Finland’s development policy in the European Union

The EU is committed to raising its development aid to 0.7 per cent of its gross national income by 2015. Photo: MFA

The European Union (EU) is the world’s most significant partner for developing countries in terms of development aid, volume of trade and direct investments.
The combined share of the European Union
 and its Member States was 56 per cent of all official international development cooperation in 2009.
In monetary terms, the aid amounted to 48.2 billion euros, i.e. about 0.45 per cent of the combined gross national income (GNI) of the EU.
The European Union is committed to raising its development aid to 0.7 per cent of its GNI by 2015. 

The majority of the EU’s development cooperation will be realised as donations, with over 160 countries, regions or organisations throughout the world as partners. From the perspective of developing countries, the EU is a central global actor. It is the most significant trade partner for many developing countries and plays an important role in international organisations, such as the UN, the WTO and international financial institutions.

EU development cooperation = Member States’ individual cooperation + Commission-controlled cooperation

Development cooperation falls under shared competence, which means that the European Union and each EU Member State have their own development cooperation. The EU’s development cooperation is often used to refer to the Commission-controlled entity, even though the EU’s development cooperation consists of the development cooperation conducted by both the EU Commission and the EU Member States. As per the Treaty of Lisbon, the aim is for the development policies of the EU and the Member States to complement and support one another.

Commission-controlled development cooperation is funded through the EU’s budget and the European Development Fund (EDF). The EDF finances cooperation with the African, Caribbean and Pacific Group of States (ACP) as per the Cotonou Agreement.

The EU’s budget is used to finance cooperation in Asia, Latin America, South Africa, Central Asia and the Middle East, as well as to target the so-called Sugar Protocol support to 18 African, Caribbean and Pacific (ACP) states. Furthermore, the budget is used to finance Thematic Programmes across the world. Thematic Programmes encompass sustainable management of the environment and natural resources, the promotion of food security, issues involving migration, asylum and investing in people, and support for non-state actors and local authorities. In addition, a separate food fund has been set up in the budget, to provide shorter-term support for developing countries.

Development cooperation is an integral part of the European Union’s external action. Development cooperation policies are decided by the Member States’ Ministers for Development in the Foreign Affairs Council (FAC). Development cooperation issues are primarily prepared in the Council Working Group on Development (CODEV) and the ACP Working Group, which meet once or twice a week; based on their work the Member States’ Permanent EU Representatives prepare the motions for the Council.

One fifth of Finnish development cooperation funds channelled through the EU

Finland takes part in the European Union’s development cooperation as part of the country’s multilateral development cooperation. Approximately one fifth of Finland’s development cooperation funds is channelled through the EU. In monetary terms, this amounted to about 154.9 million euros in 2009. In Finland, the preparation of matters related to the EU’s development cooperation is handled and coordinated primarily by the Unit for General Development Policy and Planning of the Ministry for Foreign Affairs.

Aiming to reduce poverty

Playing football in a Millennium Village in Sauri, Kenya. Photo: MFA

The aim of the development policies of both the European Union and Finland is to achieve the Development Goals of the UN Millennium Project. The most central aim is to reduce poverty, especially helping the least developed countries, and to promote sustainable development. Efforts to tackle the multidimensional problem of poverty are made through comprehensive and coherent action in all policy areas that influence developing countries. Central principles include coherence, complementarity and coordination. Work is done to enhance the effectiveness of aid by strengthening the ownership of developing countries, harmonising development cooperation practices and intensifying cooperation.

EU Development Cooperation Instrument (DCI)

The European Union’s budgetary Development Cooperation Instrument (DCI) is used to finance country-specific and region-specific cooperation in Asia, Latin America, South Africa, Central Asia and the Middle East and to channel the so-called Sugar Protocol support to 18 African, Caribbean and Pacific (ACP) states. The aim of Thematic Programmes is to supplement the country-specific and region-specific funding and to support global initiatives.

The DCI, adopted in 2007, is also used to finance Thematic Programmes across the world. Thematic Programmes cover the sustainable management of the environment and natural resources, promoting food security, questions of migration, asylum and investing in people, and support for non-state actors and local authorities.

The DCI’s budget between 2007 and 2013 is almost 17 million euros, which makes the DCI the largest financial instrument in the external relations funding of the EU budget. In line with the Treaty of Lisbon, the DCI will in future be managed in close cooperation by the European External Action Service and the Commission. Strategic planning of country-specific and region-specific development cooperation will be transferred to the European External Action Service. Management of the DCI’s Thematic Programmes, on the other hand, will remain the Commission’s responsibility, at the Directorate-General for Development (DG DEV). The DCI will continue to be implemented by the EuropeAid Development and Cooperation Directorate-General, which implements external relations programmes.

Cotonou Agreement and European Development Fund (EDF)

The EU’s cooperation with the African, Caribbean and Pacific Group of States (ACP) is based on long-term cooperation contracts known as the Yaoundé and Lomé Conventions. The fourth Lomé Convention ended in 2000 and was replaced by a partnership treaty negotiated between the ACP countries, the European Union and its Member States, known as the Cotonou Agreement. The Agreement is in force for 20 years (2000–2020), and it was agreed that it be revised every five years.

The Cotonou Agreement forms the basis for relations between the European Union and the countries of Sub-Saharan Africa, the Caribbean and the Pacific. It is both an instrument of development policy and part of the EU’s external relations framework. The Agreement states that the goal of cooperation between the EU and the ACP countries is to promote economic, cultural and social development in order to increase peace and security and to strengthen a stable and democratic political environment. According to the Agreement, cooperation aims at promoting sustainable development and the flexible and gradual integration into the world economy of the ACP countries, as well as reducing poverty.

The cooperation between the EU and the ACP countries as stated in the Cotonou Agreement is funded through the European Development Fund (EDF), funded by the EU Member States. The EDF supplements the development cooperation funded through the EU budget and the bilateral development cooperation of the Member States. Each Member State’s specific appropriation is negotiated separately for each EDF period.

In 2006, the EU Member States signed the latest agreement on the tenth European Development Fund (10th EDF). The 10th EDF will finance cooperation between the EU and the ACP countries and the EU’s overseas countries and territories for the years 2008–2013. The Fund’s budget is 22.7 billion euros, of which Finland’s share is 1.47 per cent, or about 333 million euros.

Economic Partnership Agreements (EPA)

The Cotonou Agreement between the European Union and the African, Caribbean and Pacific Group of States (ACP) included the establishment of Economic Partnership Agreements (EPA). EPAs replace the Trade Preferences in the Cotonou Agreement, and they reciprocally free trade between the EU and the ACP countries, in accordance with WTO rules.

At present, the Commission is engaged in EPA negotiations with six regional groupings. These regional groupings are West Africa, Central Africa, East and Southern Africa, the East African Community, the South African Development Community, and the Pacific.

In 2007, the first comprehensive EPA was negotiated with the Caribbean. Smaller-scale interim EPAs, focusing mainly on freeing the trade of goods, were negotiated with individual ACP countries or groups at the end of 2007.

By means of trade and development aid, the Union strives to tackle poverty in the ACP countries and to integrate them into the world economy. Efforts are made to create a sustainable base for the economy and structures of the ACP countries by expanding the markets of the ACP countries, by improving their investment opportunities and by enhancing the operating potential of the private sector.

Green Paper - EU Development Policy in Support of Inclusive Growth and Sustainable Development (PDF 283 kB)

Finland’s Response to the Green Paper on the Future of EU Development Policy