foresees regional and country strategy papers, indicative multi-annual programmes and action plans (see MEDA regulation, whereas 5 to 8).

(n3) multi-annual programming will be put to the management committee set up by thisRegulation for an opinion. This will situate the assistance within a medium-term outlook andwill make it possible to ensure that it complements and remains consistent with that of theMember States (see CARDS regulation whereas 13).

(n4) a system of performance monitoring of the programmes should be established to improvetheir effectiveness. The co-operation programmes and their results should be disseminatedthrough a systematic and specialised information addressed to the co-operation actors in therecipient countries/regions and the EU member states.

(n5) it is necessary to streamline decision-making procedures in order to permit more efficientimplementation of Community assistance. In particular the decentralisation process should beboosted and the institutional and financial instruments to make it fully operational should beset up (see MEDA regulation whereas 5).

(n6) to improve both programming and implementation of Community assistance and to in-crease its impact, the Commission should adopt aid management guidelines (see CARDSregulation whereas 10), e.g. on the use of budgetary support, sector wide approach and othermodalities of intervention that fit particularly in the ALA co-operation context.

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