Annual report 2004 on the European Community’s development policy and external assistance

This is the European Commission's fourth Annual Report on development policy and external assistance and the last of the Prodi Commission. It sets out the objectives agreed for 2003 and highlights progress against these.

The European Union is a world player in economic, trade and development terms. It accounts for 55% of global aid flows - about €30 billion per year - of which more than a fifth is managed by the European Commission. This assistance is provided to more than 160 countries, territories or organisations worldwide. It is a tangible expression of the Community's commitment to the Millennium Development Goals, which centre on poverty reduction. Since 2000 the core objective of Community development policy has been to reduce and eventually eradicate poverty. Through its external assistance, the European Union demonstrates its support for the promotion and entrenchment of universal values such as democracy and Human Rights. For 2003, the Commission set out to improve the global partnership between North and South, notably by delivering on commitments made in the 2002 UN conferences on Financing for Development in Monterrey and Sustainable Development in Johannesburg and by using the framework of the Cotonou Agreement to affirm Europe's solidarity with Africa. Moreover, the objective was to ensure that the positive effects of globalisation are shared evenly between and within countries, while respecting their cultural diversity and environmental heritage, and to work for a fairer distribution of resources between North and South.

2003 was also a significant year in terms of improving the coherence and impact of EC external assistance. The Commission pursued its reform of how it prioritises, organises and implements its programmes, and this began to deliver concrete results. Commitments and payments in both the budget and European Development Fund reached record levels in 2003. Devolution of day-to-day decision-making to delegations has made the Union's external assistance programmes more responsive to partner countries and other donors report markedly improved co-ordination.

The devolution exercise will be largely complete by mid-2004. The quality of strategy documents, which serve to analyse the situation in a partner country and select the sectors on which aid should be concentrated, has also much improved. Important steps were taken in 2003 to overhaul the Union's Common Agricultural Policy in order to minimise its distorting effects on international trade and to promote both a more development- friendly approach and improved coherence between the EU's agriculture and development policies, in line with aspirations for the WTO Doha Development Round. Further reforms are in preparation for the sectors not yet affected, in particular cotton, tobacco, olive oil and sugar.

The EU's relations with its near neighbours were given new impetus and clearer definition in 2003. In December, the European Council agreed the principles of a new policy framework offering these countries a partnership aimed at sharing everything but institutions. The European Neighbourhood Policy will ensure that following enlargement of the EU new dividing lines are not drawn on this war-torn continent between the 'haves' and the 'have nots'.

The year 2003 also brought an innovative leap forward in the Community's contribution to peace building in Africa. The Commission will be making a €250 million contribution to an African Peace Facility. It will be based on the principles of: (i) ownership reinforcing the capacity of the African people to deal with African conflicts; (ii) solidarity through financial contributions from all African countries; and (iii) development recognising that without peace and stability there can be no development in Africa.

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