kom (2018) 0460 - Ingen titel

Europaudvalget 2018
KOM (2018) 0460
Offentligt

EUROPEAN

COMMISSION

Brussels, 14.6.2018

SWD(2018) 337 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

establishing the Neighbourhood, Development and International Cooperation

Instrument

Proposal for a

COUNCIL DECISION

on the Association of the Overseas Countries and Territories with the European Union

including relations between the European Union on the one hand, and the Greenland

and the Kingdom of Denmark on the other ('Overseas Association Decision')

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

establishing the Instrument for Pre-Accession Assistance (IPA III)

Proposal for a

COUNCIL REGULATION

establishing a European Instrument for Nuclear Safety complementing the

Neighbourhood, Development and International Instrument on the basis of the Euratom

Treaty

{COM(2018) 460 final} } - {COM(2018) 461 final} } - {COM(2018) 465 final} } -

{COM(2018) 462 final} } - {SEC(2018) 310 final}

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Table of contents

INTRODUCTION ................................................................................................................................ 2

1.1. Context .............................................................................................................. 2

1.2. Scope ................................................................................................................. 3

SUMMARY OF CURRENT PROGRAMMES AND LESSONS LEARNED .................................... 5

2.1. Summary of EU external action programmes ................................................... 5

2.2. Key findings from evaluations .......................................................................... 7

2.3. Feedback from stakeholders ............................................................................ 10

THE CHALLENGES AND OBJECTIVES ........................................................................................ 11

3.1. Main challenges and new political priorities to be addressed by the

new programme ............................................................................................... 11

3.2. Objectives of the programmes of the next MFF .............................................. 13

PROGRAMME STRUCTURE AND PRIORITIES ........................................................................... 14

4.1.

Proposed changes to the EU’s external action

................................................ 14

4.2. Structure of the broad instrument .................................................................... 15

4.2.1.

4.2.2.

4.2.3.

Geographic programmes ....................................................................................... 16

Thematic programmes .......................................................................................... 17

Rapid response component .................................................................................. 18

4.3. Justification for the changes ............................................................................ 18

4.4.

Which instruments should be replaced by the broad instrument? ................... 20

4.5. Prioritisation .................................................................................................... 29

DELIVERY MECHANISMS OF THE INTENDED FUNDING ...................................................... 30

5.1. Implementation modalities .............................................................................. 30

5.2. Delivery methods............................................................................................. 31

HOW WILL PERFORMANCE BE MONITORED AND EVALUATED?....................................... 33

6.1. Monitoring arrangements ................................................................................ 33

6.2. Data provisions and sources ............................................................................ 35

6.3. Evaluations ...................................................................................................... 36

ANNEX 1: PROCEDURAL INFORMATION ............................................................................................ 38

ANNEX 2: STAKEHOLDER CONSULTATION....................................................................................... 40

ANNEX 3: EVALUATION RESULTS ....................................................................................................... 49

ANNEX 4: BROAD INSTRUMENT - DESCRIPTION OF THE PROGRAMMES COVERED

COMMON IMPLEMENTING REGULATION ................................................................................ 64

ANNEX 4A ADDITIONAL INFORMATION ON MACRO-FINANCIAL ASSISTANCE ...................... 70

ANNEX 4B ADDITIONAL INFORMATION ON THE EXTERNAL LENDING MANDATE ............... 72

ANNEX 5: ADDITIONAL INFORMATION ON IPA ............................................................................... 90

ANNEX 6 ADDITIONAL INFORMATION ON CFSP .............................................................................. 93

ANNEX 7 ADDITIONAL INFORMATION ON THE OVERSEAS ASSOCIATION DECISION

(OAD) AND THE GREENLAND DECISION .................................................................................. 95

ANNEX 8 ADDITIONAL INFORMATION ON HUMANITARIAN AID................................................ 98

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ANNEX 9 ADDITIONAL INFORMATION ON UNION CIVIL PROTECTION MECHANISM .......... 101

ANNEX 10 ADDITIONAL INFORMATION ON SUPPORT TO THE TURKISH CYPRIOT

COMMUNITY.................................................................................................................................. 102

ANNEX 11 ADDITIONAL INFORMATION ON INSTRUMENT FOR NUCLEAR SAFETY

COOPERATION .............................................................................................................................. 104

ANNEX 12 MINUTES OF THE INTER-SERVICE STEERING GROUP MEETING, 23

MARCH 2018 ................................................................................................................................... 105

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Glossary

Term or acronym

ACP

APF

CBSD

CIR

CFSP

CSO

DAC

DCI

EDF

EFI

EFSI

EIDHR

EIB

ENI

IcSP

INSC

IPA

MFA

MFF

MTR

OECD

OCTs

ODA

SDG

TEU

TFEU

UMIC

USD

Meaning or definition

African Caribbean and Pacific

African Peace Facility

Capacity building in support of security and development

Common Implementing Regulation

Common Foreign and Security Policy

Civil Society Organisations

Development Assistance Committee

Development Cooperation Instrument

European Development Fund

External Financing Instrument

European Fund for Strategic Investments

European Instrument for Democracy and Human Rights

European Investment Bank

European Neighbourhood Instrument

Instrument contributing to Stability and Peace

Instrument for Nuclear Safety Cooperation

Instrument for Pre-Accession

Macro Financial Assistance

Multi-annual Financial Framework

Mid-Term Review

Organisation for Economic Cooperation and Development

Overseas Countries and Territories

Official Development Assistance

Partnership Instrument

Sustainable Development Goals

Treaty on European Union

Treaty on the Function of the European Union

Trust Fund

Upper Middle Income Countries

United States Dollars

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NTRODUCTION

1.1.

Context

As stated in the Reflection paper on the future of EU finances (June 2017)

, the world has

become a more challenging place since the establishment of the

EU’s

current spending

plan 2014-2020 (otherwise known as the Multiannual Financial Framework (MFF)). It is

now characterised by an increasing fragility, brought about by numerous crises in the

EU’s

neighbourhood and beyond. Regional conflicts, terrorism, economic inequalities

and growing migratory pressures, are all part of this new reality, compounded by

population growth, climate change and environmental degradation. Distant crises have

not only far-reaching regional consequences, but often impact on the lives of EU citizens.

At the same time, the diversity of partners with which the EU cooperates has become

much more apparent. More partners, including some with large populations, are

graduating out of the Development Assistance Committee's official development

assistance (ODA) eligibility criteria

. Other countries have made progress on poverty

reduction, only to see it eroded due to economic and environmental shocks. Others are

conflict-prone least developed countries that remain locked in fragility and poverty.

This evolving landscape is also defined in the Global Strategy

“Shared

vision, common

action: a stronger

Europe”

. As stated in the Strategy, the new challenges and priorities

faced by the

EU’s

external action highlights the need to examine the distribution of EU

finances. Today, the

EU’s

external action budget equates to around 6% of the total EU

budget (9% if the 11

European Development Fund is included). In line with the requests

from the European

Parliament’s

resolution of 6 July 2016

, this budget had to be

reinforced in recent years to tackle humanitarian and other emergencies around Europe

and beyond, increasing amounts of displaced people, and a number of complex crises that

are set to continue.

The

Commission’s

communication on a new, modern MFF for an EU that delivers

efficiently on its priorities post 2020 (February 2018)

, reinforces the high level of

ambition for external action and that the EU must be able to deliver on its international

goals and the expectations of EU citizens. They have shown concern about poverty

reduction, migration, terrorism and external security threats in general and prefer that

these issues to be tackled at the European level. They expect Europe to play a leading

role in the world and to manage the effects of globalisation. They want the EU to defend

democracy, the rule of law, human rights, and sustainable economic development and to

project stability and security, in particular in

Europe’s

immediate neighbourhood

The policy framework for external action provides the basis for the EU to respond to

these challenges and expectations. This framework includes international commitments

See

https://ec.europa.eu/commission/publications/reflection-paper-future-eu-finances_en

Forecasts on graduation are very speculative, nevertheless, the DAC/Organisation for Economic Cooperation and

Development tentatively predict around 15 countries to graduate to high-income status (therefore no longer eligible for

ODA) before 2030. For further information see:

http://ida.worldbank.org/about/ida-graduates

See

http://europa.eu/globalstrategy/sites/globalstrategy/files/regions/files/eugs_review_web_0.pdf

See

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P8-TA-2016-

0309+0+DOC+XML+V0//EN&language=EN

See

http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=COM:2018:0098:FIN

See the results from recent Eurobarometer polls including:

https://ec.europa.eu/europeaid/special-eurobarometer-

report-eu-citizens-views-development-cooperation-and-aid_en

and

https://data.europa.eu/euodp/data/dataset/S1569_87_4_464B_ENG

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such as the 2030 Agenda for Sustainable Development

, the Paris Agreement on Climate

Change

, and the Addis Ababa Action Agenda

. Within the EU, the Treaty provisions on

external action are now complemented by the EU Global Strategy, the new European

Consensus on Development

, the renewed EU-Africa Partnership

, the reviewed

European Neighbourhood policy

and the European Consensus on Humanitarian Aid

amongst others.

Looking ahead, the EU’s external action

should build on what works well today while

also anticipating the challenges of tomorrow. In line with the Rome declaration

, the

EU’s

future external actions should help enable a Europe that is safe, secure, globally

stronger, prosperous and sustainable.

On 2 May 2018, the European Commission adopted its proposals for a new MFF for

2021-2027. Under these proposals

, the Neighbourhood, Development and International

Cooperation Instrument (NDICI) will have a budget of EUR 89.5 billion over this period,

of which EUR 300 million will be allocated to the European Nuclear Safety Instrument

complementing the NDICI on the basis of the Euratom Treaty.

1.2.

Scope

This impact assessment covers the current heading 4

programmes

in order to provide

a comprehensive picture of EU external action

. It reflects the decisions of the MFF

proposals and focuses on the changes proposed to the heading in comparison with the

current set-up.

The main changes envisaged under the next MFF, in line with the Reflection paper on the

future of EU finances (June 2017), and the Communication from the Commission to the

European Parliament and to the Council (February 2018) are:

1. Merging several external instruments into a broad instrument, namely: DCI, EDF,

EIDHR; ENI; IcSP; INSC

, PI, and the CIR

, as well as several budgetary

See

https://sustainabledevelopment.un.org/post2015/transformingourworld

See

http://unfccc.int/paris_agreement/items/9485.php

See

http://www.un.org/esa/ffd/wp-content/uploads/2015/08/AAAA_Outcome.pdf

See

https://ec.europa.eu/europeaid/sites/devco/files/european-consensus-on-development-final-20170626_en.pdf

See

https://www.africa-eu-partnership.org/en

See

https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/neighbourhood/pdf/key-

documents/151118_joint-communication_review-of-the-enp_en.pdf

See

http://ec.europa.eu/echo/files/media/publications/consensus_en.pdf

See

http://www.consilium.europa.eu/en/press/press-releases/2017/03/25/rome-declaration/

See

https://ec.europa.eu/commission/priorities/democratic-change/future-europe/eu-budget-future_en

Heading 4 is one of the six broad groups of expenditure (“headings”) contained within the MFF. The current heading

4 covers external action spending.

The programmes under heading 4 include: Development Cooperation Instrument (DCI); European Neighbourhood

Instrument (ENI); Instrument for Pre-Accession (IPA II); Instrument contributing to stability and Peace (IcSP);

European Instrument for Democracy and Human Rights (EIDHR); Partnership Instrument (PI); Instrument for Nuclear

Safety Cooperation (INSC); Greenland Decision (GD); Humanitarian Aid; Common Foreign and Security Policy

(CFSP); Macro-financial assistance (MFA); Guarantee fund for external actions (i.e. EIB External Lending Mandate

and Euratom Loan Facility); European Fund for Sustainable Development; EU Civil Protection; EU Aid Volunteers;

and the Common Implementing Regulation (CIR). The EDF is also included in this impact assessment although it is

not included in the EU budget.

It should be noted that a separate ex-ante evaluation has been prepared for the European Solidarity Corps that

integrates heading 4’s EU aid volunteers initiative. There is also a separate impact assessment for the Erasmus

programme for which funds from external action should be transferred to finance actions in respect of learning

mobility to, from or between partner countries as well as for policy dialogue with authorities.

Since part of the nuclear activities need to follow a specific procedure of the Euratom Treaty, a complementary

instrument will be created.

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guarantees currently under the European Fund for Sustainable Development (EFSD),

the European Investment Bank’s (EIB) external lending mandate (ELM) and the

Guarantee Fund for external action. The broad instrument should include: a

prominent neighbourhood window, a strong focus on migration including in the

cushion for emerging challenges and priorities and provisioning for Macro-Financial

Assistance

2. Integrating the current extra-budgetary

EDF into the EU budget, including the EDF’s

ACP investment facility.

Table 1. List of current external action instruments 2014-2020 and those proposed

for 2021-2027

Instrument 2014-2020

External action

Development Cooperation Instrument (DCI)

Neighbourhood, Development and International

Cooperation

instrument, together with the

European Neighbourhood Instrument (ENI)

European Instrument for Nuclear Safety

Partnership Instrument for Cooperation with Third Countries

Cooperation complementing the Neighbourhood,

(PI)

European Instrument for Democracy and Human Rights Development and International Cooperation

Instrument on the basis of Euratom Treaty

(EIDHR)

Instrument contributing to stability and Peace (IcSP)

European Development Fund (EDF), including ACP investment

facility and excluding African Peace Facility

Instrument for Nuclear Safety Cooperation (INSC)

European Fund for Sustainable Development (EFSD)

External Lending Mandate (ELM)

Guarantee Fund for external action

Macro-Financial Assistance (MFA)

Overseas Countries and Territories

Cooperation with Greenland, Overseas Countries

and Territories

Cooperation with Greenland

Humanitarian Aid

Common Foreign and Security Policy

Support to Turkish Cypriot community

Pre-Accession Assistance

Instrument for Pre-accession Assistance (IPA)

Crisis Response

Union Civil Protection Mechanism

European Solidarity Corps

EU Aid Volunteers initiative

Instruments outside the MFF headings

Emergency Aid Reserve

Off budget

Common Foreign and Security Policy

–

Operations with Defence

Implications (Athena Mechanism)

European Development Fund

–

African Peace Facility

European Peace Facility

Emergency Aid Reserve (internal and external)

RescEU

Investing in People and European Values

European Solidarity Corps

Instrument 2021-2027

This impact assessment satisfies the requirements of the EU’s financial

regulation

respect to preparing an

ex-ante

evaluation for the proposal of a new, broad external

financing instrument and other external instruments under heading 4.

It should be noted that the CIR is not a financing instrument but a regulation for implementing a number of the

instruments under heading 4.

MFA will be activated on the basis of separate legal bases as needed.

The financial regulation is the main point of reference for the principles and procedures governing the establishment,

implementation and control of the EU budget. See

http://ec.europa.eu/budget/biblio/documents/regulations/regulations_en.cfm

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UMMARY OF CURRENT PROGRAMMES AND LESSONS LEARNED

2.1.

Summary of EU external action programmes

Today, heading 4 covers EU external action with the exception of actions financed by the

EDF and the Athena mechanism

which are not funded from the EU budget but

from direct contributions from EU countries. A description of the programmes under

heading 4 can be found in the annexes.

The EU has an external action budget for 2014-2020 of EUR 96.5 billion

. The external

action takes place in partner countries outside the EU but also protects citizens’ interests

and safety. Through the instruments under heading 4, the EU plays an important role in

the promotion of, amongst others: human rights, stabilisation, development, humanitarian

aid, security, trade, as well as the fight against climate change and the protection of the

environment (including through ocean governance).

Table 2. Funding baseline

EUR millions

(2014-2020)

–

contributions

28 Member

States

Instrument for Pre-accession assistance (IPA II)

12.138,63

European Neighbourhood Instrument (ENI)

16.496,26

Development Cooperation Instrument (DCI)

19.947,59

Partnership Instrument (PI)

958,53

European Instrument for Democracy and Human 1.306,56

Rights (EIDHR)

Instrument contributing to Stability and Peace (IcSP)

2.365,85

Instrument for Nuclear Safety Cooperation (INSC)

325,321

Greenland Decision (GD)

217,8

Common Foreign and Security Policy (CFSP)

2.121,24

Macro-financial Assistance (MFA)

294,843

Guarantee Fund for External Actions

1.627,67

Humanitarian aid

7.553,60

Union Civil Protection Mechanism

122,827

EU Aid Volunteers initiative (EUAV)

126,02

European Fund for Sustainable Development (EFSD)

350

11th European Development Fund, including the 30.506,00

Overseas Countries and Territories Decision

Common Implementing Regulation (not a financing N/A

instrument but a Regulation for the implementation of

some of the above instruments)

Heading 4 instruments and EDF

EUR millions

(2021-2027)

–

contributions

27 Member

States

10.621

14.434

17.454

838,71

1.143

2.070

284,656

190,575

1.856

257,988

1.424

6.609

107,474

110,268

306,25

26.02

N/A

EUR millions

2021-2027

(per year)

–

contributions

Member

States

1.52

2.06

2.49

119,9

0.16

0.30

40.67

27,23

0.27

36,86

0.20

0.94

15,35

15,75

43,75

3.72

N/A

See

http://www.consilium.europa.eu/en/policies/athena/

Including the 11

EDF (EUR 30.5 billion)

Figures include all transfers between instruments up to July 2017 and the Mid Term Review of the MFF. Source:

http://ec.europa.eu/budget/mff/figures/index_en.cfm

Following the UK’s withdrawal from the EU

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The baseline shows the amounts designated to each instrument for the 2014-2020 period.

Based on these amounts, the table also highlights how much would be allocated to each

instrument if nothing were to change except for the United Kingdom’s withdrawal from

the EU. The main consequences of the United Kingdom’s withdrawal on the EU’s

external action would mean a 12.5% reduction for all instruments except the European

Development Fund to which the United Kingdom contributes 14%.

The EU is able to deploy a wide array of external instruments in support of conflict

prevention and peace building, and is one of the biggest donors in this area. It is

committed to assisting the most vulnerable people caught in natural or man-made

disasters. The EU actively promotes and defends human rights when engaging in

relations with non-EU countries in its external actions.

To the east and south of the EU, in accordance with Article 8 of the Treaty on European

Union

(TEU), the EU has developed a specific relationship with neighbouring

countries, with the aim of establishing an area of prosperity and good neighbourliness,

founded on EU values and characterised by close and peaceful relations. The EU aims to

build effective partnerships with its neighbours in support of a more stable EU

Neighbourhood, promoting democracy, good governance and human rights while

opening trade and cooperating in policy areas, including on migration and visa issues.

Through its enlargement policy, the EU also largely contributes to meeting the broader

European objectives of ensuring stability, security and prosperity in the immediate

neighbourhood of the EU. Through this policy, the EU supports beneficiaries in adopting

and implementing the political, institutional, legal, administrative, social and economic

reforms required to comply with EU values and to progressively align to EU rules,

standards, policies and practices with a view to EU membership. The EU’s commitment

to the enlargement policy was also confirmed by the recent Commission Communication

putting forward a credible enlargement perspective for and enhanced EU engagement

with the Western Balkans.

Through its development cooperation policy, the EU contributes to reducing global

poverty, ensuring sustainable economic, social and environmental development, and the

promotion of democracy, the rule of law, good governance and the respect of human

rights. Together, the EU and its Member States constitute the world’s largest

development aid donor, providing more than 50% of assistance worldwide. EU

institutions alone provide around 10% of total ODA.

The EU and its Member States are also the world’s largest donor of humanitarian aid,

assisting people affected by a wide range of crises including protracted conflict situations

and forgotten crises. It provides emergency, life-saving, needs-based humanitarian

assistance to people, particularly the most vulnerable, hit by man-made or natural

disasters. The EU also coordinates European civil protection assistance during worldwide

disasters.

See

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A12012M%2FTXT

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The EU promotes its further interests on the world scene. It builds multilateral

relationships to promote the development of collective responses to common challenges.

It promotes access to partner country markets, boosting trade, investment and business

opportunities. It also supports the external projection of its internal policies and works on

enhancing widespread understanding and visibility of the EU especially by means of

public diplomacy.

2.2.

Key findings from evaluations

Relevance:

the mid-term review report (December 2017)

of ten of the external

financing instruments

, the

ex-post

evaluation reports on MFA and the mid-term review

on the EIB external lending mandate

all concluded that the external action instruments

were overall fit for purpose and positive trends were emerging in relation to the

achievement of objectives.

The mid-term review report has shown that whilst the enabling nature

of the current

instruments means they cover most needs and goals of EU external action, in the future

they would benefit from better reflecting a number of developments such as: the new

policy framework including the universality of the 2030 Agenda, the migration/refugee

crisis, and the external projection of internal policies. Also, more consideration needs to

be given to the links between development and security and the overall level of ambition

for peace and security in external action.

The mid-term review report COM(2017) 720 final, was based on ten staff working documents, one per instrument

(see list below), which in turn were based on ten independent evaluations. The mid-term report, the staff working

documents and the independent evaluations can be found at here:

https://ec.europa.eu/europeaid/public-consultation-

external-financing-instruments-european-union_en

The ten instruments were the: Development Cooperation Instrument (DCI); European Development Fund (EDF);

European Neighbourhood Instrument (ENI); Instrument for Pre-Accession (IPA II); Instrument contributing to stability

and Peace (IcSP); European Instrument for Democracy and Human Rights (EIDHR); Partnership Instrument (PI);

Instrument for Nuclear Safety Cooperation (INSC); Greenland Decision (GD); Common Implementing Regulation

(CIR).

ELM

mid-term

review

can

found

here:

http://eur-lex.europa.eu/legal-

content/EN/TXT/?uri=CELEX:52016DC0584

The instruments are enabling in the sense that they do not define the policies; they set the scope, objectives and

procedures to allow for the implementation of the policies.

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The principle of graduation

in certain instruments (i.e. the DCI) had intentionally left a

gap

in the EU’s ability to cooperate with upper middle income countries through bilateral

cooperation. As situations in those countries may call for such support (e.g. the persistent

presence of poverty or post-crisis situations), it was found that the EU should pursue

cooperation with all countries including more advanced developing countries and

strategic partners, in line with the universal coverage of the 2030 Agenda.

The importance of promoting fundamental values and human rights is at the core of the

instruments. However, findings point to the difficulties to promote and take this agenda

forward in some countries, and to the shrinking space for civil society organisations in

many countries as well. This makes it challenging to work on these issues and highlights

a tension between promoting this agenda versus partners’ priority interests.

In the current context of multiple crises and conflicts, the EU needs to be able to react

swiftly to changing events. However, for certain instruments, responsiveness was

hindered by a lack of financial flexibility. When new priorities emerged, problems were

encountered when trying to reallocate funds within the instruments under the budget as

large quantities had been tied up through long-term programmes

. As stated in the mid-

term review report, flexibility needs to be built-up and the balance between long-term

commitments and short-term actions should be reassessed.

Coherence:

There are many types of coherence needed across the external financing

instruments including:

coherence between one instrument’s component parts, coherence

between different instruments and coherence with other donors. Overall, the mid-term

review report notes mixed findings on coherence from past experience.

In terms of coherence within the instruments, findings were satisfactory because efforts

had been made to revise guidelines. There was some level of coherence between the

instruments but the multiplicity of programmes sometimes led to overlapping actions and

complex cooperation with more advanced developing countries. In addition, the

separation between geographic and thematic approaches sometimes resulted in

inconsistent responses at country level. Feedback from EU delegations showed they had

difficulties to manage and exploit complementarities and create synergies between the

instruments. Overall, it was considered that the EU was missing opportunities for

coordinated strategies for a given country/region.

In terms of coherence with Member States, findings note the potential for joint

programming to be further strengthened. However, this would require more commitment

in certain cases from partner country governments and Member States.

Box 1. Examples of overlapping programmes

The EFSD and ELM can both provide EU budget guarantees for similar objectives in the

same regions. Also the geographic and thematic instruments/programmes such as the

EDF and the thematic programmes under the DCI can cover the same areas in certain

countries.

In the current context of EU cooperation, graduation means that upper middle income countries are no longer

eligible for EU bilateral cooperation.

Instead, ad hoc methods had to be created such as EU trust funds.

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Added value:

the mid-term report shows that the EU provides added value through the

external financing instruments compared with the actions of EU countries in a number of

ways including:

(a)

(b)

(c)

(d)

The EU's competence or expertise in a given field;

The EU's position as a supranational entity, and the relative neutrality

, political

influence and leverage this potentially entails;

The geographical spread of some instruments including the presence in fragile

contexts where there are fewer development partners and less funds available,

The scope of the instruments and modalities (such as budget support, grants,

indirect management, blending facilities and rapid decision-making for crisis

response); and

The ability of the EU to lead on joint actions (i.e. joint programming and joint

implementation), especially with Member States.

(e)

Effectiveness:

the mid-term review report points to positive trends emerging in relation

to achieving results

. However, difficulties in measuring achievements were noted. For

example: there was often limited information on monitoring systems mentioned in the

instruments; there was a lack data (including on baselines) to measure if the instruments

were on track to meet some of their (particularly high level) objectives; as well as an

understanding that many external factors (e.g. partner country policies and other donors)

influence the achievement of the objectives

Box 2. Examples of results supported with EU cooperation

- Public administration reform in Georgia

- 90% reduction in poverty in Vietnam over the last decade

- Stabilisation of Colombia after the peace agreement

In terms of mainstreaming EU priorities, significant progress was noted in the areas of

climate change and environment

. Mainstreaming human rights including gender

equality and women’s empowerment was considered as work-in-progress,

with partner

governments sometimes showing a lack of interest or resistance to these areas.

Efficiency:

while overall organisational performance was found to be efficient, some

actors considered that the implementation of some instruments was administratively

burdensome. At times the Commission was perceived to be more focused on process

rather than on policy objectives and results.

Lessons learned from other donors:

beyond these recent findings, there was an OECD

DAC peer review of the EU’s development cooperation in 2012

. The review came up

with a set of recommendations with regard to the architecture, rules and procedures of the

The EU is largely perceived by partners as an actor not defending or advancing the interest of a particular country,

which is important for the EU in its role as a peace and security actor and for election observation missions.

See annex 3 and box 2 for some examples.

See section 6 for more information on monitoring.

See recent annual reports including the 2016 Annual report on the implementation of the EU’s instruments for

financing external action in 2015

11th EDF climate contributions increased from 3.3% in 2014 to 23.3% in 2016 and DCI climate change

contributions increased from 17.7% in 2014 to 24.9% in 2016. Source: Indicator 12b, EU international cooperation and

development results framework with input from the OECD DAC Creditor Reporting System.

See

http://www.oecd.org/dac/peer-reviews/europeanunion2012dacpeerreviewmainfindingsandrecommendations.htm

kom (2018) 0460 - Ingen titel

EU's external financial instruments. For example, the OECD called on the EU to further

simplify and modernise its cooperation, by reducing the number of budget lines, aligning

rules of DCI and EDF, streamlining approval procedures and building more coherence

between regional and thematic programmes. The EU was asked to become more

effective, timely and flexible both at programme level and at aggregate level of the whole

set of instrument architecture. The latter was particularly asked for in situations of

fragility and crisis, in which the OECD saw significant room for improvement.

Summary:

The lessons show that the EU’s external programmes are largely relevant and

functioning well in terms of the content it covers, instead the main issues relate to how

the instruments are structured. A fragmented approach has led to a complex landscape of

instruments with limited flexibility to respond to emerging challenges.

Further information from studies, evaluations and consultation activities including on

Humanitarian Aid, the External Lending Mandate

and Macro-Financial Assistance can

be found in the annexes.

2.3.

Feedback from stakeholders

When drafting the evaluation documents that fed into the mid-term review report, three

types of consultations with stakeholders took place. Evaluators carried out around one

thousand structured or semi-structured interviews with EU officials and representatives

from EU institutions, Member States and partner countries. Several technical workshops

to present and discuss the draft evaluations were held with participants from the

European Parliament, Council working groups, Member States committees, and civil

society organisations and local authorities. An open public consultation was held in early

2017. It aimed at gathering feedback from stakeholders on the findings emerging from

the evaluations of the instruments and on the future external action instruments after

2020

The main messages emerging from the consulted stakeholders are summarised below.

Further details are available in Annex 2.

Flexibility:

stakeholders agreed that the new financing instruments should be more

flexible to respond to unforeseeable challenges and crises. In particular, they underlined

the need to facilitate the shifting of funds across regions and among aid modalities.

However, it was also underlined that increasing flexibility should not come at the cost of

weakened predictability, country ownership and less focus on achieving long-term

development objectives. To ensure flexibility and predictability some respondents argued

in favour of having sufficient reserves.

Coherence:

stakeholders considered it necessary to ensure greater coherence between the

internal and external policies of the EU, as well as between the external instruments

themselves. Some emphasized the need to strengthen complementarity and synergy

between geographical and thematic instruments. Others argued that the Sustainable

Development Goals (SDGs) provides the most appropriate basis for increasing coherence

between internal and external policies. Most recommended that the EU take a leading

In particular, the Commission has organised an ongoing assessment of the ELM in line with legislative requirements,

the preliminary results of which can be found in the annex.

For more information on the public consultation see

https://ec.europa.eu/europeaid/public-consultation-external-

financing-instruments-european-union_en

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role in improving complementarity between various stakeholders both inside and outside

the EU.

On the structuring of future instruments, stakeholders agreed that the combination of

geographic and thematic instruments delivers positive results. They emphasized that the

value of geographically structured instruments lies in their capacity to address the

specific needs of partner countries in a tailored manner. This is crucial given the diversity

of the challenges and needs across these countries.

While being in favour of having both geographic and thematic programmes, stakeholders

also drew attention to the need for more complementarity. Some respondents highlighted

the risk of overlap whereby the same policy objectives are funded by multiple

instruments. Respondents also called for a clear delineation between instruments, while

underlining the need to ensure that geographic and thematic programmes exploit cross-

sectoral synergies and linkages between themselves.

Simplification:

the EU was strongly encouraged to further simplify the overall

architecture of the instruments. The EU should also continue its efforts to simplify

cumbersome administrative and financial procedures. It was emphasised by civil society

and local authorities that procedures and rules currently in place have important

implications for the ability of civil society and local authorities to become more involved

in development cooperation.

Leverage:

there was an agreement amongst stakeholders that innovative financing

instruments can play an important role in leveraging public and private financing for EU

external assistance. Positive findings on the leverage effects and financial additionality of

such instruments emerging from the recent evaluation on blending

are considered

encouraging. However, civil society respondents raised concerns about private sector

priorities overriding poverty reduction objectives in partner countries.

THE CHALLENGES AND OBJECTIVES

3.1.

Main challenges and new political priorities to be addressed by the new

programme

As set out under the context (section 1.1), global circumstances have evolved since the

start of the current MFF in 2014.

Security:

the Global Strategy has spelled out fundamental external challenges that are

likely to persist over the course of the coming decade and may dominate external action

under the next MFF. These include terrorism and hybrid threats; economic volatility and

extreme poverty in least developed countries and fragile states; and energy security. In

many countries, decisive support in security and defence is essential for effective

development, while at the same time development is crucial for sustained peace.

Stability/resilience:

over the next decade, Europe will continue to be surrounded by

unstable regions in the neighbourhood and beyond. The move towards more resilient

states and societies is both a major objective and a challenge.

See

https://ec.europa.eu/europeaid/evaluation-blending_en

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Migration:

stability issues go hand in hand with continuous migratory pressures and

challenges of forced displacement. For the coming years, Europe's relative economic

affluence will be a strong pull factor for migrants, particularly from sub-Saharan Africa,

a region experiencing constant growth in forcibly displaced people, triggered by various

conflicts and protracted crises. The depletion of natural resources aggravated by climate

change is becoming an additional factor of forced displacement and therefore migratory

pressure.

Strategic partners:

New players such as China have enhanced their external outreach,

and more countries have moved to upper middle-income status, with different

cooperation needs and expectations. Consequently, there is a risk that unless new

cooperation activities with such countries are put in place, the EU could lose part of its

leverage to promote international values globally, while opportunities for building

alliances are increasing, supported by other forms of cooperation.

Human rights:

there is a growing number of countries that do not share the universal

values of open and democratic societies. Shrinking spaces for civil society and challenges

to the universal acceptance of human rights may continue to increase.

Environment and climate change:

The impact of environmental degradation and

climate change has already exposed large parts of the world’s population to natural

disasters. In the future, climate change is expected to increase the frequency and

magnitude of such natural disasters around the world. Addressing this challenge will

require cooperation with major economies including those not currently eligible for EU

bilateral cooperation.

Information and communication technologies (ICT):

ICTs are powerful enablers of

inclusive growth and sustainable development. However, a lack of connectivity remains a

major obstacle to development in many developing countries, notably in rural and remote

areas, especially in Africa. Moreover, limited competition can often make digital

technologies inaccessible and unaffordable for a large part of the population.

Beyond these policy challenges, there are other challenges related to the way the external

instruments operate.

Simplification:

with more than 15 instruments, many of which have the same legal base,

heading 4 could be regarded as overly complex compared to other headings. For

example, heading 2

currently has six times the level of funds but less than half the

number of instruments.

The number of instruments has created obstacles in the use of funds across regions and

themes due to each instrument’s different scope and rules. From the perspective of

partner countries and implementing partners, the complicated legal framework has

created a multiplication of procedures that need to be followed.

Coherence:

the previously mentioned evaluations have identified a number of challenges

related to coherence and synergies, such as weaknesses in assuring coherence between

geographic programmes and global (thematic) programmes.

Heading 2 concerns the preservation and management of natural resources. It includes the common agricultural

policy, common fisheries policy, rural development and environmental measures.

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In the past, the EU has tried to use ad hoc solutions to overcome fragmented approaches.

For example, a pan-African programme

was created in 2014 to respond to continent-

wide issues in Africa but in reality, it has added another layer of programmes for the

African region on top of the EDF and the DCI thematic programmes. The creation of

further ad hoc tools and instruments should be avoided in the future in favour of more

integrated approaches.

Several of the challenges mentioned above, including on migration and climate change,

straddle

the line between the EU’s internal and external policies. Looking ahead strong

coordination between internal and external expenditures will be needed to ensure

consistency.

Flexibility, resources and leverage:

the current volume of financing for external action

has been stretched to the limits with all margins of flexibility exhausted. This is not only

due to recently emerging challenges such as migration and security but also because of

Member States' and citizens’ expectations that the EU can do more

in external relations.

Such pressures and demands on the external budget

illustrate the need to build in more

flexibility into the budget so that the EU can mobilise its resources more swiftly in the

face of evolving contexts.

To deliver on the aid volumes needed to meet the SDGs by 2030 will be a significant

challenge. Broad estimates of current flows of development finance and the estimated

annual costs of meeting the goals point to a persistent gap in resources. The United

Nations conference on trade and development estimates that meeting the SDGs will cost

approximately USD 333 billion to USD 466 per year. At the same time, the most recent

Organisation for Economic Cooperation and Development report shows that in 2016 total

ODA reached a peak of USD 142.6 billion, less than half of the estimated needs

. This

underlines the importance of ensuring increased resource mobilisation to meet

development needs. In line with the European Consensus on development and the

Reflection paper on the future of EU finances, the EU will also need to employ

innovative financing mechanisms to leverage additional public and private funds.

3.2.

Objectives of the programmes of the next MFF

In accordance with Articles 8 and 21 of the Treaty on European Union, the specific

objectives of the broad instrument should cover those mentioned below:

(a) To support and foster dialogue and cooperation with third countries and regions

in the Neighbourhood, in Sub-Saharan Africa, in Asia and the Pacific, and in

Americas and the Caribbean;

(b) At global level, to consolidate and support democracy, rule of law and human

rights, support civil society organisations, further stability and peace and address

other global challenges including migration and mobility;

This programme is a component of the DCI.

Which are likely

to be exacerbated by the United Kingdom’s withdrawal from the EU.

World Bank, Financing for Development post 2015.

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challenges and linking of humanitarian aid and development action; and foreign

policy needs and priorities.

In order to measure progress towards achieving these objectives, while at the same time

responding to the lessons learned about the lack of monitoring information (e.g.

indicators) at instrument level, indicators would be set, see section 6 for examples.

ROGRAMME STRUCTURE AND PRIORITIES

The following section sets out the proposal for the future external action heading

focusing in particular on the changes in relation to the current set-up. The guiding

principle is to preserve what works well while improving what hinders the EU’s

effectiveness to deliver on its policies and priorities.

4.1.

Proposed changes to the EU’s external action

Building on the lessons learned and stakeholder feedback that show that the instruments

are largely relevant and delivering results, it is proposed that the content covered by the

current instruments should largely continue. Instead, modifications and improvements

should focus on how the instruments operate.

In particular the main modification proposed is to streamline several instruments into one

broad instrument. Included in the broad instrument would also be the EDF, which is

currently outside the EU budget. It is therefore also proposed to integrate the EDF into

the EU budget and by doing so, extend its flexibility features, to the extent possible, to all

countries, including those currently covered by the DCI and the ENI. The flexibility

features include its 20% reserve and multi-annuality in the form of carrying over unused

funds and recommitments of uncommitted funds

The EDF is not subject to the annuality rules of the EU budget so funds can be used any year according to needs.

Annuality refers to the EU budgetary principle whereby expenditure and revenue are programmed and authorised for a

given year, starting on 1 January and ending on 31 December. Since this principle cannot be waved under the EU

budget, a similar approach can be achieved with the broad instrument by allowing (i) uncommitted funds to be used the

following year; and (ii) committed funds that have not been spent for a specific project/programme to be reused for

another project/programme in subsequent years.

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Chart 1. Current situation of heading 4

Chart 2. Proposed external action heading

4.2.

Structure of the broad instrument

The broad instrument should regroup the current actions of certain instruments under

three components: geographic, thematic and rapid response actions. Within the first two

components, defined regions and thematic priorities should be set-out, including

dedicated amounts. Prioritisation within the third component should be made in

accordance with the need to respond rapidly to emerging crises, build resilience and in

line with foreign policy objectives.

The percentages are based on current figures for programmes (budget execution until 2017, adopted budget until

2018 and programming/planning for 2019-2020).

The percentages for the proposed, future external action heading redistributes the current figures for existing

programmes under the new structure. They are for comparison purposes only and do not prejudge the final allocations.

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Climate change, environmental protection and gender equality would be mainstreamed

throughout

Beyond the three components the instrument should provide a substantial cushion for

emerging challenges and priorities. This should allow for an appropriate response of the

Union in the event of unforeseen circumstances; for addressing new needs or emerging

challenges, such as those linked to crisis and post-crisis situations, migratory pressure at

the EU’s or its neighbours’ borders; or for promoting new international initiatives

priorities.

The broad instrument should also provide for budgetary guarantees for lending

operations to promote investment and macro-economic stability in partner countries. This

will provide the legal basis for the guarantees required for financial operations under the

current EFSD, ELM and MFA. The use of financial instruments and budgetary

guarantees as an aid modality should be promoted by creating a one-stop shop/platform

for financial instruments/blending and budgetary guarantee operations. The overall

management should remain with the Commission.

While recognising that the European Investment Bank is a key partner of the

Commission and a natural actor for implementing these types of operation, the decisions

to use lending operations through the European Investment Bank (particularly sovereign

lending), which are currently carried our through the ELM, should be taken during the

programming process and reflected in the programming documents. As regards Macro-

Financial Assistance, although the funds should be provisioned from the geographic

envelopes of the broad instrument, the current decision making applied today (full

legislative procedure for every case of assistance to a third country) could continue to be

used.

The EU and its Member States have collectively committed to spend 0.7% of their GNI

as ODA

. The broad instrument, as well as all other external action instruments should

contribute to this goal.

The internal governance systems used today to decide how funding will be allocated to

projects should continue and where possible be enhanced, notably when it comes to

upstream work with all key Commission services and the European External Action

Service. In the case of programming documents, Member States should continue to

exercise control through committee procedures.

The funds mobilised from the cushion for emerging challenges should also follow the

standard Commission decision-making procedures.

4.2.1. Geographic programmes

The broad instrument should mainly be implemented through geographic programmes.

The geographic programmes would comprise country or multi-country actions. The

potential beneficiaries of the programmes are all third countries (i.e. non EU countries).

External action spending is an important contributor to the EU’s target to mainstream climate action and to ensure

that at least 20% of the total EU budget be dedicated to climate action-related spending. The success of the

mainstreaming approach has been highlighted in, for example, the MFF Mid-Term Review, see:

http://ec.europa.eu/budget/mff/lib/COM-2016-603/SWD-2016-299_en.pdf

See

http://www.oecd.org/dac/stats/officialdevelopmentassistancedefinitionandcoverage.htm

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The only exception would be for candidate and potential candidate countries to avoid

overlaps with the successor to IPA.

This programme would succeed the current geographic programmes under the DCI, EDF,

ENI and part of the INSC

and PI. In line with political orientations from the

Commission

, it includes a prominent Neighbourhood window with a clear ring-fenced

allocation. Furthermore, it will allow for conducting current thematic activities that are

not global and pursuing EU economic and policy interests (including non-ODA classified

actions) in all partner countries

–

including on the external dimension of internal policies.

This would ensure more comprehensive programmes at country or regional level.

The beneficiaries would be grouped into the following regions each with ear-marked

amounts:

Neighbourhood

Sub-Saharan Africa

Asia and the Pacific

Americas and the Caribbean

4.2.2. Thematic programmes

A number of thematic actions currently financed by thematic programmes and taking

place at country level will instead be covered under the geographic programmes. The

remaining thematic actions should be complementary to the geographic actions and

should address global and trans-regional initiatives supporting internationally agreed

goals such as the Sustainable Development Goals or global public goods and challenges.

The thematic actions would only be undertaken where there is no geographic programme

(to ensure no overlaps), where there is no agreement on the action with the partner

country concerned, or where the action cannot be adequately addressed by geographic

programmes.

The thematic component would merge the current thematic programmes under the DCI

and the EIDHR (including election observation missions) and part of the PI.

The potential beneficiaries would be all third countries and overseas countries and

territories to ensure a global approach to common challenges. The thematic programmes

will also cover actions that are political flagship initiatives. It should be linked to the

universal agenda for the pursuit of the SDGs and the EU policy frameworks to

implement them.

In particular, actions under the thematic component should address actions linked to the

pursuit of the Sustainable Development Goals at global level, in the following areas:

(i)

Human rights, democracy and Civil Society Organisations (including actions

formerly covered by EIDHR and the CSOs part of the CSOs/Local Authorities

programme).

Except for those activities that are covered by the Euratom Treaty.

See Commission’s communication on a new, modern MFF for an EU that delivers efficiently on its priorities

post

2020 (February 2018)

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(ii)

Stability and peace (currently covered by article 4 and 5 of the IcSP

(iii) Support to the preservation of global public goods (these programmes are

currently covered by the global public goods and challenges programme and

the Local Authorities part of the CSOs/LAs programme of the DCI, and some

actions under the PI).

4.2.3.

Rapid response component

Rapid response actions should be complementary to geographic and thematic

programmes. They should be designed and implemented to enable their continuity under

those programmes, wherever relevant.

This component would be dedicated to crises of a political, security or economic nature.

It would provide rapid response capacity for crisis management and conflict prevention,

resilience building, including linking relief, rehabilitation and development, and short-

term foreign policy action.

The potential beneficiaries of the component are all third countries and overseas

countries and territories.

This component would need to retain, and build on, the current modalities for fast,

flexible and responsive actions, with funds that are immediately available. The

component would include actions which:

(a)

contribute to stability and conflict prevention in situations of urgency,

emerging crisis, crisis and post-crisis;

contribute to strengthening resilience of states, societies, communities and

individuals and to link humanitarian and development action;

address foreign policy needs and priorities.

Justification for the changes

Reduced administrative burden

As noted by the Commission

and supported by feedback from partners, the current

architecture of the external financing instruments is too complex. Streamlining a number

of instruments into a broad instrument would provide an opportunity to rationalise their

management and oversight systems therefore reducing the administrative burden for EU

institutions and Member States. Having a simplified oversight system would allow the

relevant institutions to have a better, more comprehensive view of EU external action.

Instead of focusing on multiple programming processes, debates would be more focused

on political objectives and engagement with external partners.

Simplification does not mean there would be less scrutiny. The inter-institutional balance

would be fully preserved. Rather, the budgetary and scrutiny powers of the European

Parliament would be extended by the incorporation of the EDF into the budget.

4.3.

Article 4 concerns peace-building partnerships. Article 5 concerns global and trans-regional threats and emerging

threats.

In particular the Reflection paper on the future of EU finances (June 2017), and the Communication from the

Commission to the European Parliament and to the Council (February 2018)

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Fewer gaps and overlaps between instruments

With lines between foreign and development policy, and between internal and external

policies blurring, the challenges the EU is facing often cannot be contained within

geographic and thematic boundaries. To respond to these challenges and support the

implementation of universal goals such as the 2030 Agenda, a broad instrument would

provide a more geographically and thematically comprehensive approach, facilitating the

implementation of different policies in a trans-regional and multi-sectoral way. By

merging several instruments, the EU would facilitate coherent responses, breaking down

thematic and geographic silos and better enabling the exploitation of synergies.

By ensuring thematic programmes will in principle only cover those actions that cannot

be financed through the geographic component, or which need specific approaches (e.g.

where approval by the counterpart cannot take place because of their global nature), the

broad instrument would ensure a more systematic, integrated approach to its

programming/planning. Overlaps between programmes would be eliminated, in

particular where they might occur in relation to more advanced developing countries, and

between the geographic and thematic programmes (i.e. the EDF geographic programmes

and the DCI thematic programmes). Policy lines and operational needs would drive the

programming rather than specific instrument (thematic/geographic)-based needs.

At the same time, the broad instrument would also reduce the complex framework of

interfaces between the EU’s external and internal policies. For example, on migration,

while numerous instruments and ad hoc tools, such the creation of the EU emergency

trust funds for Africa

have helped the EU support this issue, the broad instrument

would go further by ensuring full geographic coverage of support.

The EU would be able to engage with partners in a more coherent way. The 2030 Agenda

is based on equal partnerships that transform our way of cooperation and applies to all

countries. A broad instrument would allow the EU to remove artificial boundaries to

ensure a right policy mix for different countries and regions. Along these lines, the issue

raised in section 2.2. on differentiation, including graduation, should be reviewed so that

cooperation with upper middle income countries can be pursued through bilateral

cooperation. Further, cooperation with industrialised countries should also be covered

under the instrument, to ensure a coherent approach, notably through regional

cooperation and rapid response activities for foreign policy. These funds should be

limited to ensure no inverse impact on ODA figures.

Finally, cooperation and joint programming with Member States would be enhanced

since coordination would only be needed with fewer EU instruments. It is worth noting

that by creating the broad instrument the EU will be mirroring more closely the set-up of

the Member States who do not regulate their external spending according to different

geographic and thematic instruments.

More reactive to evolving needs and priorities

Established by the Commission in 2015, this trust fund was created to address the root causes of instability, forced

displacement and irregular migration and to contribute to better migration management. For more information:

https://ec.europa.eu/europeaid/regions/africa/eu-emergency-trust-fund-africa_en

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The broad instrument will provide an opportunity to enhance the responsiveness and

flexibility of EU actions.

By reserving a substantial amount of un-allocated funds, the emerging challenges and

priorities cushion, building on the successful experience of the EDF

would provide

more flexibility to shift funds more easily. These funds would be used according to needs

for unforeseen events, new initiatives/priorities or to respond to migratory pressures at

the EU’s or its neighbours’ borders. Such a precaution

would allow for top-ups to the

different regions/themes covered under the broad instrument, helping to ease the

pressures on the external action budget as unforeseen events and new priorities emerge.

The balance between flexibility and predictability should be ensured as the cushion for

emerging challenges will exist alongside dedicated amounts per region.

In today’s fast-changing

world, the transfer of budgetary flexibilities to the broad

instrument would allow the EU to better cope with unpredictable events. Under the broad

instrument, EDF practices such as making sure non-committed funds and funds that have

not been spent for a project/programme would still be available in subsequent years,

would make the instrument more flexible. More funds will become available for new

projects.

Furthermore, based on current experience there is a sound justification for having a

dedicated flexible component to cover a full range of security, humanitarian-development

nexus, and political, economic and other issues where a rapid EU response is necessary.

While lessons learned have shown the EU needs to be more agile in mobilising its funds,

feedback from stakeholders has also shown the importance of balancing flexibility with

predictable levels of funding. Such predictability is currently provided through certain

partner-driven, long-term instruments (i.e. the DCI, EDF and ENI), which together

account for approximately 70% of heading 4. The broad instrument should continue to

provide a similar proportion of predictable funding through its geographic programmes.

More focus on performance

Concerning performance, in parallel to the broad instrument, a new IT platform will be

created that will facilitate the encoding of results data at project level. This would help

increase the availability of results data for monitoring, reporting and evaluation purposes.

For further information on performance, see section 6.

4.4.

Which instruments should be replaced by the broad instrument?

With more than 15 external relations instruments currently under heading 4, not all can

justifiably be replaced by the broad instrument. What follows is an analysis (advantages

and disadvantages) of the instruments that are proposed to be replaced, mainly due to

their common legal bases or similar objectives.

European Development Fund

Advantages of integrating the EDF into the broad instrument and therefore the EU

budget:

As the 11th EDF is the largest external instrument with a volume of EUR 30.506

billion, a broad instrument will be more meaningful if such a significant programme can

As a comparison, the EDF’s un-allocated

envelope is currently 20% whereas for the DCI, it is 6% of the geographic

programme.

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be part of it. The possibilities of harvesting its previously mentioned flexibility features

are much higher by bringing EDF on-budget into the broad instrument.

The level of democratic scrutiny by the European Parliament will be enhanced with the

EDF on-budget. Unlike the current arrangements, the same Parliamentary procedures

would apply across all development cooperation. This would help strengthen the public

legitimacy and political visibility of the EU's external assistance as a whole.

At the same time, the criticism that some EDF funding is being used to finance military

expenditures as

part of a “development instrument” will cease to be an issue.

Expenditures related to military actions, which cannot be financed by the EU budget due

to Treaty limitations, could be taken up under a new off-budget security fund (see further

information on the security fund later in this section).

EU external action would become more coherent. Artificial interfaces across instruments,

in particular with regard to geographical, partner-oriented programming would be

reduced. There would be increased transparency in the EU budget, covering all external

action expenditure (except military related expenditure), therefore providing a better

global picture. The merge into a broad instrument would also provide an opportunity to

review the EDF's specific implementation procedures (e.g. the obligation to have a

national authorising officer). There would also be no need for a separate EDF key

- the

contributions from Member States would be those made (in percentage terms) to the EU

budget, as for any other programme. It should be noted that several efforts have already

been made to align the two percentages so that now there is little difference between

them.

Disadvantages of integrating into the broad instrument:

The political and financial

implications of bringing the EDF on-budget include that the EU would lose its visible

and symbolic financial basis for cooperation with African, Caribbean and Pacific

countries. Implications for ACP partners include that they may see their relations with

the EU as being downgraded as certain procedures would change. There could also be a

risk that the broad instrument would receive less funding than the sum of the EDF and

the other external action instruments combined.

The EDF’s flexibility features may be lost if it is integrated

into the EU budget and

military related expenditure currently funded by the EDF’s African Peace Facility (AFP)

could stop being funded for legal reasons.

Conclusion:

The advantages of integrating the EDF in the EU budget outweigh the

disadvantages as long as partners can be reassured on the implications and certain

preconditions can be met. The additionality of the EDF full amount for external relations

must be ensured. Existing EDF flexibilities (e.g. large reserve and multi-annuality)

should be imported as far as is possible within the annuality of the EU budget. Activities

currently financed by the APF should continue through an off-budget mechanism.

Development Cooperation Instrument

Advantages of integrating into the broad instrument:

There would be a reduction in the

artificial interfaces between the DCI and the other external action instruments

–

particular regarding the instruments that provide geographical, partner-oriented

The EDF key sets out the contributions (in percentage terms) the Member States have to contribute.

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programming. For example, the Latin America and Caribbean region would be covered

by one instrument instead of both the current combination of DCI and EDF. Global

issues such as climate change would be better addressed in a coherent manner across all

partner countries. Currently they are split between DCI geographic and thematic

programmes, the EDF and the PI. Links between development, security, and migration,

which are currently split across several instruments can be better ensured.

Disadvantages of integrating into the broad instrument:

There could be the perception of

diluting the importance of development policy within a broader external action

framework.

Conclusion:

The advantages of integrating the DCI outweigh the disadvantages as long

as the DACability

objective for a proportion of the fund and communication efforts are

made to explain that placing the DCI in a broad instrument does not represent a “down-

grading” in EU priorities.

European Neighbourhood Instrument

Advantages of integrating into the broad instrument:

During the current MFF, the ENI

has been one of the most stretched instruments in terms of funding due to multiple crises

in its regions. A major advantage of being part of the broad instrument would be that the

Neighbourhood would have access to the emerging challenges and priorities cushion in

addition to ring fenced amounts. 98% of ENI actions are reported as ODA. As the

pressure to continue actions that can be reported as ODA increases, merging within a

broad instrument may provide scope for more flexibility in defining the actions to be

financed. It would allow for easier cooperation between ENI, African and Asian

neighbouring countries on issues such as migration and energy.

Disadvantages of integrating into the broad instrument:

A dedicated instrument for the

Neighbourhood gives this policy a visible financial basis. Partner countries may be

hesitant about the cooperation being merged into a broad instrument. This may create a

negative political signal that will need to be addressed through appropriate

communication.

Conclusion:

The advantages of integrating the ENI outweigh the disadvantages as long as

a prominent ring-fenced window for the Neighbourhood is kept and communication

efforts are made to explain that (i) a merge does

not represent a “down-grading” in EU

priorities and (ii) the existence of distinct policies and strategies will be maintained

ensuring political visibility. The same should apply to specific approaches and tools such

as the more for more mechanism

Instrument contributing to Stability and Peace

Advantages of integrating into the broad instrument:

Including short-term crisis

response, conflict prevention and CBSD actions under the IcSP within the broad

instrument would reinforce further coherence and complementarity with other

instruments, providing an enhanced coordination of activities at country level. Likewise,

the coordination of the medium and long-term activities under the IcSP with the long-

Meaning actions have the main objective of being administered with the promotion of the economic development

and welfare of developing countries or are concessional in character, conveying a grant element of at least 25%

The 'more for more' mechanism ensures additional reform efforts by Neighbourhood countries are rewarded with

additional financial and other support.

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term/programmed activities from other instruments could be further reinforced. Links

between security and development would also be enhanced.

Disadvantages of integrating into the broad instrument:

There is a risk of a loss of

flexibility and distinctive modalities for crisis response and conflict prevention, reducing

the EU's role and reputation in helping partners in crises and conflicts.

Conclusion:

As the disadvantages can be mitigated by ensuring that the IcSP’s specific

focus and the existing flexibilities are maintained within a broad instrument, it is

proposed to merge the instrument into the broad instrument.

European Instrument for Democracy and Human Rights

Advantages of integrating into the broad instrument:

While it has limited funds

compared to other external financing instruments, the EIDHR is at the core of the EU's

values. As democracy and human rights are being put under greater stress, additional

funding may be needed. As part of the broad instrument, democracy and human rights

actions potentially have greater access to un-allocated funds. Boundaries with other

instruments would be reduced and more integrated programming approaches and

coherence with country actions would be possible.

Disadvantages of integrating into the broad instrument:

It could be perceived by some

actors that putting the EIDHR in the broad instrument reduces the visibility of its actions.

Conclusion:

Overall, by ensuring financial visibility of democracy and human rights

through ring-fencing inside the thematic programme together with the fast disbursing

mechanism, the advantages of integrating the EIDHR inside the broad instrument

outweigh the disadvantages.

Partnership Instrument

Advantages of integrating into the broad instrument:

The PI’s integration into a broad

instrument would help confirm that the promotion of political and policy issues in the EU

and mutual interest, including external projection of EU internal policies, with no ODA

requirements, is recognised as an integral part of a broad EU external action.

Complementarity with other instruments would be enhanced, strengthening integrated

approaches and coherence. For example, regional initiatives could be tackled in a more

consistent and harmonised way regardless of the different levels of development amongst

the countries.

Disadvantages of integrating into the broad instrument:

The integration into a broad

instrument might weaken the flexible and fast reaction approaches of the PI which allow

it to respond to emerging needs and priorities of the EU, or to seize political windows of

opportunity which depend on the political cycle in partner countries or on the dynamics

of bilateral relations or inter-regional/ multilateral dialogues.

Conclusion:

Overall, the integration of the PI’s activities into a broad instrument presents

a potential for coherence and synergies with other types of external action. The potential

risks mentioned above can be mitigated by appropriate measures such as preserving PI

approaches and visibility, in order for the advantages of integrating the PI inside the

broad instrument to outweigh the disadvantages.

Macro Financial Assistance

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Advantages of being into the broad instrument:

The inclusion of MFA under the

budgetary guarantee component of the broad instrument would ensure that the required

provisioning arrangements for the guarantee of MFA lending operations would be in line

with the provisions under the new financial regulation. Furthermore, it would allow for a

more efficient management of guarantee resources pooled in the Common Provisioning

Fund.

Disadvantages of being into the broad instrument:

Not having a specific legal base, but

being based directly on the Treaty, MFA will continue to be governed by the ordinary

legislative procedure, which requires the approval of the European Parliament and of the

Council for each specific operation. This legislative and decision making process is

different from the one envisaged for the broad instrument. This lack of alignment of

procedures would therefore be against the objectives of streamlining and simplification in

the broad instrument. Changing the current legal setup to enter into a single regulation

would require intensive consultations with the co-legislators.

Conclusion:

It is more effective to keep MFA separate from the broad instrument due to

its different legislative and decision making processes. MFA grants will continue to be

treated under a separate budget line. However, including the provisioning arrangements

for MFA in the budgetary guarantee component of the broad instrument, should help

safeguard the important leverage capabilities of the MFA and allow for a more efficient

management of provisioning resources.

European Fund for Sustainable Development

Advantages of being into the broad instrument:

Integrating into the broad instrument

would simplify the legal framework and efficiency of processes and operations. It would

improve visibility delivered by the current fragmented instruments and facilitating better

communication of impact and results. There would be a stronger policy alignment and

complementarity of actions.

Disadvantages of being into the broad instrument:

It would be difficult to regulate

distinct governance models within the same basic act. In the case of EFSD, governance

bodies include the Member States and the European Parliament as an observer, which is

not always the case for other financial instruments. Some confusion may be created

because the broad instrument would concern investment structures beyond its coverage

(e.g. pre-accession).

Conclusion:

The disadvantages of having the EFSD in the broad instrument can be

overcome by ensuring the complexities of having an investment structure serving

programmes beyond the broad instrument can be avoided by making cross-references in

the relevant legal bases.

External Lending Mandate

Advantages of being in the broad instrument:

The objectives of the ELM would be

defined alongside and coherently with those of other instruments, in particular other

budgetary guarantee instruments such as the EFSD in order to ensure maximum

coherence and added-value of the EU's budgetary guarantees. This would avoid the

current situation whereby two guarantee instruments exist (EFSD and ELM) which could

theoretically support the same kinds of projects, one exclusively for the EIB and the other

open to a range of international financial institutions. Positive experience with climate

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finance under the ELM could be imported into the new instrument, and the application of

common standards (do no harm/Paris Agreement compatibility) would be harmonised.

Disadvantages of being in the broad instrument:

The challenge will be to account for the

governance specificities of the ELM while ensuring close policy alignment of the EIB's

activities under the EU guarantee with EU objectives as well as complementarity with the

EFSD.

Conclusion:

In order to unlock the value-added of including the ELM in the broad

instrument while avoiding the disadvantages, it should incorporate certain features of the

EFSD such as a governance structure which allows for more granular policy alignment of

EIB projects (in the way of the EFSD Strategic Board or the European Fund for Strategic

Investments

investment committee). The objectives of the ELM should be defined in

such a way as to clarify the complementarity between the EFSD windows and the ELM.

For more detailed information see the annex on ELM.

Common Implementing Regulation

Advantages of integrating into the broad instrument:

There will be enhanced clarity on

the principles and policy framework that will apply during the implementation of the

broad instrument. There will also be opportunities to further harmonise existing

implementing articles that are currently included in the individual instruments but not in

the CIR.

Disadvantages of integrating into the broad instrument:

Current specificities included in

the CIR, such as support to people with disabilities could risk being diluted in a broader

framework.

Conclusion:

As long as efforts are made to ensure the specific concerns in the current

CIR are given attention in the broad instrument, the advantages of merging the CIR

would outweigh the disadvantages.

Programmes that should not be replaced under the broad instrument

The following text justifies why the remaining heading 4 instruments should not be

merged into the broad instrument, mainly due to their specific legal bases or objectives.

Further information on these programmes can be found in the annexes.

Humanitarian Aid

The delivery of humanitarian aid is guided by the principles of humanity, neutrality,

impartiality and independence. Humanitarian aid is provided solely on the basis of the

needs of affected populations, regardless of any political, military or other objective. This

is fundamental in order to secure access for humanitarian actors to all people in need

while ensuring their own security in the field. A separate instrument for humanitarian aid

is a safeguard which helps preserve the humanitarian principles and avoid confusion or

blurred lines among different EU policies, political (or other) objectives and actors

present in crises.

The European Fund for Strategic Investments is an initiative to help overcome the current investment gap in the EU.

Jointly launched by the EIB and the European Commission, it aims to mobilise private investment in projects which

are strategically important for the EU.

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The consequence of the principle of impartiality is the EU's commitment to a needs-

based approach to humanitarian aid, to reach the most vulnerable, answer the most urgent

needs and fulfil the humanitarian imperative. It should therefore be translated into a

needs-based allocation of funding, which is better guaranteed with a clear separation

between the source of humanitarian aid funding and other funding instruments, which

may have legitimate political objectives, as is currently the case.

Humanitarian aid does not function like other instruments: it is governed by the

emergency contexts and tight timeframes in which it must be delivered. The

Humanitarian aid regulation and a specific budget line have made the humanitarian aid

instrument more flexible in terms of programming than many others, in order to react to

changing circumstances in crises and sudden onset crises. This has allowed the EU to be

in the frontline of response to many of the most acute crises. A specific instrument

therefore best matches the important operational necessity of reaching people before it is

too late.

Complementarity with the broad instrument will be ensured through actions that link

development and humanitarian assistance (Linking Relief, Rehabilitation and

Development, LRRD), e.g. in the context of the operationalisation of the humanitarian-

development nexus and the resilience agenda.

Union Civil Protection Mechanism

The Union Civil Protection Mechanism (UCPM) has a specific mandate for prevention,

preparedness and response to disasters both inside and outside Europe

. The nature of

the instrument is very specific and distinct from other external instruments insofar as it

ensures the coordination of in-kind assistance provided by the participating states.

Moreover, the external dimension of the UCPM is closely linked to humanitarian

assistance provided by the EU. The UCPM has played an essential role in providing

rapid assistance in the aftermath of natural disasters in many occasions (e.g. Nepal, Haiti,

Peru, and Bangladesh), complementing the relief assistance provided by humanitarian

aid. The close cooperation between the two instruments should be reinforced. With this

in mind, the proposed reform of the UCPM tabled by the Commission in November 2017

tries to deepen this cooperation by facilitating the combined use of these instruments

when responding to a disaster outside the EU. Integrating the UCPM (or its external

component) into the broad instrument could undermine the capacity of the EU to provide

disaster relief to third countries using the most effective combination of assistance

according to context.

The UCPM has close connections with other external instruments, namely IPA and the

ENI. The cooperation between the UCPM and the ENI relates to prevention and

preparedness programmes carried out in ENP countries, both in the South and the East.

In addition to these programmes, the ENI also offers funding to neighbourhood countries

from national allocations to cover prevention and preparedness activities (twinning

programmes or technical assistance programmes).

Instrument for Pre-Accession Assistance (IPA)

It therefore straddles internal and external headings.

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IPA pursues objectives that are completely distinct from the remaining external action

instruments as it aims to prepare countries to become EU Member States by supporting

their accession process. The different nature of its objectives therefore argues in favour

of it remaining separate.

According to the IPA II mid-term review, the instrument is relevant and fit for purpose,

in line with EU priorities and beneficiary needs and has demonstrated a high degree of

flexibility. Only minimal changes would be necessary to clearly position it in the context

of the new Western Balkans Strategy, and reflect the developments in the relations with

Turkey. At the same time, more efforts should be put in place to ensure coherence and

synergies with the broad instrument, in particular with respect to the thematic and non-

programmable component. The complementarity of the instrument with other external

financing instruments, notably EIDHR and IcSP has previously been good but

coordination during both the planning and programming phase has not been sufficient.

Close alignment between the programming cycles of IPA and the programmable parts of

the broad instrument would facilitate complementarity.

EU Aid Volunteers scheme

The EU Aid Volunteers (EUAV) objectives are different to the broad instrument. The

aim will be to enhance the engagement of young people and organisations in activities

that will strengthen cohesion and solidarity in Europe and abroad. Instead it should be

integrated into the European Solidarity Corps therefore extending its geographical scope.

Both programmes are partially overlapping with a common overarching objective of

involving young people and organisations in high quality solidarity activities. Integrating

the activities of the EUAV within the European Solidarity Corps would provide clarity

through a single entry point for different EU volunteering opportunities inside and

outside the EU. Moreover, the integration of the two initiatives would present a good

opportunity to simplify the procedures in line with the findings from the interim

evaluation of the EUAV (2017).

Support to the Turkish Cypriot community

This programme has its own legal basis

and is based on article 352 TFEU (Council

unanimity and European Parliament consent) whereas other EU external instruments are

based on articles 209 and 212 TFEU. In addition, its duration is not linked to the MFF

and it has no end date. Due to its unique nature and specific coverage, there is little scope

for synergies with other instruments and the programme.

Common Foreign and Security Policy (CFSP)

The CFSP has its own legal base. Moreover, it is functionally different from the other

instruments with the main focus being security. Actions funded under the CFSP are

closely coordinated with other external instruments projects and programmes. The

conceptual design and conduct of specific CSDP mandates is subject to dialogue and

analysis involving the EEAS, the Commission (the Service for Foreign Policy

Instruments) and the Council through PSC and the relevant working groups, which

ensures strong coordination and synergy with other Union's programmes.

Greenland and OCTs

Council Regulation (EC) 389/2006

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The OCTs and the Greenland Decisions should not be integrated in a broad instrument or

to any other co-decided instrument due to their specific procedures of adoption: Council

decision following consultation of the European Parliament. However, in order to

streamline the number of programmes, they should be regrouped under one decision,

which would include a ring-fenced envelope for Greenland.

The Greenland and OCTs programme will be connected to the broad instrument through

the latter’s thematic component. A number of OCT priorities include

global challenges

such as environment and climate change.

Instrument for Nuclear Safety and Cooperation

Nuclear safety is an important part of the EU external action and should continue to be

part of a broad instrument. Nevertheless some nuclear activities are the competence of

the Euratom Treaty, and the INSC has its own legal basis (Article 203 of the Euratom

Treaty

) which is not compatible with the ordinary legislative procedure.

Analysis of the legal base has shown that if the INSC was merged into a broad

instrument it would not be possible to continue the actions of the INSC to their full

effect. As the INSC cannot be totally integrated into a broad instrument a separate

instrument should be kept based on the Euratom legal base in order to pursue the current

objectives of the INSC, complementing the broad instrument. Therefore actions carried

out under this new instrument should be consistent with those of the broad instrument.

Emergency Aid Reserve

An enlarged emergency aid reserve would replace the current emergency aid reserve. It

would cover crisis both inside and outside the EU.

The current emergency aid reserve is a budget tool outside the normal allocation in the

EU budget. It is intended to allow for a rapid response to specific aid requirements of

third countries following events "which could not be foreseen when the budget was

established, first and foremost for humanitarian operations, but also for civil crisis

management and protection, and situations of particular pressure resulting from

migratory flows at the Union's external borders where circumstances so require" (MFF

Regulation 2014-2020).

It would be essential that a significant amount of the emergency and crisis response

reserve is earmarked for external actions, in particular for humanitarian and emergency

operations.

European Peace Facility

This would be a new proposal that would be financed outside the EU budget and

therefore outside the broad instrument. In this facility, all existing military and security-

related funding actions, that cannot be on-budget according to Article 41(2) TEU would

be merged (i.e. APF that currently sits under the EDF, and other crisis management

components, namely the Athena Mechanism). This off-budget facility would address the

criticism that development funds are being misappropriated for security-related actions,

See

https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A12012A%2FTXT

kom (2018) 0460 - Ingen titel

while at the same time acknowledging the needs for funding military and security-related

actions in/by partner countries, including Africa and beyond. This off-budget fund would

have the following features:

1. Largely non-ODA actions in the military/security sector;

2. Greatly simplifies current arrangements and increases coherence and flexibility of

those instruments covered;

3. Consistency between this facility and the non-programmable component and

other security-related actions of the broad instrument.

Security related expenditures that can already be funded under the budget should

continue being implemented through the existing modalities in post-2020 situation. The

fund should be governed by the principles of coherence and complementarity, ensuring

full consistency and synergy with relevant external action instruments and measures

under the EU budget, in particular the Common Foreign and Security Policy. The High

Representative, the Council and the Commission will ensure that during each step of

implementation, coordination and synergies between EPF funded actions and measures

and other actions funded by the Union’s budget, is systematically sought to ensure

relevance and complementarity in order to increase effectiveness and impact

4.5.

Prioritisation

Prioritisation of actions should be based on the policy framework and on the objectives

of the broad instrument. During the planning/programming stage of the project cycle,

allocation methods are used to determine envelopes for the partner countries. Currently,

there are diverse methods to define financial allocations across the EU instruments,

ranging from quantitative methodologies to pure qualitative indicators.

For the EDF and DCI, the EEAS and the Commission services have developed a

transparent methodology based on a quantitative model that uses a limited number of

internationally agreed indicators, and foresees and adjustment based on the country

situation and particularly evolutions in the political/security situation and the absorption

capacity (demonstrated by past cooperation with the EU).

The DCI, the Cotonou Agreement

and the regulation implementing the 11

EDF

specify that EU should allocate resources according to country needs, capacities,

commitments, performance and potential EU impact; and that the EU must seek to target

resources where needed the most to address poverty reduction, and where they can have

the greatest impact, including in fragile countries.

Where necessary and appropriate, the allocation methodology allows for adjustments on

the basis of a qualitative assessment, reflecting elements such as commitments,

performance, impact, inequality recent evolution in country political/security situation

and its demonstrated absorption capacity. Subsequently the allocations are set in the

multiannual programming/planning documents for each partner country/region.

For the Neighbourhood countries, Association Agendas, Partnership Priorities and other

equivalent jointly agreed documents are key points of reference for setting the priorities

See

https://ec.europa.eu/europeaid/regions/african-caribbean-and-pacific-acp-region/cotonou-agreement_en

See

http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2015.058.01.0001.01.ENG

kom (2018) 0460 - Ingen titel

for Union support to neighbourhood countries. Subsequently, the objectives and priorities

together with indicative allocations are set in relevant multiannual programming

documents. The ENI regulation specifies that support to countries shall take into account

needs; commitment to and progress in implementing mutually agreed political, economic

and social reform objectives; commitment to and progress in building deep and

sustainable democracy; partnership with the EU, including the level of ambition for that

partnership and absorption capacity and the potential impact of EU support. The EU's

specific relationship with neighbourhood countries will also be reflected through the

criteria governing the allocation of funds.

For the EIDHR, the indicative overall financial allocations and allocations per priority

area are made on the basis of strategies papers.

For the IcSP, financing of actions takes into account the particular difficulties of the

partner countries or regions concerned.

For the PI, the methodology is not based on binding allocations but reflects the global

scope and coverage of PI objectives.

For the INSC, the geographical scope extends to all third countries, with a priority given

to accession and neighbouring countries.

ELIVERY MECHANISMS OF THE INTENDED FUNDING

The specific, diverse and rapidly changing context of EU external action requires the use

of all the existing implementation modalities and delivery instruments currently used by

the external financing instruments in order to pursue the policy objectives and

operational priorities described early in this document. The existing choice of tools

should be preserved both at the level of implementation and delivery method. In

choosing the appropriate implementation modality and delivery method the EU will take

into consideration the principles of subsidiarity and proportionality. Efforts will also be

put in place to enhance leverage of public and private funds through the use of innovative

financing as detailed below.

5.1.

Implementation modalities

The EU should continue relying on a variety of partners such as international

organisations, Member States agencies and organisations, civil society organisations,

national, regional and local authorities, international and development financial

institutions in situations where they have a clear added-value, building on the experience

achieved and the lessons learned. The new implementation framework should balance

flexibility with predictability, so key partners can justify the continuous investment into

competences and resources, which ultimately enable the smooth running of planned

operations and the ability to react in crisis operations. In the context of external action,

the EU can employ direct, indirect or shared management modes.

direct management,

the EU (including when it acts through the EU Delegation or an

executive agency of the EU) contracts directly with the final recipient. This management

mode can be used to finance, among others, budget support operations, grants to civil

society organisations and contracts assigned through procurement procedures for

provision of services, works and goods. Erasmus+ also employs the direct management

mode.

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indirect management,

EU funds are contracted through intermediaries (called

entrusted entities). The entrusted entity is only allowed to channel EU funds to final

recipients by way of grants, public procurement or financial instruments. The entrusted

entity either uses the EU's rules or follows its own rules if they were considered to be

equivalent in the ex-ante check known as a pillar assessment. Indirect management can

be used with the following entrusted entities to serve specific purposes as follows:

(a) With a partner country or an entity designated by it to strengthen ownership and

alignment with national procedures in line with aid effectiveness principles. This

is often used in the context of the Instrument for Pre-Accession;

(b) With an agency of a Member States or an EFTA country (Iceland, Liechtenstein,

Norway, Switzerland) or, exceptionally, of a third donor country to reinforce

donor coordination and harmonisation;

advantage of dedicated international organisations, foster long-term collaboration

with key international partners and increase donor coordination and

harmonisation;

(d) The European Investment Bank which lends and provide guarantees and

financial instruments in support of EU policies, often in conjunction with other

forms of EU support (blending, ELM guarantee, ACP Investment Facility, etc;

(e) An EU specialised (traditional/regulatory, hence not executive) agency.

Member States

5.2.

Delivery methods

In accordance with the new European Consensus on Development, to reflect the

framework set out in the 2030 Agenda and the Addis Ababa Agenda for Action

, the EU

and its Member States must adapt their approach to mobilise and make effective use of

all means of implementation, including through innovative financing mechanisms. This

requires a renewed focus on establishing an enabling and conducive policy environment

at all levels. This includes mobilising and making effective use of domestic and

international public finance, mobilising the domestic and international private sector,

strengthening the capacity of partner countries to deliver change, stimulating trade and

investment, fostering science, technology and innovation, as well as addressing the

challenges and harnessing the positive effects of migration.

In this context, the EU will continue to make use of the full range of existing delivery

methods available such as grants, procurement contracts, programme estimates, budget

support, trust funds, Technical Assistance and Information Exchange (TAIEX)

and

twinning

, guarantees, loans and other financial instruments. At the same time the EU

will seek to extend its toolbox to broaden the use of innovative financing mechanisms

including through the use of policy based lending. The choice of the most appropriate

delivery method will be policy driven and it will be guided by considerations concerning

For more information:

http://www.oecd.org/dac/effectiveness/parisdeclarationandaccraagendaforaction.htm

TAIEX supports public administrations with regard to the approximation, application and enforcement of EU

legislation as well as facilitating the sharing of EU best practices. It is largely needs driven.

Twinning is a tool used for institutional cooperation between the public administrations of Member States and

partner countries. Twinning projects bring together public sector expertise from Member States and beneficiary

countries with the aim of achieving concrete mandatory operational results through peer-to-peer activities.

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sound financial management, effectiveness, efficiency,

simplification, added value and focus on impact and results.

flexibility,

leverage,

For example, budget support has demonstrated its effectiveness in fostering policy

dialogue, ensuring ownership, supporting key reforms and delivery of results in external

action. Grants have proven essential to support civil society and private organisations as

well as local authorities in delivering public services. Similarly, procurement contracts

have favoured involvement of the private sector. TAIEX and twinning have granted the

provision of specific expertise for public administration reforms. Finally, trust funds have

ensured flexibility, responsiveness, visibility, leveraging and targeted approach towards

achievement of policy objectives.

At the same time, the EU will continue to use budgetary guarantees and financial

instruments (based on the recently created External Investment Plan and the European

Fund for Sustainable Development as well as a refocused ELM). With these tools, the

EU will support the mobilisation of investments and leveraging of public and private

funds worldwide. The EU should also continue to guarantee lending by international

financing institutions and the EIB in support of EU external policy objectives.

Similarly, MFA will continue to reinforce the EU's capacity to act in the neighbourhood

region and pre-accession countries as it produces significant financial leverage. MFA

goes beyond budget resources in providing loans, in addition to grants. MFA belongs to

an area of shared competence and it complies with the subsidiarity principle as the

objective of restoring short-term macroeconomic stability in third countries can be

achieved more efficiently and effectively by the EU than by Member States individually.

This removes the need for recipient countries to conduct multiple negotiations with

different EU Member States. Furthermore, negotiating as a single entity improves the

negotiating position of the EU vis-à-vis the recipient country and reduces the scope for

contradictory policy programmes. Ex-post evaluations have also concluded that MFA

centralised management by the Commission is more cost-efficient than the provision of

financial support by Member States individually

. It is important to distinguish MFA

from budget support under regular, programmable instruments. The trigger for MFA are

balance of payments crises. The primary purpose of MFA is to help beneficiary countries

overcome such crises, which manifest themselves in a shortage of external financing.

This is one of the major and specific as well as primary distinguishing characteristics of

the MFA instrument, compared to other support instruments.

In the future, the EU will continue its efforts to deliver its international cooperation in a

flexible manner and through simple mechanisms and rules. In the current context of

multiple crises and conflicts, the proposed broad external action instrument will have to

be able to adjust swiftly to changing priorities and unforeseen events and to deliver

rapidly on the ground. Sufficient legal, financial and procedural flexibility is needed to

allow the EU to respond to the many challenges on the world stage.

In this context, emergency procedures will ensure the quick EU capacity to respond to

crises, the resilience building and the short-term foreign policy reaction with world- and

scope-wide coverage (political, security, economic). Rules, regulations and management

MFA assistance is disbursed to the central bank (in order to support the country’s international reserves); however,

the amounts can be subsequently transferred on to the budget (thus providing not only support for reserves, but also

budget financing in case of loans or budget revenue in case of grants). Even when transferred to the budget, MFA

remains untied and undesignated.

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structures for quick response activities would have to retain their fast, flexible and

responsive nature. This also includes actions aimed at operationalising the humanitarian

and development nexus.

Finally, through the creation of the broad instrument the EU will continue to simplify the

delivery mechanisms and the streamlining of their governing rules, thus making the

existing toolbox even more fit for the implementation of geographical, thematic and

horizontal actions.

How will performance be monitored and evaluated?

6.1.

Monitoring arrangements

During the mid-term review of the external financing instruments, a number of

limitations regarding the monitoring of the EU’s external action were noted:

1. The instruments' objectives are highly ambitious (in line with the TEU) and

require global efforts: success cannot be achieved by the EU alone. For example,

the objective of poverty eradication depends on many factors that are outside the

EU's control, such as: national government willingness and capacities to

implement relevant policies, other aid providers, and the international context.

2. The wide-ranging nature of both the objectives and the partner countries covered

(approximately 140 countries) makes the meaningful aggregation of data

challenging.

3. Data collection can depend on sources outside of the EU, meaning there are

implications, for example, on the timeliness of data.

4. As a result of the high level and broad nature of the objectives, the use of

internationally agreed impact-level indicators such as the ones agreed for the

Sustainable Development Goals have often been considered the most suitable

method to measure the attainment of the instruments' objectives. However, such

indicators are not directly attributable to the actions of the EU instruments

meaning it is difficult to consistently measure the EU's contribution to results.

A number of lessons learned were also highlighted during the review, namely:

1. The lack of information about monitoring in the legal base.

2. The lack of data to measure effectiveness of the instruments.

In response to these lessons, the Commission will propose to use a number of key

performance indicators in the legal base which will show how success towards the

specific objectives will be measured. These indicators will mainly be focused at

outcome/output level so the link

with the EU’s contribution to results will be apparent.

To help improve its collection of data, the Commission has launched:

1. An EU international cooperation and development results framework covering

DCI, EDF, ENI, EIDHR

, Greenland, and Article 5 of the IcSP.

Plus they do not cover the whole spectrum of EU international cooperation, in particular when it comes to measuring

the impact of crisis response

Except for the Electoral Observation Missions part of the instrument that is covered by the FPI Results Framework.

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2. Yearly results reporting exercises covering EU funded interventions ending in the

previous year

–

as financed under the instruments above;

3. Similar performance frameworks with strategic and operational indicators for the

IcSP (Articles 3 and 4) and the PI.

The frameworks will:

- Be used to monitor the performance of the instruments, providing a clear link

between the objectives and how they will be measured.

- Include impact-level indicators (e.g. linked to the Sustainable Development

Goals) as well as output and result (outcome) indicators, thus measuring the

deliverables and direct effects of EU external action.

- Allow for the preparation of implementation reports and evaluations after

approximately three years of collecting results data.

- As far as possible harmonise the common provisions with other EU budget

programmes, including with regard to the climate mainstreaming methods.

However it is worth noting not all results can be encapsulated in such frameworks. In

particular results in implementing complex structural reforms cannot be easily

aggregated and captured beyond the country or sector level.

Examples of indicators used to measure the specific objectives could include the

following. Unless stated otherwise, the indicators are drawn from the Commission’s

results frameworks:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

(10)

Rule of Law score

Proportion of population below the international poverty line

Number of women of reproductive age, adolescent girls, and children under 5

reached by nutrition programmes with EU support

Number of 1-year olds fully immunised with EU support

Number of students enrolled in primary and/or secondary education and training

with EU support

Greenhouse gas emissions reduced or avoided (Ktons CO2eq) with EU support

Area of marine, terrestrial and freshwater ecosystems protected and/or

sustainably managed with EU support

Number of firms and/or individuals with access to financial services with EU

support

Political stability and absence of violence indicator

Number of processes related to partner country practices on trade, investment

and business, or promoting the external dimension of EU internal policies,

which have been influenced.

In terms of monitoring arrangements for joint programming, joint results frameworks

(i.e. a list of indicators agreed between donors) can be used. These would measure the

collective results of the donors participating in the joint programme. With the expected

increase in joint programming going forward, the EU expects more use of joint results

frameworks.

kom (2018) 0460 - Ingen titel

6.2.

Data provisions and sources

Data collected from EU funded interventions come from two main sources:

- Secondary sources available at country level (e.g. country statistical office,

international organisations collecting data at country/sub country level for

internationally agreed indicators like the SDGs); and

- Project monitoring systems set up by implementing partners to ensure adequate

follow up of results and project performance.

Only data not available from existing sources are collected by the latter and generally

respond to project specific needs (for monitoring and evaluation purposes). Close

coordination between the Commission and its implementing partner is ensured through

the Commission’s operational managers to avoid any duplication of efforts at any level.

Efforts are made to disaggregate data. Currently disaggregation by sex is possible for

several indicators included in the above mentioned frameworks. For other categories:

age, income, disabilities, data disaggregation remains a challenge particularly in the case

of fragile countries.

In line with the European Parliament’s call to

establish consistent monitoring and

evaluation procedures to track progress against objectives

, Commission services are

currently working together to establish an electronic system which will track project

management, monitoring and evaluation via a single IT portal. This tool will use a

consistent framework of indicators to assess performance and identify results across the

broad instrument. Work on the portal is underway, with pilot testing planned for mid-

2018, including with EU Delegations. The portal should be fully operational by the

beginning of 2020.

In addition, the portal will offer a single-entry point for all operational information and

will allow external users including implementing partners to encode key information

directly into the system. This means it will contribute to greater simplification and

coherence in the coming years.

In terms of indicators being monitored, most of them are commonly agreed at

international level and therefore have a standard methodology. The same applies for

those indicators used in the EU international cooperation and development results

framework or similar frameworks used to report at sector level. Contextual indicators can

also be defined and collected where appropriate.

It will not always be possible to set targets for the indicators in the performance

frameworks. For SDGs, targets are available and will be used. However, for a number of

outcome indicators, as partner countries set their targets independently (or sometimes not

at all), the setting of targets across countries and at instrument level would not be

meaningful. In the case of political cooperation as well as the area of peace and security,

which are prone to fast developments and changes, it would be inappropriate set targets

See draft European Parliament report: Implementation of the EU external financing instruments: mid-term review

2017 and the future post-2020 architecture

–

Schaake Report (2017/ 2280 (INI) of 12 January 2018. And also the

European Parliament study: External financing instrument and the post-2020 architecture: European Implementation

Assessment (28 February 2018):

http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_STU(2018)615636

kom (2018) 0460 - Ingen titel

ex-ante

at the overall strategic level; targets need to be set at operational level within

each single action.

6.3.

Evaluations

For the broad instrument, evaluations will continue to take place at different levels as

follows:

1) The evaluations of specific projects and programmes which will be managed by

EU delegations and services responsible and cover a wide variety of actions, from

relatively small or innovative projects, to large facilities mobilising significant

amounts of funds.

2) Strategic evaluations, which cover general policies and strategies in countries and

regions, and in sectors or themes, will be managed by the central evaluation

services.

3) In addition to the two main categories of evaluations referred to above, an

instrument level evaluation will be conducted only once sufficient data can be

collected on performance. The instrument shall be evaluated according to the

Better Regulation criteria and OECD-DAC good practice principles. In particular,

the evaluation will look at the efficiency, effectiveness, added value, coherence

and relevance of the instrument.

The 3 levels are closely interlinked. The project and programme evaluations are essential

sources of information for the strategic evaluations which in turn feed into the Instrument

level evaluation. The planning of evaluations will be carefully coordinated so as to

maximise coherence.

The evaluations will use monitoring data, weighing it up and seeking to understand why

and how the respective changes have been brought about. The project/programme

evaluations will rely on monitoring systems set out at action level, while the instrument

level and strategic evaluations will make use of the latter and of data collected as part of

the results frameworks. The common principles and standards which will guide the way

in which these evaluations will be conducted are defined in the evaluation policy for EU

development cooperation

. The specific evaluation approaches and methods to be used

for the various types of evaluations are set out in the evaluation guidelines

As per these guidelines, most evaluations will apply a theory based impact evaluation

approach, gradually building evidence to test the soundness of the intervention logic,

actions, strategies, and instruments being subject to the evaluation. Experimental and

quasi-experimental methods might also be used in some cases, in particular for pilot

projects, which are to be scaled up significantly in the future. Applying such methods for

a large number of evaluations is however not feasible, for several reasons:

They require extensive financial resources;

See

https://ec.europa.eu/europeaid/node/71167

See

http://ec.europa.eu/europeaid/how/evaluation/methodology/index_en.htm

and

https://ec.europa.eu/neighbourhood-

enlargement/sites/near/files/pdf/financial_assistance/phare/evaluation/2016/20160831-dg-near-guidelines-on-linking-

planning-progrming-vol-1-v-0.4.pdf

kom (2018) 0460 - Ingen titel

There are ethical issues involved given that such methods require the existence of a

control group, comprising people who must not receive any similar support (from

the EU or other actors) over the intervention timeframe.

Even if these methods would be applied for all evaluations, it will not be possible

to aggregate up from project level to instrument level. This is because of the

variety of actions implemented and the different contexts in which these take place.

In order to evaluate joint programming, future country evaluations by the EU should

include the joint programming process (where they exist) and in particular indicators

from the joint results framework.

A number of joint evaluations (between EU and Member States) already exist and more

will be expected under the 2021-2027 MFF. Efforts should be made to include all

partners involved in the joint programming exercise so that the collective impact of the

donors can be evaluated.

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Annex 1: Procedural information

EAD

DG(

)

The lead DGs are as follows:



International Cooperation and Development (DEVCO)

European Neighbourhood Policy and Enlargement Negotiations (NEAR)

Foreign Policy Instruments (FPI)

European External Action Service (EEAS).

Other services contributing to the impact assessment include:

European Civil Protection and Humanitarian Aid Operations (ECHO)

Economic and Financial Affairs (ECFIN)

Cyprus Settlement Support team

RGANISATION AND TIMING

In agreement with other external action services (i.e. NEAR, FPI and the EEAS), DG

DEVCO has coordinated the process of drafting the legislative proposal and impact

assessment for the post 2020 broad external action instrument.

The process has been overseen by an Inter-service Steering Group comprising all

interested policy DGs as well as the central services (e.g. the Secretariat General, DG

Budget and the Legal Service). This Group is chaired by the Secretariat General. The

first meeting took place in December 2017 to kick off the process and discuss the

inception impact assessment. The second meeting (March 2018) was used to discuss the

draft impact assessment. The minutes of this meeting can be found in the annex. The

third meeting took place in April to discuss the proposal for the legal base.

ONSULTATION OF THE

EGULATORY

CRUTINY

OARD

Services met the Regulatory Scrutiny Board twice during the preparation of the impact

assessment. An upstream meeting was held between the RSB and the external action

services in January 2018 to discuss the inception impact assessment and the main

expectations for the RSB. Main comments included: to focus on the changes compared to

the current period; to look in particular at the architecture (programme structure); and the

delivery mechanisms; and to take on board the lessons learned from the mid-term

evaluations. A further meeting with the RSB was held on 25 April to discuss the draft

impact assessment. Following the meeting a positive opinion with reservations was

received The following changes have been made to the impact assessment in response to

the RSB’s main considerations:

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RSB recommendations

The report does not sufficiently explain the

governance structure for the new broad

instrument, and does not follow up on some of

the problems it identifies. It does not provide

strong justification for merging individual

programmes into the new broad instrument.

The report does not sufficiently examine

funding and policy implications of integrating

the EDF into the EU budget.

The report leaves several funding issues

unclear. These include a funding baseline,

funding prioritisation and eventual ring-

fencing, as well as how to finance additional

flexibility reserves.

The report does not sufficiently explain how

future monitoring and evaluation would work.

Changes made to the impact assessment



Governance information has been

added

under 4.2 “structure of the

instrument”.



Concerning lessons learned, the text

explains that these mostly relate to

how the current heading is structured

with fragmented instruments. Some of

the problems, such as joint

programming have been better solved

throughout the document, e.g. under

section 6 “monitoring and evaluation”.



The justification for merging

individual programmes is explained

under section 4.4.



Further information on implications on

budgetising the EDF have been

provided under section 4.4.



Information has been added section

under 4.2 “structure of the instrument”

on what is being ring-fenced.



Funding baseline has been added to

show the outcome of the UK’s

withdrawal from the EU on funding

per current instrument.



Under section 6.1 information has been

added on how the future monitoring

and evaluation methods respond to the

lessons learned from the mid-term

review.



More information on how we will

evaluate at instrument level has been

added under section 6.3.

VIDENCE

SOURCES AND QUALITY

Evidence has been drawn from the following sources:



The mid-term review report of the external financing instruments, the

accompanying staff working documents and the external evaluations on which

they are based.

The input received from the open public consultation on the external financing

instruments (2017).



This evidence base is considered sufficiently robust, accurate, coherent, consistent and

comprehensive for the purposes of this impact assessment.

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Annex 2: Stakeholder consultation

The stakeholders’ consultation of the

ten external financing instruments

took mainly

three forms: structured or semi-structured interviews; technical workshops held in

Brussels; and an Open Public Consultation.

Evaluators carried out more than a thousand structured or semi-structured interviews to

gather views and information from EU staff at headquarters and delegations,

representatives from the Member States, the European Parliament and partner countries.

The MTR evaluations have integrated the outcomes of the interviews, which also served

to validate several findings.

Technical workshops took place with representatives of the European Parliament

(Secretariats of the Committees and assistants to MEPs), Council working groups and

relevant instrument committees. During these workshops the draft MTR reports of the

instruments were presented. Apart from instrument-specific comments, general issues

arising from these meetings concerned: the complex architecture of the EFIs, the

coherence among and within instruments, the coordination between EU and Member

States, the need to ensure the flexibility of the instruments to respond to emerging crises

while preserving predictability, and the integration of new policy priorities such as

SDGs, climate change and migration.

The draft evaluation reports were also presented at the Policy Forum on Development,

which gathers representatives from civil society and local authorities. Participants raised

a number of comments regarding access to funds, including that more opportunities

should be made available for CSOs/LAs to apply for projects across the set of external

financing instruments. Comments were also raised on mainstreaming commitments, such

as climate change, and on the role of private sector in the instruments.

An open public consultation on the external financing instruments of the European Union

took place between 7 February and 3 May 2017. The objective of the consultation was

twofold. First, it intended to gather feedback from stakeholders in both EU Member

States and beneficiary countries, on the conclusions emerging from the evaluations of the

instruments. Second, it aimed to gather feedback on the future external action

instruments after 2020. More details on the Open Public Consultation are reported in the

sections below.

More specifically to this Impact Assessment, ten forward-looking questions were posed

to the public. They broadly concerned the types of instruments needed to respond to the

evolving policy priorities, the coherence among instruments, the complementarity

between EU and MS external assistance, the use of innovative mechanisms to enhance

The ten instruments were the: Development Cooperation Instrument (DCI); European Development Fund (EDF);

European Neighbourhood Instrument (ENI); Instrument for Pre-Accession (IPA II); Instrument contributing to stability

and Peace (IcSP); European Instrument for Democracy and Human Rights (EIDHR); Partnership Instrument (PI);

Instrument for Nuclear Safety Cooperation (INSC); Greenland Decision (GD); Common Implementing Regulation

(CIR).

kom (2018) 0460 - Ingen titel

leveraging, the possible future architecture of the instruments and how to ensure

flexibility and simplification.

Answers were received from around 100 respondents, however not all questions were

answered by everyone. Respondents represented a wide range of stakeholders from both

inside and outside of the EU, the majority belonging to the former category (78%).

Respondents by origin

European Union

Neighbourhood

Latin America

Sub-Saharan

Africa

Rest

Most submissions were received from organisations and associations (52%), public

authorities (22%), followed by EU platforms, networks and associations (10%). A

limited number of respondents belonged to the category of industry, business and

workers' organisations (6%), research and academia (5%), citizens and individuals (4%)

and consultancy (1%).

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Respondents by type

Citizen/individual

Research/academia

Industry, business

or workers'

organisations

EU platform,

network, or

association

Consultancy

Organisation or

association

52%

Public authority

22%

1. M

ETHODOLOGY

The answers provided by the respondents to the ten forward-looking questions were

summarised on a question-by-question basis in order to provide a comprehensive yet

concise overview of a large amount of written inputs. In order to ensure that it is based

on a rigorous approach, the summary followed a number of simple rules. Specifically,

inputs were prioritized if they a) were relevant to the question to which they were

supposed to respond, b) were recurrent even across a sub-set of respondents, and c)

addressed issues which were more cross-cutting in nature and less specific to the

respondent's own profile or mandate. In all cases, care was taken to ensure a balanced

representation of inputs that were in contradiction with each other.

To account for their distinctive characters, inputs from public authorities were

summarised separately from those provided by civil society organisations. This

distinction seemed further justified in light of the inputs received from these two

categories which often differed in terms of their respective focus and concern. In the next

section, the main results of the Open Public Consultation have been clustered and

presented in such a way to reflect the key sections and elements of the impact

assessment.

kom (2018) 0460 - Ingen titel

2. R

ESULTS FROM THE

PEN

UBLIC

ONSULTATION

RIORITIES AND

EOGRAPHICAL

COPE

Several respondents from public authorities underline the need to align the new

instruments with the priorities identified by the EU Global Strategy and the new

European Consensus on Development. The new External Financing Instruments (EFIs)

should also reflect commitments taken under recent international agreements such as the

2030 Agenda, the Paris Agreement, and the Addis Ababa Action Agenda. Civil society

respondents are more specific and encourage the EU to reinforce its engagement in

thematic areas, which include climate change, environment, gender, democracy, human

rights, civil society, peacebuilding, conflict prevention, security, resilience, fragility and

nuclear safety.

In addition, member tates’ respondents place particular emphasis on strengthening

action in the field of security. Some emphasize the need to build more on the link (nexus)

between security and development. Others suggest creating a separate instrument

dedicated to Capacity Building in Support of Security and Development. Such an

instrument would enable the EU to respond more effectively to unexpected challenges

with security implications. Finally, some respondents mention the need to maintain the

African Peace Facility due to its important role in supporting regional peacekeeping

operations.

Civil society respondents highlight that emerging EU priorities, in particular migration

and security, should not affect funding for other key global challenges. They emphasize

that the allocation of development funds must be based on objectively assessed

development needs rather than on the EU's emerging priorities. They also encourage the

EU to uphold its rights-based approach to development cooperation. Respondents

underline the need to ensure the respect for human rights including the rights of children,

workers and persons with disabilities. Others recommend that the EU should include

sustainability criteria in the procurement processes in order to ensure compliance with

international environmental, health and labor standards.

In terms of geographical scope, respondents concur that the EU should continue to focus

on Least Developed Countries and countries affected by fragility. At the same time, a

number of respondents from civil society also emphasize the need to reshape the EU's

engagement with Middle Income Countries. They highlight that despite the fact that the

majority of the world's poor live in these countries, the EU's development assistance

focuses on the category of Low-Income Countries. At present, none of the existing

external financing instruments is dedicated to the objective of reducing poverty in MICs.

As for the EU’s engagement with the African, Caribbean and Pacific Group of States,

there has been a variety of suggestions from public authorities’ respondents including to

maintain an ACP-focused instrument and even to approach these regions separately given

their specificities.

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LEXIBILITY

Respondents agree that the new financing instruments should be more flexible in order to

be able to respond to unforeseeable challenges and crises, such as migration and

conflicts. Member states respondents recommend that efforts to increase flexibility

should aim to simplify lengthy and cumbersome procedures, as well as to address

difficulties in adjusting programs and shifting funds between regions and aid modalities.

Civil society respondents acknowledge that the rise of regional and global challenges has

exposed the need for more flexibility across the EU's External Financing Instruments.

The migration and security crises in particular have shown the limits of the instruments'

ability to give adequate response to rapidly changing circumstances. Recognizing this

issue, civil society respondents agree that the future instruments must be able to support

both short-term and long-term objectives in partner countries.

However, it is underlined that increasing flexibility should not come at the cost of

predictability, country ownership and less focus on achieving long-term development

objectives. Member states respondents suggest that the instruments' flexibility should

result from sufficiently available reserves, which can be mobilized and deployed in line

with the instruments' original objectives. Related to flexibility, some Member States’

respondents raise concerns about the recently-created trust funds highlighting that there

has been limited evidence of the criteria used for the allocation of resources as well as

limited data on impact. It is suggested that using special funds outside of the EU budget

should be minimized.

In addition, civil society respondents encourage the EU to enhance the instruments'

flexibility also in terms of engaging with relevant partners. It is highlighted that civil

society organizations, both European and local, are facing accessibility challenges

because of a new EU funding landscape. The increased grant sizes in calls for proposals,

as well as requirements for large programs and consortia, put small CSOs at a

disadvantage vis-à-vis larger, established NGOs, which are often international and

already have experience with working for the EU. Respondents point out the risk that

such an approach to channeling funds can result in EU grants becoming concentrated in

the hands of a small group of international NGOs. In order to make funds more

accessible for smaller organizations, respondents recommend a number of measures such

as reducing the share of co-funding, accepting in-kind contributions as part of the co-

funding, adapting pre-financing requirements and simplifying calls for proposals.

OHERENCE AND

YNERGY

Most respondents consider necessary to ensure greater coherence between the internal

and external policies of the EU, as well as between the external instruments themselves.

In this respect, some public authorities’ respondents wish to ensure coherence within the

instruments themselves, as well as between different EU policy domains such as

humanitarian assistance, development, security and trade, particularly in countries

affected by fragility and conflict. They also suggest further elaboration of the existing

comprehensive approach, which integrates development, security and diplomacy efforts.

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Fostering synergies between development and commercial instruments is also viewed as

necessary. The implementation of the EU Global Strategy is viewed as an appropriate

basis for efforts to increase coherence between policies. Enhancing dialogue between

different bodies of the European Union such as the European External Action Service

(EEAS) and the Directorate-Generals of the Commission is highly relevant. Establishing

joint working groups and promoting better information sharing are seen as important

contributors to coherence.

Civil society respondents assert that the universal and integrated character of the

Sustainable Development Goals makes the SDGs framework the most appropriate basis

for increasing coherence between internal and external EU policies. Respondents

emphasized that efforts to increase coherence should be aligned with the principles of the

EU's approach to Policy Coherence for Development. Civil society respondents identify a

number of areas where major challenges remain regarding policy coherence. Some

highlight that consumption patterns in Europe may have harmful implications for

development processes and outcomes in the rest of the world, particularly in the domains

of food production, climate change, environment, biodiversity and natural resources.

Others point to the tension between the EU's development objectives and emerging

European political priorities related in particular to migration and security. Some

respondents consider the ongoing efforts to address the root causes of migration

problematic from a coherence perspective.

Respondents emphasize the need to strengthen complementarity and synergy between

geographical and thematic instruments. Others encourage the EU to take a leading role in

improving complementarity between various stakeholders both inside and outside the

EU. Given its status as a multilateral organization unbound by domestic interests, the EU

is encouraged by civil society respondents to play a leading role in improving

complementarity between various stakeholders both inside and outside the EU.

In this context, the contribution that EU Delegations can make to better aid coordination

and complementarity has been emphasized by many

respondents. Public authorities’

respondents encourage Delegations to work more closely with Member States' embassies

and play a stronger role in information sharing in particular through the Heads of

Cooperation meetings. Civil society respondents maintain that Joint Programming can

have the potential to enhance complementarity and synergy between EU and Member

States both at the country and the sectoral level. Findings emerging from the recent

evaluation of Joint Programming should influence how such approaches can be further

improved in the future.

IMPLIFICATION

The EU is strongly encouraged to further simplify the overall architecture of the

instruments. In this respect, the EU should continue its efforts to simplify cumbersome

administrative and financial procedures.

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Member states respondents consider that the instruments should be further simplified. It

is highlighted that the multiplication of EU funds and facilities adds extra layers of

complexity to an already complex financing architecture. Member states also point to the

excessive complexity of grant management rules and procedures and the consequent need

to simplify them. In order to enable faster project adoption and implementation, efforts

should also be made to revise the structure and different stages of the EU programming

cycle.

Civil society respondents agree with the need to further strengthen on-going efforts to

simplify the current administrative and financial procedures applied in EU external

assistance. Although important improvements have been made in particular as a result of

the Structured Dialogue process, more needs to be done in terms of simplification. It is

emphasized by respondents that procedures and rules currently in place have important

implications for the ability of civil society organizations to become more involved in

development cooperation. Given their limited human and financial resources, small

NGOs are often constrained in their capacity to participate in calls for proposals. It is

underlined, therefore, that simplifying rules and procedures governing grant application

and management is crucial to enable such organizations to access funding.

ERFORMANCE FOR

ESULTS

To make best use of existing and new instruments, an incentive-based approach in

external assistance is viewed positively given its ability to promote reforms in partner

countries. However, some respondents highlight the increasingly challenging nature of

using development aid as an incentive due to the rising availability of alternative

resources such as private finance and remittances.

Most public authorities’ respondents underline that the decision on the allocation of

funds should be made on the basis of a rigorous assessment which establishes objective

criteria and is conducted by an independent panel of experts. It has also been highlighted

that the incentive-based approach should not be utilized to make EU assistance

conditional on a partner country's cooperation in other policy areas such as migration and

security. It is suggested that the effectiveness of the incentive-based approach would

increase if it were extended beyond development assistance to other

–

often more

powerful

–

EU instruments such as trade.

Civil society respondents underscore the importance of maintaining incentive-based

approaches in the EU’s external assistance. They emphasize that incentives can improve

accountability for results and also enhance the EU’s impact in policy areas where

progress is difficult to make such as in the field of human rights, good governance and

rule of law.

Some respondents point to available evidence of success achieved through incentive-

based mechanisms such as the ‘More for more’ approach applied to Neighbourhood

countries or the Millennium Development Goals contracts introduced under the 10th

cycle of the European Development Fund. Others recommend that the EU should utilize

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its preferential trade agreements (e.g. Generalised Scheme of Preferences) in order to

strengthen respect for human rights and international labor standards in partner countries.

Recommendations on efficiency and effectiveness were also given. As for efficiency,

respondents recommend that the EU simplify burdensome procedures and the overall

architecture of the instruments. As for effectiveness, some respondents emphasize the

need for a clear results framework coupled with stronger monitoring systems to assess

impact. Better monitoring and evaluation of results is seen as crucial to enhance

institutional learning and to inform decision-making with a view to improve programme

effectiveness. In this respect, respondents call for an improved traceability of results and

accessibility of information on all actions financed by EU instruments.

ROGRAMME

TRUCTURE

Respondents expressed diverging views on the most appropriate approach to take when

structuring the future instruments. Some Member States are in favour of maintaining

both geographically and thematically structured instruments. As regards the relative

importance of these categories, however, some respondents show preference for

geographically-based instruments over thematic ones. Yet others suggest that instruments

be thematically structured but have a certain geographical focus, which can be flexibly

adapted when circumstances change. Regarding the approach to geographical structuring,

some respondents consider that the category of ACP countries is artificial when viewed

from a development perspective. Others suggest moving from a regional approach to one

based on income categories such as low-income and middle-income countries.

Most respondents from civil society agree that the combination of geographic and

thematic instruments delivers the best results. They emphasise that the value of

geographically structured instruments lies in their capacity to address the specific needs

of partner countries in a tailored manner. This is crucial given the diversity of the

challenges and needs across these countries. It has been suggested, however, that this

geographical structuring should be influenced less by European historical/political

considerations (e.g. ACP and Neighbourhood countries) and, instead, more by

developing country needs.

Civil society respondents equally agree on the importance of maintaining thematic

instruments. These are viewed as capable of delivering on transversal priorities, which

are not specifically addressed in bilateral programmes such as the support for civil

society organizations and marginalized groups. Furthermore, thematic programmes allow

the EU to engage with graduated middle-income countries, which are no longer eligible

for Official Development Assistance (ODA).

While being in favour of combining geographic and thematic instruments, respondents

also draw attention to the need for more complementarity. Some respondents highlight

the risk of overlap and double funding whereby the same policy objectives are funded by

multiple instruments. Respondents call for a clear delineation between instruments while

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also underlining the need to ensure that geographic and thematic programmes do exploit

cross-sectoral synergies and linkages between themselves.

ELIVERY

ECHANISMS

There is an agreement between respondents that innovative financing instruments can

play an important role in leveraging public and private financing for EU external

assistance. Positive findings on the leverage effects and financial additionality of such

instruments emerging from the recent evaluation of blending are considered encouraging.

Nevertheless, some Member States identify areas where improvements should be made.

Increasing the transparency of these mechanisms is considered necessary. Furthermore, it

is suggested that funds become subject to thorough evaluations in order to inform

decisions on their future application. Others stress that the use of funds should be limited

to justified cases where other instruments cannot be deployed effectively. As for the

implementation of blending projects, it is recommended that the group of entities mostly

involved so far (EIB, AFD, KfW, EBRD, AECID) should be further diversified.

Civil society respondents gave recommendations and raised concerns regarding the role,

use and impact of such innovative mechanisms. It is highlighted that private sector

funding should not substitute, but rather complement, public support in the fight against

poverty. In order to have an added-value when compared to other forms of finance,

innovative financing mechanisms have to represent additionality, meaning that they are

to support projects which are not commercially viable, and therefore would not have

been implemented without using ODA funds. Civil society respondents also emphasize

the need for putting in place safeguards to ensure that innovative mechanisms contribute

to achieving the Sustainable Development Goals. To this end, the EU needs to make

certain that private sector priorities do not override poverty reduction objectives in

partner countries.

Most respondents agree on the need for a strengthened multi-stakeholder approach in EU

external assistance. Partnership and dialogue with non-governmental actors such as civil

society organizations and the private sector are considered necessary for building wider

consensus around programmes in partner countries as well as in the implementation of

EU development cooperation.

The EU is encouraged to strengthen its partnership with stakeholders who can make

significant contributions to the implementation of the 2030 Agenda. Respondents

highlight the need to build more on the capacity of Local and Regional Governments,

private partners, universities and research institutes. The EU can play an important role in

facilitating Public-Private Partnerships in developing countries. Civil society

organizations and NGOs are seen as key partners in EU external assistance. However,

some respondents caution that recent funding trends (e.g. increasing grant sizes) may risk

concentrating grants with large consortia of NGOs vis-à-vis smaller organizations.

kom (2018) 0460 - Ingen titel

Annex 3: Evaluation results

Introduction

From 2016-2017, independent, mid-term evaluations took place for the following

external financing instruments:

1. Development Cooperation Instrument (DCI);

2. European Development Fund (EDF) including on the Overseas Countries and

Territories (OCTs)

3. European Neighbourhood Instrument (ENI);

4. Instrument for Pre-Accession (IPA II);

5. Instrument contributing to stability and Peace (IcSP);

6. European Instrument for Democracy and Human Rights (EIDHR);

7. Partnership Instrument (PI);

8. Instrument for Nuclear Safety Cooperation (INSC);

9. Greenland Decision (GD);

10. Common Implementing Regulation (CIR) (not a financing instrument but a

regulation for implementing a number of the instruments mentioned above)

The aim of the evaluations was to provide the EU and wider public with an independent

assessment of the external financing instruments, including how each instrument

interacted with the remaining instruments

. In 2017, the Commission followed the

independent evaluations with a set of staff working documents (one per instrument)

The staff working documents were based on and for the most part concurred with the

findings of the independent evaluations. In order to gain a better understanding of key

messages occurring across the instruments, an independent coherence report (2017) was

produced

. These documents all fed the Commission’s mid-term

review report

(2017)

which responds to the requirement set out in the Common Implementing Regulation

(Article 17) for a review of the instruments at their mid-point.

Regulatory Scrutiny Board

Two of the Commission’s staff working documents were assessed by the Regulatory

Scrutiny Board in 2017, namely the EDF and the ENI.

For the EDF the main comments of the RSB were as follows:

The independent evaluations can be found here:

https://ec.europa.eu/europeaid/public-consultation-external-

financing-instruments-european-union_en

The staff working documents can be found here:

https://ec.europa.eu/europeaid/mid-term-review-report-external-

financing-instruments_en

The coherence report can be found here:

https://ec.europa.eu/europeaid/sites/devco/files/coherence-report-main-

report-170717_en_0.pdf

The report can be found here:

https://ec.europa.eu/europeaid/mid-term-review-report-external-financing-

instruments_en

The Common Implementing Regulation can be found here:

https://publications.europa.eu/en/publication-detail/-

/publication/43f92a44-af94-11e3-86f9-01aa75ed71a1/language-en

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Particular challenges with evaluating the 11th EDF were noted, and appreciation was

made of the body of evidence that the external study compiled. The RSB considered the

evaluation should be improved with respect to the following key aspects:

(1)

The Staff Working Document (SWD) should be a self-standing document.

(2)

The analytical approach should be sufficiently clear on how it assesses

effectiveness rather than leaving out several relevant issues.

(3)

The analysis of coherence with other instruments should be complete and could

be more informative.

For the ENI evaluation, the main comments from the RSB were as follows:

Limitations that the ENI evaluation faced were noted concerning tight timing, lack of

monitoring data and a changed context in many partner countries. The RSB considered

the report should be improved by the following:

(1) The report should draw lessons for the future.

(2) The report should adequately take up and examine critical feedback from the Court of

Auditors and stakeholders.

(3) The report should be more reader-friendly.

Evaluation conclusions

The independent evaluations and staff working documents on the external financing

instruments have overall shown that the instruments are, at the mid-point in their

implementation, generally fit for purpose and positive trends are emerging in relation to

the instruments' objectives. In conclusion, there is no need to amend the legislation that

establishes the instruments.

Relevance

The evaluation staff working documents have confirmed that the instruments' objectives

were largely relevant to the policy priorities at the time of their design. Compared to the

2007-2013 MFF, the strategic relevance has improved substantially, as lessons from the

past were integrated in the new regulations:

confirmation of global reach (IcSP, PI);

promotion of EU interests worldwide (PI);

increased focus on conflict prevention (IcSP);

new common programming principles (DCI, EDF);

greater differentiation (DCI, ENI, IPA);

sharper focus on sector approaches (IPA);

clear delineation of specific objectives (EIDHR);

enhanced consistency and complementarity between the IcSP and the

geographical cooperation instruments29 and with CFSP operations;

broader ambitions for the Greenland partnership (GD); and

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harmonisation of implementing procedures (CIR)

Furthermore, the external evaluations underline the strategic relevance of the thematic

instruments, in particular their ability to act without the explicit consent of the partner

country if required, such as engaging in crisis response, human rights and

democratisation in a deteriorating context and promoting EU interests and global actions

on public goods, including climate change.

The set of broad, enabling instruments have been able to cover EU priorities without any

major gaps, except for capacity-building in support of security and development (CBSD).

However, on programming (where programming applies) and implementation of the

instruments, this potential was not always fully exploited. In some countries, actions

under the instruments were strategically combined

, whereas in others, the potential for

strategically combining actions was not always used

A benefit of the instruments' relevance is the flexibility that they have built into them.

Flexibility to respond to unforeseen events is required at different levels:

(i) short-term crisis response;

(ii) flexibility in choice of programming and implementation methods;

(iii) financial flexibility with reserve funds and reallocations within and between

instruments;

(iv) flexibility in the multi-annual programming with the possibility to adapt the duration

of the programming to the situation on the ground and to swiftly redirect the funding in

case of major changes; and

(v) the use of special measures provided for by the Common Implementing

Regulation38.

The evaluation staff working documents found that the instruments, due to their enabling

character and sufficiently broad objectives, facilitated the EU to respond to new crises

and its evolving needs and policy objectives as well as those of partner countries.

However, the ability to reallocate financial resources was fully exhausted with the

emergence of new crises in countries surrounding the EU.

Internal resources and funds that were not earmarked were insufficient to deal with the

crises. Consequently, Heading 4 had to be increased during the mid-term review of the

MFF, and the EU had to set up different crisis-related trust funds and coordination

mechanisms such as a Facility for Refugees in Turkey (FRiT). Through the trust funds

and the FRiT, the EU was able to respond fairly rapidly to the crises and mobilise

additional funds from EU Member States and other donors, even if the contributions

See staff working document on the IcSP, section 5

See coherence report, paragraph 16

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from Member States were less than expected. The response also had to be facilitated by

the use of special measures outside the regular programming decisions.

Overall, it appears that the priorities and sectors of intervention defined in the regulations

for the 11th EDF, EIDHR, ENI, DCI, IPA II, IcSP and the PI are still relevant and

encompass current needs and priorities. This implies that no amendments to the

regulations are needed at this stage

. Nevertheless, the lessons-learned from the mid-

term review of the MFF in terms of limited financial flexibility and complexity of the

current architecture, thwarting enhanced complementarity on the ground, as well as to

cover gaps in the area of security would need to be considered in the future architecture

of the instruments

Effectiveness

The staff working documents show that positive trends are emerging in relation to their

objectives

. For example, most countries where the 11th EDF and DCI geographic

programmes operate have experienced progress in poverty reduction and human and

economic development over the last 10 years

In the western Balkans, IPA II assistance contributed to the implementation of reforms in

key areas, such as the judiciary, anti-corruption, public administration and social

inclusion, and supported the progressive alignment with EU legislation and standards.

In the Neighbourhood, ENI assistance produced visible results in various sectors, such as

regional development, agriculture, the labour market, border management and migration.

At the same time, the instruments (ENI complemented by IcSP

26) demonstrated a

capacity to respond to evolving needs and crisis situations.

The INSC raised levels of nuclear safety, for example by supporting follow-up to the

joint comprehensive plan of action cooperation with Iran, and stress testing nuclear

power plants in various countries.

The PI effectively influenced policy developments in partner countries in line with EU

interests and contributed to development of mutual relationship with third countries

complementing the larger thematic activities financed under the DCI, in particular the

global public goods and challenges programme.

However, difficulties in measuring the achievement of objectives should be noted. As at

the time the independent evaluations were taking place, several of the instruments only

recently started being implemented (following the drafting of EU strategy documents), so

it was too early to measure the achievement of high-level (and long-term) objectives. To

With the exception of the CBSD proposal.

See coherence report, paragraph 65

See staff working documents, section 4 for further examples of how the instruments are achieving their objectives.

See indicators on poverty evolution in the last Millennium Development Goal Report (2015)

http://www.un.org/millenniumgoals/2015_MDG_Report/pdf/MDG%202015%20rev%20(July%201).pdf

Source Commission staff working document on the evaluation of the IcSP, Section 5.

Source Commission staff working document on the evaluation of the PI, Section 5

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help mitigate this situation, the independent evaluations also collected data from previous

instruments (2007-2013). That said, other limitations in measuring the achievement of

objectives must be taken into consideration. Often EU support can only be seen as a

contributing factor towards any results achieved. For example, the fight to eradicate

poverty is a highly ambitious endeavour. Many factors, both internal and external, affect

the development of the EU's partner countries and other objectives. Other major external

relations actors play an active role, together with an increasing number of private donors

including foundations. In addition, it is for the partner countries to adopt and implement

the necessary reforms and policies that the instruments support. Also a number of results

can only be measured at country and/or sector level and cannot be aggregated at

instrument-level, partly because of the variety of countries and themes concerned.

Since the establishment of the instruments, the Commission has invested efforts and

improved reporting on the results of projects and programmes. For example with the

launch of the EU International cooperation and development results framework

in 2015

which produced its first report on selected results in July 2016

. Other, similar

performance frameworks with strategic and operational indicators have also been created

specifically for IPA II, IcSP and PI.

The range of implementation arrangements available plays a major role in the

instruments’ effectiveness

. The simplifications introduced in the Common

Implementation Regulation such as the possibility of sub-granting or awarding grants to

entities without legal personality, have reinforced the EIDHR’s effectiveness. Benefiting

from exceptions, crisis response under the IcSP can be as rapid as humanitarian aid.

The introduction of the budget support modality and the related policy dialogue under the

IPA II have played an important role in improving policy dialogue in support of

furthering real reforms and stabilisation programmes in beneficiary countries. This was

particularly the case in the western Balkans where this was introduced for the first time

Similarly in Greenland budget support arrangements resulted in stronger public financial

management systems and improvements in the national administration's ability to plan

and implement policies

. However, EU procedures (originating from the Financial

Regulation) are still perceived by interested parties as lengthy and burdensome

In terms of mainstreaming EU priorities, significant progress has been noted in some

programmes in the areas of climate change and environment

. However, more remains

See further information on the EU international cooperation and development results framework:

https://ec.europa.eu/europeaid/devcos-results-framework_en

This report presents selected results achieved from EU funded development cooperation projects and programmes

completed in mid-2013 - mid-2014 in EU partner countries. See: https://ec.europa.eu/europeaid/eu-international-

cooperation-and-development-first-report-selected-results-july-2013-june2014_en

See for example, PI, EIDHR and IcSP, staff working documents, section 5

See IPA staff working document, section 5

See Greenland staff working document, section 6

See for example, EIDHR staff working document, section 6

11th EDF climate contributions increased from 3.3% in 2014 to 23.3% in 2016 and DCI climate change

contributions increased from 17.7% in 2014 to 24.9% in 2016. Source: Indicator 12b, EU international cooperation and

development results framework with input from the OECD DAC Creditor Reporting System.

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to be done to integrate these areas across all sectors in view of the scale of the

challenges

. Mainstreaming human rights issues including gender equality and women's

empowerment is still a work-in-progress although some positive messages have emerged

from the study

on the implementation of the EU gender action plan II, in particular for

the IcSP. Overall, the external evaluations have shown partner governments' lack of

interest or resistance to working in support of human rights often presents a major

challenge in implementation.

Efficiency

The level of administrative expenditure points to an efficient management of the

instruments’ respective budgets

While overall organisational performance may be efficient, some interested parties

consider the implementation of the instruments in some cases as administratively

burdensome. The Commission is perceived by some stakeholders as being more focused

on process rather than on policy objectives and results. Requirements such as

mainstreaming different policies and fulfilling international commitments such as

ownership and partnership imply heavy processes. Other regulations (such as the

Comitology Regulation

100

) add to the complexity and length of time needed to implement

the instruments.

Modest efficiency gains were made in comparison to the instruments from the 2007-2013

MFF. For example by reducing the number of DCI thematic programmes from five to

two, although rigidities remains within the global public goods and challenges

programme since five different budget lines were created. Some efficiency gains

resulting from the simplification processes (such as the use of national strategies rather

than EU country strategies and that joint programming documents can replace multi-

annual indicative programmes if quality criteria are met) were introduced for DCI, EDF,

ENI and IPA II programming processes.

For geographic instruments, a lengthy programming process is in place to safeguard

principles of ownership and partnership. In the case of the EDF, the procedures also

include involvement of the National/Regional Authorising Officers whose function is

often seen as hampering effectiveness and efficiency, in particular at regional level. An

See for example, DCI and EDF staff working documents, section 5

EU gender action plan 2016-2020 at year one: European implementation assessment by the European Parliament:

http://www.europarl.europa.eu/thinktank/en/document.html?reference=EPRS_STU%282017%29603256

57 The

gender action plan 2016-2020 is the EU's framework for promoting gender equality and women and girls'

empowerment in external relations in external relations. The above-mentioned European implementation assessment

by the European Parliament states that the EU has mainstreamed the notion of gender equality and women's

empowerment in partner countries and has taken on board a number of lessons identified from the previous identified

from the previous Gender Action Plan (2010-2015). The IcSP was particularly commended on results to date in terms

of engagement with women’s NGOs/CSOs on the “whole of society” approach.

See staff working document accompanying the document '2016 Annual Report on the implementation of the

European Union's instruments for financing external actions in 2015', SWD(2016)456 final of 19 December 2016.

100

Comitology refers to a process by which committees made of representatives from Member States assist in the

making, adoption and implementation of EU laws. See Comitology Regulation: http://eur-lex.europa.eu/legal-

content/EN/ALL/?uri=celex%3A32011R0182

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explanation often given relates to capacity issues despite regular support in capacity-

building

101

The establishment of the Common Implementation Regulation was a new, simplifying

feature of the 2014-2020 MFF for the EU-budget instruments covered by this report,

which was largely replicated in the 11th EDF implementation regulation. By harmonising

rules and limiting differences of interpretation across the external financing instruments,

the external evaluations point to efficiency gains thanks to the Common Implementation

Regulation, albeit on a modest scale. Under, for example, the EIDHR (in specific cases)

and especially the IcSP, direct award of funding speeds up implementation in situations

of crisis or urgent need.

Internal coherence, external coherence, complementarity and synergies between

external financing instruments

Each external financing instrument has its own specific scope either based on the issues

of substance it addresses (e.g. the EIDHR, INSC, IcSP, and PI) or in terms of

geographical focus (the DCI, EDF, ENI, GD, and IPA II).

Three instruments are clearly designed to complement others through their distinct

implementation modalities:

1) EIDHR (independent and flexible actions);

2) IcSP (for quick response with short and long-term actions); and

3) PI (actions in the EU and/or mutual interest that are not possible to fund under the

DCI, ENI or IPA II).

The internal coherence within the instruments is largely satisfactory because of revised

geographic programming instructions, sector concentration, appropriate decision-making

processes and improved quality review systems. However, significant variations can be

observed at the level of EU delegations.

The evaluation staff working documents provide some examples of complementarities

between the instruments. For example, the EIDHR and the PI support certain actions that

other geographic instruments are not able to finance, such as direct cooperation with civil

society organisations on human rights issues or cooperation with industrialised

countries

102

Effective synergies between the IcSP (with its ability to provide short-term reactions

without programming) and the geographic instruments were also found. Although

effective follow-up is hampered by the lack of flexibility in procedures of most other

instruments which are bound by long programming periods

103

101

102

See EDF staff working document, section 5

Including with some strategic partner countries such as Brazil, China, India and Mexico

103

See IcSP staff working document, section 5

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Nevertheless, overall coherence between instruments could be further improved, in

particular by streamlining the instruments to reduce the boundaries between geographic

(the 11th EDF, ENI, DCI, and IPA II) and thematic instruments/programmes (thematic

programmes within the DCI, IcSP and PI) which can both intervene in the same areas

104

The specific scope of the geographic instruments has made it difficult to engage

strategically and coherently with some partner countries. Three geographical instruments

are used to engage with Africa (the EDF, DCI and ENI) and cooperation at continental

level is funded both from the DCI (the Pan African programme) and with a slightly

reduced scope from the 11th EDF (intra-ACP programme)

105

. Similarly, it has proven

difficult to build bridges between regions as, for example, EU relations with the

Caribbean and Latin America are covered both by the DCI and the EDF.

Policy Coherence for Development

106

has gained momentum. The analysis of trade

policy support to development in regional cooperation shows an increasing attention to

the trade/development nexus.

On geographic instruments (the DCI, ENI and 11th EDF), in terms of coherence between

partner country and EU priorities, some external evaluations mention tendencies towards

predominantly EU driven agendas during the programming. This was despite the

extensive consultation of interested parties during programming and project

implementation, and, in particular in the EDF, the co-signature of the multi-annual

programming documents and annual actions. This apparent trade-off between EU

interests/international values and partnership principles should be seen within the new

policy context of the universally agreed 2030 Agenda/SDGs

107

Added-value

A combination of several factors explains the added-value of the EU's instruments

108



the EU's competence or expertise

109

;

the EU's nature as a supranational entity, and the relative neutrality, political

influence and leverage this potentially entails

110

;

104

105

See coherence report, paragraph 33

In addition, the IcSP crisis response component devoted 33% of its funds to Africa during the period under review.

106

Through Policy Coherence for Development, the EU seeks to take account of development objectives in all of its

policies that are likely to affect developing countries. It aims at minimising contradictions and building synergies

between different EU policies to benefit developing countries and increase the effectiveness of development

cooperation. Policy coherence in support of development objectives was first integrated in EU fundamental law in

1992 and further reinforced in the Treaty of Lisbon (Art. 208 Treaty on the Functioning of the EU) making the EU a

forerunner on the international stage in this area. See 5th EU Policy Coherence for Development report, 2015:

https://ec.europa.eu/europeaid/policies/policy-coherence-development_en

107

See coherence report, paragraph 51-53

108

See coherence report, paragraph 37 and section 5 of the staff working documents

109

See for example the IPA II staff working document, section 5 on the centres of thematic expertise created by the

Commission. Or the PI staff working document, annex 3

110

The EU is largely perceived by partners as an actor not defending or advancing the interests of a particular country,

which is important for the EU as a peace and security actor under IcSP crisis response and for Election Observation

Missions under EIDHR.

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

geographical spread of some instruments

111

including the presence in fragile

contexts where there are fewer development partners and the significant volume

of funds available

112

the scope of the instruments and modalities (such as budget support, grants,

indirect management, blending facilities and rapid decision-making for crisis

response); and

(v) the ability of the EU to lead on joint actions (i.e. joint programming and joint

implementation), especially with Member States.

Additional factors are that the instruments can be used to intervene at various levels (i.e.

national regional, continental), the predictability of funds (especially the EDF which is

not subject to the annuality rule of the EU budget

113

), the emphasis placed on regional

cooperation

114

and the unique position of the EU to prepare accession countries for EU

membership through the IPA.

More specialised instruments have specific added-value linked to their scope. For

example, the IcSP’s speed, flexibility and capacity to adapt to evolving contexts, and

presence in zones where other actors are absent, and the EIDHR actions in sensitive

human rights situations without needing partner governments' consent.

Leverage effect

Conditions are in place for the instruments to enable a strengthened policy dialogue at

country level, in particular when programmes are implemented through budget

support

115

. The PI substantiates policy dialogues/partnerships with third countries

through support of specific cooperation activities (based on mutual interest) which help

to promote EU interests and create a unique political leverage

116

Another important leverage effect stems from the donor coordination role the EU

Delegations play: fostering complementarity and coherence between different EU actors

and increasing the visibility of the EU. This is particularly true where joint programming

processes have been launched

117

The specialised instruments also engage in targeted policy dialogue, for example through

the INSC or the EIDHR on election observation. The IcSP contributed to leverage the

EU's policy dialogue in increasing donor funds spent in a conflict-sensitive manner

118

EIDHR's worldwide scope, including Election Observation Missions and the PI (albeit focused on strategic

partners).

112

Especially the EDF and the thematic component of the DCI

113

Annuality is the budgetary principle according to which expenditure and revenue are programmed and authorised

for one year, starting on 1 January and ending on 31 December. Source: Article 9 of Regulation 966/2012 on the

financial rules applicable to the general budget of the Union: http://eur-lex.europa.eu/legal-

content/EN/TXT/PDF/?uri=CELEX:32012R0966&from=EN

114

See IPA II staff working document, section 5

115

See IPA II and ENI staff working document, section 5

116

See PI staff working document, section 5

117

See external evaluation on Joint Programming: https://ec.europa.eu/europeaid/evaluation-eu-joint-programming-

process-development-cooperation-2011-2015_en

118

See IcSP staff working document, section 5

111

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The evaluations also point to some drawbacks for the political leverage exerted in terms

of enhanced policy dialogue on human rights and fundamental values. The drawbacks

were linked in particular to a decreasing acceptance of the liberal democratic model of

development, the diminishing importance of official development assistance and the

emergence of new actors

119

The instruments' financial leverage varies from case to case. Overall it is reasonably

high, thanks mainly to blending facilities (i.e. for DCI, EDF, ENI and IPA)

120

. The

creation of trust funds has also resulted in financial leverage, even if not always at the

expected level.

Scope for simplification

Cost-efficient and effective delivery mechanisms are essential to improve the

instruments' performance. The Commission has embarked on a simplification process

through the revision of the multi-annual programming guidelines and annual decision

procedures. Nevertheless, the overall number of instruments as well as some instruments

in particular was still viewed by interested parties as complex, administratively

burdensome and lacking financial flexibility. The detailed budget distribution included in

the DCI both for geographic and thematic programmes adds to the complexity and

rigidity of the instrument, making the possibilities to transfer funds between objectives

and for changing priorities within the instrument difficult, in particular when there is a

need to face emergencies and crises.

Before the 2014-2020 Multi-annual Financial Framework, each instrument had its own

implementing rules which led to divergences in their implementation. The Common

Implementing Regulation, to which the EDF implementing regulation is largely aligned,

contributed to the simplification agenda in that it prevented divergences and problems in

interpretation. Since 2014, the continued simplification efforts in external relations have

been focused on eliminating unnecessary burdens, increasing flexibility and reducing

complexity for external partners at implementation level.

Contribution to a consistent EU external action

The EU ensures the security and prosperity for Europeans by actively engaging on the

world stage, to promote its interests and uphold the values of democracy, the rule of law

and protection of human rights. EU external action policies include international

commitments such as the 2030 Agenda and the Paris Agreement on climate change,

together with the Global Strategy for the EU's Foreign and Security Policy, the new

European Consensus on Development, the renewed EU-Africa partnership, the reviewed

European Neighbourhood policy, the Enlargement policy and the Consensus on

Humanitarian Aid, among others, which taken together provides the necessary

framework for the EU to achieve its objectives.

119

120

See coherence report, box 1

See for example, EDF and DCI staff working documents, section 5

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To meet these objectives, the EU toolbox for external policies encompasses development

cooperation, diplomacy, peace, security and defence actions, economic cooperation,

enlargement, humanitarian aid and civil protection, enhanced neighbourhood relations,

macro-financial assistance, partnership on global challenges and trade.

Furthermore, to improve the EU's effectiveness in supporting stability, security and

sustainable development in partner countries the Commission adopted a proposal to

amend the IcSP Regulation. The amendment closes the gap identified in the EU's ability

to provide support when building EU partners' capacities in the security sector and would

enable the EU to support military actors, under exceptional and clearly defined

circumstances.

Through the use of joint programming with Member States and other donors, a more

coherent and visible EU response to partner countries' development has been created. A

specific evaluation published in March 2017 found progress on joint programming with

Member States showing that, despite still being in its early stages, it is valuable for the

EU and its Member States

121

. Challenges linked to ensuring ownership of the process and

results by partner countries would need to be further addressed.

On civil society in partner countries, although the geographical instruments work mainly

with their authorities, cooperation with civil society organisations remains a constant

feature across the instruments with a view to contributing to reinforcing the

organisations’ capacity and to a civil society that is able to promote reforms and

hold

governments to account. Some instruments and programmes, such as the EIDHR and the

DCI CSO/LA are primarily intended to support civil society.

The close interconnection between internal and external policies is self-evident, for

instance, with the migration crisis where the coordination and complementarity between

instruments was necessary. EU internal policy priorities have been integrated, to the

extent possible, in external actions in a coherent and consistent way, in order to safeguard

EU interests and promote mutual interest solutions and also benefited from the specialist

focus of PI on the internal/external policy nexus.

To properly address external interest and achieve global objectives stronger collaboration

between EU internal and external services have been pursued91 to ensure coherent

approaches and to avoid duplication and overlaps. To help reinforce coherence, to ensure

that EU actions are mutually reinforcing and to avoid contradictory approaches, external

services need to have a more complete picture of the activities that take place outside the

EU, in particular on global challenges such as climate change, biodiversity or the fight

against terrorism. The current multiple programming documents covering a given

country/region/continent make it difficult to have a clear overview of external actions.

Contribution to EU priorities for smart, sustainable and inclusive growth

121

See external evaluation of EU Joint Programming Process of Development Cooperation (March 2017)

http://ec.europa.eu/europeaid/evaluation-eu-joint-programming-process-development-cooperation-2011-2015_en

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Smart, sustainable and inclusive growth is at the heart of the EU’s external assistance.

The instruments contribute to smart growth through support to trade-related projects and

the development of collective approaches on climate change and environment.

In line with the Agenda for Change

122

that aims to significantly increase the impact and

effectiveness of the EU’s external assistance, EU assistance at country level has to focus

on three or fewer sectors of concentration in most partner countries. EU support has since

been more focused on the two priority areas of the Agenda for Change, one of those

being inclusive and sustainable growth for human development.

IPA II has a clear objective of enhancing its beneficiary countries' economic and social

development with a view to attaining the targets set in the Europe 2020 strategy for

smart, sustainable and inclusive growth. The development instruments have a strong

focus on smart, sustainable and inclusive growth as reflected in the actions adopted in the

various Annual Action Programmes

123

. The PI also contributes to these EU priorities as

does the Greenland Decision. On the PI, one of its specific objectives is the promotion of

the international dimension of the Europe 2020 strategy in all its aspects (e.g. jobs,

growth, and investments, SMEs).

Since 2008 the Commission has been setting up blending facilities in different regions of

the world, resulting in the leveraging of investments, to promote sustainable economic

development. These blending operations have covered different areas of intervention

(infrastructure projects, Micro, Small and Medium Enterprise financing, etc.) and the

value added they generate varies according to the specific additionality objective they are

meant to address, as well as to the economic conditions in the given country of

operations (e.g. macroeconomic framework, conducive business environment, investment

climate).

Long-term impact

The external evaluations have highlighted that there are obvious difficulties in measuring

the long-term impact of the instruments at the mid-point of their implementation, as some

of them have only recently started implementing a significant number of projects and

programmes and baselines have, in many cases, not yet been established.

Nevertheless, some evaluations were able to look at achievements under previous

instruments to show positive trends in key indicators. For example, the DCI supported

the drafting of 50 national and regional climate strategies over the last years; in

Neighbourhood countries, and despite difficult circumstances (e.g. the global economic

crisis, regional crises, civil wars, terrorism, and the migration crisis), some countries

showed significant progress in certain governance areas (e.g. Georgia in the area of

public administration). For the PI the mid-term evaluation concludes that the support

deployed is on track to deliver the expected impacts.

122

123

COM (2011) 637, 13 October 2011

See Commission 2016 Annual Report on the implementation of the European Union's instruments for financing

external actions in 2015, SWD (2016) 456 final of 19 December 2016

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Performance against the current set of objectives contained in the instruments is

dependent on various external factors outside the control of the instruments, such as

national ownership, political will and a country's administrative capacity. The cost of

non-action or late action in external relations would be catastrophic if instability, conflict

and war were to increase, in particular in the EU’s Neighbourhood, with

potential spill-

over effects for the EU itself.

Evaluation results for Humanitarian Aid

The independent comprehensive evaluation of the European Union humanitarian aid

during the period 2012-2016

124

concluded that the Commission-funded humanitarian

actions were overall needs-based and implemented in line with humanitarian principles.

The actions made an important contribution to the core objectives to save lives, reduce

morbidity and suffering as well as improve dignity of life of the populations affected by

disasters. The evaluation found that the scale of funding dedicated to humanitarian aid

actions allowed the EU to have a real impact on the ground, addressing the needs of a

significant number of beneficiaries in a large number of countries and regions. Positive

impact on the ground was also found in regions where funding allocations were more

limited, thanks to the selection of projects with high leverage or multiplier effect

potential.

EU added value was found primarily in the very fact that the EU's humanitarian aid

funding helps address humanitarian needs around the globe. In a global context where

needs largely outpace the available resources, stopping EU humanitarian aid funding

would leave a significant proportion of humanitarian needs globally unaddressed. EU

added value was also found in relation to the Commission’s use of a global field network

(key unique factor compared to other donors), the focus on forgotten crises and the

politically independent and principled approach.

The evaluation confirmed that the current configuration allows for a rapid response to

crisis situations as they develop and to new needs as they emerge. It ensures the

necessary flexibility, adequate expertise, relevance, efficiency and cost-effectiveness.

The evaluation pointed to the fact that there is a clear and consistent approach towards

the humanitarian principles. It also noted that keeping EU humanitarian aid separate from

other external policy instruments supports its independence.

This is also supported by stakeholders at all levels

125

, including the European Parliament.

The [DEVE Committee report] on the implementation of the Development Cooperation

Instrument, the Humanitarian Aid Instrument and the European Development Fund

insists on the need to ensure that humanitarian aid is not instrumentalised and that the

humanitarian principles are respected. The report also calls for the recognition of the

124

http://ec.europa.eu/echo/funding-evaluations/evaluations/geographic-

evaluations_enhttp://ec.europa.eu/echo/funding-evaluations/evaluations/geographic-evaluations_en

125

The evaluation included a wide-range of stakeholders' consultations, including an Open Public Consultation.

kom (2018) 0460 - Ingen titel

specificity of humanitarian aid in the EU budget and recommends, therefore, keeping a

separate instrument and budget for humanitarian aid.

Evaluation results of the External Lending Mandate (ELM)

An independent external evaluation undertaken in 2016 found that the ELM enabled the

European Investment Bank (EIB) to support EU external policy objectives and to

respond to a number of challenges that have arisen during the course of the current

mandate (2014-2020). It found that all the operations under the current ELM since its

inception in July 2014 are fully aligned with the three high-level objectives set out in the

ELM Decision. It also found that the three objectives themselves are aligned with the

Sustainable Development Goals and that the ELM has supported the EU external policy

agenda, showing sufficient flexibility and reactivity to new geopolitical challenges as

demonstrated in Syria, Ukraine, Egypt and Morocco (the Arab Spring) and Jordan (the

refugee crisis). The ELM has enabled the EIB, alongside other development partners, to

play a positive role in the economic and political stabilisation of these countries hit by

political crises. The consistency of the ELM with EU external, climate and allocation

policies is ensured through regularly updated regional guidelines.

The evaluation also concluded that the ELM has substantially contributed to the EU's

climate change-related objectives, especially in terms of climate change mitigation. ELM

operations enabled the saving of an estimated 1.35 Mt CO2-eq/year of GHG emissions

based on operations signed between July 2014 and December 2015. EIB lending volumes

exceed the quantitative target of 25% and even the target of 35% by 2020.

The evaluation concluded that without the EU guarantee, the EIB would not have

financed most of the projects it considered since the recipient countries were too risky for

the EIB to lend to on its own risk. The financial added value of ELM financing

operations is substantial compared to the private sector both in terms of the interest rate

and longer maturity. Moreover, there is clear evidence of non-financial benefits for the

final beneficiaries generated by EIB lending under the ELM: technical assistance,

promotion of good financial standards within the local banking sector, procurement

standards, etc.

ELM projects often take place in less developed markets with higher risks and more

complex challenges. The EIB's added-value in these markets is often its ability to

mobilise finance on terms that are not normally readily available in these markets (e.g.

longer loan tenors, grace period, etc.). In addition, the EIB brings further added value by

using its signalling power to crowd-in private sector investors.

A further mid-term evaluation required by recent amendments to the ELM Decision is

ongoing and will be published before mid-2019. It will examine the ELM's capacity to

crowd-in private investment, synergies with existing financial instruments and

institutions, presence of experts on the ground, etc.

Evaluation results for Macro Financial Assistance

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All MFA operations are subject to an ex post evaluation, which is normally carried out

within two years from the end of the availability period defined in the legislative decision

granting assistance. The objective is twofold: (i) to analyse the impact of MFA on the

economy of the beneficiary country and in particular on the sustainability of its external

position; (ii) to assess the added value of the EU intervention.

The evaluations carried out so far conclude that MFA operations do contribute, albeit

sometimes modestly and indirectly, to the improvement of external sustainability, the

macroeconomic stability and the achievement of structural reforms in the recipient

country. In most cases, MFA operations had a positive effect on the balance of payments

of the beneficiary country and contributed to relax their budgetary constraints. They also

led to a slightly higher economic growth. A few examples of recent ex-post evaluations

of MFA operations:

- ON MFA I and II in Ukraine:

"The main conclusions from the evaluation are that the

MFA, in part because

of the sped of its deployment, had a positive impact on Ukraine’s

economy helping to stabilize the financial situation and avoided measures (such as

further public spending cuts) that would have had serious negative social impacts. It also

contributed to the reform effort in the country"

On MFA I in Jordan:

"The evaluation concluded that the MFA, combined with a

simultaneous IMF SBA programme, effectively contributed to the timely stabilization and

the medium-term

sustainability of Jordan’s external financial and fiscal positions;[…],

EU added-value was most prominent in reinforcing the promotion of structural reforms

in several EU priority areas and in addressing short and medium-term social

challenges".

An ex post evaluation for the MFA programme in the Kyrgyz Republic is currently

ongoing and is expected to be finalised in 2018. Additionally, ex post evaluation for the

MFA programmes in Tunisia I and Georgia II will be launched in mid-2018.

126

All final reports of completed ex-post evaluations of MFA operations are published on

http://ec.europa.eu/dgs/economy_finance/evaluation/completed/index_en.htm

126

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Annex 4: Broad instrument - description of the programmes

covered

Common Implementing Regulation

The CIR is not a financing instrument, but a regulation for the implementation of the

financing instruments under its scope

127

. While each of the external financing instruments

determine the objectives, scope, programming, financial envelope and process for

allocation of funds for the respective policy they implement, the CIR provides a set of

common rules and procedures applicable to project formulation, implementation,

evaluation and audit. The CIR is not a standalone regulation: its provisions are

heterogeneous and vary from some procedural/technical provisions which complement

the Financial Regulation, to some overarching cross-cutting policy-commitments (on

diverse punctual topics, such as accessibility for persons with disabilities, rule of law or

environmental screening) which complement the commitments made in each external

financing instrument.

In the MFF 2007-2013, each individual External Financing Instrument contained its own

implementing rules. The CIR's primary achievement hence lies in the establishment of

common rules, thereby ruling out the divergences which existed previously between the

pre-2014 External Financing Instruments. The particularity of the CIR being that it is

merely ancillary to the External Financing Instruments through which it operates, the

2014-2020 impact of the CIR beyond this harmonisation-aspect, is difficult to assess

128

Development Cooperation Instrument

The DCI 2014-2020 is the EU's main financing instrument within the EU budget

available to support its development policy. It is complementary to the EDF which is

funded outside the EU budget and specifically covers African, Caribbean and Pacific

countries. The aim of the DCI is to finance actions aimed at the eradication of poverty

and provide a long-term response to global threats/challenges in countries included in the

DAC-OECD list of aid recipients. Approximately

129

24% of the programme will be spent

on sustainable agriculture, food and nutrition security; 14% on natural resources and

environment; 11% on Civil Society Organisations and 11% on education. Unlike other

external financing instruments, the actions under the DCI must be designed to fulfil the

criteria for Official Development Assistance

130

127

\The CIR applies to the Heading 4 external financing instruments under the EU budget. It does not apply to the EDF

although the EDF’s own implementation rules largely reflect those in the CIR.

128

The qualitative and quantitative appreciation of the functioning of the CIR can only be based on the qualitative and

quantitative results seen in the functioning of the various External Financing Instruments;

129

Based on programmed amounts.

130

A few exceptions exist in the case of the thematic global public goods and challenges programme and the pan-

African programmes, where a limited percentage (5 and 10 % respectively) can be used for non-Official Development

Assistance.

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European Development Fund

The 11

European Development Fund is funded by EU Member States outside of the EU

budget. It is the EU's main financing instrument for providing development aid to the

ACP countries and the Overseas Countries and Territories (OCTs). The objectives of the

EDF are to reduce and eventually eradicate poverty in the ACP countries, and to attain

sustainable development of the OCTs. With total financial resources of EUR 30.5 billion,

the EDF is the largest of all EU's external financing instruments in terms of volume,

representing the equivalent of almost half of the Multiannual Financial Framework

Heading 4 'Global Europe' of EUR 66.26 million for the same period. Approximately

131

21% of the programme will be spent on sustainable agriculture, food and nutrition

security, 11% on infrastructure and transport, 10% on energy and 8% on natural

resources and environment.

Key features of the EDF includes its substantial reserve: 20% of its geographic

programme is unallocated compared with only 6% for the DCI meaning it can respond

quickly to emerging challenges; it is able to move unused funds from one year to the next

(multi-annuality), enhancing flexibility to respond to evolving needs; and its off-budget

nature permits the funding of actions that could not otherwise be financed (e.g. support to

peace keeping operations).

European Instrument for Democracy and Human Rights

The EIDHR 2014-2020 with EUR 1.33 billion, the equivalent of EUR 190 million per

year, is the EU's financing instrument dedicated specifically to the promotion and support

of democracy and human rights, allowing for assistance to be provided independently of

the consent of the third countries' governments and public authorities. The EIDHR

focuses, in complementarity to other EU financing instruments, on urgency situations

where human rights and fundamental freedoms are most at risk and where disrespect for

human rights is particularly pronounced and systematic. The EIDHR mandate is

worldwide, with the exception of the EU Member States. In order to be able to respond in

a flexible and timely manner, the EIDHR enjoys a number of more flexible

administrative procedures and is untied. The EIDHR is mainly (not exclusively)

implemented through civil society organisations and in support of civil society.

Approximately 20-25% of the instrument is spent on Support to human rights and human

rights defenders in situations where they are most at risks; 20-25 % on other EU

priorities in the field of human rights; 15-20% on support to democracy, 25% on EU

Election Observation Missions, and 5-10% on support to targeted key actors, including

international and regional human rights instruments and mechanisms.

European Neighbourhood Instrument

The European Neighbourhood Instrument implements the European Neighbourhood

Policy. With an envelope of EUR 16.49 billion for the period 2014-2020, it aims at

further advance towards an area of shared prosperity and good neighbourliness involving

131

Based on programmed amounts

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the EU and 16 countries and territories. The ENI as financial instrument is based in Art.

208 and 208 TEU but it underpins the pursuit of Art. 8 of the TEU. Accordingly the ENI

promotes enhanced political cooperation, deep and sustainable democracy, progressive

economic integration and a strengthened partnership with societies between the Union

and the partner countries and, in particular, the implementation of partnership and

cooperation agreements, association agreements or other existing and future agreements,

and jointly agreed action plans or equivalent documents.

The ENI features traditional bilateral and multi-country programmes (including those

specifically based on the priorities of the Eastern Partnership and the southern dimension

of the ENP as well as an ENI-wide dimension), along with cross-border cooperation

programmes. The latter is unique to the ENI and IPA II instruments, and addresses

cooperation between one or more Member States, on the one hand, and one or more

partner countries and/or the Russian Federation, on the other hand, taking place along

their shared part of the external border of the Union. The ENI makes use of a

differentiated approach and it establishes country specific frameworks for bilateral

cooperation in the form of Partnership Priorities, Association Agendas and Action Plans.

The ENI employs an incentive-based approach ("more for more") to reward progress in

key areas of cooperation.

European Sustainable Development Fund

The EFSD guarantee is established by Regulation (EU) 2017/1601 of the European

Parliament and of the Council of 26 September 2017 establishing the European Fund for

Sustainable Development (EFSD), the EFSD guarantee and the EFSD guarantee fund.

The European Fund for Sustainable Development (EFSD) aims to support investments

primarily in Africa and the Union’s Neighbourhood as a means to contribute to the

achievement of the Sustainable Development Goals of the United Nations (UN) 2030

Agenda for Sustainable

Development (the ‘2030 Agenda’), in particular poverty

eradication, as well as the commitments under the recently revised European

Neighbourhood Policy. By supporting such investments, the EFSD aims to address

specific socioeconomic root causes of migration, including irregular migration, and to

contribute to the sustainable reintegration of migrants returning to their countries of

origin and to the strengthening of transit and host communities.

The EFSD is composed of regional investment platforms, which have been established

on the basis of the working methods, procedures and structures of the external blending

facilities of the Union and which should combine their blending operations and the EFSD

Guarantee.

The guarantee should give priority to funding projects which have a high impact on job

creation and whose cost-benefit ratio enhances the sustainability of investment. In order

to fulfil the political commitments of the EU on climate action, renewable energy and

resource efficiency, a minimum share of 28 % of the financing under the EFSD

Guarantee should be devoted to investments relevant for those sectors.

The EFSD guarantee shall be used to cover the risks from loans, guarantees, counter-

guarantees, capital market instruments as well as any other form of funding or credit

enhancement, insurance, and equity or quasi-equity participations for a maximum

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amount of EUR 1.5 billion. The provisioning rate shall be at 50 % of total guarantee

obligations.

The guarantee will be implemented through ''investment windows'', targeted amounts for

specific regions and/or sectors. So far, five investment windows have been set up. All of

them cover the two regions under the EFSD (Africa and Neighbourhood) and have a

specific sector focus: sustainable energy, MSMEs financing, sustainable cities,

sustainable agriculture and digitalisation.

External Lending Mandate

The European Investment Bank (EIB) is 'the EU bank' and the largest multilateral

borrower and lender in the world. In addition to its main mission to contribute to the

development of the internal market, the EIB is also a major partner in pursuing the EU's

external objectives: about 10% (approx. EUR 8 billion) of its annual activity takes place

outside the EU. Given the EIB's policy to maintain its AAA-rating, the EIB's ability to

lend outside the EU in support of EU policy objectives using its own resources is limited

to relatively lower-risk projects. Under the External Lending Mandate (ELM) the EIB

can benefit from an EU guarantee on part of its lending outside the EU, excluding those

countries covered by the ACP Investment Facility. The ELM thus enables the EIB to

support EU external policy objectives in a wider range of countries by investing in

projects which the EIB would be otherwise unable to finance. For most projects in the

private sector, the guarantee covers political risk only. For projects in the public sector

and a limited number of projects in the private sector, the EU provides a comprehensive

guarantee. Following recent amendments to the ELM Decision, the maximum amount of

the EU guarantee has been increased to EUR 32.3 billion over the period 2014-2020,

with sub-ceilings for each region.

EIB loans guaranteed by the EU under the ELM must meet one of four high level

objectives: 1) local private sector development, in particular support to micro, small and

medium-sized enterprises (MSMEs); 2) development of social and economic

infrastructure, including transport, energy, environmental infrastructure, and information

and communication technology; 3) climate change mitigation and adaptation; and 4) the

long-term economic resilience of refugees, migrants, host and transit communities, and

communities of origin as a strategic response to addressing root causes of migration.

Regional integration among beneficiary countries and between beneficiaries and the EU

is an underlying objective.

The ELM allows the EIB to grant large amount of loans with a limited impact on the EU

budget. This is due to the mechanism whereby the Guarantee Fund which cushions the

EU budget against calls under the ELM need only be provisioned at a rate of 9% of the

EU's total outstanding liabilities under the ELM and two other (smaller) programmes

including Macro Financial Assistance and Euratom loans.

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Instrument Contributing to Stability and Peace

The Instrument contributing to Stability and Peace (IcSP) with an envelope of EUR

2,366 million is primarily devoted to crisis response, conflict prevention and peace

building actions. The IcSP makes non-programmable funding available in a timely,

flexible way thereby providing a tool to address crisis or emerging crisis situations from

a political perspective and allowing the EU to fulfil its Treaty mandate to preserve peace,

prevent conflicts and strengthen international security. In addition, programmable

funding is provided to structural peace building and crisis preparedness actions alongside

support to reinforce third countries' capacity to deal with global risks and threats,

ultimately ensuring long-term stability. The IcSP is a crucial tool for the EU as a

respected and effective peace and security actor and underpins EU crisis response

policies with quick and flexible action.

Macro Financial Assistance

Macro-Financial Assistance (MFA) is an EU financial instrument designed to address

exceptional external financing needs of countries that are geographically, economically

and politically close to the EU. It is conditional on the existence of an adjustment and

reform programme agreed with the International Monetary Fund (IMF), and can take the

form of either loans, for which the Commission borrows the necessary funds in capital

markets and on-lends them to the beneficiary country, or, under certain circumstances,

grants financed by the EU budget. MFA operations are triggered by balance-of-payments

crises within a country; the instrument thus delivers assistance of 'last resort'.

MFA has successfully contributed to both short-term stabilisation and medium- to long-

term economic stability of countries around the EU’s borders. This

dual impact, which

has been confirmed by ex-post

evaluations, is derived from the instrument’s two-pronged

approach. Its primary and most immediate goal is to help countries overcome acute

economic crises by filling an external financing gap and thereby restoring an adequate

international reserve position. The second objective is to spur lasting change through

structural and economic reforms; this contribution to medium- and long-term

stabilisation is achieved through policy conditionality. The acute need of beneficiary

countries for emergency funding tends to increase the traction of MFA conditionality

compared with non-emergency, programmable support instruments. Thus, MFA endows

the EU with significant policy leverage in beneficiary countries. Importantly, through its

stabilisation and reform impetus in favour of a sound macroeconomic environment, MFA

also supports the efficiency of other EU financing instruments.

MFA is available to accession and pre-accession countries, as well as countries covered

by the European Neighbourhood Policy. The instrument's geographical scope reflects not

only the regional priorities of EU external policy, but also the economic imperative to

support economic stability in the EU's neighbourhood, which could otherwise be a source

of negative spillovers to the EU economy. In this sense, MFA is part of the "network" of

financial instruments contributing to the macro-financial stability of the EU, along with

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the financial stability instruments put in place for EU Member States (the EFSM/BoP

facilities and ESM).

Each MFA operation requires the adoption of a stand-alone legislative decision by the

European Parliament and the Council, on a proposal by the Commission. A previous

proposal by the Commission of a Framework Regulation for MFA of 2011, which would

have laid down the key features of the instrument and streamlined the decision-making

process, was rejected by the co-legislators, as they were not prepared to give up their

decision-making power on individual operations.

Partnership Instrument

The PI 2014-2020 with EUR 960 million in total, average annual allocation of EUR xxx

million, is designed to pursue policy and political cooperation and alliance-building on

issues of own/mutual interest with partner countries and challenges of global concern.

The PI has world-wide coverage and is not subject to requirements for Official

Development Assistance (ODA). It is designed to support the EU as a global actor

partnering with third countries - notably middle-income countries and in particular

strategic partners - on a peer-to-peer basis. The PI addresses four specific objectives:

1) Promotion of EU bilateral, regional and inter-regional cooperation partnership

strategies by promoting policy dialogue and by developing collective approaches and

responses to global concerns;

2) Implementation of the external dimension of 'Europe 2020';

3) Improvement of access to partner country markets and boosting trade, investment and

business opportunities for EU companies and elimination of barriers to market access and

investment; and

4) Enhancement of widespread understanding and visibility of the EU and thereby

promotion of its values and interests via public diplomacy actions. The PI also

contributes to the Erasmus+ programme.

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Annex 4a Additional information on Macro-Financial

Assistance

MFA is not a programmable instrument; it is intended for exceptional circumstances and

has been used to address key crises in the EU's neighbourhood. Future crisis moments

will need to be catered for, but cannot necessarily be anticipated

–

even less so in terms

of their magnitude

–

and thus it is difficult to evaluate well in advance the possible

financing needs. In this respect, it will continue to be important to keep a level of both

grants and loans sufficient to ensure that possible specific external financing needs,

including in acute crisis moments, from third countries can be catered for.

MFA goes beyond budget resources in providing loans, in addition to grants. This

reinforces the EU's capacity to act as it produces significant financial leverage.

In this context, it is important to highlight that in the context of the current MFF mid-

term review, the Commission proposed to increase the lending volume for MFA loans

substantially, from EUR 0.5 billion to EUR 2 billion per year for the remainder of this

MFF, precisely to cater for the geopolitical and economic instability of the region, which

is expected to persist. The Commission proposal was supported by both Council and

Parliament, and given the importance that has been put on instruments that provide

positive leverage for external policy priorities the current annual lending volume of EUR

2 billion as agreed in the current MFF mid-term review is taken as the baseline for also

the next MFF (post-2020) period. MFA indeed is considered to be a programme with

strong European added value and high leverage. A future new Guarantee Scheme will

have to make sure that sufficient provisioning will be earmarked for enabling these

volumes of MFA loans, so as to safeguard the important leverage capabilities of the

instrument.

Although loans provide for the majority of assistance disbursed, in line with the logic

behind the instrument, grants have proved to be a key element for complementing the

operations in situations of high vulnerability. Eligibility for MFA grants is guided by the

Joint Declaration of the European Parliament and the Council of August 2013 and relates

mainly to the level of development of the recipient country and its debt sustainability

and/or creditworthiness.

A sufficiently provisioned MFA grants budget line is a prerequisite for the EU to

maintain the required flexibility of the MFA instrument and intervene with a suitable

operation in case of emergency.

Indeed, in the upcoming MFF post-2020, a number of countries could still require large

MFA operations, in terms of both loans and grants, to restore BoP and financial stability.

Some of these might require large interventions from the international community,

including possibly in the form of grants to support economic reconstruction. Syria, a

likely future priority, could be such a case. When deciding on any possible cuts or

reallocations, it should therefore be considered that a cut in the budget for MFA grants

could increase the risk of the EU being less well prepared for upcoming challenges in the

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neighbourhood and candidate countries. For that reason, the option to use grants in

exceptional circumstances to incentivise and ensure reform implementation and

economic stabilisation should be retained, even in a scenario of a fundamental redesign

of the external action budget; sufficient flexibility for this purpose would need to be built

into any revamped budget allocation system.

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Annex 4b Additional information on the External Lending

Mandate

Table of contents

INTRODUCTION: POLITICAL AND LEGAL CONTEXT ............................................................. 73

THE OBJECTIVES ............................................................................................................................ 76

PROGRAMME STRUCTURE AND PRIORITIES ........................................................................... 80

DELIVERY MECHANISMS OF THE INTENDED FUNDING ...................................................... 85

MONITORING AND EVALUATION .............................................................................................. 86

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NTRODUCTION

: P

OLITICAL AND LEGAL CONTEXT

Scope and context

This annex presents information related specifically to the EIB External Lending

Mandate (ELM). The ELM is a budgetary guarantee, not a grant-based instrument, so

specific considerations apply to it beyond the discussion in the main body of this impact

assessment.

Introduction to the External Lending Mandate (ELM)

The ELM supports the European Investment

Bank’s (EIB) lending outside the EU in

support of EU policy objectives.

The EIB is 'the EU bank' and the largest multilateral borrower and lender in the world. In

addition to its main mission to contribute to the development of the internal market, the

EIB is also a major partner in pursuing the EU's external objectives: about 10% (approx.

EUR 8 billion) of its annual activity takes place outside the EU.

The EIB's ability to lend outside the EU in support of EU policy objectives is, however,

limited given its policy of maintaining its AAA credit rating. Under the ELM, the EIB

can benefit from an EU guarantee on its lending outside the EU in non-ACP countries.

The ELM thus enables the EIB to support EU external policy objectives in countries with

higher political risk by investing in projects that the EIB would otherwise be unable to

finance. For most projects in the private sector, the guarantee covers political risk and not

commercial risk. For projects in the public sector, the EU provides a comprehensive

guarantee.

The ELM therefore increases the firepower of the EIB, allowing it to increase its

investments outside the EU in support of EU external policy. The current mandate which

runs from 2014-2020 allows the EIB to lend up to EUR 32.3 billion under the ELM

guarantee. Eighty-six percent of the overall guarantee ceiling is earmarked for operations

in the EU's Neighbourhood partners and in Pre-Accession countries. The rest can be used

in Asia, Latin America and South Africa.

The ELM enables EIB lending in support of one or more of the following four high-level

objectives:

ii)

local private sector development, in particular support to SMEs and

micro-enterprises;

development of social and economic infrastructure, including transport,

energy, environmental infrastructure, and information and communication

technology;

climate change mitigation and adaptation;

long-term economic resilience of refugees, migrants, host and transit

communities and communities of origin as a strategic response to

addressing root causes of migration.

iii)

iv)

The fourth high-level objective was recently added via amendments to the ELM Decision

which will enter into force in April 2018.

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The ELM is an extremely efficient instrument from a budgetary perspective. The

Guarantee Fund for external actions was set up to protect the EU budget in the event of a

default on an EIB loan which the EU has guaranteed under the ELM. The Guarantee

Fund (which plays a similar role for Macro Financial Assistance and Euratom loans)

must be maintained at a level of 9% of the EU’s total outstanding liability for these three

programmes. In other words, each euro in the Guarantee Fund underpins approximately

eleven euros of EIB investment abroad in support of EU policy objectives.

The table below shows the amounts paid each year into the EU budget to maintain it at

the target level of 9% of outstanding liabilities:

Annual average amounts of the current budget in nominal terms - Provisioning of

the Guarantee Fund for external actions

In EUR million

2014

2015

2016

2017

2018

2019

2020

58,4

144,4

257,1

240,5

137,8

103,2*

287.8* **

(*) Before use of external assigned revenue (which is EUR 55 million for both 2019 and 2020)

(**) Forecast

ELM in a changing context

The

Reflection paper on the future of EU finances

identified the need to align EU

external investment with new external action priorities to tackle challenges efficiently.

132

The paper indicated the need to leverage private funds to increase impact in line with EU

objectives. The paper also identified notably the need to tackle the root causes of

irregular migration.

The current ELM 2014-2020 has just been amended to add a fourth high-level migration-

related objective in order to allow the EIB to invest in the economic resilience of

countries most affected by the migration crisis. Due to the efficient nature of its

budgetary provisioning, the ELM allows the EU collectively to 'do more with less.'

Lessons learned from previous programmes

There have been three recent independent evaluation studies analysing the ELM and one

on the Guarantee Fund for external actions:



132

Mid-term evaluation of the 2007-2013 mandate (2010)

133

Evaluation of the Guarantee Fund for external actions (2010)

134

Mid-term evaluation of the 2014-2020 mandate (2016)

135

COM(2017) 358, available at

https://ec.europa.eu/commission/sites/beta-political/files/reflection-paper-eu-

finances_en.pdf

133

DG ECFIN (2010), “Mid-term evaluation of EIB’s external mandate”, Final report, available at

http://ec.europa.eu/dgs/economy_finance/evaluation/pdf/ecfin_eval_en.pdf

134

COWI (2010), “EIB’s external mandate 2007-2013 Midterm Review”, the Evaluation of the Guarantee Fund for

External

Actions

(March

2010),

ECFIN,

Copenhagen,

available

http://ec.europa.eu/dgs/economy_finance/evaluation/pdf/ecfin_eval_en.pdf

135

PwC (2016), “Final Report for the External evaluation of the application of the European Union Guarantee for the

EIB lending operations outside the European Union”, DG ECFIN, Brussels, available

http://ec.europa.eu/dgs/economy_finance/evaluation/pdf/mid_term_201612-final_report_pwc_en.pdf

kom (2018) 0460 - Ingen titel



Further evaluation of the 2014-2020 mandate (ongoing in 2018)

This section builds on the 2016 mid-term evaluation and includes very preliminary

results from the ongoing evaluation of the 2014-2020 ELM.

Objectives

The independent external evaluation undertaken in 2016 found that the ELM enabled the

EIB to support EU external policy objectives and to respond to a number of challenges

that have arisen during the course of the current mandate. It found that all the operations

launched under the current ELM since its inception in July 2014 are fully aligned with

the three high-level objectives set out in the 2014 ELM Decision (which was

subsequently amended to include a fourth migration-related objective which comes into

force in April 2018).

The evaluation also found that the three objectives themselves are aligned with the EU’s

policy objectives, notably the Sustainable Development Goals and the fulfilment of the

Paris climate agreement. It found that the ELM has allowed for sufficient flexibility and

reactivity to new geopolitical challenges as demonstrated in Syria, Ukraine, Egypt and

Morocco (the Arab Spring) and Jordan (the refugee crisis). The ELM has enabled the

EIB to play a positive role alongside other development partners in the economic and

political stabilisation of these countries hit by political crises.

The evaluation also concluded that the ELM has substantially contributed to the EU's

climate change-related objectives, especially in terms of climate change mitigation. ELM

operations saved an estimated 1.35 Mt CO2-eq/year of emissions based on operations

signed between July 2014 and December 2015. EIB lending volumes under the ELM

(39%) currently exceed the quantitative target of 25% and are on track to continue to

exceed the target of 35% by 2020.

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Additionality

The 2016 evaluation concluded that without the EU's guarantee, the EIB would not have

financed most of the projects it considered since the recipient countries were too risky

(speculative-grade) for the EIB to lend at its own risk. In some cases, with important

exceptions, a project could technically have been realized in the absence

of the EIB’s

involvement, as the borrower may potentially have found an alternative source of

financing, mainly from other international financial institutions (IFIs). However, the

other IFIs face their own lending constraints, so it is unlikely that even all sound projects

would have attracted financing in the absence of the ELM. IFIs also seek to diversify

risks and aim for risk sharing when engaging in project financing, in particular in

emerging and developing countries. Thus in the absence of the ELM, other IFIs would

probably scale down their overall lending volumes in proportion to the reduction in ELM

lending, as the IFIs would reduce their risk exposure to some projects in the absence of

the EIB's participation. Thus, other IFIs would not have been able to fill the gap entirely.

Furthermore, the evaluation found that the projects financed in the context of the EIB’s

external operations often take place in less developed markets with higher risks and more

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SWD(2016) 295 final, mid-term evaluation of the ELM

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complex challenges. The EIB's added-value in these markets is often its ability to

mobilise finance on terms that usually are not easily available in these markets (e.g.

longer loan tenors, grace periods, etc.). This significant financial capacity is

complemented by technical expertise for the assessment of viable investments,

leveraging the EIB's core experience within the EU. In addition, the EIB brings further

added value by providing projects with both an EU and an IFI ‘label,’ enabling it to

further crowd-in other investors including from the private sector.

Other findings

Preliminary findings from the current ongoing evaluation (required to be published by

mid-2019 by the amendments to the ELM Decision which will enter into force in April

2018) reinforce the above conclusions. However, the findings also point to the need to

strengthen the granular link between ELM projects and the EU’s policy objectives.

Experience over the last several years suggests that for instance the Commission should

have greater oversight over issues such as conditionality and other relevant aspects

insofar as these elements have an impact on the EIB’s ability to deliver EU policy

objectives.

The ongoing evaluation has also pointed to monitoring to be a potential area for

improvement in the next MFF, for example

by changes in the timing of the EIB’s three

year lending forecast and its provision to the Commission. A further recommendation is

for a rationalisation of the interaction between ELM projects and the EU’s blending

facilities which is currently organised on a more or less ad hoc basis.

Consultation

No open public consultation has been undertaken recently on the ELM, in line with the

exemption provided for in the relevant provisions of the Better Regulation Guidelines.

However, each of the above evaluations has included a variety of forms of stakeholder

consultation, including targeted interviews, workshops and online surveys of

beneficiaries. The results of these consultations were used as a source of evidence to

arrive at the conclusions described above.

THE OBJECTIVES

Challenges for the programmes of the next MFF

There are a number of challenges which the ELM must address in the next MFF.

Based on the findings of the evaluations described above, the ELM will need to be

reformed in order to ensure a stronger alignment at the project level with EU policy

objectives. In addition, challenges deriving from the cross-cutting objectives of the new

MFF will include coherence, synergies and simplification. All instruments have to

reinforce their capacity to attract private investments in order to contribute to achieving

the Sustainable Development Goals. Finally, the ELM will need to continue to address

rising political priorities in the next MFF, especially climate change and financing needs

consistent with the approach of the Commission's new Action Plan on Sustainable

Finance

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Complementarity

The ELM operates alongside other EU external instruments such as the blending

facilities/platforms, the new European Fund for Sustainable Development (EFSD) and

the African, Caribbean and Pacific (ACP) Investment Facility. These instruments have

largely similar objectives. All three instruments, although to differing degrees, target the

root causes of migration, local private sector development and climate change mitigation

and adaptation. The ELM and ACP both also contribute to the development of social and

economic infrastructure. Each instrument should strengthen the crowding-in of private

investments to underpin the achievement the Sustainable Development Goals.

The ELM and the ACP Investment Facility are geographically almost entirely distinct,

whereas both the ELM and EFSD cover the Eastern and Southern Neighbourhood. The

ELM and the EFSD are complementary tools and both serve the objective of the EU

Neighbourhood policy. Coordination of efforts in the next MFF will thus be required to

ensure synergies. The EIB has a role in the governance of the EFSD which is designed to

enhance the coordination and complementarity between the two instruments.

Climate change

The EIB has already in 2015 expanded its climate-related target in developing countries

from the current level of 25% to 35% by 2020, and the EU has increased the ELM target

also to 35%. Any new legislative proposal should take into account such expansion as

well as the EU's own commitments to climate policy in the coming years. Although the

climate action under ELM operations is already at 39% and total EIB external operations

(i.e., including non-ELM operations) is also at about 32% already quite close to the target

level by 2020, more needs to be done to ensure continued delivery.

Economic diplomacy

Economic diplomacy is an overriding EU policy goal, which not only seeks to defend the

EU’s strategic economic interests (business internationalisation,

market access, jobs and

growth, etc) but is also fully compatible with EU development policy and works in the

interests of our development partners. Investment climate, the participation of private

operators and private financing are critical for ensuring sustainable development in

partner countries. This is reflected in the SDGs Agenda 2030, the EU Consensus on

Development and the EU Global Strategy for Foreign and Security Policy.

The importance of EU Economic Diplomacy has been recognised in the

Commission’s

Reflection Paper on Harnessing Globalisation

adopted in May 2017.

EIB investments supported by the ELM could be among the tools for achieving the

objectives of economic diplomacy, for example through an adjustment or update to the

underlying objective of regional integration or the inclusion of a new objective related to

support for European SMEs in third countries, one of the key aspects of economic

diplomacy.

Objectives of the programmes

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ELM Objectives

EU external objectives

EIB external financing operations are required to support the EU external policy

objectives in the areas of development cooperation, Neighbourhood policy, climate

action, addressing the root causes of migration, etc. With the exception of the SDGs and

Paris Agreement, which were finalised in 2015, the broadest EU external objectives were

essentially unchanged for the current mandate.

The intervention logic of the current mandate as elaborated during the 2016 mid-term

evaluation is below:

The ELM currently has four high-level objectives which operationalise the link with the

EU’s external objectives. These current objectives are stated below with some

considerations for how they may need to be developed in a future mandate based on

experience under the current framework.

Objective 1: Local private sector development, in particular in support of small and

medium-sized enterprises (SMEs), possibly including the internationalisation of

European SMEs

Access to finance is one of the key constraints to growth and private sector development

in developing and transition countries. EIB funding through intermediaries aims to ease

this constraint, consolidate existing jobs, and support the creation of new jobs. It also

supports the development of local financial sectors to improve access to finance over

time. While the EIB uses a variety of instruments to enhance access to finance, the most

common of which are credit lines to financial intermediaries (mainly banks) for lending

to SMEs. These credit lines aim to increase the number of loans that the local

intermediary banks are providing and to extend the duration of the loans they offer to

SMEs and midcaps.

Additionally, lending can be channelled to SMEs through other sources. For example,

risk-sharing portfolio guarantees insure banks against losses on lending to SMEs in

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difficult and underserved markets. Direct (or intermediated) lending to companies is also

used for specific infrastructure and R&D improvements.

Objective 2: Development of social and economic infrastructure

The development of social and economic infrastructure provides a foundation for

economic growth, job creation and social development. It is also critical for the transition

to a low-carbon

future. The EIB’s activities in the infrastructure

domain mostly target

public borrowers. As laid out in the 2014 ELM Decision, this high level objective is

realised by the production and integration of energy from renewable sources, enabling

energy systems to utilise lower carbon intensive technologies and fuels, sustainable

energy security and energy infrastructure (including for gas production and transportation

to the EU energy market), electrification of rural areas, environmental infrastructure (e.g.

water, sanitation, and green infrastructure), and telecommunications and broadband

network infrastructure. Support can also target health, education, and urban development

infrastructure where specified by regional objectives.

Objective 3: Climate change mitigation and adaptation

Climate action is a cross-cutting objective addressed in projects in various sectors such as

transport, energy, natural resources and water. The overall aim is to limit global warming

to 2 degrees Celsius or 1.5 degrees if possible as compared to pre-industrial times.

Different projects contribute to climate action mostly via renewable energy generation

and greater energy efficiency, but also by promoting a shift to a more circular economy,

more sustainable transport modes and more sustainable management of forests and other

natural resources. The financing is distributed among a large number of projects across

almost all sectors. In fact, the funds for climate action also contribute to the above

objectives of local private sector development or the development of social and economic

infrastructure. Typical examples include credit lines for SMEs involving achieving

greater energy efficiency in buildings or installing small-scale renewable energy

generation capacity such as solar panels.

This objective also supports relevant EU commitments including: Paris

Agreement/UNFCCC; the Sustainable Development Goals; the EU 2020 climate and

energy package; the EU 2030 climate and energy framework; the EU 2050 low-carbon

roadmap; the EU strategy on adaptation to climate change COP21; the Circular Economy

Action Plan and the EU Strategy on Environmental Integration in External Policies.

The 2014 ELM Decision requires that 25% of ELM financing volumes support climate

action, while the EIB targets at least 35% of external lending volume in developing

countries to support climate action by 2020. Many Member States agencies also have

climate finance targets (e.g., AFD's target of 50%).

There seems still room to improve the contribution of the ELM programme to climate

action.

There are several options to achieve this. First, some carbon-intense sectors could be

excluded from financing under the ELM. Second, the project pipeline could be made

more climate-friendly with measures to increase climate adaption. This would require

more technical assistance in the pre-appraisal stage and a climate risk and vulnerability

assessment for each project. Third, special windows for loans to SMEs/mid-caps that

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deliver a climate contribution could be included in the contracts with financial

intermediaries. This category of loans currently delivers the lowest climate contribution.

Finally, the successful climate finance target in the current MFF could be built upon in

the next budget period.

The introduction of a specific climate finance window would require that the financial

intermediaries begin assessing the climate contribution of the SMEs/mid-caps. Besides

the climate target, it would be important to ensure that the part of the operations that do

not contribute to the climate action target are not detrimental to climate change. The

climate impact of the entire portfolio should therefore be measured and considered.

Reflecting a targeted external report on climate mainstreaming, this is in line with the

Commission analysis, the European Court of Auditors Special report 31/2016, related

Council Conclusions, and a recent statement of 14 Member States. The EP Budget

Committee has in the draft report on the next MFF:

Preparing the Parliament’s position

on the MFF post-2020

(2017/2052(INI)) asked for a thorough climate mainstreaming,

underlining that the EU should not finance projects and investments that are contrary to

the achievement of EU climate goals. In terms of an external climate target, 30% could

be envisaged over the next budget period.

Objective 4: Long-term economic resilience / addressing the root causes of

migration

The current mandate (2014-2020) for the EIB did not originally contain an explicit

objective related to migration. However, the refugee crisis has made migration-related

issues an increasingly

important element of the EU’s foreign policy.

The recently agreed amendments to the 2014 ELM Decision will add a fourth high-level

objective: addressing the root causes of migration, i.e. strengthening the long-term

economic resilience of refugees, migrants, host and transit communities and communities

of origin. The revision of the ELM regional guidelines will incorporate the new high-

level objective and will define how to target the root causes of migration in practice. The

fourth high-level objective will have a guarantee envelope specifically earmarked as

described in the EIB's Economic Resilience Initiative (ERI)

–

EUR 2.3bn for private

sector projects and EUR 1.4bn for public sector projects. At present, no other objective

has funds that are specifically earmarked.

Underlying objective

The 2014 ELM Decision also stipulates that EIB financing operations support an

underlying objective of regional integration among partner countries, including economic

integration between Pre-accession countries, Neighbourhood countries, and the EU.

Regional integration is particularly relevant for ELM projects targeting transportation

and communication infrastructure.

ROGRAMME STRUCTURE AND PRIORITIES

Subsidiarity

The ELM complies with the subsidiarity principle, as it allows the EIB to operate at a

higher risk level than current Member State cooperation would allow by pooling

resources and diversifying financing operations, thereby enabling the EIB to undertake

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financing operations in third countries in

support of the EU’s external policies without

affecting the credit standing of the EIB. The ELM objectives could not be achieved by

Member States acting alone due to the disparities in the capacities of national financial

institutions.

137

In addition, the ELM allows to invest in a larger number of countries than

what national promotional banks typically do.

Proportionality

The proportionality principle requires that any EU action should not go beyond what is

necessary to address the problem or meet the objectives spelled out in the Treaties. In this

respect, based on stakeholders’ feedback and available evidence, the ELM has proven to

be an efficient tool to cover the political and sovereign risks related to EIB external

operations in support of EU external policies. In fact, with relatively little public support,

the ELM is able to spur the functioning of the market and ensure that projects aligned

with EU external policy priorities are implemented.

The leverage of the Guarantee Fund is relatively high, since the Fund is maintained with

contributions from the EU budget at a level of 9% of outstanding liabilities under the

ELM, and the EIB can finance in the limit of 50% of the total project costs. In addition,

between 1994 and 2017, the Fund

was called for a cumulative amount of about €850

million and had, over that period, a recovery rate of 100%, except more recently for

defaults in Syria (which started in year 2012) and another more recent default of a project

in the private sector in Tunisia,

leading to a total default amounting to €270 million over

a 24-year period.

Changes to the structure of the programme: EFSD model

Several changes could be made to the structure of the ELM to address a number of

challenges and lessons learned described above, notably related to complementarity.

One way to address these challenges would be to align the EU's two main budgetary

guarantee instruments, the ELM and the European Fund for Sustainable Development

(EFSD), including potentially the integration of the ELM within the EFSD.

The EFSD is the most recently launched EU external financial programme that integrates

various financial instruments and blending tools and replicates recent experiences with

similar fund-structures in the EU (e.g. EFSI & EFSI 2.0) and is the main financial

component of the External Investment Plan (EIP). The EIP was adopted in September

2017 to stimulate investment in the European Neighbourhood region and Africa. Its

objective is to boost inclusive growth, create jobs and contribute to the sustainable

development of these regions, thereby addressing the root causes of irregular migration.

The following table compares the current ELM set-up with the EFSD/EIP model:

ELM

Structure

Financial

instruments

Technical assistance

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EFSD/EIP

√

See Proposal for a Decision of the European Parliament and of the Council amending Decision No 466/2014/EU

granting an EU guarantee to the European Investment Bank against losses under financing operations supporting

investment projects outside the Union, COM(2016) 583 final., p. 6.

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ELM

Policy dialogue

Financial instruments

Loans or credit lines

Intermediated loans

Guarantees

Credit enhancement/

insurance

Capital market

instruments

Equity or quasi-

equity

Technical assistance

Transfer of EU

standards

√

(exceptional cases)

EFSD/EIP

√

Ad-hoc basis

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Indirectly via capacity building

and project requirements

Integrated

Dedicated pillar focusing on local

economic governance and the

business environment

European Commission

EIB, other IFIs and NPBs

European Commission (EIB provides

opinion on banking-related aspects)

European Commission (advised by

G-TAG [EIB {Lead}, KfW, AFD]

on risk assessment, impact,

monitoring and reporting)

Coordination & Management

European Commission

Policy priorities

Programme strategy

EIB in consultation with EC

EIB

Project pipeline

EIB

Project assessment

Project decision

making

EIB (EC has influence through

Article 19 of EIB statutes and

EIB board)

Integrating the ELM into the EFSD would have as a main advantage that it would ensure

a coordinated implementation of the EU's policy objectives for external actions by both

the EIB and a wider range of international financial institutions.

Integration would potentially allow the use of the most appropriate financing instrument

for an operation as well as make blending with grants and technical assistance more

systematic, which could improve contribution to development respectively in both the

EIB's own activities and those of other implementing partners. The coordination of such

an instrument might be more resource intense and processes more time-consuming,

unless an appropriate governance were established with the participation of the

Commission and financial institutions.

Structure of an integrated instrument

The architecture of an integrated instrument would expand beyond the provision of a

budgetary guarantee, incorporating several financial instruments and supplementary

tools.

In its main structure, the instrument could follow the three-pillar architecture of the EIP

see figure below). The first pillar of the EIP is the European Fund for Sustainable

Development (EFSD) that contains besides the EFSD guarantee two regional blending

138

For example through the Neighbourhood Investment Facility (NIF), Western Balkans Investment Framework

(WBIF), Latin America Investment Facility (LAIF), Asia Investment Facility (AIF), Investment Facility for Central

Asia (IFCA) or the Facility for Euro-Mediterranean Investment Partnership (FEMIP).

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platforms

139

. The second pillar provides technical assistance (TA) to projects to allow for

capacity building and improved project quality. The TA can be provided to public or

private entities. These measures are interlinked with the third pillar aiming to improve

the investment and business climate in the country/region through policy dialogue.

Pillar 1

Financial

instruments

supported by

EU/MS guarantee

Pillar 2

Technical

Assistance

Policy dialogue

(Improving the

Investment

Climate)

Pillar 3

The three pillar structure provides a holistic approach and facilitates the inclusion of

technical assistance and investment climate enhancing measures into projects.

Encompassing the three elements under one umbrella aligns the tools for the purpose of

investment windows or individual projects.

This approach may have an impact on the likelihood that technical assistance (TA) is

used in a project which could provide a substantial advantage to beneficiaries and

contribute to the policy objectives. The ELM included TA measures in only around 15%

of its operations in this MFF period. An explanation for this low rate is the targeted

recipients

140

and more importantly the administrative burden associated with the

application for a TA grant from external providers, such as EU Member States (incl.

public institutions or agencies thereof), IFIs or other entities. If the single fund structure

mitigates these barriers, it could be a great added value since previous studies

141

have

shown that projects with TA deliver a higher contribution to long-term development.

Moreover, coordinating the TA efforts within the single structure could realize

economies of scale and thus improve efficiency. The aggregated impact depends on the

required additional staff resources and the costs/efforts to attract externally organized

TA. Another aspect is beneficiary awareness. Final beneficiaries are not always aware of

the possibility to include TA in projects

142

, thus pointing to a need for enhanced

communication, which may be easier when integrated in a single instrument.

A single EIP-style instrument incorporating the ELM might be therefore more directly

equipped to create an investment package catered to the needs of beneficiaries and

regions in general. This is also reflected in form of the range of financial instrument

which could be provided. The EFSD is endowed with a large set of financial instruments,

while under the ELM the EIB receives the EU guarantee only for loans, credit lines and

intermediated loans and exceptionally for guarantees. Innovative financial instruments

could be added to the arsenal of a stand-alone structure such as counter guarantees and

other types of financial instruments such as equity, credit enhancements and insurance.

139

140

The Neighbourhood Investment Platform and the Africa Investment Platform.

Public sector actors are less likely to require technical assistance than private sector activities.

141

See for example Wise persons report (2010).

142

See for example see European Court of Auditors (2015).

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This array of financial instruments enables a flexible combination targeted to the

recipient’s needs.

In many cases these financial instruments will still need to be bundled

with the aforementioned grants to finance technical assistance or provide interest rate

subsidies. Under an integrated instrument, the financial instruments and technical

assistance can be centrally developed to properly reflect respective needs of the country,

region, sector or particular beneficiary

–

an advantage highlighted by several

stakeholders during the interviews in the context of the ongoing ELM evaluation.

This flexibility could also be extended to the investment windows and ceilings. The

current ELM is flexible in allowing its operations to match shifts in priorities. An

integrated EFSD/ELM instrument would bring greater flexibility as opposed to

stringently defined investment windows or separated instruments.

Conversely, for monitoring and evaluation purposes, ensuring that investment windows

are linked to specific (or high-level) objectives is desirable. There is a trade-off between

flexibility allowing to shift priorities on the one hand and transparency and security of

minimum allocation to certain objectives/regions on the other. The flexibility of the

stand-alone ELM has been a great asset and an integrated structure would have to be

well-designed to maintain this advantage.

ELM as a potential window of the EFSD

The analysis carried out shows the advantages of an integrated structure and the limits of

a standalone instrument, setting the basis for the need of a financial tool-box where the

ELM is one of the budgetary guarantees/financial instruments needed for the

implementation of the external policy objectives. In this scenario the ELM could be

integrated as an EIB-exclusive window inside the successor EFSD.

There are currently five investment windows under the EFSD covering the following

areas:



Energy and connectivity

SMEs and micro-enterprises

Agriculture, rural entrepreneurs and agribusiness

Cities

Digital

In the future, the ELM could be folded into the EFSD potentially as an investment

window exclusive to the EIB. This would require an adaptation of the definition of

'investment window' to allow the coverage of a number of sectors.

Such an investment window could retain a separate provisioning rate within the future

Common Provisioning Fund which will replace the Guarantee Fund for external actions

in the next MFF.

Management and coordination

To ensure complementarity and to generate synergies, the ELM currently relies on

extensive cooperation with other institutions and facilities. An integrated structure could

internalize some of these channels, which could increase adaptability and the efficiency

of coordination.

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An integrated solution would allow one decision-making body to build a coherent

programme that reduces complexity and fragmentation and enhances synergies between

different objectives and actions. The integrated structure could theoretically facilitate the

complementarity of the fund with the EU external action goals, however the ELM mid-

term reviews suggested that this has also been adequately accomplished in the current

stand-alone structure of the ELM.

In terms of coordination efficiency, the potential impact of an integrated structure

depends on the efficiency of the existing structure within and between stand-alone

programmes. Exchanges via the strategic board

143

would in both cases provide guidance

on the investment strategy and ensure activities are coordinated and complementary. In

addition, operational boards support the coordination on a more granular level. This

structure allows for regular exchanges and coordination of the different stakeholders via

the boards and secretariat. The integrated structure internalises some of these exchanges

and could thereby increase the frequency of interactions and coordination, and improve

responsiveness of the system.

ELIVERY MECHANISMS OF THE INTENDED FUNDING

The ELM entails a guarantee from the EU to the EIB which is administered by the

European Commission and protects the bank from potential financial risks linked to these

operations. The guarantee allows the EIB to preserve its credit rating, while expanding

the lending portfolio and maintaining attractive lending rates.

The need for this guarantee stems from the EIB's obligation under its statutes to ensure

adequate security for all its lending operations and the need to safeguard its

creditworthiness in general. The guarantee allows the EIB to preserve its high credit

rating despite its higher leverage compared to other international financial institutions

(IFIs) and the significantly higher risk of lending in third countries, which otherwise

would potentially put the high credit rating at risk and consume more capital or reduce

lending.

An overview of the functioning of the guarantee under the External Lending Mandate is

presented in the figure below. In principle, the EIB grants or issues loans, loan guarantees

and debt capital market instruments (for example, bonds) for eligible EIB investment

projects. Loans in the public sector are covered by a comprehensive guarantee, which is

provided for financing operations where the borrower (or a guarantor) is a local, regional

or central government or corporations under state control (Public borrowers). The

political guarantee is provided for cases not covered by the comprehensive guarantee and

is more restricted. It only covers non-payment due to non-transfer of currency,

expropriation, war or civil disturbance, and denial of justice upon breach of contract.

Simplified overview guarantee under External Lending Mandate

143

This strategic board is currently composed not only of representatives of the EC but also of the high representative,

experts from member states and representatives from the EIB. The European Parliament is taking part as an observer.

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Monitoring and evaluation

This section sets out the arrangements that could be put into place to monitor the

performance of the programme in delivering the objectives. The section identifies the

information that will be needed to compile the indicators allowing an assessment of the

degree to which objectives are achieved. It takes into account the existing information

and what new information will need to be collected and by whom. Moreover, potential

targets against which success will be measured are discussed.

General

The external financing activity under the EU guarantee is managed and monitored by the

EIB under its own rules and procedures, which include measures for audits, control and

monitoring. Moreover, the Board of Directors of the EIB approves each financing

operation and monitors whether it is managed according the provisions in the EIB Statute

and with the general directives. The Commission is represented in the Board of Directors

with a Director and an alternate Director. The EIB must inform the European

Commission when it obtains any information or considers likely that a guarantee on a

project will be called. In case the guarantee is actually called, the EIB is obliged to

provide the European Commission with detailed information on it according to the ELM

Decision and related guarantee agreement.

The EIB has the obligation to provide the Commission statistical, financial and audited

accounting data on every financing operation under the EU guarantee, necessary for the

reporting to the European Parliament and the European Council. The European Court of

Auditors can obtain the same information at request. Moreover, the EIB will also provide

the information on the outstanding financing operations covered by the EU guarantee

with a certificate of an auditor. The Commission requests this information to determine

the provisioning amounts for the Guarantee Fund.

The Court of Auditors can also conduct audits on EIB financing operations under the EU

guarantee. This is determined based on a Tripartite agreement of the Court with the EIB

and Commission. While no ELM audit is presently available, the Court of Auditors has

published a special report on a parallel EIB external finance instrument: the ACP

Investment Facility. This report’s conclusions may apply,

mutatis mutandis,

to ELM

activities as well. The ACP Investment Facility was found to generate added value and be

coherent with EU external policy. The Court of Auditors found that cooperation with

recipient countries and coherence with EU development policy had improved since the

EIB began taking on higher-risk projects. However, the special report found that the

‘allocation procedure’ was not always effective. Stated simply, numerous banks

receiving EIB loans broke their contractual agreement by failing to inform the

beneficiary SMEs of EIB funding. Additionally, TA provided to supplement credit lines

did not always sufficiently target the end beneficiaries. To address these issues, the Court

of Auditors recommended systematic disclosure of EIB contribution in on-lending

agreements, and greater cooperation between the EIB and financial intermediaries to

ensure effective TA.

Additionally, the EIB must regularly conduct evaluations of its financing activities on

relevance, performance and development effects. This is important for the accountability

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of EIB, but also to find ways to improve the future financing activities. Furthermore, it

must provide all independent evaluation reports assessing the results of EIB external

lending activity under the ELM to the European Commission, European Council and

European Parliament.

The Commission reports annually to the European Parliament and the European Council

on the EIB’s implementation of the mandate. The reports are based on information on the

full portfolio or sector obtained via the ReM from the EIB, which provides information

on various indicators from the appraisal level to the full implementation of the project.

The indicators include for instance the contribution of the external lending to the

objectives (e.g. climate change, biodiversity), but also whether the financing is blended

with financing under other programmes or other European or international financial

institutions. This system of reporting from the EIB to the European Commission could be

better synchronised, which would result in cost savings and more effective reporting.

Currently there are various monitoring and reporting provisions in the Decision and

Guarantee agreements. The most important legal obligations for monitoring are found in

the Decision and EIB Statute. Article 19 of the Decision is a particularly important

reporting requirement. Further consideration of Article 19 reporting requirements would

be worthwhile as sometimes the information provided by the EIB to the Commission is

in some cases too limited to allow for sufficiently detailed consideration.

As noted above, one key finding of previous evaluations is that the final beneficiaries are

frequently unaware that the EU is providing them funding. According to an interviewee

in the context of the ongoing evaluation, this has the impact that beneficiaries may be

unable to lodge a complaint if project implementation is contrary to relevant standards.

For the EIB, control and accountability in this sense is provided with the EIB Complaints

Mechanism (EIB-CM). The EIB is currently updating its complaints procedure. It will be

important for future evaluations to consider the ability of beneficiaries to lodge

complaints, and the EIB to respond to them.

Project level

At the project level, monitoring and evaluation is primarily accomplished with two

frameworks: ReM (results measurement framework) and the RTOG (Regional Technical

Operational Guidelines). Generally, the project level monitoring and reporting is

sufficient. However, given that the EIB is demand-driven and operates on a project by

project basis, additional efforts in identifying gaps, and the impact of ELM activities on

market development, is advisable. Otherwise, it is possible that the ELM funds projects

with individual merit, but no coherent strategy.

The RTOGs are agreed between the Commission and the EIB and set out in greater

operational detail how the EIB should contribute to the high-level objectives set in the

ELM Decision. These will need to be refined in any future programme to ensure that they

are useful to the bank in its lending decisions and to the Commission in its consideration

of EIB loans during the Article 19 process.

ReM

The ReM is a framework in place since 2012 that incorporated many best practices from

other IFIs. The ReM is still evolving, as the EIB continues to exchange best practices and

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share lessons with other development banks. The ReM provides concrete criteria for ex

ante assessments of the contribution of projects to ELM objectives, but also for tracking

project implementation, and ex post assessment at two milestones. The milestones are

immediately upon project completion, and three years after project completion (or end of

fund life for micro-finance and equity). At both milestones, performance is measured

against benchmarks set at the beginning of the project cycle, then performance is rated

and reported to the EIB. The most recent ELM midterm assessment found that ReM had

absorbed best practices from other IFIs, and is effective for monitoring project

contribution to operational objectives. As such, monitoring at the project level is mostly

effective.

The ReM framework is composed of three pillars. The first pillar evaluates consistency

of the project with the three existing high-level objectives and overarching objective of

regional integration. Contribution to the high-level objectives and overarching objective

are based on a number of indicators. For example, the first high-level objective - local

private sector development - is measured by indicators including number of sub-loans to

SMEs, average size of sub-loans to SMEs, and employment sustained. Pillar two

evaluates the quality and soundness of a project. This is based on separate sets of

guidelines for investment loans, intermediated operations, and non-intermediated

framework loans. Pillar three evaluates

the EIB’s technical and financial contribution

based on EIB inputs and market alternatives. This pillar considers the EIB’s ‘financial

contribution’, or to what extent the loan makes a difference for the beneficiary, as well as

the EIB’s ‘financial facilitation’, which concerns to what extent the EIB can contribute to

raising project standards and attracting other financiers. Each pillar is graded on a scale

of 1-4,

with 1 corresponding to ‘unsatisfactory’ and 4 corresponding to ‘excellent’. Based

on the 2016 EIB report, the majority of projects are found to be good or excellent across

all three pillars.

Pillars of EIB Result Measurement Framework

Source:

EIB (2017).

ReM indicators are specific to sectors and beneficiary groups, and around 150 indicators

are in use. The EIB is continuing its efforts to harmonise ReM indicators with those of

other IFIs so that projects are more readily comparable, and their impacts can be better

understood. In 2013 EIB signed a MoU with 25 other IFIs to harmonise 27 indicators,

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and 16 additional indicators are currently being harmonised. For indicators that concern

‘blended’ projects, which contain a mixture of grant and loan funding, the

EIB has

harmonised indicators with the EC within the framework of the EU blending platform.

ReM is an evolving instrument that the EIB seeks to continually improve, and additional

changes may be necessary. Should an additional high-level objective be approved, i.e.

addressing the root-causes of migration, the EIB would need to develop guidelines for its

implementation. Given the new emphasis on economic resilience, specifying a set of

relevant indicators would be helpful. Furthermore, the EIB only recently adopted a

gender strategy. Several interviewees indicated that it is not yet clear if this strategy is far

reaching enough. The EIB should ensure its gender strategy is fully incorporated in

practice, including with dedicated ReM indicators and guidelines.

Most publicly available information on ReM is contained within the annual report ‘The

EIB outside the EU’. These annual reports aggregate results for ELM and other EIB

activities, so it is not possible to evaluate ELM activities alone. The EIB did provide

‘ReM sheets’ for the ten projects considered as case studies in time for the present impact

assessment. Still, it would increase transparency and allow interested parties to better

understand the ELM if it were reported separately from other EIB activities.

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Annex 5: Additional Information on IPA

The Instrument for Pre-accession Assistance (IPA II) - with an envelope of EUR

12,138.63 million for the period 2014-2020 - aims at supporting seven beneficiaries in

adopting and implementing the reforms required for EU membership. IPA II assistance

focuses predominantly on a selected number of policy areas to help beneficiaries

strengthen democratic institutions and the rule of law, reform the judiciary and public

administration, respect fundamental rights and promote gender equality, tolerance, social

inclusion and non-discrimination. It also aims at enhancing their economic and social

development with a view to attaining the targets set in the Europe 2020 strategy for

smart, sustainable and inclusive growth. In addition, IPA II assistance supports the

progressive alignment of beneficiaries with EU legislation and standards.

Support under IPA II is spelled out in indicative strategy papers, and takes the form of

bilateral assistance, cross-border cooperation between IPA II countries, territorial

cooperation with EU Member States, multi-country programmes in the Western Balkans

and Turkey, and support measures.

According to the Mid Term Review (MTR), IPA II is overall fit for purpose. It

corresponds to EU priorities and to beneficiary needs. Compared to its predecessor, IPA

II has become more strategic. In terms of priorities, it increasingly focuses on promoting

key reforms, i.e. the three "fundamentals" of the enlargement strategy (rule of law and

fundamental rights, strengthening democratic institutions and public administration

reform, and economic governance), as well as on results of reforms, through the

introduction of a performance framework. It has also demonstrated its capacity to react in

a flexible manner to emerging crises/challenges (floods, migration, security).

IPA II is unique in addressing the objective of preparing candidate countries and

potential candidates for EU membership. Through IPA II, the EU is by far the biggest

donor in the beneficiary countries and IPA II serves as an important catalyst for the

actions by other donors, including EU MS and non-EU donors.

The introduction of the sector approach, especially when implemented through budget

support, has improved the strategic focus of IPA II and the IPA beneficiaries' focus on

reforms. Key results have been achieved, such as the development of public

administration reform strategies in most IPA II beneficiary countries.

A feature of the Instrument for Pre-Accession Assistance, which distinguishes it from

other external instruments, is the use of indirect management by the beneficiary country

that allows the latter to adapt to the possible management of EU’s structural funds after

accession. The use of indirect management has generally increased ownership by

beneficiary countries, although there have been poor contracting performance and longer

delays of implementation, especially in Turkey.

IPA II has an increased focus on performance and results, however, there is some room

for improvement. Other features, such as the use of Twinning and TAIEX and the

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promotion of territorial cooperation, add further value to the instrument. Twinning and

TAIEX initiatives provide concrete benefits to recipient institutions through exchanges of

valued European public expertise.

The Western Balkans Investment Framework (WBIF) provides co-financing and

technical assistance to strategic investments in the energy, environment, social, and

transport sectors, and also supports private sector development initiatives. Such projects

could not be funded solely from EU Member States' funds.

Territorial cooperation in the form of cross-border, transnational and interregional

cooperation programmes, as well as macro-regional strategies, favours reconciliation and

confidence building in the Western Balkans, overcoming geographical barriers and

legacies of the past, and developing good neighbourly relations.

IPA II continues to be relevant, as also pointed out in the MTR, and only minimal

changes would be necessary at the level of objectives and main principles set in the

current IPA II regulation. Three key elements will need however to be taken into

consideration:

For the period 2021-2027, the new instrument should be clearly positioned in the context

of the new Western Balkans Strategy , and reflect the developments in the relations with

Turkey, and allow for sufficient flexibility to take into account evolving circumstances .

For the Western Balkans an important element of IPA III is the indicative date of 2025

mentioned in the Strategy when Montenegro and Serbia might be potentially considered

ready for accession, if all conditions are met, i.e. within the next MFF period. This would

mean not only the need for a rapid and flexible mobilisation of funds under the next

period, but also an increase of current IPA II allocations for these countries in order to

ensure that the necessary financial means are available for all preparations and

investments required in the years before accession, including to ensure a gradual and

seamless transition from pre-accession status to that of Member State to allow the

necessary absorption capacity to be developed

The countries are still adjusting to IPA II changes and the implementation for IPA II is

still in an early stage as a result. While continuity should be secured, a phased-in

approach should also be applied with intensity of support increased in the second half of

the MFF period for the countries approaching accession.

In terms of political priorities, IPA III will be shaped around the following key political

priorities: Rule of Law, Fundamental Rights and governance; Socio-Economic

development; EU policies and acquis; and Reconciliation, good neighbourly relations and

regional cooperation. While these were already spelt out under IPA II, new challenges

such as migration, security and climate change will also have to be taken into account.

At the same time, in order to respond to the new priorities and integrate lessons from the

MTR, IPA III will need to be further aligned with recent developments in enlargement

policy. This requires in particular close links to the objectives of the new Strategy for the

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Western Balkans, to maximise the impact of the Flagship Initiatives set forth in the

Strategy to help the transformation process in the Western Balkans in the next period, to

implement robust Economic Reform Programmes (ERPs), or to renew the focus on

reforms necessary for future membership. Greater flexibility in funding allocations will

have to be ensured in order to cater for unexpected/emerging priorities and to take into

account the level of progress of respective countries in EU related reforms.

Implementation will need to be accelerated, in particular in the first years, to avoid

structural contracting and implementation backlogs, and to progressively absorb current

delays. In a context of constrained budgetary resources, IPA III will have to work to

further mobilise the leveraging potential of IFIs and other partners, including the private

sector, in particular for supporting competiveness and inclusive growth, or financing

large scale infrastructure investments. The overall performance framework will have to

be strengthened and simplified.

For these reasons, whereas the objectives and logic of the intervention will remain

similar, on the planning and programming side it is proposed to structure the delivery of

funding in a different manner around the creation of facilities reflecting the specific

objectives of the instrument.

The instrument will continue to be a toolbox and foresee all the existing implementation

modes deployed in a coherent way depending on the facility, type of intervention and

state of preparation of countries on their path towards EU accession and their

administrative capacities. An indicative allocation will be identified in the beginning of

the period for each of the facilities, and a mid-term review will take place to take into

account of the evolving situation and results achieved.

No fixed or indicative national/geographical envelopes will be established, although a

principle of "fair share" allocation for beneficiary countries will be integrated.

Performance will be part of the process of accessing to funds, which will be based on

criteria such as project/programme maturity, absorption capacity, administrative capacity,

expected impact and progress on rule of law, fundamental rights and governance.

Therefore, no additional performance reward mechanism will be needed.

Increased financial flexibility could be achieved by strengthening possibilities for

reallocating funds within the instrument, in particular between and within facilities.

Establishing a reserve within IPA could be considered; this would mean that a share of

the total budget (e.g. 10 %) could be kept unallocated to cater for unforeseen needs (e.g.

migration) provided the carry over for commitments is allowed.

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Annex 6 Additional information on CFSP

The European Union’s Common Foreign and Security Policy (CFSP) contributes to the

preservation of peace, the prevention of conflicts and strengthening international

security. It is one of the main

instruments used to implement the European Union’s

Global Strategy for Foreign and Security Policy, the relevance and importance of which

are demonstrated by events worldwide.

As such the CFSP continues to be a core part of the EU's external action instruments;

notably contributing to safeguard the Union’s values, fundamental interests, security,

independence and integrity as well as helping to support and consolidate democracy, the

rule of law, human rights and the application of principles of international law

worldwide. As such CFSP plays an essential part in implementing the EU Global

Strategy and underpin the EU's role as a global actor.

By providing for joint action, the EU can provide added value beyond the activities of

individual Member States; by reaching critical mass when responding to global

challenges and providing for joint ownership. CFSP also enjoys the credibility inherent

in a proven mechanism and the ability to act as an impartial external actor on behalf of

and alongside Member States.

In contrast with other policy areas, the CFSP operations are not financed under an over-

arching instrument / regulation adopted for the full period of the multiannual financial

framework period. For the CFSP to be effective, the EU needs to be ready to react

rapidly and with determination, to respond to new emerging threats to its strategic

interests. As and when needs or opportunities for action arise, the Council adopts

specific decisions for each CFSP action under the CFSP provisions of the Treaty on

European Union (TEU). Typically the decisions provide for:



The conduct of civilian CSDP Missions to promote stability and build resilience

through strengthening rule of law on the strategic and operational levels in fragile

environments.

The work of the European

Union’s Special Representatives (EUSRs) who promote

the EU’s policies and interests in troubled regions and countries and play an active

role in efforts to consolidate peace, and to promote stability and the rule of law.

Actions to combat the proliferation of weapons of mass destruction (including their

delivery mechanisms) and to combat the illicit spread and trafficking of other

conventional weapons, particularly through supporting effective multilateralism.

In addition, through the CFSP the EU provides funding for the European Security and

Defence College (ESDC) and for the operation of the Kosovo Specialist Chambers. The

CFSP can also be used to fund other operations on the basis of Article 28 TEU.

During the 2014-2020 MFF period, the funding for CFSP operations is budgeted in

chapter 19.03 of the budget. The total allocation for CFSP operations over the current

MFF is EUR 2 121 million.

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CFSP actions have concretely contributed to putting the EU's Global Strategy into place

by (a) providing capacity building, support and advice through the civilian CSDP

missions deployed in Africa, Afghanistan and the Middle East as well as in Ukraine,

Georgia and Kosovo; (b) promoting peace and stability as well as promoting and

advancing the values of the EU by means of the EUSRs; (c) promoting multilateral

responses to the security threats posed by weapons of mass destruction and the illicit

trafficking and accumulation of conventional weapons through dedicated non-

proliferation and disarmament projects.

The overall impact and achievements triggered by the CSFP budget are of much greater

value than the sum of its individual actions. In particular in the field of CSDP missions,

the scope and reach of the agreed actions goes beyond the limits of what a single EU MS

could do alone. CSDP missions profit in particular from their multinational EU nature

both in terms of image - EU credibility as a peace actor - and of accessing a larger pool

of human resources and expertise. They also regularly attract contributions (co-financing)

from interested third countries willing to participate in EU-led actions. Such missions are

the concrete and visible operational translation of the EU's ambitions as a security actor.

Given the political priorities of the EU and challenges worldwide, CFSP operations will

remain a fundamental pillar of the EU Global Strategy post-2020, in support of three

strategic priorities: (a) responding to external conflicts and crises, (b) building the

capacities of partners, and (c) protecting the Union and its citizens.

The CFSP operations will coordinate with the future EU external action instruments to

ensure synergies and avoid overlaps, but they will keep their distinct management and

implementation modalities, in order to ensure their responsiveness, flexibility and close

alignment with the political priorities of the EU in the external field.

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Annex 7 Additional information on the Overseas Association

Decision (OAD) and the Greenland Decision

Context

The mid-term review report (December 2017)

144

on ten of the external financing

instruments, including the Greenland Decision

145

and the 11

European Development

Fund (EDF), which includes the programming for the other Overseas Countries and

Territories (OCTs) concluded that the external financing instruments

were ‘fit for

purpose’. However, in the report and in the consultations conducted during the

evaluation, a need for flexibility, simplification, coherence and performance was

reflected.

The Overseas Association Decision

146

covers the relations between OCTs

–

including

Greenland

–

the Member States to which they are linked and the EU. This Decision

outlines the special relationship that OCTs have with the EU as part of the ‘EU family’

and the specific legal framework which applies to them.

The Greenland Decision complements the Overseas Association Decision but outlines

some specificities of the relations with Greenland as well as providing its financial

resources.

The Overseas Association Decision and the Greenland Decision Greenland should not be

integrated in the new broad instrument or to any other co-decided instrument due to their

specific procedures of adoption: Council decision by unanimity following consultation of

the European Parliament

147

. However, in order to streamline the number of programmes

it is proposed that all OCTs, including Greenland, be regrouped by merging both

Decisions in one single instrument.

Rationale for integrating the Overseas Association Decision and the Greenland Decision

into one sole decision for Overseas Countries and Territories

The financial source of the current Overseas Association Decision is the EDF which

covers the programming and funding of territorial and regional programmes for OCTs

other than Greenland, which is covered by the Greenland Decision and funded under the

Budget.

The Overseas Association Decision does not have an end date, but would need

amendments due to the EDF being ‘budgetised’ and a need for a new financial envelope.

The Greenland Decision ends on 31 December 2020. Historically, the need for defining

The mid-term review report was based on ten staff working documents, one per instrument (see list below), which

in turn were based on ten independent evaluations. The mid-term report, staff working documents and independent

evaluations can be found at here:

https://ec.europa.eu/europeaid/public-consultation-external-financing-instruments-

european-union_en

145

Decision (EU) No 137/2014 of 15 March 2014 on relations between the European Union on the one hand, and

Greenland

and the Kingdom of Denmark on the other, OJ L76, p.1

146

Decision (EU) No 755/2013 of 25 November 2013 on the association of the overseas countries and territories with

the European Union, OJ L344, 19.12.2013, p.1

147

Treaty on the Functioning of the European Union, OJ C326, 26/10/2012 p.1

–

article 203

144

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the financial cooperation in a separate manner (other OCTs/Greenland) corresponds

partly also to the fact that Greenland receives its funding from the EU budget (Heading

4) instead of the EDF

148

. With the budgetisation of the EDF, this important constraint

disappears, as all the OCTs should now be funded under the Budget.

Moreover, the legal basis of Article 203 in the Treaty on the Functioning of the European

Union is the same for the Overseas Association Decision as for the Greenland Decision.

In light of this, it has been decided to keep the Greenland Decision under Heading 4 of

the EU Budget and include the other OCTs under the same heading.

Considering the specificities of the OCTs and their special relationship with the EU, a

new financial instrument covering all OCTs both concerning the political and legal

frameworks as well as the implementation of the cooperation will ensure:



unity of management with all the OCTs under a same source of financing

–

the Budget

–

will create synergies in programming and implementation;

consolidation of shared objectives;

simplification and coherence in the legal framework;

more visibility for the OCTs as a group.

As both Decisions have been deemed ‘fit for purpose’, the

guiding principle is to

preserve what works well, while improving what hinders the partners' effectiveness to

deliver on their policies and priorities.

The future instrument/decision

The future OAD would comprise of a merger of the current Overseas Association

Decision and the Greenland Decision, integrating the two decisions in all the

areas where they are similar or have synergies and highlighting specificities of the

Greenland Decision such as the objective to preserve the close and lasting links

between the EU, Greenland and Denmark, the acknowledgement of the

geostrategic position of Greenland and policy dialogue and potential cooperation

on Arctic issues and food security.

It is foreseen that the structure and the majority of the current Overseas

Association Decision provisions be maintained, with specific provisions for

Greenland such as Arctic issues and the special historical and political links to be

integrated. In the mid-term review report, it was concluded that the Greenland

Decision was designed in such a way as to cover and better deliver on the wider

political aims of the partnerships and it is important to ensure that this framework

will still be provided in the new Decision. As such the new Decision will remain

very similar to the current Overseas Association Decision with few new and

updated provisions.

The future Decision should consist of the same pillars as the current Overseas

Association Decision: political, trade and cooperation. The OCTs have a special

148

Greenland was until 1985 part of the EU as a region in the Kingdom of Denmark, which entailed support through

structural funds. When Greenland left the EU, the support to Greenland continued as well as the EU's fishing

rights in Greenland waters.

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place in the EU as part of the 'EU family' and it is important to ensure that this

continues to be reflected in the same way in the future instrument.

The Instrument will take into account the consequences of the withdrawal of the

United Kingdom (UK) from the EU and the fact that the special regime regulated

in Part IV of the Treaty on the Functioning of the European Union would no

longer apply to the 12 UK OCTs. These OCTs would no longer come under the

territorial application of the Overseas Association Decision from March 2019 nor

in the future instrument.

The future Instrument should provide for financial allocations under the Budget

for the OCTs, including a ring-fencing of the financial allocation for Greenland.

There will be a general “clause de renvoi” to the broad instrument for the

implementation of the instrument. Hence, ensuring the coherence between and

simplification of implementation and management across instruments, the new

Decision will be aligned with the new implementing regulation including

implementation modalities, monitoring, evaluation etc. as outline in the Impact

Assessment.

Following the latest developments in EU cooperation, it is envisaged to introduce

a specific provision/facility to promote a better integration of regional projects

between OCTs, African Caribbean and Pacific countries and the Outermost

Regions.

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Annex 8 Additional Information on Humanitarian Aid

As the world's largest humanitarian aid donor, the EU and its Member States play a

central role in tackling humanitarian challenges worldwide.

The Humanitarian Aid programme provides emergency assistance to people, particularly

the most vulnerable, hit by man-made or natural disasters.

In line with the Humanitarian Aid regulation

(1257/96), the EU’s humanitarian assistance

goes directly to people affected by disaster or conflict, irrespective of their race, ethnic

group, religion, sex, age, nationality or political affiliation and must not be guided by, or

subject to, political considerations. The EU acts on the basis of the international

humanitarian principles of humanity, neutrality, impartiality and independence.

The main objective is to provide needs-based delivery of EU assistance to save and

preserve life, prevent and alleviate human suffering and safeguard the integrity and

dignity of populations affected by natural disasters or man-made crises, also including

protracted crises. In addition, the EU is committed to build capacity and resilience of

vulnerable or disaster-affected communities, in complementarity with other EU

instruments, and has put in place a resilience action plan. These objectives contribute to

the overall objectives, principles and actions of the Union's external action as defined in

Article 21 of the Treaty.

The EU is recognized as a leading player in humanitarian assistance both in terms of its

ability to provide rapid and flexible assistance across a wide range of crises, and in virtue

of its influence in shaping the global humanitarian policy agenda. Because of the

financial weight and world-wide scope of its humanitarian actions, the EU is also able to

encourage other humanitarian donors to implement effective and principled humanitarian

aid strategies. A key comparative advantage of humanitarian aid stems from the fact that

it is often the only EU instrument able to intervene in acute conflict situations. Thanks to

its flexibility, humanitarian aid has also made a significant difference on the ground in

many of the countries and crises at the origin of the global refugee and migration crisis.

In a context of insufficient funding to address ever-growing needs, the EU is also able to

fill gaps in global humanitarian aid by addressing needs in areas which are difficult to

access and by providing response not only to the biggest and most visible humanitarian

crises, but also to forgotten crises (i.e. crises receiving no or insufficient international aid,

political and media attention). Moreover, Member States often look to the EU as a donor

to provide assistance in crises where they are not able to intervene in a national capacity.

Member States also benefit from the EU's "humanitarian diplomacy" which results in

more effective provision of humanitarian aid. Another key element of EU added value

for Member States lies in the strong operational knowledge and technical expertise of the

EU's unique network of humanitarian field offices spread over almost 40 countries.

The Commission implements EU humanitarian aid operations through over 200 partner

organisations, including United Nations agencies, other International Organisations

including the Red Cross and Red Crescent movement and non-governmental

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organisations (NGOs). The EU has been playing a leading role in the development of

new policy approaches (e.g. education in emergencies) and innovative funding modalities

(e.g. cash-based assistance).

The scale, frequency and duration of crises that demand international humanitarian

response is increasing, aggravated by long-term trends such as climate change,

population growth, rapid and unsustainable urbanisation, resource scarcities as well as

increasingly protracted armed conflicts. These are, and will continue to be, among the

main drivers of humanitarian crises, which in turn generate growing humanitarian needs

globally. The projected number of people in need of humanitarian assistance worldwide

in 2018 reached a new record high (136 million people in 25 countries)

149

And the

figures are increasing every year. On the other hand, the amount of available resources at

global level to respond to these ever growing humanitarian needs is not increasing at the

same level. The overall gap between available resources and humanitarian needs is

expected to continue to grow. Against this background, there will be an ever greater need

for front-line life-saving humanitarian assistance. At the same time, given the protracted

nature of several crises, there will also continue to be a need for enhanced cooperation

between humanitarian and development assistance in order to cater for the needs of

people affected by protracted crises.

Against this background, the EU will continue to play an active role as an important actor

in humanitarian action at global level, also beyond 2020. The EU will continue to

promote the development of more effective coordination of humanitarian aid at global

level, to push for the development of new policy areas (such as education in

emergencies) as well as to support efforts aimed at making the delivery of humanitarian

aid more effective and efficient (for instance, through the continued roll-out of the use of

cash as an effective delivery modality; or by exploring possibilities to move towards a

more programmatic partnership between the EU as a donor and its humanitarian partners,

in line with the Grand Bargain commitments agreed at the 2016 World Humanitarian

Summit).

Providing rapid and flexible life-saving assistance both in the major crises and in so-

called "forgotten crises" will continue to be a hallmark of the EU's profile as a donor. The

EU's extensive network of humanitarian field experts based in countries in crisis will

remain a key element of the EU's humanitarian aid delivery and a clear comparative

advantage as a donor.

The EU's action as a humanitarian aid donor will continue to be complementary with EU

Member States' bilateral contributions in response to crises. A share of the annual EU

humanitarian aid budget will continue to be pre-allocated to on-going crises and for

prevention/preparedness measures, while the rest will be deployed to respond to new

crises or deterioration of existing ones.

The policy and legal framework for the EU's humanitarian aid is not expected to change.

The comprehensive evaluation on humanitarian aid for the period 2012-2016 confirmed

the relevance of the current framework for humanitarian aid. The evaluation underlined

that the EU humanitarian objectives are very relevant with respect to the continuing

global humanitarian needs and that they are future-proof and in line with the

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humanitarian principles. Consultations at all levels also confirmed that stakeholders want

the EU to continue most of what it has been doing to date. Some areas for improvement

were also identified, but these do not require a change to the current legal framework.

The Humanitarian Aid Regulation (HAR) continues to offer wide flexibility. This

ensures that assistance is channelled effectively and efficiently to people in need. The

Regulation is also flexible enough to allows adaptations to working modalities where

needed (e.g. to fulfil new commitments such as those undertaken at the World

Humanitarian Summit in 2016; or to allow the EU's humanitarian aid to contribute

effectively to the humanitarian-development nexus or to resilience-building).

In light of the above, and considering that the HAR is not linked by duration to a specific

Multi-Annual Financial Framework, a revision of the HAR is not deemed to be necessary

at this stage.

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Annex 9 Additional Information on Union Civil Protection

Mechanism

The Union Civil Protection Mechanism (UCPM) was established in 2013 by Decision

1313/2013/EU with the objective to support, complement and facilitate coordination of

Member States’ action in the field of civil protection. The UCPM ensures the

coordination of in-kind assistance provided by the participating states to victims of

natural and man-made

disasters in Europe and elsewhere. The total UCPM’s financial

envelope for the period 2014-2020 is EUR 368.4 million, 144.6 million out of which are

funded by Heading 4 (40% approximately). There are two budget lines within Heading 4

for the UCPM: a) Prevention & Preparedness outside the EU, and b) Response actions

outside the EU. The combined budget of both external lines amounts to approximately

EUR 20 million per year.

The funding provided by Heading 4 is explained by the fact that the UCPM is not an

intra-EU disaster management tool solely, as it can be activated by any country in the

world (or UN body) following a disaster. Indeed, the external dimension of the UCPM

has steadily grown in importance in recent years. According to the most recent data

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, of

the 96 times that the UCPM has been activated since 2014 64 of those activations were

for activations from outside the EU, i.e. 66 % times.

Despite the rather positive results of the recently conducted UCPM Interim Evaluation

(2017), it is difficult to measure the expected impacts post-2020, especially for the

international dimension of the UCPM. According to recent scientific research, climate

change is expected to significantly increase the frequency and magnitude of natural

disasters around the world

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. Against this backdrop, the UCPM might be confronted to

an increasing number of activations outside the EU borders, sometimes in remote

locations, which will put the UCPM to the test.

The European Commission adopted in November 2017 a proposal to amend Decision

1313/2013 with the objective of improving the efficiency and effectiveness of the

Union's Civil Protection Mechanism by developing additional overall capacities at EU

level (rescEU), increasing funding in support of operations and reinforcing the

prevention component of the Mechanism. This proposal is currently under negotiation in

the Council of the EU and the European Parliament, with the aim of reaching agreement

before the end of 2018.

150

151

Source: Emergency Response Coordination Centre, January 2018

Forzieri, G.

et al., 'Increasing

risk over time of weather-related hazards to the European population: a data-driven prognostic

study',

Lancet Planet Health,

vol. 1, 2017, pp. e200–08.

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Annex 10 Additional Information on Support to the Turkish

Cypriot Community

At the time of Cyprus' accession to the EU in 2004, the Council stated its determination

to "put an end to the isolation of the Turkish Cypriot community and to facilitate the

reunification of Cyprus by encouraging the economic development of the Turkish

Cypriot community". Therefore, in parallel to supporting negotiations for a

comprehensive settlement of the Cyprus issue, the EU provides support through a single

EU Aid Programme for the Turkish Cypriot community.

This programme was established in 2006, following a request of the Council and

amounts to 232 million (33 million yearly) for 2014-2020

The Programme aims at facilitating the reunification of Cyprus by encouraging the

economic development of the Turkish Cypriot community with particular emphasis on

the economic integration of the island, improving contacts between the two communities

and with the EU, and preparation for the EU acquis. The Aid programme pursues six

specific objectives: a) developing and restoring infrastructures; b) promoting social and

economic development; c) fostering reconciliation, confidence building measures, and

support to civil society; d) bringing the Turkish Cypriot community closer to the EU; and

e) preparing the Turkish Cypriot community to introduce and implement EU acquis

following a comprehensive settlement of the Cyprus problem.

The Aid Programme is an unique instrument with its own legal basis

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. Contrary to most

external action instruments, its duration is not linked to the MFF and the programme has

not an end date. The Aid Programme presents little scope for synergies with other

instruments and the Aid Programme should remain a separate instrument financed under

Heading IV allowing its implementation to pursue the scope and the objectives defined in

the basic act.

The EU is in a unique position to provide political and economic support towards the

reunification of the island.

The programme is directly implemented by the European Commission. Some projects

are implemented under indirect management by International Organisations or Member

States Agencies.

A third of the Aid Programme funds have been dedicated to environmental infrastructure

projects. This resulted in the replacement of old asbestos pipes in water distribution

networks, and the construction of wastewater treatment plants and sewerage networks.

Another third was allocated for socio-economic development enabling some 400 grant

awards to farmers, businesses and civil society organisations to help modernise and

improve competitiveness. The remaining funds were allocated for bi-communal efforts

and familiarisation with EU matters (including the EU acquis). This allowed the

Committee on Missing Persons (CMP) to exhume 1217 sets of remains out of 2002

missing persons. In addition, 72 island-wide Cultural Heritage initiatives were completed

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Council Regulation (EC) 389/2006

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involving more than 6000 Greek and Turkish Cypriots. More than 1000 grants for

studying in the EU have been awarded to Turkish Cypriot students and professionals

upgrading their qualifications and their EU awareness.

Finally, the impact of EU investment through TAIEX medium term assistance has been

significant, with around 200 legal texts prepared with the support of TAIEX experts.

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Annex 11 Additional Information on Instrument for Nuclear

Safety Cooperation

The INSC, with EUR 250 million, is addressing nuclear safety in third countries,

alignment with EU policies and priorities and addressing specific needs. The set-up in

2015 of a multilateral Environmental Remediation Account on remediating legacy

mining waste in Central Asia is an example of how the Instrument addresses these needs,

in coordination with international donors and organisations. The Instrument duly

promotes the highest standards and practices used in the European Union on the basis of

the Euratom Treaty and a set of relevant Directives

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. The Instrument also matches

recognised priorities as pursued by the International Atomic Energy Agency (IAEA) and

the G7 Nuclear Safety and Security Group (NSSG). Coordination with the European

External Action Service ensures compatibility of actions with international Conventions

and Treaties and international developments.

The INSC can foster unique added value to engagement in nuclear safety cooperation

with third countries, well beyond the capacities of Member States and other donors. The

institutional framework allows the Commission to act at a global level on nuclear safety

cooperation with consultations with the G7/8, and features specialized know-how and

expertise, high nuclear safety standards and exclusive EU powers to address nuclear

safeguards and based on continuity for nuclear safety cooperation with a track record of

over a quarter of a century. It allows the EU to assume a world leading role in nuclear

safety and permits engagement in policy level dialogue with Partner Countries and, in

specific cases the triggering of political dialogue in the wake of nuclear safety

negotiations.

The activitites under this instrument should continue as much as possible under the broad

instrument, notwithstanding the need for a specific instrument with a Euratom legal base,

to preserve its competence, in full coherency and complementarity. Therefore a new

instrument complementing the broad instrument should cover these types of activities.

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Euratom Directives on Nuclear Safety (amended 2014), Radioactive Waste management (established 2011), and

Basic Safety Standards on radiation protection (amended 2013).Common Implementing Regulation

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Annex 12 Minutes of the Inter-service Steering Group

Meeting, 23 March 2018

REPORT

–

ISSG Meeting - MFF External Policy Cluster on 23 March 2018

Services participating: BUDG, CLIMA, CNECT, DEVCO, EAC, ECFIN, ECHO, EEAS,

ENV, HOME, MARE, NEAR, SG, SRSS, TRADE (participants list attached).

The SG together with DG DEVCO provided feedback to questions on the draft impact

assessment (IA), and invited DGs to provide written comments by Monday 26 March

12h. SG also outlined the next steps including the submission of the IA early next week,

with the RSB meeting taking place on 25 April.

The SG (W. Sleath) highlighted the context of the current draft impact assessment, and

the need to clearly point to the costs of a non-Europe and the European added-value.

Guidance was provided by the joint note from Commission President Juncker and

Commissioner Oettinger. The SG also reminded that the Impact Assessment (IA) was a

document that would be shared with the general public and that the minutes of the ISSG

meeting will accompany the IA when sent to the Regulatory Scrutiny Board (RSB).

DG DEVCO underlined that the objective should be to secure a positive opinion from the

RSB. The work on the new broad instrument in general, and the IA in particular, was a

collaborative undertaking of contributions and discussions with several DGs. The work

was based on the mid-term review evaluations (MTR), taken forward by sketching out

where the EU would like to go in the future, and taking into account RSB guidance. The

SG had confirmed that the ex-ante evaluations listed in the guidance note were not

required as separate texts if covered properly in the IA. The IA was an analytical

document informing future discussions - not a position paper- focusing on the future

broad instrument. DG DEVCO stressed that the instrument would be primarily an

enabling instrument and not a place to set policies. The Annexes to the IA would focus

on the instruments that would exist outside the new broad instrument.

DG CLIMA asked whether the Partnership Instrument (PI) would be covered by the

geographical or thematic pillar of the future instrument, highlighting that the former

instrument would deliver through both channels. A link to the SDGs was important,

including in the context of G20 discussions, where PI support was a valuable bargaining

chip. The FPI added that the PI had a proven track-record and in the future would also

need a thematic perspective. DG DEVCO recalled that the new broad instrument was not

a copy-paste of previous instruments and would not put entire previous programmes in

individual pillars, but would rather look at the actions financed under the former

instrument and assign them to pillars where maximum synergies with other efforts could

be reaped. This would also apply to the external projection of EU policies. The

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geographic pillar would focus on national and regional cooperation, while the thematic

pillar should address truly global issues. Crisis management and the development-

humanitarian nexus would be covered under the un-programmed pillar. SG added that

since EU interests apply overall, it is not useful to define the structure of the instrument

based on such interests.

DG HOME enquired on how migration would precisely be captured in the new external

instrument, given the emphasis in the note from the President and Commissioner

Oettinger, and noted the importance of an effective delineation with the funds with an

internal focus. DG DEVCO highlighted the importance of migration across the three

pillars of the new instrument, with migration having a national, regional but also global

and possibly an emergency dimension; the latter of these would be covered by the un-

programmed part of the new instrument, or under the unallocated heading (20% of the

instrument). It was too early to discuss amounts.

DG ECHO wondered how the development-humanitarian nexus would be covered under

the un-programmable pillar, how the European Development Fund's (EDF) ability to

complement for emergencies would be preserved, and how the internal and external

dimensions of disaster relied actions would be procedurally captured under the two

respective headings (the SG pointed to the internal centre of gravity of RescEU financing

actions). DG DEVCO stressed that that access to the broad instrument’s unallocated

funds for humanitarian purposes was not foreseen. If necessary, the successor to the

emergency reserve should supplement funding of the humanitarian instrument. The

development-humanitarian nexus would be covered under the un-programmed pillar.

The Legal Service (SJ) enquired about the place of the investment related parts (e.g.

guarantees) in the new architecture, and wondered about a 'plan B' in case the EDF could

not be budgetised (DG DEVCO confirmed there is no 'plan B'). The SJ also provided

comments on the Instrument for Nuclear Safety Cooperation and the EU Aid Volunteers

and on the need to verify the legal bases of the Regulation of the new instrument at a

later stage, when the shape and form of the Regulation is clearer. DG ECFIN added that

the investment-related provisions were part of the new instrument but this would have to

be made clearer in the current draft IA.

DG BUDG asked for a clearer link between the objectives and the individual pillars, to

which DG DEVCO replied that this was against the spirit (maximisation of synergies) of

the new instrument, in the sense that objectives would be met by actions under all pillars

(thereby benefitting from the possibility of addressing challenges at the most effective

level (national, regional, and/or global). The SG added that the new broad instrument was

an enabling tool to fulfil political set (and possibly changing) objectives.

The EEAS underlined that the Global Strategy should be clearly referred to, and pointed

to the need for several thematic topics (climate change, human rights, peace and

stabilisation) to maintain the current funding level, despite the smaller proportion of the

thematic pillar compared to the geographical pillar. DG ENV was also in support of a

thematic coverage to promote EU policies. DG MARE indicated their wish to maintain

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the financing of their global ocean governance actions under the thematic pillar,

highlighting global challenges such as illegal fishing, climate change and water pollution.

DG CNECT asked for higher visibility in the current draft IA text for the digitalisation of

societies, including in the developing world. DG EAC recalled the importance of

simplifying the procedures of the Erasmus+ programme to overcome the current

(planning and programming) mismatch between the different budget headings.

On the next steps, the SG invited the DGs and services to send written comments at the

latest by Monday 26 March noon. Shortly thereafter the IA would be submitted to the

RSB, which will meet on 25 April. College adoption of the MFF proposal is planned for

2 May, and the adoption of the individual instruments for the end of May.

SG.E3

LIST OF PARTICIPANTS

L. Havas (LS)

L. Forsberg (CNECT)

M. Giacomini, F. Ceriani Sebregondi, M-L. de Bergh, M. Kreibich (EEAS)

K. Morris, L-J. Magnusson (BUDG)

F. Gaztelu Mezquiriz, J. D'Souza (HOME)

A. Ladefoged, F. Sordet, (ENV)

P. Owen, M. Kaspar (CLIMA)

B. Nolan, C. Morel, G. Guazzugli Marini (EAC)

R. van Bameveld (MARE)

Y. Cimmarrasti (JRC)

S. Weinberg, D. Lenaerts (ECFIN)

H. Gerstbrein, G. Miller, K. Valica (FPI)

R. Mengel-Jorgensen (TRADE)

C. Gariazzo, M. Panigalli (ECHO)

R. Henoumont (SRSS)

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A. Lidou, A. Pires, G. Balducci (NEAR)

V. Grimaud, B. San Emeterio, H. Dean (DEVCO)

W. Sleath, J-C. Van Eeckhaute, T. Ketterer, D. Majoros, C. van den Boogert (SG)

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