New Approach to EU Foreign Aid

Source: EU plans change to rules for aid – FT.com

The EU proposed a new code of conduct to its development ministers that would make Europe’s $66 billion annual aid budget more efficient. Currently, each EU country independently provides aid to countries of its choice, resulting in overlapping projects to economically vibrant countries, such as Tanzania, Ghana, and Vietnam, while needier countries, such as Malawi and Niger, receive little aid. The proposed code would require greater coordination of aid projects as the EU increases the amount of aid it provides from 0.39% to .056% of gross national project in the next three years.

The proposal would encourage each EU states to limit aid to only a few countries and to two narrowly defined sectors within each country, based on the donor country’s expertise. EU governments would publish an annual “developmental aid atlas” that would show how EU aid is distributed throughout the developing world. These proposals would facilitate greater coordination, a goal historically hindered by national sensitivities and colonial ties.

Questions:

How will the proposal create incentives for European countries to provide aid to countries that currently receive little aid? Would it be better for the EU to pool its resources and provide aid from one central agency? If so, would EU member states ever be willing to cede control over its aid programs or forego the goodwill created by such programs?