Verbatim report of proceedings

Tuesday, 14 February 2006 - Strasbourg

15. New financial instrument for development in connection with the Millenium Goals (debate)

  President. – The next item is the Commission statement on the new financial instrument for development in connection with the Millennium Goals.

  Charlie McCreevy, Member of the Commission. Mr President, the Commission was asked last week by the European Parliament to make a statement on innovative sources of financing for development cooperation. Commissioner Michel cannot be here tonight as he is travelling to eastern Africa to previous engagements which could not be rescheduled. He is extremely sorry not to be able to share with you the Commission’s views on this topic and has asked me to step in for him.

Aid needs to be substantially increased if the Millennium Development Goals are to be achieved. The European Union has not shied away from its responsibilities towards its partner countries. Quite the contrary: the European Council of June 2005 forcefully restated its support for the Millennium Development Goals with ambitious commitments on both the quality and the quantity of aid.

In particular, the European Council has committed itself to increasing official development assistance with the aim of achieving a target of 0.7% of gross national income in 2015. To that end, a collective target of 0.56% of GNI has been fixed for 2010.

However, more aid will not be enough. We need to ensure that current and promised increases in financing are provided in ways which actually help countries meet their commitments to achieve the Millennium Development Goals.

In the recently approved joint statement by the Council, the European Parliament and the Commission on the European consensus for development, the European Union commits itself to the more predictable and less volatile aid mechanisms. The Commission believes that innovative mechanisms for financing development have a useful role to play. For this reason during 2005, at the request of the Council, the Commission produced a series of staff working papers providing technical analysis of innovative sources of financing for development.

In addition, in April 2005, the Commission adopted a communication to the Council and the European Parliament, ‘Accelerating progress towards attaining the Millennium Development Goals – Financing for Development and Aid Effectiveness’. Amongst other things, this communication discussed innovative sources of financing and new delivery aid mechanisms and invited the Council to ‘agree to accelerate work on the most promising options for innovative additional sources of finance’. The Commission noted that any innovative sources of financing must be assessed in light of a number of criteria. For example: how much would each proposal raise? To what extent would the funds be additional to existing commitments? How stable and predictable would they be? What are the competitiveness and sectoral impacts? What would the launch and administration costs be? Which proposals can go forward fastest? Is universal support required or can proposals be implemented at regional – that is EU – level?

The Commission notes France’s readiness to start implementation of one of the proposals emerging from that debate, namely, the imposition of a solidarity contribution on all air tickets sold in France as of July 2006. This initiative may have a positive effect on other countries’ readiness to carry forward initiatives in the area of financing for development.

The Commission would also like to inform the European Parliament that, to support the debate and preserve the momentum on these issues, a technical workshop between the Commission and Member State representatives was held on 9 February 2006. The workshop touched upon the existing initiatives, as well as possible alternatives with respect to innovative financing. The Commission, however, also looked at ways in which existing aid arrangements could be modified and complemented so as to deliver resources in more predictable ways.

Finally, the Commission would like to note that, during the workshop, the French representatives gave an update on the high-level conference to be held in Paris on 28 February and 1 March. Representatives of the Commission will be present at that event.

  Tokia Saïfi, on behalf of the PPE-DE Group. – (FR) Mr President, Commissioner, the European Union must play a leading role in ensuring that the Millennium Development Goals are attained. Ever since the Monterrey Conference in 2002 and the United Nations Summit in September 2005, the international community has recognised the need to rise to the challenge of development by executing a common policy integrating the Millennium Goals. At a time when the gap between the North and the South is ever widening and when the growing prosperity of industrialised countries is plunging many countries of the South back into poverty, it is high time the involvement of the international community took the form of practical measures.

While the European Union is the main donor, it must do more today; it must work more effectively and it must move more swiftly. The European consensus on development and the new strategy for Africa are steps in the right direction, as was the recent announcement of the creation of a European fund to finance African projects, and I am delighted at these breakthroughs. Despite the increase in traditional public aid, the current figures show that the attainment of the Millennium Goals hinges on the adoption of mechanisms of complementary funding. On the initiative of several Member States, innovative and complementary financial instruments are being created. The European Union must work on implementing these instruments so as to produce stable and predictable resources needed to meet the unfulfilled requirements of developing countries, particularly in the health care sector. Several Member States already support these initiatives. Commissioner, you pointed out that some of these countries, including France, committed themselves to implementing international solidarity contributions, for example on flight tickets.

At the next ministerial conference, the Member States will strengthen the international consensus on the need to introduce innovative and practical sources of funding. This meeting must provide the opportunity to build on the momentum generated in New York during the last United Nations Summit.

  Glenys Kinnock, on behalf of the PSE Group. – Mr President, Commissioner, I would like to talk about the potential offered by the International Financing Facility proposed by the UK Chancellor Gordon Brown. The IFF leverages money from international capital markets by issuing bonds which can potentially raise USD 50 billion each year from 2005 to 2015.

The advantage of this, referring to some of the points you raised in your introduction, Commissioner, is that this money is frontloaded, it is long term, it is stable and it is predictable money. It raises one billion a year, which can be used to get children into school and to abolish the fees that jeopardise the education of millions of children in developing countries, especially little girls.

The IFF has already put in place a pilot scheme for immunisation, which is searching for vaccines for malaria and for HIV/AIDS – the scourge in Africa and many other parts of the world – for which there is no cure. The agreement is to provide a global advanced purchasing scheme to make sure that life-saving vaccines are commercially produced at affordable prices and that these are produced in ways of which we in this Parliament should all approve and which we should find essential at this time.

We acknowledge that meeting the Millennium Development Goals, which is part of the purpose of this debate, is difficult, but if we can put the money in place – predictable money – then we will get every child into school and we will prevent the needless deaths of 30 000 children every day. That is what we are talking about; that is about us trying to translate hope into reality.

When he heard about the IFF, Nelson Mandela said that it was an absolutely necessary and timely initiative that deserves an active response from the international community. I very much hope that the European Union will support this initiative firmly and in a very committed way.

  Fiona Hall, on behalf of the ALDE Group. – Mr President, my group welcomes this resolution. There is broad consensus that under-financing and under-investment, in Africa in particular, have played a significant part in holding developing countries back. Economists like the American Jeremy Sachs admit that development assistance to Africa to date has been peanuts when measured against the scale of infrastructure investment that is required.

The title of this resolution is somewhat restrictive and mentions a new financial instrument as if there were only one solution to the problem, but the text is fortunately much broader. The nub of the problem is that we have to find ways to finance development over and above the national commitment to 0.7%.

The resolution floats the idea of a solidarity contribution on air tickets, but that should not be the only avenue, and like Mrs Kinnock I should like to suggest other possibilities. Firstly, Member States can simply decide to accelerate the timetable for reaching the 0.7% GDP target and indeed go beyond it. In Britain the Liberal Democrats have pledged to reach the 0.7% by 2011, two years ahead of the deadline set by the present UK Government.

Secondly, there is a role for foreign direct investment. No country has ever been lifted out of poverty by aid alone and countries which have enjoyed the most spectacular rates of development, such as China, have enjoyed high levels of FDI. The problem is that when foreign investment is negotiated via bilateral investment treaties or as proposed by the WTO at Cancún, it can involve exploitation of the weaker partner and the waiving of environmental and social protection. What is needed is a new international investment agreement under the auspices of the UN Commission on Sustainable Development.

In conclusion, we should explore as many ways as possible for levering extra investment into development, but the methods we choose must have public support and they must never be covert.

  Caroline Lucas, on behalf of the Verts/ALE Group. – Mr President, I thank the Commissioner. One of the reasons why we are discussing this issue tonight is because there is an international conference in Paris at the end of this month, a key opportunity to make progress on the subject of innovative sources of finance for development. My group particularly welcomes the fact that this meeting looks set to agree an air ticket levy with proceeds going to benefit some of the world’s poorest people. Of course there are a range of other tools and instruments as well. Mrs Kinnock has already spoken very eloquently about the benefits of the IFF. However, I believe that the air ticket levy is also important because it marks a turning point in the quest for the introduction of global levies for the financing of global development needs. It deserves our full support. I would stress, however, that the new finances must be genuinely new: in other words, additional to, and not a substitute for, existing development budgets.

I am very glad that the Commission will be represented at the meeting in Paris, but I would like to know whether it has plans to encourage the other Member States to go, whether there will be a mechanism for feeding back to Parliament the results of the meeting in Paris, and whether there are plans to share the contents of the workshop that took place on 9 February between the Commission and the Council. I am sure that many of us would be very interested to know.

  Alessandro Battilocchio (NI). – (IT) Mr President, ladies and gentlemen, I am speaking on behalf of the new Italian Socialist Party and as a member of the Committee on Development.

The data and figures on poverty send this House a deafening appeal for help. Over a billion people in the world live in extreme poverty, surviving on less than a dollar a day. Millions of children still die each year through lack of appropriate health care, clean water, decent dwellings and adequate nutrition, while 20 000 people a day die of causes linked to a shortage of food.

In the current state of technological development and agricultural production, the fact that this situation persists is economically irrational, politically unacceptable and morally shameful. We are therefore eagerly and hopefully looking forward to the work of the forthcoming Paris conference, although we are well aware that not only are greater resources needed, but also other kinds of resources, which must be diverse, innovative and also, perhaps, predictable and stable.

The biggest scandal is not that there is still hunger in the world, but that it persists even though the international community has the means to eliminate it. The time really has come to turn words into action.

  Karin Scheele (PSE). – (DE) Mr President, the international debate on substantially increasing development aid from the leading industrialised nations had intensified – and that is a comforting situation – because it is highly likely that we will fail to reach the development goals set by the international community at the turn of the millennium.

There is international consensus that a significant increase in public development funding is needed if we are to achieve the Millennium Development Goals and thus halve poverty in the developing countries. In its 2004 report, the OECD development centre emphasises the importance of the speed with which the additional funds can be made available. Time, and the growing poverty in many developing countries, is therefore pressing. The European Parliament must use the decision to continue to exert pressure on the Member States to achieve the 0.7% threshold for funding provided for development cooperation and to press those Member States – including my own – that do not yet have a plan of how to achieve this by 2015 to draw up such a plan as soon as possible.

It is also important for us to emphasise that these innovative funding methods always involve additional resources. We must not find any forms of funding that are financed by commitments we have already made. It has already been mentioned that the international financial facility is a method of doubling the necessary development funding. However, I think it is a shame that the compromise on the table does not take into account other methods that will be required if we are going to provide enough money in the future. Perhaps we could improve it further tomorrow.

  Michel Rocard (PSE). – (FR) Mr President, Commissioner, for 30 years now, the wealthy countries have been unable to fulfil the commitment they made before the UN to increase their development aid to 0.7%. This is a scandal, and we are all here to search for new ideas.

I find it very regrettable that the Commission should have so few of them, and that the communication that you have been asked to read should be so flimsy. You did not even mention the British idea of a tax on the movement of capital. You only mentioned a French idea of a tax on the movement of aeroplanes. In this quest for new ideas, allow me to propose another one to you.

I believe that it was in its document issued in April 2005 that the Commission proposed the idea of a global lottery. Mr Michel, whom I myself questioned during a sitting in this very Chamber, acknowledged that this was an option. You did not even take it up. Commissioner, I think that the option of a global lottery is easier to follow through than many other options.

The World Food Programme, which took up this idea with the aim of looking into it further, concluded that, on the basis of an estimated minimum of 1% of our countries’ turnover being spent on each draw, four draws per year would raise an annual sum of USD 400 million, which the World Food Programme proposes allocating to the measures aimed at preventing children in the world from starving. Why did not the Commission put its own stamp on this idea? I take no pleasure whatsoever in searching for a solution outside our budgets: our countries should be quite serious about doing what they say they are going to do, but given that they are incapable of keeping their promises, this new idea at least has the virtue of not bothering anyone and of being unrestricted, if, in each of the Member States, it is the legislative authority that allocates this share of the profit to the World Food Programme instead of to the local State authorities. Setting up a global lottery is an easy thing to do. I therefore suggest to the Commission that it take the initiative in setting up the lottery and firmly encourages our Member States to implement it.

  President. – I have received five motions for resolutions under Rule 103(2) of the Rules of Procedure.

The debate is closed.

The vote will take place on Thursday at 10 a.m.