eu development policy: an ambiguous case

8/14/2019 EU Development Policy: An Ambiguous Case

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EU Development Policy

2nd of June 2009, Group 9 - Team A

F. Arab, K. Diakidis, T. Krume, C.Tonne


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June 2, 2009 Group 9 Team A - EU Development Policy An Ambiguous Case

EU Development Policy Milestones / Main Tenets EU and HIPC Initiative

Economics BehindThe Vicious Circle of Poverty

EU Reality Check: Ghana

Ghana and HIPC Initiative Ghana and the Vicious Circle of Poverty

Conclusion


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1950: Schuman DeclarationDevelopment of the African continent

1957: Treaty of RomeDevelopment assistance officiallyintroduced in EC

1975-1995: Lom ConventionsGeographical widening (ACP countries) &trade arrangements

2000 (revised 2005): Cotonou

Agreement


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Built on 3 Complementary Pillars:1.Development cooperation2.Economic and trade cooperation

3.Political dimension Objective 1: Eradication of poverty in the context of

sustainable development (to achieve MDGs)

Objective 2: Economic cooperation to integrate economies

gradually and smoothlyinto world economy

African, Caribbean, Pacific (ACP)

countries


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Rationale The HIPC Initiative funds debt relief for all Highly

Indebted Poor Countries (HIPCs)

Initiators

Established 1996 by World Bank & IMF / EUsupport since

$51 bn funded in total / EU: $1.6 bn

Objectives

Lower external debt burdens of HIPCgovernments Finance add. government spending on poorpeople

Conditions

Eligibility is based on external debts and incomeper capita


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DebtReliefasSolution ?


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2002: Ghanas initiative to revive economicgrowth Application for HIPC programme (set an end to

debts)

Pre-2004: Successful efforts to restructure: Administration (combating corruption) Procedures

Practices

2004: HICP completion point reached after: Poverty reduction Improved macroeconomic performance (e.g.

inflation)

Efficiency



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IMF Resident Representative inGhana stated:

Ghana has achieved relatively strongeconomic growth with significant

reduction in the rate of inflation andother efficiency related

improvements. The progress isoverall satisfactory. (IMF, 2005)



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Magic Formula: 1. Reform system 2. Remove corruption

3. Insert aid 4. Flourish

Set of conditions and assessments madesure Ghana will be able to act under the

right measures when receiving debt reliefthrough HIPC

consider economic AND politicalinfrastructure to prevent wasted aid



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After all this, sneaky trade barriers remain: Major obstacle to the eradication of poverty Example 1: EUs export restriction on Ghanaian

cocoa using the chocolate directive (mainexport product to the EU) Example 2: Strict EU regulations on banana

exports, regarding Size Weight Colour Shape Texture Quality



11/18June 2, 2009 Group 9 Team A - EU Development Policy An Ambiguous Case


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Adjei Henaku, the ExecutiveSecretary of the Ghana FarmersAssociation, put it like this:

It is extremely difficult to figureout how the dumping of cheap

poultry parts-like legs, wings, necks- that have no markets in the EUanyway, could be permitted in the

name of free trade that is supposed

to promote competitiveness.June 2, 2009 Group 9 Team A - EU Development Policy An Ambiguous Case


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In order to escape the poverty cyclean income high enough to allow

savings must be achieved investment! Sneaky export restrictions and dumping

prevent exactly that

So the EU is making efforts to eradicatepoverty while partially being the sourceof it

Going 2 steps forward, and 1 back each time?June 2, 2009 Group 9 Team A - EU Development Policy An Ambiguous Case


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No, 2 steps forward and 1.5 back: It can be good though:

With the support of international donors

Ghana has been able to curb economicgrowth between 1991 and 2002 by 4.2percent per annum (European Commission,2006). However, Ghana has a much higher potential, still

largely depends on primary products

deteriorating terms of trade... EUs economic interests still main

priority, interest groups still dominant Aid could have a much bigger positive

impact!June 2, 2009 Group 9 Team A - EU Development Policy An Ambiguous Case


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http://www.youtube.com/watch?v=BlDhd_0f-r4


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Aim: Eradicate poverty and integrateeconomies into world economy

Ghana: HIPC partly helps to break vicious circle of poverty

EU trade barriers and Directives hinder sound economicgrowth

Works on poverty reduction but hinders economicintegration

Statement confirmed:EU Development Policy reveals

ambiguousness

What should be done? Remove barriers to trade

Stop dumping


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The World Bank (2009). Poverty. Retrieved May 5,2009, from:http://www.worldbank.org/depweb/beyond/beyon

GAWU, D. C.(2004). New ACP-EU Trade Arrangements: NewBarriers to Eradicating Poverty? Brussels:

Eurostep.

Damned by Debt Relief (movie)(2007). Retrieved May 28, 2009, from:

http://www.youtube.com/watch?v=BlDhd_0f-r4
http://www.worldbank.org/depweb/beyond/beyondbw/begbw_06.pdfhttp://www.youtube.com/watch?v=BlDhd_0f-r4http://www.youtube.com/watch?v=BlDhd_0f-r4http://www.worldbank.org/depweb/beyond/beyondbw/begbw_06.pdf


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eu development policy: an ambiguous case

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