Chapter 4. The European Union’s structure and systems
Authority, mandate and co-ordination
The question of where authority and leadership for development co-operation sits within the European Union is a complex one. Despite this situation, those working within its structures point to a consultative and pragmatic approach that strengthens co-ordination and buy-in for decision making across the development co-operation system.
Authority and leadership for development co-operation are shared across a complex system
Legally, the codification of development co-operation as a shared competence by the Lisbon Treaty leaves the ultimate authority for the EU’s development co-operation policy for the EU institutions. The shared nature of development policy also means that the EU and its member states need to co-ordinate the EU’s development policy on the one hand and the policies of its 28 individual member states on the other (European Union, 2010). Thus the member states are required to follow the aims of the EU's external action in designing and implementing their national programmes, while the EU is also required to respect the sovereignty of its member states. Commentators have argued that, despite this legal framework, the EU has little or no scope for sanctions if the member states’ policies do not align with the EU’s global or development policies (Ducourtieux, 2018).
Nevertheless, the Treaty1 stipulates that the EU’s development co-operation policy and that of its member states should complement each other. Furthermore, it states that the Commission may take initiatives to promote co-ordination. In this context, the new European Consensus on Development (the Consensus), agreed in 2017, strengthens the potential for increasing the co-ordinating role and convening power of the EU2 over member states - including through the elevation of EU joint programming as a top-level priority across the EU’s development system (Chapter 5).
Within EU’s development co-operation policy, the ultimate authority lies with the European Parliament and the Council of the European Union (Figure 4.1). In a division of power governed by the Treaty, the Parliament’s role is political, legislative and budgetary. The Council, which sets general policy direction, also has a co-legislative role, such as the adoption of some financing instruments, for example, the Development Co-operation Instrument. It also decides on the multiannual and annual EU allocations and exercises political oversight over the use of these funds within the annual budget discharge procedure, subject to the final decision of the European Parliament (European Union, 2010). All external actions, including development aid, are scrutinised by the European Court of Auditors whose reports form the basis for the discharge exercise led each year by the Parliament’s Budgetary Control Committee.
Source: DAC Secretariat.
The European Commission is the executive body of the EU.3 As such, it has the right of initiative for all policies related to development co-operation except in the area of the Common Foreign and Security Policy (CFSP). In addition to responsibility for policy and proposed legislation, the Commission, as the EU’s civil service, oversees the day-to-day running of the EU, implementing policies and executing its budget. The Commission is organised into the College of 28 Commissioners (one national from each member state), including a President proposed by the European Council and appointed by the European Parliament (European Union, 2010). Since the Lisbon Treaty came into force, the High Representative of the Union for Foreign Affairs and Security Policy (HR/VP) is automatically a Vice-President of the Commission, representing the EU in international fora including the United Nations, exercising authority over the EU’s 140 delegations globally and ensuring the co-ordination of development co-operation policy with the EU’s global policy (Article 18.1, TEU). While this common approach to foreign policy makes the EU’s external action more consistent with the ability to speak with one voice, it also makes the EU’s external action architecture more complex, with cumbersome processes and procedures (see below).
Co-ordination of the EU’s development policy: Challenging but effective
Within EU actors, a plethora of co-ordination mechanisms to the EU’s external action constitutes an integrated approach to maximise synergies among policy areas. While individuals interviewed in Brussels by the Peer Review Team reported that they are effective compared to other donor and international systems, the EU nevertheless maintains a complex and administratively heavy web of co-ordination mechanisms.
Without prejudice to the overall responsibility of the Commission as a whole, the Directorate-General for International Cooperation and Development (DG DEVCO) is in charge of formulating overall EU international co-operation and development policy. The Directorate-General for European Neighbourhood Policy and Enlargement (DG NEAR) is also responsible for formulating and implementing the European Neighbourhood Policy, through which a large portion of the EU’s official development assistance is programmed.4 Meanwhile, the Directorate-General for European Civil Protection and Humanitarian Aid Operations (DG ECHO) is responsible for humanitarian assistance.5 In terms of direct leadership, each Directorate-General receives political guidance from its respective Commissioner. At the EU inter-institutional level, Commission representatives (notably from DG DEVCO, DG NEAR and DG ECHO) maintain relations with member state representatives through preparations for ministerial meetings and relevant working groups of the Commission and Council. They also maintain relations with the European Parliament for all matters related to development co-operation and cross-cutting issues. These DGs represent the Commission as appropriate at plenary and committee sessions as well as co-ordinate on follow-up actions to resolutions and all the relevant procedures related to the Parliament.
Sitting somewhat apart from the EU’s institutional system, the European Investment Bank (EIB) which operates in accordance with the provisions of the EU treaties is able to make decisions relating to its operational tasks independently of the Commission through its shareholders of EU member states. While only a small proportion of EIB financing goes to developing countries, it disburses approximately one quarter of the EU’s total net ODA. Therefore, as a significant implementer of the EU’s development co-operation system, the EIB, as a signatory of the 2017 Consensus, is committed to supporting and implementing the EU’s external and development co-operation policy objectives (Chapter 3).6
In 2009, the appointment of the HR/VP, which added another layer to the EU’s leadership structure, intensified the EU’s policy co-ordination efforts. As Figure 4.1 shows, the HR/VP is a central figure in development policy, mandated to ensure that all EU policies are coherent and consistent with the principles, values and objectives of EU external action. The HR/VP is supported by the European External Action Service (EEAS), which was established in 2010 to assist the HR/VP to further develop and implement the EU’s Foreign and Security Policy. The EEAS also provides support to the Commission, including on development co-operation.7 However, the structure whereby the EEAS, which is separate from the Commission but reliant on Commission systems to do its work, does not always make this co-ordination role in Brussels easy. At field level, however, the EEAS takes on a key leadership role, particularly through its appointment of Heads of Delegation.
As seen in Mali and Bolivia, the EEAS is playing a valuable role at diplomatic levels in the field in ensuring co-ordination across EU actors and in implementing the shared vision outlined in the Consensus and the Multiannual Financial Framework (Chapters 2 and 3). A substantial proportion of the delegation heads - approximately 40% at present - are seconded from member states, which can potentially further increase synergies between EU and national-level policies. Sustaining these gains is likely to require:
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Streamlining existing co-ordination mechanisms and clarifying how each EU actor is responsible for implementing the EU’s vision for the 2030 Agenda.
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Defining new opportunities for co-ordination in new development-related budget instruments proposed for the next Multiannual Financial Framework 2021-27.8
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Continuing to ensure an efficient division of labour between EU entities (e.g. EEAS leading on geographic programmes and some thematic instruments,9 with DG DEVCO leading on other thematic programming) while breaking down development silos.
Systems
The European Union has made some progress in simplifying its system and standardising its processes. As it moves towards a new period of planning and guidance with the release of a draft Multiannual Financial Framework for the period 2021-27, the European Union has an opportunity to review the effectiveness and efficiency of its development co-operation system as a whole, including the heavy burden of its systems on partners.
EU processes and systems remain too time-consuming
The 2012 DAC review of the EU’s development co-operation identified challenges across the management system for development co-operation, highlighting the need to reduce budget lines and align rules for implementation of the Development Cooperation Instrument (DCI) and the European Development Fund (EDF). The review made a number of recommendations on simplifying and streamlining procedures and further devolution of authority to EU delegations. While there is some progress in addressing these areas and in improving quality assurance tools, EU actors have further to go to ensure their systems are fit for purpose. As it moves towards a new period of planning and guidance for the next Multiannual Financial Framework 2021-27, including plans to simplify and streamline its instruments, the EU has an opportunity to review the effectiveness and efficiency of its development co-operation system as a whole (COM, 2018a).
Overall, the EU’s approval processes for both policy and programming remain complex due to the sheer number of institutional and external actors involved. For example, before long-term programming decisions can be adopted by the Commission, they require not only approval through EU actors but also endorsement from member state experts (the EU’s committees). Moreover, at the administrative level, the EU could do more to reduce the burden of its systems for its own users and its partners. For example, the time-consuming PAGoDA agreements, including for relatively small amounts of financing, were drawing criticisms from partners (FAFA, UN-European Commission 2015) - however, the template has been significantly simplified in recent years.10 As observed in Bolivia and Mali, a number of the planning, implementation and reporting tools developed in Brussels could better take account of needs in the field. For example, a one-stop shop electronic acquittals tool that was rolled out to posts does not allow delegations to input transportation costs, requiring complementary paperwork. Furthermore, these and other duplicative or heavy administrative procedures are diverting senior officials in the field from more strategic work.
The EU’s procurement and contracting systems are widely recognised as inclusive and transparent (Chapter 5). However, although simplified in recent years, they are still difficult to understand for the EU’s implementing partners. While the EU has no plans to streamline this process, the introduction of a new user guide - the Practical Guide for Procurement and Grants for European Union External Actions (PRAG) - represents a positive development that is also helping to standardise processes in some areas (Annex D). In addition, the EU has adopted a Common Implementation Regulation that sets out common rules for the external financing instruments of the EU budget such as the DCI, the Instrument for Pre-Accession Assistance and European Neighbourhood Instruments. Many of these rules have also been aligned to the EDF in response to the DAC’s 2012 call for further synergies among these instruments and in preparation of the proposal to consolidate instruments in the new Multiannual Financial Framework for 2021-27.
The EU is increasing its operational and political focus on risk management beyond its existing guidance and procedures on fraud identification and management (Abrahams, 2017). To implement this focus, the Commission in 2018 introduced a new Internal Control Framework (ICF), with the first assessment planned to inform the Commission’s 2018 activity report. In 2017, a new two-step quality procedure was introduced that begins with an informal process to target issues of major concern at an early stage, followed by a second stage aimed at strengthening the overall quality of programme documents.11 In addition, the EU’s 2015 audit reform has expanded the role of the audit committee substantially.
These developments demonstrate the EU’s deep commitment to assessing and managing risks. At the same time, while the EU is already supporting innovation in a number of important areas, such as financing for research on global public goods, green bonds and state building contracts in fragile contexts (Chapters 1, 3 and 7), there is room for further efforts in the way the EU balances its increasing risk management demands with an innovation culture. In particular, as the EU moves towards a new period of planning and guidance, it will need to pay attention to ensuring that it does not stifle innovation, including by continuously reviewing trade-offs around risk management (e.g. high administration and management costs). In doing so, the EU might benefit from the experience of other donors in this area where efforts to incentivise innovation and adapt to changes in the development landscape are well embedded.
Capabilities throughout the system
As it continues to implement organisational reform efforts, the European Union may benefit from a dedicated assessment of whether the current approach to strategic workforce planning, including through the service level agreements, enables it to have the right specialist skills in the right places at the right time.
Despite some impressive reform efforts, the EU still struggles to ensure it has the right people in the right places
Over the past decade, the EU has implemented a number of organisational and management changes to support its reform efforts with a clear rationale. While these changes offer opportunities for increased coherence and co-ordination across the system, the EU still struggles to ensure it has the right people in the right places to deliver on its priorities and core business.
Following the creation of the EEAS in 2010, the EU’s humanitarian and neighbourhood programmes retained their previous mandates and functions. However, the EU’s external development co-operation function was reconfigured in 2011 through the establishment of DG DEVCO, bringing policy and management functions under one roof.12 Impacts on staffing levels and expertise differed across these organisations. For instance, between 2012 and 2018, DG DEVCO experienced significant staff cuts while staff numbers increased at DG ECHO, DG NEAR and EEAS. Table 4.1 shows these staffing trends. Moreover, despite some specific initiatives to preserve critical expertise,13 the reduction of specialist skills in DG DEVCO and prioritisation of generalist and diplomatic career paths since the DAC’s last review, there is increasing risk of diluting the EU’s ability to make informed decisions, to engage strategically with partners and to deal with an increasing number of complex crises. Responding to this, DG DEVCO has developed a new human resources strategy to help manage ongoing impacts of staff reductions.
Retention of knowledge and expertise remains a major challenge
In 2017, the EU introduced a new human resources modernisation project that aims to harmonise conditions and standards across the Commission. This welcome initiative has significant potential to improve consistency in the application of the EU’s human resource policies which could also reduce transaction costs associated with managing multiple services and staff categories across the EU’s development co-operation. In implementing these reforms, the EU will need to ensure that initiatives developed in Brussels also take account of needs in the field. As evidenced in Bolivia and Mali, there is a need to review differences in staff conditions for the different categories of employment at post.14 Efforts are needed specifically to improve support for development and mobility opportunities for local staff.
Retention of knowledge and expertise remains a major challenge as well, particularly for DG DEVCO where one-third of the workforce are contract staff. Therefore, recent efforts to share the know-how and expertise of staff leaving DG DEVCO through the dedicated REFLECT programme (Retrospective Reflecting on Experience for Learning, Enhancing Capacity and Uptake) are welcome. Nevertheless, more systematic knowledge sharing across the EU’s development co-operation system, including between headquarters and the field, would improve its evidence base for decision making and strengthen organisational learning (Chapter 6).
Overall, many of the human resources challenges observed by the DAC review team in 2012 were still present across all EU actors in 2018: significant differences in conditions and career opportunities among different employment categories, challenges in retaining technical expertise and knowledge, and staff morale below the Commission’s average. For example, in the last Commission’s staff survey carried out in 2016, the employee engagement in DEVCO was 58%, a level below the 65% average of the Commission. Furthermore, as evidenced in Mali and Bolivia, while it is positive that EU instruments are constantly evolving to better address global challenges, it is often difficult for EU staff and partner organisations to keep pace with these changes (Annex D).
As the EU reflects on what kind of donor it wants to be in a rapidly evolving development landscape, it will need to ensure that its system as a whole has appropriate resourcing and capacity to deliver on its development objectives. The EU may benefit from a dedicated assessment of whether the current approach to strategic workforce planning - including through the service level agreements between the EEAS, DG DEVCO, DG ECHO and DG NEAR - are improving working arrangements and harmonising regulations and conditions among these different entities, enabling the EU to constantly ensure that it has the right mix of specialist skills and generalist/diplomatic profiles in the right places at the right time, both at headquarters and in the field.
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Notes
← 1. See Article 208/1 and 210/2 of the TFEU.
← 2. The EU, having a legal personality under international law, is a member of the OECD DAC and as such is recognised as an individual member of the DAC along with 20 EU member states.
← 3. The Commission is renewed every five years with current commissioners due to end their terms in 2019. For further details on EU entities, see Annex D.
← 4. The European Neighbourhood Policy (ENP) governs EU relations with 16 of the EU's closest eastern and southern neighbours: Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, West Bank and Gaza Strip, Syria, Tunisia and Ukraine. Russia takes part in cross-border co-operation activities under the ENP but is not a part of the ENP.
← 5. Since the last review, the core development entities in the EU’s system are also working more closely with DG HOME, the directorate-general responsible for migration policy, in the scale up of the response to the global migration and refugee crisis (Chapter 7).
← 6. The European Investment Bank (EIB) was founded in 1958 under the Treaty of Rome to support EU policies by providing long-term lending. It is supervised by the Board of Governors that comprises finance ministers of the EU member states. Its resources are based on borrowing from the capital market or with funding from the EU, the European Development Fund (EDF) or EU member states. Since about 90% of its financing is based in EU member countries, only a small proportion is disbursed to ODA recipient countries. The EIB, committed to the SDGs and the new European Consensus, works in these countries to mainly encourage private sector development, infrastructure development, security of energy supply and environmental sustainability.
← 7. The 26 July 2010 Council decision on the EEAS on 26 July 2010, states that the organisation should contribute to the “management and programming” of the external action instruments. See https://eeas.europa.eu/sites/eeas/files/eeas_decision_en.pdf. A general service level agreement was issued in December 2010, updated guidance on working relations was provided in December 2011, and a memorandum of understanding between EEAS and the Commission was agreed in 2012.
← 8. The Heading 4 (comprising the development component) currently represents roughly 6% of the total MFF 2014-2020 budget.
← 9. For example, the Partnership Instrument, Instrument contributing to Peace and Stability, European Instrument for Democracy and Human Rights, and Instrument for Nuclear Safety Cooperation.
← 10. The PAGoDA-template was significantly simplified in 2016, taking into account the feedback and recommendations from partner organisations. The new EU Financial Regulation, which entered into force on August 2, 2018, provides for further simplification, allowing for, inter alia, a stronger reliance on partners’ rules and procedures. These new elements are reflected in the contribution agreement template, which is currently being finalised to replace the existing PAGoDA template.
← 11. Quality assurance for EU-funded programmes takes place through the Quality Support Groups (QSGs) process, which provides a prior quality assessment of the design of programmes under the responsibility of operational directorates of the DG DEVCO.
← 12. DG DEVCO was established in 2011 following the merger of parts of the former Directorate General for Development and Relations with ACP States and the EuropeAid Cooperation Office, bringing under one roof the policy and management of most of the EU’s financial instruments for development co-operation. A new Service for Foreign Policy Instruments was also set up within the Commission in January 2011.
← 13. In 2015, the EU organised a specialised competition to attract former specialist contract agents in development co-operation. The competition was aimed specifically to attract expertise in fragile contexts. Further information on this and other EU initiatives to improve expertise is outlined in (COM, 2018b) below.
← 14. The categories of staff are: officials, temporary agents from the diplomatic service of the member States, contract agents, and local agents.