Verbatim report of proceedings

Wednesday, 14 December 2011 - Strasbourg

21. Budgetary control of EU financial assistance to Afghanistan (short presentation)

  President. – The next item is the report by Jens Geier, on behalf of the Committee on Budgetary Control, on the budgetary control of EU financial assistance to Afghanistan (2011/2014(INI)) (Α7-0388/2011).

  Jens Geier, rapporteur. – (DE) Madam President, Commissioner, ladies and gentlemen, are there 111 774 or 125 218 officers serving in Afghanistan’s national police force? This question remains to be answered. That is one of the problems that we encounter when we examine the issue of the use of EU aid in Afghanistan. This question is not inconsequential, as the salaries of the Afghan police officers are paid through the Law and Order Trust Fund for Afghanistan (LOTFA), which was set up by the United Nations Development Programme. LOTFA is the largest recipient of financial aid in Afghanistan.

We do not know how many police officers there are because the databases of the Afghan police force are unreliable. Up to now, the European Union has provided funds to Afghanistan via three different channels. There is the use of private contracting partners which fulfil contracts issued by the European Commission. There are non-governmental organisations and there are the multi-donor trust funds, the largest being maintained by the United Nations, and there is another important one that was set up by the World Bank for the development of Afghanistan. These are the channels through which the European Union’s projects in Afghanistan, which must meet a number of criteria, are financed. They are to ensure the visibility of the European Union in Afghanistan. They are to support capacity building in the public administration. They must not be vulnerable to corruption. They must be sustainable. They are to be aligned with the regional priorities, but also with the priorities of the government. If we examine the strengths and weaknesses of the channels through which we transfer funds to Afghanistan, then we see that not all of the criteria can be met via any one channel, but that each of the different channels that the European Union uses to transfer funds to Afghanistan has its own particular strengths, but also its own particular risks.

Two of the important objectives, namely, capacity building in the public administration and alignment with the priorities of the government, cannot be met at all via the channels used up to now. In my report, I therefore propose that we use a fourth channel, one that is now used for Afghanistan by many donors in the international community although not as yet by the European Union, and that is the channel of direct budget support to the Afghan state.

This direct support to the Afghan budget brings with it a number of problems. One of these became very clear in media reports when it was found that cash – dollars in this case – was immediately being taken out of Afghanistan by the box-load, and I am pleased to be able to say at this point that, if these boxes contained any European funds at all, it would have only been a very small amount. With their direct budget support, the Americans had to learn a very expensive lesson in using this channel. However, they have learnt that lesson. They are proceeding step by step. They are taking it department by department of the Afghan ministries and ensuring that certain criteria are met, namely, that management and control systems are employed, that there are mechanisms for combating corruption in place, and that accountability to the Afghan Parliament is ensured. I believe that if the European Commission were to follow the same path, that is to say, take a step-wise approach, set clear goals for the Afghan Government that are retrievable and possible to monitor, ensure that there is accountability to the Afghan Parliament and – I believe this is very important – a truly independent Afghan court of auditors, then we can also support the use of this channel.

After the withdrawal of the military, there will be a greater need for civilian aid. We must therefore ensure that this aid functions in a targeted, effective and sustainable way and that the funds provided by the European Union are protected against corruption and waste. That is in the best interests not only of European taxpayers, but of Afghanistan, too.

  Seán Kelly (PPE). – Madam President, personally, I am somewhat dubious about giving any aid to Afghanistan from European Union funds. This is a state where, a few short months ago, Osama Bin Laden was found in a custom-built compound under the noses of the Afghan authorities.

Until we are satisfied that things are in order, that funds can be used for what they are designed for, and that we can satisfy the European Court of Auditors and other independent auditing bodies, I think we should progress very slowly with this matter.

In an ideal world, we should give assistance, because we need to be neighbourly. However, without having firm guarantees in place that any money coming from the European Union is going to be used in a proper fashion and that we can guarantee that, I think we should be very careful about moving along too quickly.

  Piotr Borys (PPE). – (PL) Madam President, I should like to thank the rapporteur for this report. I am a member of the Delegation for Afghanistan. I know that this country was, for 30 years, involved in a notorious war and that all the foundations of a democratic and transparent state were shattered and simply did not exist. This state is being recreated from scratch. This is why it is so important to combine UN and World Bank funds with our own European resources. They should be accounted for using similar channels, which must be based on a system of transparency and, in particular, on measurable indicators of how effectively the aid is being used.

It seems to me that all elements should be dealt with. This, of course, requires a strengthening of government administration, which has its own goals, because the country needs to be reconstructed. However, we should remember that non-governmental organisations must be supported in parallel, and thus the channel of distribution of funds by organisations is also important. There is no private sector, but it is also key to the redistribution of funds, which must be used efficiently. I therefore consider that we should create exactly what the rapporteur says – clear steps towards transparency and efficiency and, above all, accounting that, over time, is based on clear and understandable principles.

  Jaroslav Paška (EFD). – (SK) Madam President, the EU provides funding and humanitarian aid to many developing countries. One such country is Afghanistan, which has long been plagued by civil war. The unstable security situation in the country makes it impossible, however, to carry out the necessary monitoring of the distribution and actual use of the funds provided. The risk of fraud, corruption, and non-compliance with the rules or effectiveness criteria is very high in such an environment. It is therefore necessary to focus more on proven methods and procedures which have shown their worth in the provision of civilian aid, and to opt rather for support for long-term useful projects, the success of which can be monitored in individual phases, along with the sensible disbursement of funds. If projects do not prosper, they can be halted in time and, where appropriate, modified.

  Nicole Sinclaire (NI). – Madam President, I was in Afghanistan less than three weeks’ ago, in Helmand Province, visiting the British forces that are part of the International Security Assistance Force or ISAF.

It is an interesting situation there, and there are many fears for post-2014, but since the Taliban was overthrown in 2001, there has been a 60% increase in health care provision, with infant mortality reduced by 20%. Education has increased – obviously including females – with 13 000 more schools, 170 000 more teachers and 7.3 million more students.

These are things that we need to build on. I am glad – amazed actually – that the European Parliament is having this debate here tonight and actually showing some concern about where the money goes. This makes a welcome change from previous years.

We must continue to help Afghanistan build, because it was a factory of terrorism. The UK, other Member States and the international community need to show faith with Afghanistan to build a strong and prosperous country that rejects terrorism and all the disasters that go with it.

  László Andor, Member of the Commission. – Madam President, I wish to thank the rapporteur, Mr Geier, for his contribution to the effectiveness and efficiency of EU development assistance in Afghanistan.

The Commission shares the view that our commitment to Afghanistan must focus on the long-term perspective. At the Bonn conference on 5 December 2011, the EU looked to the Afghan Government to provide the context for this long-term engagement by improving governance and the rule of law and making other structural reforms which are necessary for the transformation of Afghanistan into a fully-functioning, sustainable state at the service of its people.

In Bonn, the EU and its Member States also announced the negotiation of a partnership agreement on cooperation and development with Afghanistan. This agreement will create a coherent, legally-binding overall framework for EU relations with Afghanistan. This long-term commitment will be conditional on the Afghan Government’s progress in further strengthening public finance management systems, reducing corruption, improving budget execution, developing a financing strategy and increasing government capacity. The establishment of a fully independent control and audit office will also remain a precondition for budget support.

As the Afghan Government progressively takes over full responsibility for security and development, we also expect democratic institutions to be strengthened both at central and provincial level. In this context, the Commission will continue to assist Afghanistan by ensuring that monitoring mechanisms adequately address corruption and proper management of aid and that the recipient communities are involved in identifying needs and shaping development assistance policies.

Shortcomings of external assistance in Afghanistan are the result of a complex mix of political factors, military insurgency, economic underdevelopment and drug trafficking, to name just a few. In this environment, multi-donor trust funds have been instrumental in pooling donors around Afghan-owned strategies, harmonising aid and contributing to strengthening national public finance management capacities. They also enable the efficient donor division of labour and facilitate pooling donors’ specific expertise and resources.

The EU aims to surpass the goal of providing 50% of development assistance either directly (on budget) or through multi-donor trust funds, as agreed within the Kabul Process. In Buzan earlier this month, the Commission reiterated its commitment towards aid effectiveness, focusing and deepening on results and accountability, ownership, transparency and reduced fragmentation of aid. This is also our commitment to Afghanistan.

With 2014 on the horizon, we will need to focus on reinforcing current mechanisms to ensure that Afghanistan becomes a fully-functioning and sustainable state capable of fighting fraud and corruption.

  Martin Ehrenhauser (NI). – (DE) Madam President, I would like to say a few brief words on Afghanistan. I have, of course, also read the report. Between 2002 and 2010 alone, the European Union invested more than EUR 2 billion in Afghanistan. In my view, this report comes to a very clear conclusion: there are a high number of cases of corruption and there is a lack of ability on the part of the administration, a high risk of waste and no independent audit authorities, there are projects that lack sustainability and effectiveness and there are unrealistic timeframes for the projects. In my opinion, as the budgetary control authority, we cannot provide a guarantee to European taxpayers that the funds are used in Afghanistan in an economically effective and sustainable way. In the medium term, we cannot guarantee that these problems will be resolved, either. For this reason, I reach a different conclusion to some of my other fellow Members and that is that we should end this armed development assistance in Afghanistan as quickly as possible.

  President. – The debate is closed.

The vote will take place at 11.30 on Thursday, 15 December 2011.

Written statements (Rule 149)

  Georgios Stavrakakis (S&D) , in writing. – (EL) I, too, should like to take my turn in congratulating the rapporteur on his excellent report on the very interesting and crucial issue of budgetary control of EU financial assistance to Afghanistan. Our role and duty as the European Parliament is to maintain the principle of sound budgetary management of financial assistance granted by the EU, via the Community budget, from European taxpayers’ money. The maintenance of this principle must apply to assistance granted both to EU Member States and to third countries. In this spirit, I warmly support the rapporteur’s call for the European Commission to address the weaknesses identified in the audits carried out by the European Court of Auditors and third-party auditing agencies. Accountability in respect of EU funds channelled to Afghanistan and managed by various UN agencies also needs to be strengthened and the EU institutions need to gain access to the internal reports produced by those agencies. With transparency and accountability, we can ensure that the money from the UN budget is spent correctly and effectively.