EU: The European Commission has called on EU governments to stop linking development aid to trade deals that oblige poor countries to buy from donor countries.
The Humanitarian Aid Commissioner, Mr Poul Nielson said that untying aid from trade would make assistance to poor countries go further.
"The debate on untying aid has long been at the centre of discussions on development policy. It is generally accepted that untying of aid is an important factor in improving both the effectiveness and coherence of pro-poor development policy. Community aid has been untied to a high degree for more than 25 years. It is essential, however, that other donors follow this example and we expect them to do so," he said.
Much of EU member-states' development aid is given to poor countries on condition that it will be used to buy goods and services from the donor country. None of Ireland's development aid is tied to trade and the Minister of State at the Department of Foreign Affairs, Mr Tom Kitt, welcomed the Commission's recommendation.
"This is very encouraging. Our aid is untied and I see that as a very important principle. We go in and allow the local people to choose where to purchase. Untying aid promotes accountability and greater transparency," he said.
Anti-poverty organisations called on EU development ministers, who were meeting in Brussels yesterday, to heed the Commission's call. They claim the conditions put on assistance cut the value of aid by up to 20 per cent and prevents the Third World from getting cheaper deals with local firms or through open tender.
The Commission has already started infringement proceedings over the "tied aid" practices of Denmark and Italy, on the grounds that they are inconsistent with the EU's internal market.
In April, Denmark cancelled a $45 million aid contract to repair ferries in Bangladesh. The Danish grant was tied and the repair work was to be carried out in Denmark and sent back to Bangladesh.
Some other rehabilitation work was to be undertaken in Bangladesh, but with equipment and capital goods imported from Denmark. The bidding price was four times higher than if all the work had been undertaken and sourced from Bangladesh, or within the region. Following a request from the Bangladesh, to increase local supplies to reduce the price, Denmark cancelled the contract.
Denmark claims the contract was cancelled because of corruption in the Bangladesh government, but anti-poverty activists are sceptical.
Mr Shahidur Rahman, ActionAid's Bangladesh policy analyst, welcomed the Commission's initiative. "My people, who are among the poorest in the world, fail to gain enough from money given by wealthy nations, because of strings attached. For their sake, the EU must back these proposals to untie aid."
