eu development policy in a changing world

Mold - [Link] 1 15-6-2007 14:37:18

Mold - [Link] 2 15-6-2007 14:37:20
 EU Development Policy
in a Changing World
Challenges for the
21st Century

Edited by
Andrew Mold

Mold - [Link] 3 15-6-2007 14:37:20

 The publication of this book is made possible by a grant from the European As-
sociation of Development and Research Training Institutes (EADI).

Cover design: Mesika Design, Hilversum

Lay-out: v3-Services, Baarn

isbn 978 90 5356 976 4

nur 754 / 759

© Andrew Mold / Amsterdam University Press, 2007

All rights reserved. Without limiting the rights under copyright reserved above, no part
of this book may be reproduced, stored in or introduced into a retrieval system, or trans-
mitted, in any form or by any means (electronic, mechanical, photocopying, recording or
otherwise) without the written permission of both the copyright owner and the author
of the book.

Mold - [Link] 4 15-6-2007 14:37:20

1
2
3
Table of Contents
4
5
6
7
8
9
10
1
2
3
Foreword and Acknowledgements 
4
5
 The Evolution of EU Development Policy –
6
Enlargement and a Changing World 
7
Andrew Mold and Sheila Page
8
9
. Introduction 
20
. Are there Lessons to be Learned for Developing Countries
1
from Recent European History? 
2
. Effects of Enlargement 
3
. The EU’s Other Foreign Policy Interests 
4
. Contents of the Book 
5
6
7
 The Enlarged European Union and the
8
Developing World: What Future? 
9
Mirjam van Reisen
30
1
. Introduction 
2
. Europe and Its Colonial Past 
3
. Europe’s Early Unification: From Colonialism
4
to Multilateralism 
5
. Expanding the Focus of the EC towards the Mediterranean 
6
. The First Enlargement and the Increased Scope for
7
Development Aid 
8
. The European Development Fund and the Budget 
9
. Towards a New Relationship with the Third World 
40
. Second Enlargement: Further Expansion of Community Aid 

Mold - [Link] 5 15-6-2007 14:37:20

 . Beyond : Emphasis on the Near Abroad 
. The Legal Basis for EU’s Development Aid Policy 
. Towards Eastward Enlargement: Greater Emphasis on the
‘Near Abroad’ 
. Reform of Institutional Arrangements Affecting the
EU’s Development Policy 
. The Contradictory Trends in the EU’s Policies 
. Conclusions: Enlargement and Development:
Is there a Future? 

 European Development Policymaking: Globalisation

and the Post-Lomé World 
Marjorie Lister

. Introduction: Globalisation and Development 

. The End of Development? 
. Third World or Globalisation? 
. The Post Post-colonial Phase? 
. Enlargement and Development 
. The European Union as a Powerful Attractor 
. Effects on the Structure of the EU – Constituent Policies 
. Disappointment 
. Partnership: An Elusive Goal? 
. Conclusion 

 Clash of Civilisations or Intercultural Dialogue?

Challenges for EU Mediterranean Policies 
Roderick Pace

. Introduction 
. The EU’s Perspectives of the Mediterranean Region 
. The EU’s Policy Response 
. The Underlying Principles 
. Is there a Clash of Civilisations in the Mediterranean
Region? 
. Conclusions 

 Table of Contents

Mold - [Link] 6 15-6-2007 14:37:20

  To Reciprocate or Not to Reciprocate? Is that the
Question? A CGE Simulation of the Euro-
Mediterranean Agreements 
Andrew Mold

. Introduction 
. The Historical Experience of Liberalisation in the Region 
. Potential Comparative Advantages of the SEM Region 
. Trade Creation and Diversion within the SEM Region 
. A CGE Simulation Scenario 
. Conclusions and Recommendations 

 Challenges of Forging a Partnership Between the

European Union and Latin America 
Christian Freres

. Introduction: The EU’s Enlargements and Ties with

Latin America 
. Building the ‘Partnership’: Progress to Date 
. Does the EU Offer Something Different for Latin America? 
. Is Another Bi-regional Partnership Possible? 
. Final Reflections: Looking Towards the Lima Summit 

 The EU and Democracy Promotion in Africa:

High on Rhetoric, Low on Delivery? 
Gordon Crawford

. Introduction 
. EU Democracy Promotion Policy: High on Rhetoric 
. Democracy Promotion in EU-Africa Policy 
. EU Democracy Assistance in Africa: Low on Delivery? 
. Explaining the Rhetoric-Reality Gap: Two Propositions 
. Propositions Explored: Learning from Ghana 
. Conclusion 

Table of Contents 

Mold - [Link] 7 15-6-2007 14:37:20

  A Critical Assessment of Proposed
EU-ACP Economic Partnership Agreements 
Oliver Morrissey, Chris Milner and Andrew McKay

. Introduction 
. The Nature of EPAs 
. Modelling Framework 
. Illustrating the Welfare Effects: An EU-EAC EPA 
. Conclusions 

 Creating a Development-Friendly EU Trade Policy 

Christopher Stevens

. Europe’s Tangled Web 

. The Patchwork 
. The WTO Link 
. The GSP 
. The India Case 
. The New GSP 
. Will GSP+ Survive in the WTO? 
. The GSP as an Umbrella 
. Improving the GSP for the ACP 
. Conclusions: The Economic Effects 

 Between a Rock and a Hard Place –

Whither EU Development Policy? 
Andrew Mold

. Introduction: Raising Expectations Too High? 

. The Thorny Issue of Democracy Promotion 
. The Controversial Issue of Aid Conditionality 
. What is Motivating the Economic Partnership Agreements? 
. A Deeper Dilemma with Development Policy? 
. The Malaise of Development Economics 
. Towards a Conclusion: How Can the EU Genuinely
Help Restore ‘Policy Space’? 

About the Authors 

 Table of Contents

Mold - [Link] 8 15-6-2007 14:37:20

 Foreword and Acknowledgements

The editor of this collection would like to thank the following people for their
constant encouragement and support in ensuring that this project finally saw the
light of day: Thomas Lawo and Susanne von Itter, Maja Bucar, Isa Baud, Jean
Luc-Maurer and the team at Amsterdam University Press. Also a special mention
goes to Louk de la Rive Box during his time as President of the European As-
sociation of Development and Research Training Institutes (EADI) for his un-
flagging support to both this project and the European Journal of Development
Research. The contributors to this volume themselves deserve my thanks too for
their patience in what turned out to be a long and drawn out process.

Special thanks to Beatriz Suso who provided the cover photos, taken while she
was working in Darfur over 18 months between 2005-6. The front photo shows a
typical well in the North of Darfur in an area called Malha, the photo being taken
in February 2006.

Several people around me have been enormously supportive during the writing
the editing of this book – Zahra Kamil in particular, and friends and colleagues
in Addis Ababa. A special mention in this context goes to Dagma, Edu and
Schumene – here’s hoping that development one day will work for you too.

Finally, for an edited collection like the present book this is not common practice,
but with the indulgence of my co-authors I would like to dedicate this book to
my father, Norman Brede Mold, who passed away while the book was in the final
stages of preparation. He was a loving supportive father who will be sorely missed
by my sister, mother and myself.

Mold - [Link] 9 15-6-2007 14:37:20

Mold - [Link] 10 15-6-2007 14:37:20
 1 The Evolution of EU Development Policy –
Enlargement and a Changing World

Andrew Mold and Sheila Page1

1. Introduction

Half a century after its foundation with the signing of the Treaty of Rome in 1957,
the European Union (EU) is moving slowly but surely towards a different stage
in its development. It originally consisted of a group of six relatively homoge-
nous member states but now comprises of a much more diversified heterogeneous
grouping of 27 member states. Needless to say, the ongoing process of enlargement
implies not only a quantitative, but also qualitative transformation in the outlook
of the EU. Moreover, the most recent enlargements in 2004 and 2007, from 15 to 27
members, have been different from previous ones, in the sense that whereas previ-
ous enlargements had been generally welcomed, and even celebrated, by existing
members, this time enlargement was looked upon with much trepidation. Public
opinion polls consistently showed that there was little support for enlargement.
On the contrary, many citizens showed an open hostility to the process and fears
were frequently voiced about the dangers of an influx of illegal immigrants, of the
threat to jobs from competition from low-wage workers in Eastern Europe, and
the perceived impossibilities of meeting the budgetary pressures which the en-
largement supposed. If these reactions sound familiar, it is because they are – they
reflect the standard conservative response to the problems posed by interaction
with developing countries, including the fear of immigration, complaints about the
costs of ‘wasted’ aid, and concerns over ‘unfair’ low-wage competition.

This book deals fundamentally with the evolution of EU development policy,

both in the context of the changes in the global political environment and within
the EU itself. As the subtitle of the book (‘Challenges for the 21st Century’) sug-
gests, the broad focus is on long-term strategic questions. The questions that will
be asked are: How has the EU’s expansion to the east been affecting political and
economic relations with the developing world? In the post-9/11 world, security



Mold - [Link] 11 15-6-2007 14:37:20

 concerns have come to play an increasingly dominant role. How will the EU make
its security policy compatible with its development policy? Can the EU design a
coherent approach to developing countries or will its other interests, such as pro-
tectionism in agriculture or its neighbourhood policy, constrain its development
policy? What would a ‘development-friendly’ trade policy look like?

EU development policy and the influence of the EU on the developing world are
of course multi-dimensional, and thus in trying to answer questions like these it
is not sufficient to simply look at the activities of the Directorate General of De-
velopment of the European Commission. Indeed, the interaction between the dif-
ferent dimensions of EU policy with the developing world (as well as with other
industrialised countries or groups of countries) is becoming increasingly complex.
A helpful typology for understanding these different dimensions to EU develop-
ment policy is provided by Maxwell et al. (2006), who consider three clusters of
challenges. Cluster one involves the post 9/11 ‘development and security agenda,
which focuses on weak societies (like Afghanistan) and ‘difficult/fragile states’
(like Sudan, Iran, North Korea, or Syria). Development policies in the areas of
conflict prevention, conflict management, political stabilisation, nation building
and democratisation are consequently gaining in importance. The second cluster
concerns growing problems related to the provision of global public goods and
global governance which cross national frontiers and which require coordinated
responses from both rich and poor countries. Climate change is a prime example
of this. Other such problems include environmental degradation, disease threats,
migration, and nuclear proliferation. Finally, there are the challenges to the estab-
lished development agenda produced by other fundamental shifts in the global
political and economic environment. These include the tensions between Europe
(‘the Western world’) and the Islamic countries, the rise of China and India, de-
mographic shifts, the rapid pace of technological change, and a deepening of the
process of economic globalisation.

Confronted by such a complex panorama, EU development policy is currently

at a critical juncture on a number of fronts. The apparent impasse in the Doha
Round of multilateral trade negotiations has lent a new impetus to bilateral trade
agreements. The EU is currently negotiating an extremely ambitious set of agree-
ments (the Economic Partnership Agreements) with the African, Caribbean, and
Pacific (ACP) group of countries. Its foreign policy stance (and, by extension, its
developmental policy) towards its near neighbours in North Africa and the Mid-
dle East has been eclipsed by the aggressive (and arguably fundamentally flawed)
policy of the United States towards the region. Relations with Latin America are
floundering. Clearly, it is an opportune moment for critical reflection on the cur-

 Andrew Mold and Sheila Page

Mold - [Link] 12 15-6-2007 14:37:20

 rent state of EU development policy and to consider options for the future. This
short introductory chapter focuses on the way in which enlargement itself may be
affecting EU – developing country relations.

2. Are there Lessons to be Learned for Developing Countries

from Recent European History?

Most of the contributions to this edited collection try to illuminate the develop-
ment challenges facing Southern countries, with a view to providing some point-
ers for EU development policy. But lessons can of course be learned both ways.
The experience of developing countries with economic reform, social change, and
political upheavals is often directly relevant to Europe itself. In the past, many
members of the European Association of Development Research and Training
Institutes (EADI), the leading pan-European network of research centres on de-
veloping countries, have promoted this viewpoint. Dudley Seers, the first elected
president of EADI, was a pioneer in applying the lessons from developmental
research to the problems of peripheral Europe. His edited volume, Underdevel-
oped Europe: Studies in Core-Periphery Relations (1979)) was a classic study in how
to apply structuralist concepts to the analysis of underdevelopment in Southern
and Eastern Europe. The theme has been a recurring one for EADI. In 1994, for
instance, the European Journal of Development Research published papers from the
1993 EADI conference ‘ Transformation and Development: Eastern Europe and
the South’. In that volume, Tony Killick traces the economic crises of the 1980s in
Africa and Eastern Europe to a common cause:

The 1980s economic crisis of Eastern Europe can rather obviously be attrib-
uted to the failings of the political systems then in place there. A persuasive
case can similarly be made in tracing the relative economic decline of Africa
to generally dysfunctional political systems, marked by personal rule and a
consequential distortion of incentives and structures. (1994: 8)

In fact, the parallels between the experiences of Africa and Eastern Europe may
be deeper than simple transitory coincidences such as failed political systems at a
particular point in time. Basil Davidson, one of the doyens of historians of Africa,
once pointed out that Central and Eastern Europe saw their autonomy and polit-
ical independence trampled on in a similar way, and for a similar duration, to the
African countries under European colonialism (Davidson, 1992: chap. 9). Their
freedom disappeared under Hapsburg domination and, after a short respite in
the years after World War I, they fell under the yoke of Nazi Germany and finally

The Evolution of EU Development Policy 

Mold - [Link] 13 15-6-2007 14:37:21

 under Soviet ‘neocolonialism.’2 Although the effect is somewhat intangible and
difficult to quantify, most development researchers would agree that subjugation
of this kind leaves an indelible mark on a nation’s collective psyche, and makes
development a far more difficult task than it would have been otherwise.3

Regarding the economic effects of the transition to a market economy, although

great progress has been made in a number of countries, the process has been far
more difficult than most observers anticipated. In a story again familiar to schol-
ars and students of international development, bad policy advice (sometimes di-
sastrous policy advice) from big-league international consultants contributed to
great economic and social suffering in the initial stages of the transition.4 The
road to recovery proved to be much longer than expected. In the first years of
reform, countries like Poland, Romania, and Bulgaria suffered serious falls in
output (exceeding 20 percent) and triple-digit inflation. Some of the structural
problems which arose in that period, like the elevated levels of unemployment
(currently at around 15 percent on average, reaching 20 percent in the case of
Poland), have yet to be resolved.

Indeed, although their point of departure is so different, in some senses the eco-
nomic outcome in Eastern Europe in the first decade after the collapse of com-
munism closely mirrors how globalisation has affected developing countries. For
instance, Ellman’s (2003: 178) description of the economic hardships endured
by Eastern Europeans is easily transferable to many of the developing countries
which underwent structural adjustment in the 1980s and 1990s:

The transformation in Eastern Europe has been marked by a sharp po-

larization, both between and within countries. Not all the countries have
made great progress with transformation. Even in relatively successful
countries, not all the population has enjoyed the fruits of this success...
the winners are the new business elite (owners of profitable firms, special-
ists in business services such as law, marketing, advertising, financial ser-
vices) and those members of the political and criminal elites who have been
able to enrich themselves. The losers have tended to include older (former)
employees, those working in agriculture, manufacturing, coal mining, and
the state sector, the newly unemployed, ethnic minorities...children, large
families and the less educated.

Of course, because of the sheer novelty of the situation, the transition was always
going to prove difficult – when Eastern European communism was (forcibly)
established in the aftermath of World War II, the existing capitalist economies

 Andrew Mold and Sheila Page

Mold - [Link] 14 15-6-2007 14:37:21

 were dismantled and a socialist mode of production installed in place of the mar-
ket. But the converse case, of an economy having to shift from a collective mindset
to one embodying capitalist ideals and institutions, had never occurred in the
whole history of development.

Under such circumstances, it is understandable that mistakes were going to be

made. And from a purely economic perspective, there is nothing wrong with high
rewards going to those who move into new activities first. The problem was that
the whole process was conducted in a way that was deeply divisive. The architects
of the transition showed scant consideration regarding how to foster the devel-
opment of a new capitalist class. Instead, following perhaps Milton Friedman’s
view that it does not matter so much what the system of property rights is, the
important thing is that it is established and subsequently enforced, Eastern Euro-
pean countries rushed headlong into a ‘fire sale’ privatisation programme (Nolan,
1995). The resulting inequities in the scramble for assets were thus hardly sur-
prising. Underlying all this is the question of how property rights are determined
– perhaps one of the central issues in development economics. It is a controversy
that refuses to go away. In Latin America, land reform continues to be the source
of much controversy. In the face of communal systems of land tenure, in Africa
there is still much uncertainty as to how to ascribe property rights at all.5

Another curious lesson from Eastern European economic history for the develop-
ment community is the way that different economic systems have failed to make
much of an impact on relative wealth in Eastern Europe. John Kenneth Galbraith
(1980) once observed that if around 1880 someone embarked on a train journey
around Eastern Europe, the highest and best-distributed standard of living would
have been found in what was by 1980 the German Democratic Republic. The next
highest would have been in Bohemia (then Czechoslovakia), followed by Slovenia
and Croatia. Hungary and the German parts of Poland, Romania, and Bulgaria
would have been yet poorer, and poorer still were Macedonia, Montenegro, and
parts of Serbia. A hundred years later, and after more than 30 years of commu-
nist rule, the same journey would have showed virtually the same relative states
of prosperity and poverty. Seen in this light, economic planning and scientific
socialism achieved little. One might add that the post-communist revolution and
dramatic return to a market system in the 1990s has similarly failed to alter this
hierarchical pyramid of relative prosperity – if anything, it has compounded it.

Such observations are disturbing for development economists because it would

seem to suggest that an imperceptible but powerful ironclad law might exist that
condemns countries to permanent relative states of poverty or prosperity accord-

The Evolution of EU Development Policy 

Mold - [Link] 15 15-6-2007 14:37:21

 ing to their geography, a law from which moreover it is very difficult to escape.
Such a conclusion would, however, be misleading. The dramatic change in the
situation in a country such as South Korea, which has been transformed from one
of the poorest developing countries in the world to having a higher income per
capita than Portugal in a period of just 40 years, shows that it is possible to escape
from the rigid straight-jacket of economic geography. There are, to use Stephen
Haggard’s words, pathways from the periphery (1991). Nonetheless, the observa-
tion that relative wealth within Central and Eastern Europe has been fairly static
does provide food for thought as to how ingrained structural and societal impedi-
ments to convergence and development may be.

At a time when there are many propositions in favour of a ‘big push’ on develop-
ment aid, especially for the African continent (see, inter alia, UNCTAD, 2006
and Sachs, 2005), another major lesson that can be derived from the Central
and Eastern European experience is the limited transformative power of financial
resources alone. Since the end of communism the massive fiscal transfers dedi-
cated to German reunion have not proved enough to overcome underlying eco-
nomic and social problems and disparities between East and West. By the end of
2003, net transfers from West to East Germany to fund unification had reached
about 800 billion (The Economist, 2003). That makes it the most generous aid
programme ever, far outstripping the total cost of the post-war Marshall Plan.
Yet despite these enormous transfers, progress has been slow: from the end of
the 1995 construction-driven boom until 2003, the east-German economy had
grown at about half the (already slow) pace of Germany’s western states; unem-
ployment stood at around 20 percent; and average wages were only 77 percent
the level of west German levels (and barely 60 percent if Berlin was excluded
from the figures).

This disappointing outcome should, at the very least, cause the development
community to reflect upon the potential of aid to significantly change the growth
and development perspectives of poor countries – if aid on such a scale, and
in the context of such a strong social and cultural affinity between donor and
recipient, is incapable of making a dramatic impact, then what are the chances
of aid-led development in the context of the poorest developing countries? Read
between the lines and this conclusion is what multi-disciplinary researchers into
development have been saying all along – that the key to successful development
is not simply a technical question to be resolved by, say, more aid or higher rates
of investment: there is a qualitative, social dimension related to cultural attitudes,
institution building, etc., which economists in particular are poorly equipped to
explain, let alone offer advice upon.6 Consequently, recent ambitious proposals,

 Andrew Mold and Sheila Page

Mold - [Link] 16 15-6-2007 14:37:21

 like those emanating from the United Nations (UN)-led Millennium Project, or
the UK government’s Commission for Africa, for a massive increase in aid are at
best only part of the solution to much deeper problems.7

High aid dependency also creates other difficulties, which we see in the relations
of the EU with both Eastern Europe and developing countries. As aid recipients,
developing countries are looked upon as disadvantaged objects for assistance, de-
pendent on the decisions of donors. But they are also partners and rivals in trade:
they have market access to offer and demand; they attract and work with foreign
investors, and demand the right to participate fully in international decisions and
governance. This simultaneous existence of reciprocal and client-type relation-
ships requires sensitivity and a consistent approach. The EU has faced difficulties
in reconciling its dictatorial approach as donor with the need to negotiate with
increasingly strong developing country interests in the World Trade Organization
(WTO). It has shifted uneasily between offering preferences and proposing recip-
rocal liberalisation. The difficulty of this dual relationship both for the acceding
countries and for developing countries is an underlying theme of this book.

3. Effects of Enlargement

What of the influence of the process of consecutive enlargements on developing

countries? As chapter 2 of this volume, by Mirjam van Reisen, makes plain, the
influence contains at least two different elements. One is the differing attitudes of
the new members towards developing countries. In the early years of European in-
tegration, France, followed by the UK, then Spain, and Portugal maintained (and
continue to maintain) traditional ties and economic relationships with countries
outside of Europe. Subsequently, Germany, whose power and willingness to make
its influence felt have been increasing, has jealously guarded its links with Eastern
European countries, while these in turn are for the moment more concerned with
their own transformations than with helping other countries to develop.

The second influence that enlargement is exerting on the developing world is

economic. It should be remembered that previous enlargements have often preju-
diced the economic interests of developing countries. For instance, Northern Af-
rican countries like Tunisia and Morocco were very much disadvantaged by the
expansion of the EU to include Greece, Portugal, and Spain (White, 2001). Prior
to the second enlargement of the EU in the 1980s, the European Union was not
self-sufficient in many Mediterranean agricultural products and was dependent
on imports from North Africa. The admission of the southern European coun-

The Evolution of EU Development Policy 

Mold - [Link] 17 15-6-2007 14:37:21

 tries into the EC significantly cut their access to the EC market for a number of
their key export products, such as olive oil and oranges.

Arguably, one of the major ways in which European integration has harmed de-
veloping country interest has been through the workings of the Common Agricul-
tural Policy (CAP). It is commonly pointed out that the subsidisation of European
farmers (who moreover only constitute around 1-2 percent of the active popula-
tion) costs far more than the total aid budget dedicated to developing countries. In
recent years, there has been an enormous groundswell of criticism that the CAP
has not only closed off one of the potentially most lucrative agricultural export
markets for developing countries, it has also undermined agricultural prices on
world markets and exacerbated food insecurity in the poorest developing coun-
tries.8 Although it is true that the African, Caribbean, and Pacific countries (ACP)
have enjoyed since 1975 the benefits of preferential market access to the European
market, most observers agree that it has proved totally inadequate for offsetting
the distortions of world agricultural trade brought about by the CAP (see, for in-
stance, Grant, 1997). It has been particularly damaging to the large, poor countries
in Asia and Latin America where most of the world’s poor live, and which do not
even enjoy the limited benefits of the ACP. One particularly beneficial impact of
European enlargement may be the way in which it makes the existing system of
agricultural subsidisation unsustainable, as new entrants claim the same entitle-
ments as those given to existing members to protect their agricultural sectors.9

Some observers argue that European enlargement distracts attention from the
problems of the Third World – Europe still provides around 50 percent of total
aid flows and, so the argument goes, enlargement may simply divert financial and
human resources away from the more pressing problems of the developing world.
While it may be true that the European Commission is overstretched, and the
budgetary implications of enlargement mean that there will be less money to go
round, we should not overplay the extent to which the developing countries can
potentially lose from the enlargement. Over a decade ago, Mkandawire (1994: 86)
made some pertinent comments on this issue, words that still ring true:

It is symptomatic of what is wrong with Africa’s position in the world that

democratisation and economic recovery in Eastern Europe should be con-
sidered threats to Africa’s well-being. To the extent that changes in Eastern
Europe signal the end of imperial domination and the beginning of a new
society based on respect for human rights, Africa can only benefit from
such a change.

 Andrew Mold and Sheila Page

Mold - [Link] 18 15-6-2007 14:37:22

 4. The EU’s Other Foreign Policy Interests

Within the whole panoply of the EU’s foreign policy interests, there is no hiding
the fact that developing countries and development objectives take a relatively
secondary place. That is why relations with the poorer developing countries are
more often delegated to the European level than are relations with the US or
other major countries. Particularly for countries without strong traditional in-
terests in particular developing regions (such as Italy and Greece), the impor-
tance of what is called the ‘near abroad’ and security questions will ultimately
determine which countries are the focus of interest and what types of assistance
are offered.

Nevertheless, as some Asian and Latin American countries become economically

or politically important, they attract increasing attention. This is also true of
course of the more developed African countries, such as South Africa or Egypt.
Here, the EU’s approach to them will undoubtedly differ from a traditional de-
velopment relationship. In all developing countries the EU’s policy will reflect a
combination of motives, with economic or political development only part of the
picture. In examining how EU development policy is evolving, these other com-
ponents of foreign relations must not be neglected.

Finally, despite all the problems and tensions, the EU continues to exert a strong
political and social appeal (what Joseph Nye once termed ‘soft power’) upon many
developing regions, in the sense that it offers an apparent alternative to what
is seen as the unbridled capitalism of the United States model. Social justice
has been intrinsically a part of the European project, with a central role given
to welfare policies. The economic model has been different, too, with a greater
stress on regulation and socially-inclusive corporatism. Thus whereas the United
States’ regional integration with Mexico, under the North American Free Trade
Association (NAFTA), has come to be viewed as singularly one-sided, with the
lion share of the benefits accruing to US-based corporations and relatively few
tangible benefits for the poorer partner Mexico,10 with its Structural Funds and
other compensatory schemes for poorer regions the EU model of regional inte-
gration holds out the possibility of a more progressive approach. One concern
raised in this book is precisely that in its dealings with developing countries the
EU may be moving towards a limited, business-like and mercantalistic approach,
more akin to the US model.

To sum up, therefore, the picture is an extremely complex one. It is not imme-
diately evident as to how the deepening of the process of European integration

The Evolution of EU Development Policy 

Mold - [Link] 19 15-6-2007 14:37:22

 will affect developing countries. However, EU enlargement clearly represents an
important catalyst for change. It is also worth stressing the difficulties of articu-
lating a coherent development policy in a world in which classical regional and
development classifications are in a state of flux. Old boundaries, such as those
between ‘least developed’ and those which are simply ‘developing’, are breaking
down. It is now clear that there is no monotonic scale. Different definitions of
development give different rankings: not just by income, but by human develop-
ment or by capital, both economic and political, or by history and experience. It
is not only in Europe that regions have changed. In the Western Hemisphere,
Africa, and Asia, there are increasing groupings and alliances that cut across tra-
ditional areas, such as the Cairns Group of agricultural exporters, or the G-20,
or indeed, the countervailing axis to US power and influence currently being
driven by Venezuela, Iran, and North Korea (all alliances spanning no fewer than
three continents). But the shift is more fundamental than these intra-classifica-
tion changes suggest. While traditional and new regional loyalties or income and
development classifications continue to provide common interests and the basis
for international action, other interest groups have emerged: in trade, those who
produce or import certain kinds of goods are an obvious example (African cotton,
for instance), but there are also those with different approaches to free trade or
to national economic intervention. Similar divisions can be derived from other
international interactions on issues such as climate change or security. This does
not mean that the concepts of ‘Europe’ and ‘developing countries’ are no longer
meaningful, but they must be seen, as they are here, against a complex backdrop.
It is in this context that this volume is intended as a modest but forthright con-
tribution to the analysis of evolving policies and strategies of the enlarged EU
towards the developing countries.

5. Contents of the Book

Each chapter in this book deals with a different thematic issue. In chapter 2, Mir-
jam van Reisen speculates on the future of Europe’s relations with the South in
an enlarged EU by looking at the historical record of its dealings with developing
countries and, in particular, the impact of previous processes of enlargement. Van
Reisen warns that, in the post-enlargement, post 9/11 world, EU development co-
operation may become increasingly subordinated to other policy objectives, such
as the common foreign and security policy. Nonetheless, because of the symbiotic
nature of the relationship, the EU will continue to need the South for its energy
products, raw materials, labour force, export markets, and as a destination for
foreign direct investment. Beyond straightforward material interest, van Reisen

 Andrew Mold and Sheila Page

Mold - [Link] 20 15-6-2007 14:37:22

 argues that in its relations with the developing world the EU needs to actively
promote the values upon which it was founded: the European values of social de-
mocracy, the promotion of human rights, and accountable and transparent gover-
nance. If the EU is to succeed in its objective of rejecting the notion of a unipolar
world dominated by the United States it will inevitably need alliances with the
South more than ever.

Chapter 3, by Marjorie Lister, addresses the question of how globalisation has af-
fected the international development agenda. For the EU, the advent of the single
currency, the consolidation of the European single market and the EU’s ability
to act cohesively in international fora such as the WTO potentially offer it great
power. At the same time, in consonance with what we have argued above, Lister
argues that the Third World as a political and geographical entity is becoming in-
creasingly fragmented. This fragmentation necessarily implies division and weak-
ness vis-à-vis the EU. Despite initiatives like the Cotonou Agreement, which
stress that the ownership (i.e., responsibility) for development programmes lies
mainly with the developing countries themselves, Lister argues that the EU´s
relations with these countries are impossible to understand without reference to
the historical experience of colonialisation and subordination.

In a controversial reflection on the current state of Euro-Mediterranean rela-

tions, in chapter 4 Roderick Pace discusses the relevance of Samuel Huntington’s
theory on the ‘clash of civilisations’. Significantly, the EU has attached much im-
portance to the ‘dialogue of civilisations’ and the need for the development of more
links between the civil societies on both sides of the Mediterranean (indeed, this
was supposed to be one of the great innovations of the Barcelona Process which
was initiated in 1995). Attempts to intensify the ‘dialogue of civilisations’ were
also made in the aftermath of the terrorist attacks of September 11th and the sub-
sequent attacks carried out in Turkey, Morocco, and Madrid. Yet the EU’s own
actions suggest a tacit acceptance of the ‘clash of civilisations’ hypothesis that dif-
ferences of culture and civilisation exercise a strong influence on relations in the
Mediterranean region. Pace dissents from this view, and argues that the ‘clash of
civilisations’ hypothesis is essentially flawed: the differences are exaggerated and
traditional sources of conflicts ignored. On the political front, for example, Pace
suggests that there is no essential incompatibility between Islam and democracy
– with leaders like Ben Ali in Tunisia and Mubarak in Egypt trying to conserve
their power base, the resistance to political and democratic reform owes more
to internal political considerations than to a clash of cultural or civilisational
values.

The Evolution of EU Development Policy 

Mold - [Link] 21 15-6-2007 14:37:22

 Similarly, Pace argues that the achievements of North African countries like
Egypt in the 1960s and 1970s, and Tunisia in the 1990s, in attaining a fast grow-
ing economy shows that there is no intrinsic incompatibility between Islam and
economic growth – just as the idea that India could never escape from the slug-
gish ‘Hindu rate of growth’ was shown to be false in the 1990s, so too it would
seem to be an absurdity to allege that Islamic countries are incapable of achieving
a dynamic economic performance or an acceptable degree of development. The
economic values of Islamic movements – such as respect for private property, pro-
motion of fiscal good management and discouragement of corruption are clearly
compatible with economic development. For the true source of the Mediterranean
region’s conflicts, Pace concludes that we need to look to the underlying causes,
those normally associated with human conflicts, namely, clashes of ‘interests’ not
clashes of ‘civilisations’.

Chapter 5, by Andrew Mold, analyses the economic and social implications of the
European-Mediterranean agreements (EMAs). At a time when the EU is aggres-
sively pursuing similar deals with the ACP countries (the Economic Partnership
Agreements), it is important to take stock of progress regarding the EMAs, the
first of which were signed over 10 years ago. In this context, Mold reviews existing
studies and carries out a computable general equilibrium analysis for the different
scenarios for liberalisation for three North African economies – Egypt, Morocco,
and Tunisia. Using a realistic closure for the model, which takes into account both
the high levels of unemployment in the region and the probable replacement of
tariff revenue with other kinds of fiscal pressure, Mold explores the different re-
sponses of the North African economies to the EMAs. Two of the key issues here
are the questions of reciprocity and the inclusion of agriculture within the agree-
ments. Regarding the latter, despite some scope for expanding agricultural exports
from the North African economies, it is argued that these countries as net food im-
porters stand to gain little from liberalisation of agricultural trade.11 On the second
issue of reciprocity, Mold finds that this is indeed one of the fundamental problems
with the agreements – North African industry is simply not sufficiently competi-
tive to sustain head-on competition with the EU. Yet as in the case of the ongoing
Economic Partnership Agreements (EPAs) negotiations with the ACP countries,
reciprocity is one of the key premises on which these agreements are built. In their
present form, it is thus argued that the EMAs are potentially damaging to the
North African economies, and will do little or nothing to alleviate the difficult
economic and social situation in these countries. In the conclusions, a number of
particularly problematic elements in the agreements are discussed and some sug-
gestions are made as to how to make the EMAs more pro-developmental.

 Andrew Mold and Sheila Page

Mold - [Link] 22 15-6-2007 14:37:22

 In chapter 6, Christian Freres documents the evolving political and economic
relations between the EU and Latin America. As a result of the incorporation of
Spain and Portugal into the EU in 1986, Latin America attracted greater interest
from the European authorities. With the subsequent enlargements, however, that
interest has waned. Freres asks several important questions regarding the kind of
partnership that might be possible over the medium- and long-term. He argues
that in principle it should be possible to have a network of Association Agree-
ments covering all the countries in the region. The December 2005 Communi-
cation of the European Commission appears to show Europe’s political will to
achieve this objective. Nevertheless, Freres argues that in the future these agree-
ments should be more ambitious. In the case of Mexico, the agreement signed
barely goes beyond a simple free trade agreement. The association agreements
hold much more potential than just expanding trade or investments or even aid.
A partnership implies opening up new fields of co-operation, which in turn pro-
vides possibilities for new stakeholders on both sides to get involved. Future as-
sociation agreements should base themselves on this principle, Freres argues.

In chapter 7, Gordon Crawford contrasts EU democracy promotion policy in

Africa with the reality of its implementation in Ghana. He finds that the EU’s
policy in Ghana is high on rhetoric but remains low on delivery. He argues that if
policy performance is poor in Ghana (by most standards in Africa, a relatively fa-
vourable political environment), then it is unlikely to be better elsewhere. Craw-
ford outlines three possible explanations of the rhetoric-reality gap – one bureau-
cratic, one political, and one economic. These explanations are then applied to the
Ghanaian case. The conclusions are two-fold. First, the EU’s political activities
in Africa are driven more by its self-interests than by the norms and principles
of democratic governance. Secondly, consistent with hegemonic neo-liberalism,
Crawford argues that democracy is narrowly conceived by the EU and is more
concerned with limiting state power than extending popular control.

In chapter 8 Oliver Morrissey, Chris Milner, and Andrew McKay discuss an issue
which is generating much controversy among the African, Caribbean, and Pacific
(ACP) countries – the proposed Economic Partnership Agreements (EPAs).
ACP countries entering such arrangements would preserve preferential access to
the EU market but, as in the case of the Euro-Mediterranean agreements (chap-
ter 5), must offer reciprocal access in return; potentially they will attract more aid
and investment from the EU. Morrissey et al. present a method for measuring
the likely welfare consequences of such an arrangement for ACP countries, using
the example of the East African Community (EAC, comprising Kenya, Tanzania,
and Uganda). If under the EPAs the EAC countries are required to liberalise sub-

The Evolution of EU Development Policy 

Mold - [Link] 23 15-6-2007 14:37:22

 stantially and quickly they conclude that this will have an adverse welfare impact
and cause a significant loss of government revenue from the elimination of tariffs
on imports from the EU. Morrissey et al. conclude that the ACP countries have
little to gain from a reciprocal agreement with the EU.

In chapter 9, Chris Stevens asks a simple but important question – how can EU
trade policy be made more ‘development-friendly’? He outlines the major char-
acteristics of EU trade policy and makes several suggestions for how to mitigate
the negative effects and enhance the positive ones. In this context, he extensively
explores the recent reforms to the ‘backbone’ of the EU preference system, the
Generalised System of Preferences (GSP), and suggests ways in which the EU
could revise and strengthen the GSP+ regime. Stevens stresses that simply ex-
tending the product coverage of GSP+ (i.e., increasing the number of products
for which tariffs are reduced or eliminated) is no longer sufficient. From the
point of view of achieving a development-friendly trade policy, any acceptable
reform to the GSP would need to introduce greater certainty and dispute settle-
ment mechanisms.

Finally, in chapter 10, Andrew Mold draws some conclusions regarding both EU
economic and also political ties with the developing world. In the first place, the
fact that development policy rhetoric so often outstrips performance implies
that expectations need to be toned down. Secondly, the weaknesses observed
and the lack of overall coherence in EU development policy might actually be
more deeply rooted rather than a simple reflection of a lack of resolve on the
part of the European Commission and the EU member states – they have deeper
structural causes. Part of the problem stems from institutional limitations, but
it is also suggested that one of the underlying causes of what might be described
as the ‘malaise of development economics’ – that is, the apparent inability of
the economics profession to provide answers to the key problems confronting
developing countries – unemployment, poverty, and relatively poor growth per-
formance. In order to compensate for the excessive influence of the international
financial institutions (IFIs) and their neoliberal conceptions of development,
part of the solution resides in greater efforts by the EU to articulate a differ-
entiated approach – one that builds on the historical experience of European
countries themselves. But it also relies on allowing developing countries greater
‘policy space’ – the ability to experiment and eventually find their own ‘paths
from the periphery’.

 Andrew Mold and Sheila Page

Mold - [Link] 24 15-6-2007 14:37:22

 Notes
 The views expressed herein are those of the authors and do not necessarily reflect the
views of the United Nations. The authors would like to thank Gordon Crawford and An-
drew Allimadi for comments on an earlier draft of this chapter. The authors are of course
responsible for any remaining errors.
 Lest the phrase Soviet ‘neo-colonialism’ appears excessive, Davidson (: ) claims
that ‘this Soviet “neo-colonial” control was extremely close, closer even than anything of
its kind that appeared in Africa. There was even an oil refinery in Bulgaria, it appears,
which was incapable of refining any oil except Soviet-produced oil. One may compare this
with the American-financed bauxite smelter built in Ghana that was unable, in practice,
to smelt Ghanaian-produced Bauxite.’
 See, for instance, Easterly ().
 See, for instance, ‘Selling the Capitalist Miracle’ (The Guardian,  March, , page ).
Ellman (: ) tells the sad story of the policy advice given on privatisation to the
Russian government by the Harvard Institute for International Development (HIID), fi-
nanced by USAID, and the corruption associated with it. After official US investigations,
HIID was eventually closed down.
 See, for example, De Soto’s () provocative (and highly ideological) book on how the
poor have allegedly been ‘disempowered’ by the lack of recognition of their property rights.
On the problems of defining land rights in Africa, see the special issue of the European
Journal of Development Research edited by Benjaminsen and Lund ().
 This, in essence, is the message that William Easterly () tries to convey in his contro-
versial, but highly engaging, recent book The White Man’s Burden – Why the West’s Efforts
to Aid the Rest have Done so Much Ill and So Little Good.
 For a critical evaluation of these two proposals, see Mold ().
 See, for instance, Oxfam ().
 At the same time there is much controversy as to whether the poorest developing coun-
tries would now benefit much from the elimination of the CAP. Empirical studies tend to
show that the major benefits would accrue to the Cairn Group of countries – large agri-
cultural exporters like Argentina, Canada, Brazil, etc. Being net food importers, some of
the poorest developing countries may actually lose out, at least over the short run, because
food imports would become more expensive (Piermartini and Teh, ). Nevertheless,
this story misses the dynamics of the process. Up until the late s, for instance, Af-
rica was a net exporter of food and agricultural products. The deficits opened up in the
s and s after African governments liberalised their trade regimes, under consid-
erable pressure from the Bretton Woods institutions. They pursued this policy despite
the threat of competition from massively subsidised farm exports (both from the EU and
other developed countries like the United States which pursue similar policies). Far from
saving African countries, then, the policy of the EU and other industrialised countries
has contributed to undermining the African continent’s agricultural production in a very
damaging way. To say then that ‘agricultural subsidies in the OECD help poor developing
countries is akin to saying heroin helps a drug addict’ (Mold, b).
 See, for example, Mold and Rozo (), which analyses the disappointing impact of
NAFTA on its southern partner, Mexico.
 Moreover, it has to be borne in mind that there is no ‘level-playing field’ – the massive sub-
sidisation of EU agriculture makes it very difficult for North African economies to compete
in agricultural production, even in crops where they have a natural comparative advantage.

The Evolution of EU Development Policy 

Mold - [Link] 25 15-6-2007 14:37:22

 References

Audley, John, Sandra Polaski, Demetrios G. Papademetriou, and Scott Vaughan

(2003),‘NAFTA’s Promise and Reality: Lessons from Mexico for the Hemi-
sphere’, Washington: Carnegie Endowment for International Peace, available
at [Link]
Benjaminsen, Tor and Christian Lund (eds.) (2002), ‘Securing Land Rights in
Africa’, The European Journal of Development Research, vol.14, no.2, December.
Davidson, Basil (1992), ‘ The Black Man’s Burden – Africa and the Curse of the
Nation-State’, Nairobi: E.A.E.P.
Easterly, William (2006), ‘ The White Man’s Burden – How the West’s Efforts
to Aid the Rest have done so much Ill and so little Good’, New York, The
Penguin Press.
Economist, The (2003), ‘When East Meets West – A Survey of EU Enlargement’,
Nov. 22.
Ellman, Michael (2003), ‘ Transition Economies’, in H-J. Chang (ed.) Rethinking
Development Economics, London: Anthem Press, pp. 179-198.
Grant, Wyn (1997), The Common Agricultural Policy, Basingstoke: MacMillan
Press Ltd.
Mkandawire, Thandika (1994), ‘Africa and the Changes in Eastern Europe’, The
European Journal of Development Research, vol 6, no.1, June, pp.77-88.
Maxwell, Simon, Dirk Messner, Francoise Moreau, and Laurence Tubiana (2006),
‘European Development Report – A Prospectus’, mimeo produced for DG
Development, European Commission.
Mold, Andrew (2005), ‘Africa’s Last “Last Chance”? Reflections on the Commis-
sion for Africa and Millennium Project Reports’, Real Instituto Elcano de Es-
tudios Internacionales y Estrategicos, Working Paper 42/2005, September.
Mold, Andrew (2005b), ‘Down on the Farm’, The Economist, April 16t, page 16
(letters).
Mold, Andrew and Carlos Rozo (2006), ‘Liberalisation, growth and welfare: the
“maquiliacion” of the Mexican economy’, in Kishor Sharma and Oliver Mor-
rissey (eds), Trade, Growth and Inequality in the Era of Globlization, Abingdon:
Routledge.
Nolan, Peter (1995), China’s Rise, Russia’s Fall – Politics, Economics and Planning
in the Transition from Stalinism, London: Macmillan Press.
Oxfam (2002), ‘Rigged Rules and Double Standards – trade, globalisation, and
the fight against poverty’, available at [Link].
Peters, Enrique Dussel (2000), ‘El Tratado de Libre Comercio de Norteamérica y
el Desempeño de la Economía en México’, Mexico DF: Economic Commission
for Latin America and the Caribbean (ECLAC).

 Andrew Mold and Sheila Page

Mold - [Link] 26 15-6-2007 14:37:23

 Piermartini, Roberta and Robert Teh (2005), ‘Demystifying Modelling Methods
for Trade Policy’, WTO Discussion Papers, no. 10.
Sachs, Jeffrey (2005), The End of Poverty – How We Can Make it Happen in our
Lifetime, London: Penguin.
Seers, Dudley (1979), Underdeveloped Europe: Studies in Core-Periphery Relations,
Brighton: Institute of Development Studies.
de Soto, Hernando (2001), The Mystery of Capital – Why Capitalism Triumphs in
the West and Fails Everywhere Else, London: Black Swan.
UNCTAD (2006), ‘Doubling Aid: Making the “Big Push” Work’, Geneva:
UNCTAD.
White, Gordon (2001), A Comparative Political Economy of Tunisia and Morocco
– On the Outside of Europe Looking In, New York, State University of New
York Press.

The Evolution of EU Development Policy 

Mold - [Link] 27 15-6-2007 14:37:23

Mold - [Link] 28 15-6-2007 14:37:23
 2 The Enlarged European Union and the
Developing World: What Future?

Mirjam van Reisen1

The past is not dead – it is not even past.

William Faulkner

A necessary stage on humanity’s path toward a new state of being must be, and
cannot help but be, a renewal of its thinking.
Mikhail Gorbachev

1. Introduction

The restructuring of Europe’s relations with its colonies and former colonies
was a substantive and essential part of the establishment of the (then) European
Community (EC). The creation of the European Union (EU) was a clear prod-
uct of the new world order following World War II, in which the division of Eu-
rope between East and West was a defining factor. The creation of Europe was
rooted in the East-West divide on the one hand and the decolonisation process
on the other hand. These three historical processes – the creation of a European
Community, the East-West conflict, and the decolonisation – are intrinsically
linked since they were distinct but parallel responses to a new global division of
power.

Today the EU is a global actor in development and its activities have continuously
expanded. In 2004 the EU’s Official Development Assistance (ODA), which is
managed by the European Commission, made up 11 percent of total Development
Co-operation Directorate of the OECD (DAC) ODA disbursements, amount-
ing to US$ 8.7 billion for ODA and an additional US$ 4.2 billion worth of aid
for the countries of Eastern Europe (OA). If bilateral aid from member states
is included as well, the total EU ODA amounts to 54 percent of the total DAC



Mold - [Link] 29 15-6-2007 14:37:23

 ODA, equivalent to US$ 42.9 billion in 2004. With the fundamental change in
East-West relations at least one of the components of the world order was re-
moved. The end of the East-West divide was marked by the accession of ten new
member states from the former Eastern Bloc into the EU in 2004. This begs the
question as to how this fundamental change will impact on the future relations of
the EU with the South. This chapter will consider the future of these relations,
beginning with an examination of the impact of previous processes of enlarge-
ment on development policy.

The first part will consider the history of the EU’s relations with developing
countries, including the origin of EU North-South relations in Europe’s colo-
nial past and the impact of the Cold War on Europe’s relations with the Third
World. The creation of the EU itself, together with the contribution of subse-
quent enlargement processes, will be stressed as a factor of change in traditional
North-South relations. In the following section the impact of the end of the
Cold War on Europe’s development policy will be highlighted. This will include
(i) an examination of current changes of the legal definition of the EU com-
petence in development policy, (ii) changes resulting from the 2004 eastward
enlargement, (iii) a review of the accompanying institutional reforms, and (iv)
an examination of the contradictory trends in EU policy with regards to devel-
opment co-operation in the period after the fall of the Berlin Wall. Based on an
assessment of recent trends, the chapter will conclude with some observations
regarding the future prospects of development co-operation in the enlarged Eu-
ropean Union.

2. Europe and Its Colonial Past

Europe’s colonial past is still seen by many scholars as an important influence on

European aid. Emphasizing the impact of French colonial history on the creation
of EC aid Bretherton and Vogler conclude:

In a very real sense the EC was to be associated with French policy to-
wards Africa; to share with France some of the potential trade benefits, but
also the financial burden, of French colonialism – and subsequently of the
decolonization process and its aftermath. Consequently it is appropriate,
in the early years, to regard the EC role in North/South relations as an
adjunct to French policy rather than a distinctive Community approach to
development (1999: 113).

 Mirjam van Reisen

Mold - [Link] 30 15-6-2007 14:37:23

 There is extensive historical evidence that substantiates this position. It can be
shown that Europe’s relations with developing countries were built and expanded
upon the basis of previous colonial connections. It can also be demonstrated that
the developing countries were seen as an all-important source of energy and raw
materials, necessary for the economic development of Europe. Europe’s weak-
ness in its limited access to raw materials and energy was well understood by the
founders of the EU. Indeed, the instrument of Marshall aid was created explicitly
on the understanding that Europe would need access to the Third World to sup-
port its recovery, which in turn was seen as necessary for the economic expansion
of the post-war American economy.

The objective of US foreign policy in the early post-World War II period was to
construct a ‘Grand Area’, which specifically included the Western Hemisphere,
Western Europe, the Far East, the former British Empire – which was to be fur-
ther ‘dismantled’ – and the Middle East. Different functions were assigned to the
various regions, such as industrial production, the supply of raw materials, and
the provision of energy resources.2 Chomsky quotes a memo from the US State
Department in 1949, which stated that the Third World was to:

... fulfil its major function as a source of raw materials and a market’ for the
industrial capitalist societies. (...) It was to be exploited for the reconstruc-
tion of Europe and Japan (1992: 12).

The Treaty of Rome (1957) arranged the ‘association’ of the former French and
Belgium colonies with the EC. It involved two important elements for a viable
common economic market: the supply of raw materials and the expansion of ex-
port markets. This would ensure free access to the common market for colonial
exports and would extend France’s preferential access to the markets of its former
colonies to other EC members. The fact that General De Gaulle threatened to
break off negotiations on the Treaty of Rome if the other parties to the negotia-
tions did not agree to the association of the French Overseas Countries and Ter-
ritories appears to give strength to the idea that Europe’s relations with the South
were originally intended to protect French interests. Moreover, in the second half
of the 1950s, with a recession looming in Europe, France’s economic interests in
its colonies regained importance.3

Eventually France, with the support of Belgium and Luxembourg, secured the
principle of ‘association’ for the Overseas Countries and Territories in the Treaty
of Rome, in exchange for a number of concessions to Germany and the Nether-
lands, who were strongly opposed to the initial proposals for ‘association’. France

The Enlarged EU and the Developing World 

Mold - [Link] 31 15-6-2007 14:37:23

 conceded that enterprises from all member states were free to establish subsidiar-
ies in the associated countries on equal terms and that special preferential tariffs
and trade arrangements should also apply to all EC states. Associated countries
and territories would gradually and progressively receive free access for their
products to the markets of the member states. Based on a specific arrangement
West Germany would continue to import bananas from Latin America.

While it is evident that colonial relations, as they existed at the time, were the pri-
mary basis for the EC’s policy towards developing countries, it is worth stressing
some additional elements. Firstly, it is interesting to note that the French introduced
the subject of ‘association’ and its future relations with its colonies as late as 1956 in
the negotiation with their European partners. Long before leaders of the African
countries had expressed their apprehension about their future role in the project
of European integration – following the obvious success of the European Coal and
Steel Community (ECSC) – and were pushing the French government to take ac-
tion with regard to their inclusion in a European arrangement. In 1953 an ad hoc as-
sembly was set up to identify the future shape of relations between African colonies
and European countries. The representative of Sénégal in the French government,
Léopold Sédar Senghor, who had served in the French army during World War
II, made the constitutional argument that the Overseas Countries and Territories
should be fully entitled to be part of the European Community.4 He proceeded
with a political warning about the risk that the Treaty might not be ratified due to
opposition from the delegates of the Overseas Countries and Territories, who had
seats in the French Parliament under the constitution of the Fourth Republic. Sen-
ghor’s idea of a federation in the framework of a French-African Community was
consistent with the French approach of viewing colonisation as assimilation. The
French did indeed, at one point, introduce a proposal that the colonies should be
fully included in the European Economic Community (EEC). In France different
levels of association and assimilation were maintained, with Algeria, Martinique
and Vietnam in particular being seen as an integral part of France.

Yet on the other side of the political spectrum of nationalist politics the pressure
for a change in colonial policy became intense between 1953 and 1956. African
leaders, such as Nkrumah from Ghana and Sekou Touré from Guinea, promoted
African unity with the objective of achieving complete independence and full sov-
ereignty. Between 1953 and 1956 the French defeat in Diên Biên Phu and the sub-
sequent end of French rule in Indochina, as well as the outbreak of the Algerian
war in 1954, and tensions arising in Tunisia and Morocco, forced the leadership of
the Fourth Republic to review the premises of relations with the colonies. At the
same time, under mounting pressure in the Congo, the Belgian government was

 Mirjam van Reisen

Mold - [Link] 32 15-6-2007 14:37:23

 forced to present a plan in 1955 accepting that independence of its colony would
be inevitable.

Within this political climate, and given the important role played by African
troops during World War II, there was serious pressure on France to reshape
its colonial relations. The introduction of a policy of ‘association’ should be un-
derstood as an alternative to traditional French colonial policies of ‘assimilation’
and ‘integration’. Today the notion of ‘association’ appears to be derived from old
colonial policies – and it was obviously grafted on these. However, it introduced
a new style of colonialism, based on the recognition that influence in the colonies
could only be maintained if various degrees of autonomy were allowed.

In 1958 De Gaulle tried to guarantee French influence in West Africa by creating

the French Community. Pan-Africanists such as Sekou Touré in Guinea rejected
this proposal, whereas moderate Francophone and Anglophone African leaders
were looking for ways to continue close collaboration with Europe. The great
dependency of the (former) colonies in terms of trade with European markets, as
well as aid received (in particular from France), was one of the decisive elements
in the Euro-African perspective. Hence European integration facilitated a fun-
damental change in policy towards the colonies. The Treaty of Rome was based
on the principles of ‘association’, as opposed to ‘assimilation’, and on principles of
non-discriminatory trade access by other European member states. These prin-
ciples ushered in a new period of relations between the European countries and
their colonies. These colonial relations were set on a new footing through the
Treaty of Rome (Art. 131-136), which unilaterally established an association be-
tween the Community and the Overseas Countries and Territories, ‘Europeanis-
ing’ the former exclusive relations between colonisers and colonised. The associa-
tion basically created a free trade area between the EC and the colonies, giving the
right of establishment to firms and nationals from all parties.

The Treaty of Rome also created an instrument to collectively share the burden
of financial assistance to the colonies, in the form of the European Development
Fund (EDF). These contributions of member states to the association countries
were arranged separately, outside the Community budget, but were administered
by the Community. Germany and the Netherlands made a substantial contribu-
tion, which was all the more remarkable given their original opposition to the
regional focus of the fund, especially in view of the fact that none of the Dutch
dependencies or former German ones were included. Germany’s contribution
matched that of France with 34 percent of the total and the Netherlands contrib-
uted 12 percent of the fund’s resources.

The Enlarged EU and the Developing World 

Mold - [Link] 33 15-6-2007 14:37:23

 Twenty-three countries of sub-Saharan Africa gained independence between
1956 and 1960. This unexpected change triggered new negotiations for a pioneer-
ing association agreement with the newly independent countries. An agreement
arranging preferential trade and aid provisions, along the lines of the provisions
for Overseas Countries and Territories in the Treaty of Rome, was signed be-
tween the Community and 17 African states and Madagascar in Yaoundé, Cam-
eroon in 1963, valid for a period of five years. The group was composed of former
French and Belgian colonies, organised in the Associated African and Malagasy
States (AAMS).

3. Europe’s Early Unification:

From Colonialism to Multilateralism

In the aftermath of the Second World War, the decline of French and British
power in the developing world was very much accelerated to the benefit of the
United States. While Europe suffered enormous economic losses, US produc-
tive capacity expanded dramatically. US capital began to move into Africa, Asia,
and Europe. Although Latin America remained the largest source of mineral
imports for the US, the US also invested heavily in the Congo/Zaire, Gabon,
Ghana, Libya, Liberia, and South Africa. The expansion of US investments in
African mining was mainly provoked by a worldwide shortage of minerals. The
American armament industry utilised virtually all available supplies during the
Second World War and the Korean War. American experts explored every cor-
ner of Africa for mineral wealth, and aid through the Marshall Plan went to sup-
port these initiatives. The International Bank for Reconstruction and Develop-
ment (IBRD or World Bank), set up to manage the Marshall Plan, administered
these activities.

Rebalancing the power between Europe and the US was a principal element un-
derpinning the new co-operation efforts with the developing world at this stage.
The increased influence of the US in the (ex-) colonies went hand in hand with
the introduction of a new lexicon – notably through the appearance of terms
such as ‘development’, ‘co-operation’ and ‘partnership’ – in order to set US inten-
tions apart from the despised colonial project. This new lexicon was reflected in
official European overseas policies, which was increasingly aligned to American
policy. In 1962 the objective of French overseas policy was re-formulated in the
following fashion:

 Mirjam van Reisen

Mold - [Link] 34 15-6-2007 14:37:23

 It is a matter of helping the people who need our support for their modern
development and, above all, a matter of our co-operation with those coun-
tries from Africa, Asia and Latin America who wish to accept France’s co-
operation (cited in Uribe 1984: 244-245).

The change in policy was particularly notable in that ‘co-operation’ was no longer
explicitly linked to the colonies. The driving force of France’s policy in the de-
veloping world was the desire of its leaders for the country to be a global power.
What had changed was that this objective was now seen in the context of Euro-
pean integration.

Yet the creation of the European co-operation programme with the African, Ca-
ribbean, and Pacific countries represented both a continuation of colonial policies
and practices, as well as a fundamental change. As Lanning and Mueller (1979:
105) commented:

Recent efforts to persuade African states to affiliate and associate them-

selves with the EEC may be seen partly as a continuation and reinforce-
ment of the colonial pattern of trade and dependency, and partly as a de-
fensive move against the incursions of the US into what had hitherto been
regarded as the exclusive preserves of France and Britain.

This strategy opened new avenues for France to pursue a broader global pres-
ence and increase its political power. Co-operation was, therefore, not limited
exclusively to the (ex)-colonies, but to the ‘ Third World’ in its entirety, now called
more optimistically ‘developing countries’.

One of the first political expressions of this new concept of co-operation with
countries outside the French sphere of influence – and the desire to move the
centre of gravity of French foreign policy to include new horizons in Africa, Asia,
and Latin America, was De Gaulle’s visit in 1964 to Mexico. De Gaulle himself
heralded the ‘beginning of a new orientation’:

A policy has been laid out (...) for the whole world to see. Yes! For the whole
world to see! Although this policy is French-Mexican, it is at the same time
worldwide. The fact that special links should be established between your
country, the living heart of Latin America, and my country, essential to Eu-
rope but also with a deep influence and activity in Africa and Asia, this is
a fact from which happy consequences could follow, which go well beyond
our own countries (cited in Uribe 1984: 248).

The Enlarged EU and the Developing World 

Mold - [Link] 35 15-6-2007 14:37:24

 De Gaulle insisted on policies that would ensure France’s independence from the
United States, and would be able to act as an independent player in the interna-
tional arena – using European integration to achieve this objective. In his view
the visit to Mexico was successful in making this point to the United States:

I have concluded, and everybody has reached the same conclusion, that the
international situation of our country is more brilliant, more secure than
ever before. We are a great nation (cited in Uribe 1984: 248).

Particularly in the context of the negotiation of Britain’s entry in the community,

Europe provided another route for the expansion of French relations overseas.
The collapse of negotiations with Great Britain following De Gaulle’s veto of
British membership in the Community in 1962 did not close the door for the
members of the British Commonwealth. In 1963, several months after the first
collapse of negotiations on British entry, the six adopted a declaration that con-
firmed that the EC was open to all requests by third countries which had an
economic structure comparable to that of the AAMS and who wished to join
the Yaoundé Convention or to form a different kind of association. According to
Harry Dyett (1998: 11) “this offer, the Community Declaration of Intent, was at
the same time a lever to prod Britain to become a part of Europe” and to come
to terms with the new international realities. This included both decolonisation,
leading to a diminishing influence of Britain over its former colonies, and a great-
er international role for an integrated European Community. Dyett concludes
that this “was an indication that the Community was ready to widen the scope of
its association with developing countries and give teeth to its development poli-
cies with or without Britain.” The Community Declaration of Intent made clear
that Europe did not wish, and saw no justification, for its policy to be based on
the ex-colonies of its member states.

The EEC’s increased power and emphasis on Africa was a direct challenge to
Britain, which was heavily dependent economically on cheap imports from its
(former) colonies. Under pressure, the British government announced in Novem-
ber 1966 that it would again explore the possibilities for British entry into the
Community. In 1969 an association agreement was signed between the Commu-
nity and three former British African colonies – Kenya, Tanzania, and Uganda
– called the Arusha Agreement. This was seen as a substantial improvement on
the Yaoundé Convention. Hence the relationship with the (ex-) colonies became
a key aspect of the process of European integration.

 Mirjam van Reisen

Mold - [Link] 36 15-6-2007 14:37:24

 4. Expanding the Focus of the EC towards the Mediterranean

In the early 1970s the Commission published the first policy documents on EC
aid justifying its exclusive regional focus on Africa while, at the same time, em-
phasizing the strength of the Community institutions as having no association
with the colonial era, and, therefore, being particularly suited to foster a globali-
sation of European aid relations. This apparent contradiction between exclusive
regionalism and globalism was built intrinsically into the Treaty of Rome, which
allowed for these parallel objectives by ensuring that the right to association was
not exclusive to former dependencies. The Treaty of Rome (Art. 238) established
the possibility of concluding an association agreement with a third country, union
of states, or an international organisation ‘embodying reciprocal rights and obli-
gations, joint actions and special procedures’ (Art. 238). This would allow former
colonies that had gained independence to maintain a close relationship with the
EC, and allowed the conclusion of special arrangements with third countries in
general. In the Treaty’s Declaration of Intent, emphasis was given to the wish to
achieve association with the Mediterranean countries. Initially this focussed on
the former French colonies of Morocco and Tunisia. The first Mediterranean
policy included all countries north and south of the Mediterranean, with the ex-
ception of Libya.

Article 238 could also be invoked for a range of future potential situations, includ-
ing accession of future members – limited to the not specifically defined term
‘European countries’. This article was agreed with the aim of accommodating
possible future enlargements, particularly with regard to Northern Mediterra-
nean countries, such as Greece, Spain, and Portugal, and the countries of Eastern
Europe. Negotiations for the association of Greece started as early as 1959 and
came into force in 1962. Turkey signed an association agreement with the EC in
1963. Morocco and Tunisia also approached the Community for an agreement in
1963 but nothing was signed until 1969. In 1970 controversial preferential trade
agreements were signed with the dictatorial Spanish regime as well as with Israel,
despite growing tension in the Middle East.

The policy towards the Mediterranean (including the Middle East) was strongly
reinforced by the outbreak of the oil crisis in 1973. In his 1975 annual address
to the European Parliament, the President of the Commission François-Xavier
Ortoli warned that

We are losing our independence ... For thirty years or so Europe was hap-
pily able to ignore the unpleasant fact that its energy and raw material re-

The Enlarged EU and the Developing World 

Mold - [Link] 37 15-6-2007 14:37:24

 sources were limited. There is no avoiding the truth today. ... The United
States has energy and raw material resources on a continental scale. It is
natural that it should want to exert all the influence of its increased domi-
nance in a difficult and unstable situation (Ortoli,1975: x).

Indeed, there is evidence that one of the factors in the increase in oil prices in the
early 1970s was an arrangement between some OPEC countries – Saudi Arabia in
particular – and US oil-related multinationals with the joint objectives of keep-
ing US control over oil reserves in the Middle East and ensuring that exploration
investments could be made profitable and reinvested in the US to avoid further
devaluation and erosion of the dollar.5 No matter what the exact details and mo-
tives were, the increase in oil prices resulting from the oil embargo on the coun-
tries that supported Israel in the 1973 Arab-Israeli war had particularly negative
effects for the European Community.

As a result the access to affordable fuel resources became an increasingly impor-

tant issue for the EC. One of the few options the EC had to secure energy imports
was to urgently intensify its relations with the southern Mediterranean and Arab
countries, with Algeria and Libya and to a lesser extent Egypt and Syria being
the most significant suppliers of petroleum and gas in the region. The increased
interest in the Middle East and Mediterranean gave rise to an expansion of nego-
tiations with the countries of the Mediterranean Basin and the Middle East.

In July 1974 a Euro-Arab dialogue was initiated in order to intensify the degree
of co-operation between Europe and the Arab world. The success of this process
was limited as the European side was unable or unwilling to politically deal with
issues that would go overtly against the position of the United States (and Israel),
while the Arab side was not ready to give ‘specific assurances’ with regards to the
supply of oil to European countries. In the December 1974 Paris Summit the EC’s
leaders agreed that the Mediterranean agreements were of vital importance. At
the same time the Commission initiated a reorganisation of the various bilateral
relations with countries of the Mediterranean into an overall ‘Global Mediter-
ranean Policy’. This increased activity resulted in the conclusion of agreements
and protocols on financial and technical co-operation with 17 Mediterranean
and Middle Eastern States, including loans and grants. The protocols related to
the association agreements with these countries were financed by resources from
the EC budget. In this way a first distinction was made between the sourcing of
Community assistance to developing countries through the EDF and through
the budget.

 Mirjam van Reisen

Mold - [Link] 38 15-6-2007 14:37:24

 5. The First Enlargement and the Increased Scope for
Development Aid

The enlargement of the European Community to include the United Kingdom,

Ireland, and Denmark represented a turning point for EC development policy.
How the areas of enlargement and development aid became intertwined is notice-
able from the division of portfolios within the Commission. While the first two
commissions included a Commissioner for Overseas Countries and Territories,
and the next one, for development aid, the fourth Commission (1970-1973) in-
corporated Commissioner Jean-François Deniau to take charge of the combined
portfolio for ‘enlargement and development aid’. It was not coincidental that the
four first Commissioners all had French nationality.

When the negotiations started on how the relationships between the colonies
and former colonies would be arranged in an enlarged community, Britain’s rela-
tions with these countries had already evolved substantially, and many were al-
ready independent, such as Iraq, Egypt, India, Ghana, and Tanzania. The British
Commonwealth was established in 1931 in order to include the ‘white’ dominions
of the British Empire into an arrangement that granted them more independence.
In 1949 the criteria for membership in the Commonwealth were changed so as to
allow ‘non-white’ developing countries – at that stage particularly India – to join
the Commonwealth. By the time Britain prepared its accession to the EEC, and
the discussions started on the association of the members of the Association of
Commonwealth States (ACWS) in 1971, the basis for negotiations was entirely
different from that of the provisions for association in the Treaty of Rome. The
period in which the negotiations on enlargement went hand in hand with the in-
crease in scope of European development aid is sometimes portrayed as the first
‘breakthrough’ by those advocating a ‘globalised aid approach’. Based on the reality
of special interests and ties with former colonies the Community was multilater-
alising these previously exclusive contacts – and so fundamentally changing the
basis of relations with the former colonies.6

The three options put on the table for the members of the ACWS – accession
to a successor agreement of the Yaoundé Convention, association through the
right of association under the Treaty of Rome, and a trade agreement under the
EC’s common commercial policy – were all based on the concept of ‘association’
with the EC, which to some had the connotation of a senior/junior relation-
ship. A number of the developing countries in Africa, the Caribbean, and Pacific
who were members of the British Commonwealth (the so-called ‘Commonwealth
associables’) saw in the three offers a ‘political arrangement, which would insti-

The Enlarged EU and the Developing World 

Mold - [Link] 39 15-6-2007 14:37:24

 tutionalise second-class membership’ based on an unequal relationship between
Europe and the South.7 Nigeria reacted strongly against the political implications
of Britain’s application for membership and its relations with the UK soured. The
Commonwealth associables were acutely aware that the association arrangements
under the Yaoundé Conventions were first and foremost political and intended
to maintain ‘privileged relationships’. The main problem identified by the Com-
monwealth associables was the limitation in establishing an independent trade
policy under the Yaoundé Convention, and this gave rise to ‘the accusation in
many quarters of political subservience on the part of the States in the Yaoundé
Convention, and more particularly the Francophone associated countries’ (Dyett
1998: 37). The Commonwealth independent states thought of this as offensive
and made repeated accusations of these being neo-colonialist policies by the Eu-
ropean Community.

The original group joined with the Commonwealth associables and managed to
negotiate on the basis of commonly agreed principles, of which the element of
non-reciprocity was the most important aspect. Non-reciprocity was considered
essential for developing countries to build and protect their nascent econom-
ic potential without being subject to rivalry from strong competitors. Despite
French opposition, the inclusion of the principle was achieved with the support
of Britain, Germany, and the Netherlands. This construed an important, and per-
haps even remarkable, advance, particularly since the Treaty of Rome was entirely
based on the concept of reciprocity. Nevertheless in some areas of agricultural
products, Commonwealth associables had to accept a decrease of access to the
EC market compared to the free market access they had previously enjoyed to the
British market.

Another major achievement was the introduction of a scheme for export stabiliza-
tion, STABEX. Although endowed with limited resources, this was recognition
of the need for instruments to compensate for demand and price fluctuations, in
order to create more economic stability in countries heavily dependent upon ex-
ports of basic commodities. Moreover, the inclusion of iron ore in STABEX was
seen as a major victory for the ACP countries. Finally, through specific protocols,
such as on sugar, rum, and bananas, the access that former British colonies had to
the UK was extended to the EC as a whole.

The timing of the negotiations, which paralleled the negotiations in the UN

General Assembly on a New International Economic Order (NIEO), coincided
with the quadrupling of oil prices by OPEC in 1973 and was advantageous to the
outcome of the Lomé I negotiations. The need for smoother co-operation with

 Mirjam van Reisen

Mold - [Link] 40 15-6-2007 14:37:24

 the developing countries in other sensitive areas benefited the agreement with
the ACP countries which was agreed at a higher price than perhaps originally
anticipated.8 In 1975 the first Lomé Convention was signed with 46 countries; 19
countries from Yaoundé II, 21 Commonwealth associables and eight other Afri-
can countries.

6. The European Development Fund and the Budget

The European Development Fund (EDF) agreed for the Lomé I Convention was
considerably more generous than its predecessors under Yaoundé.9 However if
inflation is taken into account the increase is a great deal less. The per capita al-
location increased between Yaoundé II and Lomé I and has continued to increase
in subsequent EDFs (table 1).10

Table 1 Value of EDF Financial Aid Allocation to Associated Countries,

in Million ECUs/Euros11
Rome Yaoundé Yaoundé Lomé Lomé Lomé Lomé Lomé Cotonou
Treaty I II I II III IV IVbis
1957 1963-9 1969-75 1975 1979 1984 1990- 1995- 2000-
1995 2000 2020
EDF1 EDF2 EDF3 EDF4 EDF5 EDF6 EDF7 EDF8 EDF9

Year 1957 1963 1969 1975 1980 1985 1990 1995 2000

EDF 569 730 887 3,053 4,207 7,882 11,583 13,151 14,300

% ACP - 18 18 46 58 65 68 70 77
countries

% EU - 6 6 9 9 10 12 15 15
countries

EDF/per capita 10.5 9.7 10.5 12.3 13.5 17.9 21.9 21.3 20.7
current prices

In 1979 the European Parliament reinforced efforts to strengthen a global ap-

proach towards Community aid when it again requested that the European De-
velopment Fund be integrated into the Community Budget. This coincided with
the signing of the second Lomé Convention between the Community and 56 ACP
states. The Commission supported the Parliament in this effort but the Council

The Enlarged EU and the Developing World 

Mold - [Link] 41 15-6-2007 14:37:24

 did not approve it and therefore the distinction between co-operation through
the EDF and the budget remained.

The first enlargement with the UK, Ireland, and Denmark initiated a period not
only of increased co-operation with associated countries but also with non-as-
sociated countries. For the EC several former British colonies (in particular those
in Asia) were unsuited to join the successor of the Yaoundé Convention as fears
were raised that they would seriously compete with domestic agricultural and in-
dustrial European sectors, as well as in textile and clothing. Hence it became clear
that, in order to adopt a foreign policy that was more global in scope, additional
instruments were necessary, primarily focused on trade and agriculture, the two
principal domains of Community policy. Even though a small budget line for de-
velopment co-operation was created in 1974, the non-associated countries in Asia
and Latin America did not yet have a specific place in European development pol-
icy. In April and July 1974 the Development Council adopted two resolutions on
technical and financial aid with non-associated countries following Commission
proposals. Moreover, in 1974 trade co-operation agreements with India, Uruguay,
and Brazil were concluded. In 1976 a budget line for extending financial aid to the
non-associated countries from Asia and Latin America (ALA) was included in
the budget. But the resources of this budget line remained limited in scope.

Previously some arrangements had been made through the budget for develop-
ment aid. This was in the area of food aid, which was directly funded from the
European Agricultural Guidance and Guarantee Fund (EAGGF). The food aid
programme was initially established as an instrument to dispose of the massive
overproduction resulting from the progress in agricultural production technol-
ogy and the unrestricted guarantee of prices under the Common Agricultural
Policy (CAP), which were set higher than world market prices as a subsidy to
the farmers. The food aid programme was not restricted to particular countries,
although there was no food aid to Eastern Europe. The largest recipients of food
aid (in cereals) were Bangladesh followed by Pakistan. The food aid programme
also included emergency food aid. Alongside these programmes the EC initiated
a Generalised System of Preferences (GSP) in 1971. This was an instrument that
provided a global application of preferential market access for imports from the
associated countries. While the measure was intended to move forward from a
restrictive regional Euro-African development approach, the proliferation of in-
struments granting preferential treatment quickly eroded their value to the part-
ner countries.

 Mirjam van Reisen

Mold - [Link] 42 15-6-2007 14:37:24

 7. Towards a New Relationship with the Third World

The oil crisis forced the EC to look again at its relationship with the developing
countries. The Commission now recognised that the EC’s ability to achieve a
dynamic economic performance depended at least in part upon the Community’s
ability to establish a new relationship with the developing world:

Europe, for its part, must, even more than other industrial areas, remain
in a position to import energy and raw materials in order to keep up its
expansion. It therefore needs to export more than in the past, with a dif-
ferent market pattern giving more prominence to new emerging markets
(Ortoli, 1975: xx).

Ortoli stressed the ‘real interdependence between them and the countries of the
Third World’, and acknowledged the fact that EC member states, more than oth-
er industrialised countries, were dependent for ‘both their supplies and markets
upon the existence of a favourable climate in international economic relations.’ In
this context, the 1970s marked ‘a breakthrough from the development aid era to
that of co-operation in the true sense of the term’ (Ortoli, 1975: xxi). In a series
of policy papers the Commission addressed this question, aiming to establish a
three-sided arrangement between the developing countries, which would sup-
ply energy, raw materials, and newly emerging markets for Europe’s exports. The
Community’s ability to achieve such a trilateral relationship would determine its
capacity to act as an independent player in the international arena.

During the 1970s European development policy took on an increasingly global

perspective. As observed above, in the aftermath of the oil crisis it was recognized
more than ever that relations with developing countries would be an essential
part of any future European economic strategy. Among the ACP countries, Ni-
geria became an important exporter of crude oil to Europe. At the same time,
the historic element of Europe’s relations with Asia, Africa, and America was
accepted as an essential part of its policy. Finally, solidarity with the world’s im-
poverished people was now introduced as an objective in itself, bearing in mind
the concept that the Community ‘stands for democracy, inspired by principles of
fairness and brotherhood’ (Ortoli, 1975: xxi).

The dividing line between the contrasting views on European co-operation from
either a regional Euro-African or global perspective, was blurred during these
years. Europe’s role as a global player was increasingly defined on the basis of
its ability to assert a strong regional partnership with Africa, and its capacity to

The Enlarged EU and the Developing World 

Mold - [Link] 43 15-6-2007 14:37:25

 be partner and player outside the regional arena. The signing of the agreements
with the Mediterranean countries and the successful negotiations on Lomé I now
ensured that the whole of the African continent was embraced. These achieve-
ments were used to send a message to the international community, in particular
to the US. According to the then Commissioner Cheysson, the Lomé Convention
proved at once the strength and quality of European-African relations, ‘surpass-
ing the US-Latin American connection’, as another way of saying that the Euro-
pean Community had not lost its ambition, or its potential, to be a global player
alongside the United States and the Soviet Union.

At the same time, there was an increasing awareness that some commonality and
definition was required between the efforts of the Community member states
and the Commission’s activities in development co-operation. In 1973 the Council
adopted various conclusions and resolutions on the harmonisation of national
and community policies. In general terms the approach consisted of putting into
practice close coordination between member states and the Community. At the
same time, member states jointly set themselves the objective of increasing offi-
cial development assistance and insulating their aid flows as far as possible from
any budgetary and balance of payments difficulties. For the first time members
confirmed or expressed their desire to attain as soon as possible the objective of
an annual ODA flow corresponding with 0.7 percent of GNP, an objective set
by the UN for the second development decade. Member states also agreed to
exchange information between themselves and the Community on the geographic
distribution of aid.

8. Second Enlargement: Further Expansion of Community Aid

In 1979 oil prices reached a new peak. The precarious economic situation in cer-
tain countries and the tight budgetary situation virtually ruled out any new poli-
cies funded from the general budget. To put the brake on inflation and reduce
their budget deficits governments pursued restrictive financial policies at home,
which had a noticeable effect on the Community, which was ‘fast approaching the
financial limit of its activity’ (European Commission 1981: 21). As a result of the
war between Iran and Iraq, which followed in 1980, oil supplies dried up even
further. Moreover, the Strait of Hormuz, the artery through which 48 percent of
EU oil flowed, was being threatened. These developments gave new impetus to
the Communities’ relations with Turkey and relations with the countries of the
Mediterranean and the Middle East. Moreover, European member states also
began to explore the unused potential of energy reserves in the Soviet Union.

 Mirjam van Reisen

Mold - [Link] 44 15-6-2007 14:37:25

 At this stage, Greece, Portugal, and Spain were all recipients of the Community
development programme after the military regimes had given way to democratic
governments in 1974 and 1975. In 1979 a treaty was signed regarding the accession
of Greece to the EEC. Negotiations restarted with Spain on its accession in the
same year and the Council speeded up the implementation of financial protocols
with Portugal. Additionally Portugal and Spain received ‘pre-accession aid’ from
1981 onwards. In the context of the Iberian accession negotiations, the Commis-
sion made proposals in 1984 to substantially increase the budgets for assistance
to non-associated countries. Aid to these countries was brought under the bud-
get heading for development in the 1985 budget. New proposals for increases in
these budget lines were put forward despite a relatively low utilisation of existing
resources under these budget headings. These included new aid resources to the
Southern Mediterranean countries, motivated by the need to off-set the nega-
tive impact of the Mediterranean enlargement on the Southern Mediterranean.
This resulted in a renegotiation of existing trade and co-operation agreements
between the Southern Mediterranean and the EC, taking into account the export
losses of these countries due to Spain’s and Portugal’s direct access to the com-
mon European market, in many products that would compete with those of the
Southern Mediterranean (Commission 1985: 58).

The accession negotiations with Spain and Portugal also extended the reach of
the EC’s external relations with Latin America. In 1985 the Accession Treaty with
Spain and Portugal was signed. This had a provision, annexed to the treaty, that
Community aid to Latin America would be increased. This was deemed necessary
because the aid programme to Latin America had remained fairly limited until
then. In 1985 the budget of 268 million ECU, less overhead for aid to non-associ-
ated developing countries, was divided up on a geographical basis as follows: 75
percent for Asia, 20 percent for Latin America and 5 percent for non-associated
African countries (Commission 1985: 328). This was agreed despite the fact that
in committee the debate had been very animated with several Spanish members
of the European Parliament (MEPs) expressing their wish for a 50/50 distribu-
tion, a position that Spain advocated at the same time in the European Council.

In 1988 the European Parliament insisted on increasing resources for aid pro-
grammes. The budget article concerning aid for developing countries in Latin
America and Asia was split into two separate headings, 65 percent for Asia and
35 percent for Latin America. Following a debate in the European Parliament on
aid to Asia and Latin America, the Parliament called again for more appropria-
tions in the 1989 budget for ‘economic assistance’. The Parliament also stated that
Asia and Latin America should be differentiated and that a separate co-operation

The Enlarged EU and the Developing World 

Mold - [Link] 45 15-6-2007 14:37:25

 scheme should be set up for each of the two geographical areas. In this resolution
the European Parliament also stated that financial and technical co-operation
should be strictly poverty-oriented so that it would be the poorest countries and
the poorest sectors of the population that would benefit most.

To sum up, in the 1980s three major features can be distinguished as main devel-
opments in the EC external co-operation programme.
– First, the proportion of aid through the budget increased and there was a pro-
liferation in the number of budget lines, defined on the basis of either thematic
or regional parameters.
– Secondly, the available resources, through the budget, for Latin America, and
the Mediterranean increased exponentially, as a consequence of the enlarge-
ment of the Community towards the South (Greece, Portugal, and Spain).
– Thirdly, external co-operation became a major area in negotiations on the bud-
get between the three Community institutions: the Parliament, the Council,
and the European Commission.

9. Beyond 1989: Emphasis on the Near Abroad

The events in 1989 leading up to the fall of the Berlin Wall had an energising
effect on the EC in almost every aspect of its existence. The visionary editor of
Agence Europe, Emanuele Gazzo, noted in April 1990:

The extraordinary upheavals that have taken place in Eastern Europe (and
to the East of Europe) have deeply influenced world politics... The events in
question coincided with a particularly active and sensitive phase of the EC’s
evolution... But the pressure of events – in other words, the unavoidable
imperative of necessity – combined with the pressure of public opinion...
demands an acceleration of movement. When history accelerates, stopping
means going backwards... The acceleration is facilitated by the existence
of favourable political, economic and psychological conditions, but this
might rapidly change and Europe might then miss an historic opportunity.
(Agence Europe: 5234)

In 1992 the Maastricht Treaty translated these prophetic words into the establish-
ment of the EU. This treaty, and subsequent treaties, would dramatically increase
the scope for European integration. It established a common foreign, security and
defense policy, the European Monetary Union, and a further integration of many
policy areas, including development co-operation.

 Mirjam van Reisen

Mold - [Link] 46 15-6-2007 14:37:25

 10. The Legal Basis for the EU’s Development Aid Policy

The Maastricht Treaty (1992) provided a legal basis for EU development co-oper-
ation. As a result development co-operation is clearly and fully integrated into the
acquis communautaire (the legal provisions already negotiated in earlier European
treaties). The responsibility in this policy area is shared with the member states.
In order to further define Community responsibilities, the Maastricht (1992) and
Amsterdam Treaties (1997) set out the principles of the four C’s:
– Coherence between policies that have an impact on third countries and the
objectives of development co-operation;
– Complementarity between member states and Commission activities in devel-
opment;
– Co-ordination of actions between member states and the Commission;
– Consistency between the policies of the Common European Security and De-
fence Policy (ESDP) and development co-operation.

The objectives set out in the Maastricht Treaty were: (i) promoting social and
sustainable development; (ii) the campaign against poverty; and (iii) the inte-
gration of developing countries into the world economy. In 2000 the European
Commission presented a policy paper, and in a subsequent joint statement by
the Council and the Commission the overarching objective was specified as ‘the
reduction, and ultimate eradication of poverty’. The Convention on the Future
of Europe, a new body, which negotiated a Draft Constitutional Treaty during
2002-2003, included the objective of the ‘eradication of poverty’ as the overarch-
ing objective within a separate chapter for development co-operation and as one
of the objectives of the EU’s external policies.

For the first time, the Maastricht Treaty gave the EU responsibility for the Com-
mon European Security and Defence Policy (ESDP) – a responsibility that was es-
tablished at an intergovernmental level in the so-called ‘second pillar’ of the Treaty.
Whereas development co-operation was the responsibility of the European Com-
munity (‘pillar I’) and could be carried out by the European Commission, the ESDP
remained within the scope of the European Council, the assembly of EU Member
States (‘pillar II’). In later treaty updates the Common Foreign Defence Policy
(CFDP) was included – and extended the scope of the EU to military matters. In
both foreign and defence policy, the entry point for greater EU common action has
been in areas closely linked to existing development co-operation and emergency
action. The reason for this has been both the availability of financial resources and
the mandate, as well as public support for action in these areas. However, this has
also carried the danger that distinctions between the policy areas were blurred.

The Enlarged EU and the Developing World 

Mold - [Link] 47 15-6-2007 14:37:25

 This blurring has been compounded by a new legal heading that was created in
the Nice Treaty, signed in February 2001, which entered into force on February 1,
2003. The new heading in the treaty was called: Co-operation with Third Coun-
tries (Art. 181a, TEC). The purpose of this chapter was aimed at ensuring a legal
base for assistance with countries from the former Warsaw Pact (de Witte, 2001:
127). The Portuguese presidency in 2000 had acknowledged that a separate legal
treaty would be justified, given that the 23 regulations and decisions on pre-acces-
sion aid and macro-financial assistance to former Eastern Bloc countries adopted
since 1993 were made on a dubious legal basis.12 The introduction of this chapter
provoked an extensive debate as to its applicability – even though there is no legal
difference of opinion on its scope. An article published by Bernd Martenczuk,
member of the legal services of the European Commission and therefore a legal
expert from the ‘inside’, argued unequivocally that ‘Article 181a (EC) does not ap-
ply to co-operation with developing countries’ (2002: 406).13

In the EU Constitutional Treaty, signed in 2004, the confusion was remedied

and the provisions between developing countries and non-developing countries
were distinctly separated. Case law and a legal opinion of the Council have fur-
ther contributed to a clear interpretation of Article 181a with a view to main-
taining a clear distinction between the two legal provisions and recognising the
specific goals and objectives of the EU’s development policy.14 The Constitu-
tional Treaty further provides a legal basis for the EU’s humanitarian assistance
aimed at relief operations in natural and man-made disasters. This legal basis is
given in a separate Treaty article and its clarity is legally uncontested. An opin-
ion by the Council Legal Services (2005) 15 unequivocally stated that: ‘Article
181a empowers the Community, within its sphere of competence, to adopt “eco-
nomic, financial and technical co-operation measures” with third (non-develop-
ing) countries.’ A European Parliament legal opinion (2005) came to a similar
conclusion.

The clarification of the legal basis for development co-operation was subject to
prolonged negotiations, in which the European Parliament and the European
Convention played a critical role. The reason for the prolonged confusion was the
interest the Commission had in a broader definition of its mandate in external
relations, and an extension of the use of the Community mandate in development
policy (and its resources) for a wider mandate in external relations. The new rela-
tions with the former Eastern Bloc countries were used as leverage in an attempt
to widen the mandate based on the strong foundation provided in EU Develop-
ment Co-operation, as is explained below.

 Mirjam van Reisen

Mold - [Link] 48 15-6-2007 14:37:25

 While the agreements defining the areas of co-operation with third countries in
the treaties have been significant, the difficulties of the EU moving forward have
also become visible, particularly with respect to the Common Foreign, Security
and Defence Policy (CFSDP). The European Commission was not given a role
in the implementation of the CFSDP. Soetendorp (1994: 104) highlighted the
following concerns:

The outcome of the year-long negotiations on the treaty of Maastricht

raises therefore the question as to whether the willingness of the mem-
ber states to act in international affairs as a single foreign policy actor has
reached its limits. The willingness to share national sovereignty is an im-
minent condition for the capacity of the EC to effectively manage common
foreign policies.

Several attempts were undertaken to clarify the many open ends left by the
Maastricht Treaty. Both in the Treaty of Amsterdam and in the Treaty of Nice,
member states failed to introduce a reform of the administrative and institutional
structures that might match the political ambitions expressed in the treaties. In
the Amsterdam treaty (1997) the principle was introduced that development co-
operation should be consistent with CFSDP, a principle that has since gained
increasingly more ground. It was agreed that the general secretary of the Council
would also become the high representative of CFSDP. In 1999 Javier Solana was
appointed to this post. The attempts to increase the profile of the CFSDP with-
out a clear programme to support activities in this area have affected EC develop-
ment co-operation policy which is often used as a substitute.

Within this context an understanding of the relations between the different com-
ponents of the EU’s external relations is crucial. The key policy principles that
define the relationship between the external policy areas are the principle of ‘co-
herence’ (Art. 178 TEC) and the principle of ‘consistency’ (Art. 3 TEC), which in
the context of the EC treaties have a legal significance. The principle of coherence
sets out that those EU policies with an impact on developing countries should be
‘coherent’ with development objectives. Its meaning is described in Council reso-
lution 8631 on coherence adopted in 1997 (van Reisen, 2000: 40-41), a Parliament
resolution of 2000, and a Commission working document on the same subject
in 2001. It should be noted that this principle identifies a hierarchical relation in
which development objectives should be given serious consideration in any other
EU interventions affecting the poorest countries, including trade, agriculture,
and migration policy. The principle of ‘consistency’ is defined as the need for the
various components of the EU’s external policies, including development co-op-

The Enlarged EU and the Developing World 

Mold - [Link] 49 15-6-2007 14:37:25

 eration, to broadly support overall policy objectives towards third countries. The
different components of the EU’s external policy are all equal and one policy field
is not considered superior to any other. The Draft Constitutional Treaty also
respects the separation of these two principles.

Yet despite the clear distinction between coherence and consistency in the trea-
ties, the meaning and use of these two concepts is often confused. There has
been a trend to define the framework only in terms of ‘consistency’ leaving no
independent room for the notion of ‘coherence’. For instance, the Convention
on the Future of Europe, which prepared the Draft Constitutional Treaty, ini-
tially did not specifically contain the concept of ‘coherence’ and proposals were
introduced to make EU development co-operation subordinate to foreign, secu-
rity, and defence policy objectives. Ultimately the convention accepted that the
principle of ‘coherence’ was distinct from ‘consistency’, and that this was part of
the acquis communautaire, and should be included into the Draft Constitutional
Treaty. The Draft Constitutional Treaty includes the notion that all EU policies
affecting developing countries should take the development objectives into ac-
count (‘coherence’).

While the treaty is clear on the relationship between the different components of
the EU’s policies, since 9/11 the Council has sought to give a higher priority to the
EU’s security policy and some parts of the EU have advocated for a stronger de-
fence policy for the EU, all other components of the EU’s external policies includ-
ing development co-operation being subordinate to the EU security and defence
policy. However, at present the EU’s development policy is clearly included as an
EU competence in all the treaties, whereas the EU’s Common Foreign, Security
and Defence Policy remains part of the intergovernmental arrangement provided
in the Maastricht Treaty. Development policy remains the strongest area of the
EU’s external policy in terms of competence, resource allocation, and administra-
tive capacity for implementation.

11. Towards Eastward Enlargement: Greater Emphasis on the

‘Near Abroad’

While the formal basis for development co-operation became more poverty-focused,
the EU’s development co-operation was steered away from the poorest countries
as a consequence of the change in geo-strategic priorities from 1989 onwards. The
fall of the Berlin Wall was followed by a rapid shift of European attention towards
the east. Aid allocated to Eastern European countries increased exponentially, as

 Mirjam van Reisen

Mold - [Link] 50 15-6-2007 14:37:25

 large aid packages were agreed (initially for Poland and Hungary) and were swiftly
opened up for other Central European countries through the PHARE programme.
Following the collapse of the Soviet Union in 1991 equally large aid packages were
arranged for the independent countries of the former Soviet Union.

While in subsequent years a great deal more attention and aid was given to the
countries of the former Eastern Bloc, EC aid to Southern countries and re-
gions did not diminish in absolute terms. In 1989 a comprehensive new ten-year
agreement with the ACP countries was signed. With Spain as the ‘bridge’ or
self-declared advocate for Latin America and the Mediterranean, France for the
ACP, Italy for the Southern Eastern European countries and former Yugoslavia
and Germany for Eastern Europe, on the whole the political reality of EU’s
membership base ensured that a certain balance in the EU aid programme’s
global reach remained. All the same, the result of the increased emphasis on
neighbouring foreign countries (the so-called ‘near abroad’) has been very no-
ticeable. All of the top ten recipient countries of EC aid in 1999 were neighbour-
ing countries. 16

If pre-accession aid is excluded and only ODA is taken into account a clear trend
emerges between 1989 and 2004. Whereas in 1989 five of the poorest countries
were top recipients of EU aid, in 2000 the five top recipients were all among the
near abroad in the Mediterranean and Eastern European region and this trend
persisted in 2003 and 2004. This trend was significantly different from all DAC
top five priority countries, which in 2003 and 2004 were Iraq, DRC, China, India,
and Indonesia. The EU’s tendency to favour the near abroad results in a distribu-
tion of disbursements per income group that is increasingly unreflective of the
incidence of poverty in recipient countries. While in 1990 the share of EC aid
to low-income developing countries was 70 percent, in 2001 this had declined 38
percent (BOND, 2002).

Thus it is clear that the neighbouring ‘ring’ around the Union has gained in-
creasing importance. The new high profile issues on the political agenda, such
as security and migration, have further contributed to this trend. 17 The 2004
enlargement did not change this preoccupation of the EU with its neighbours,
particularly because the new member states had an interest in playing a role
as a bridge to the region to their east, which had thus far lacked the support
of the EU. The focus on the ‘new abroad’ is currently being formalised in the
European Neighbourhood Policy (ENP). This will be implemented through
the European Neighbourhood and Partnership Instrument (ENPI), which will
replace the current TACIS and MEDA programmes from 2007 onwards, and

The Enlarged EU and the Developing World 

Mold - [Link] 51 15-6-2007 14:37:26

 will draw on “substantially increased funds” (Reisen 2005: 20-21). The ENPI
will govern relations with the EU neighbours. 18 The majority of these are also
classified as developing countries under the OECD Development Assistance
Committee (DAC). Aid to these countries can, therefore, be classified as ODA.
Furthermore, candidate countries negotiating potential accession with the EU
will continue to benefit from assistance to give support to required reforms.
From 2007 this will be administered by the new Instrument for Pre-accession
Assistance. 19

It is increasingly clear that the weight of the new member states in the EU Coun-
cil is influencing the EU development policy, but their lack of capacity in this
area forms a constraint. The problem of the limited public interest in develop-
ment aid in the accession countries as well as the need for an active political
involvement of advocates for North-South co-operation in new member states
urgently needs to be addressed. A so-called ‘Presidency Fund’ supported by the
Irish Government as a gesture to new member states following their entry during
the Irish Presidency was set up and is managed by the European NGO network
Eurostep.20 It has the aim to enhance the capacity of civil society in new member
states to strengthen European development policy. Subsequent EU presidencies
are contributing to the fund.

12. Reform of Institutional Arrangements Affecting the EU’s

Development Policy

Following the introduction of the European Monetary Union and the eastward
enlargement, political and public pressure has mounted to demonstrate that the
EU is a global player, and can act independently from the United States. How-
ever, the incapacity of the EU to translate these aspirations in legal, institutional,
and financial terms that would allow a stronger CFSDP has created increasing
pressure on European development co-operation for resources and institutional
capacity to be used in support of common external actions, other than develop-
ment purposes.

The first change – a technical institutional change which would have major po-
litical implications – was the setting-up of the Common Service for External
Relations (SCR or Service Commune Relations Exterieure) as a shared unit for
the various Directorates General (DGs) dealing with external relations. This
was a first step to divorce development policy (remaining in DG-Development,
then called DG8) from the implementation of the development programmes. In

 Mirjam van Reisen

Mold - [Link] 52 15-6-2007 14:37:26

 2000 Javier Solana was appointed Secretary General of the Council and high
representative for ESDP. The appointment of Solana by the Council, intended to
strengthen EU unity within in the context of the ESDP, provided a direct chal-
lenge to the external mandate of the European Commission. How the Commis-
sion could retain its influence in external relations was one of the most pressing
questions that the Prodi Commission had to address when it was designating
posts and portfolios in 1999. A key question in this context was the division of
responsibilities between external relations on the one hand and development co-
operation on the other hand.

The Prodi Commission renamed the Directorates General, and DG8 became
DG-Development. Prodi also decided to award the Commissioner for Devel-
opment, Poul Nielson, with the portfolio for all developing countries, including
ACP, Asia, Latin America, Southern Africa, and the Mediterranean. However
this was mostly a paper portfolio, given that the policy for countries in Asia,
Latin American, and the Mediterranean came under the responsibility of the Di-
rectorate General for External Relations under the British Commissioner Chris
Patten. Furthermore, the relations with Central and Eastern Europe were located
in a new Directorate General for Enlargement. The earlier established SCR was
moved within the Directorate General for External Relations, under the respon-
sibility of the Commissioner for External Relations. Additionally trade policy
with ACP countries was removed from DG-Development and went to a new
DG dealing with all regions. The DG for External Relations (DG-RELEX) now
managed the implementation of all aid to developing countries. DG-RELEX was
also administratively in charge of programming and policy to the Mediterranean,
Latin American, and Asian regions. DG-Development was no longer in charge of
ACP trade policies (these had moved to DG-Trade). This was one of the major
aspects of its programme with important significance on EU policies towards
LDCs. Additionally DG-Development was not in charge of the policy and pro-
gramming of development programmes in Asian, Latin American, and Mediter-
ranean countries. Lastly DG-Development had no administrative influence over
the implementation of any of the development programmes. Nevertheless, on
paper at least, the development Commissioner’s political responsibility covered
all of the Commission’s development programmes.

In reality the mismatch between portfolios and responsibilities for the Director-
ates General was setting the scene for a potential disaster. The Commissioner for
development was politically responsible for development co-operation but had
no administrative structures to ensure the implementation of his policies. The
Commissioner for external relations, politically in charge of external relations,

The Enlarged EU and the Developing World 

Mold - [Link] 53 15-6-2007 14:37:26

 had the actual responsibility for the implementation of all development policies.
The Commissioner for development, Poul Nielson, did not choose to publicly
identify the problems that would arise from this structure. In his response to
questions asked in the European Parliament he stated:

The new Commission structure for external relations will give the Devel-
opment Commissioner the lead role for development policy and develop-
ment co-operation in all third countries. The Development portfolio will
combine responsibility for development and humanitarian aid and will give
greater coherence to the Commission’s activities in this field ... There will
be a single development policy towards all developing countries (European
Parliament 1999).

The Commissioner was proven wrong. The Common Service for External Rela-
tions was replaced by a new organisation, which was given the name EuropeAid.
A board of Commissioners, of which Commissioner for External Relations Chris
Patten was the chair, supervised this new structure. The Commissioner for devel-
opment was left with the post of director general of EuropeAid, and was stripped
of all responsibilities for any policy-setting towards regions other than the ACP.
While the programming towards the ACP countries was being decentralised to
European delegations in developing countries, Nielson’s Directorate General was
left with few staff, even fewer tasks, and arguably became an empty shell that
merely upheld the rhetoric that development co-operation still existed as a sepa-
rate independent policy area in the European Commission. Just before leaving of-
fice a candid Commissioner Nielson acknowledged to the European Parliament:
‘ The CEO for EuropeAid was a joke. It was a bad joke’ (2004).

The question remains how this Commissioner lost all powers to implement de-
velopment policies. The answer lies in the heavy pressure exercised to main-
stream the EU’s development policy into external relations, in a response to
the competition created between the European Commission and the Council in
external relations, following the creation of a post of high representative of the
EU Common Foreign and Security Policy in the Council. While the high repre-
sentative, Javier Solana, had the advantage of power – being close to the CSFP
decision-making process in the Council – the Commission potentially had the
advantage of resources. These resources for external actions were primarily giv-
en in the budget lines for development co-operation. It is these resources that
the Commission sought to give itself greater influence in the broader external
area.

 Mirjam van Reisen

Mold - [Link] 54 15-6-2007 14:37:26

 Meanwhile, a reorganisation of the Council in 2002 followed the trend to bring
development aid closer to external policy objectives when the Development
Council was abolished. This body had existed independently since the creation of
the EU. The public justification for this change was given as the need to ‘enhance
the efficiency of the institution on the eve of an unprecedented increase in the
number of Member States of the Union’, as stated in the Presidency Conclusions
of June 2002, somehow linking the abolition of the Council to the EU’s enlarge-
ment. The link between the two events was not further explained.

During the deliberations on the abolition of the Development Council (a decision

never formally put on the agenda but taken over lunch), several member states
expressed concerns over the excessive remit of the new Council and asked ques-
tions about the effectiveness of such a merger. According to the terms of the Seville
decision, each government would be represented at the different meetings of the
General Affairs and External Relations Council by the minister or state secretary
of its choice. Development ministers are seriously disempowered by this decision.
With little opportunity to meet at the EU level, it has been reported that develop-
ment ministers of member states are increasingly hesitant to attend EU Councils
– given the limited scope for tangible impact on policy decisions. There have also
been indications that this trend would have serious repercussions on the political
level of representation given by member states in the area of development co-oper-
ation. It is hardly surprising therefore that the development ministers in member
states are increasingly critical of the EU’s development programmes and do little
to defend the development policy of the EU as a whole, despite the sizeable extent
of development resources allocated through the European Community.

A new Commission, led by President José Manuel Barroso, took office in 2004,
making the institutional set up for development even worse. The board of Eu-
ropeAid, jointly established to represent the external DGs, was abolished and
the agency came directly under the Directorate General for External Relations
with Commissioner Benita Ferrero-Waldner, now in charge of policy towards
Asia, Latin America, and neighbouring countries as well as implementation for
all developing countries. The new Commissioner for development co-operation,
Louis Michel, no longer had a say in EuropeAid and is now only in charge of the
Directorate General for Development Co-operation and ECHO, the service for
humanitarian assistance. Ferrero-Waldner proclaimed her mission immediately
after her inauguration with a public statement at the unveiling of a poster cam-
paign promoting EuropeAid across Europe, pointedly called: ‘Would you leave it
to chance? We don’t.’21

The Enlarged EU and the Developing World 

Mold - [Link] 55 15-6-2007 14:37:26

 Meanwhile the inter-institutional competition between the Commission and the
Council remains, particularly with regard to negotiations on an EU External Ac-
tion Service (EAS). Intended as a new institution on external relations jointly
managed by the Council and the Commission, this was proposed and agreed
without much deliberation at the final negotiations of the Constitutional Treaty.
Even though the Draft Constitutional Treaty has not been ratified, negotiations
on the set up of the EAS have begun – as part of a legal provision provided in the
draft treaty allowing for negotiations to begin following the signing of the treaty
and irrespective of its ratification. Its outcome will determine the future role of
the Commission for external policy.

The reforms in both the Council and Commission are being pursued as technical
changes, designed to increase the efficiency and effectiveness of the institutions –
particularly in the face of enlargement. As internal reforms requiring no changes
to the treaties of the EU, they are seen as internal decisions to two institutions.
However, these reforms will inevitably have wide-ranging political implications
for the role of development and humanitarian policy within the EU.

13. The Contradictory Trends in the EU’s Policies

While the institutional and administrative set up was moving to eradicate de-
velopment co-operation from the Commission’s organigramme, the Cotonou
Agreement (2000) and policy papers professed a greater commitment to poverty
eradication. Cotonou established poverty eradication clearly as the principal ob-
jective and assigned a greater role to the participation of civil society as well as
reinforcing the political dimension of relations between the ACP countries and
the EU. It also included a process for renegotiation of the framework for trade
relations with the EU – to be negotiated before 2008.

The first fully-fledged policy on development co-operation for all developing

countries was adopted by the three EU institutions in 2000, which stated that:
‘the main objective of Community development policy must be to reduce and,
eventually, to eradicate poverty.’ The Communication also identified that the ‘pol-
icy frameworks in different regions’ should be ‘aligned’. At the same time, the rival
idea, that EU development policy should be focused on and limited to Africa,
seemed to gain ground in the allocation of money and implementation struc-
tures. This was expressed during a debate in 2003, when the Commission stated
in the Budget Committee that development policy was no longer a basis for its
activities in Asia and Latin America, although MEPs did not accept that view. In

 Mirjam van Reisen

Mold - [Link] 56 15-6-2007 14:37:26

 that year, the Commission changed the budget nomenclature and removed Asian,
Latin American, and Mediterranean countries from the chapter on development
co-operation and re-introduced these under a chapter of external relations. This
is consistent with the way development has been communicated by the Commis-
sion, which, for several years, has focused on the website of the DG for devel-
opment exclusively on ACP countries. Additionally, during the preparations for
the review of country strategy papers DG-RELEX has refused to accept general
guidelines for all developing countries, and stated that it would have separate
guidelines for Asian, Latin American, and Mediterranean countries (Eurostep:
2003). All this suggests that the tension between exclusive regionalism (focused
on Africa) and EU multilateralism (focused on a global approach to all develop-
ing countries) is still very much alive within the EU.

In the meantime, advocating the need for a global approach to developing coun-
tries, the Commission has proposed that the (still separate) funds for ACP coun-
tries in the European Development Fund are included in the Community Budget.
If this were to be the case, resources for the ACP countries would no longer be
‘ring-fenced’ in the future. A report offering justifications to the French govern-
ment for going along with this proposal stated:

In today’s European Union, it is ... the integration of the EDF [resources

allocated for ACP countries] into the community budget which will make
it possible to assign a more central role to co-operation with ACP countries
with regard to political choices (Bocquet and Viallon, 2003: 29).

What explains the apparent contradictions in the proposals by the Commission?

An internal explanatory note from the Commission prominently features the
concept of ‘flexibility’ – arguing that budgeting of resources for the ACP would
allow greater flexibility over the funds. Flexibility in this context appears to mean
that development resources can be more easily used for non-development areas
such as security, defence, and migration. While the EU is clearly committed to the
Millennium Development Goals as the main international framework for devel-
opment policy, seen in the context of the Paris Declaration on the harmonisation
of aid, ‘flexibility’ has become the key objective – almost to the extent that it has
become an end in itself.

The principle of flexibility served as the rationale to prevent a definition of pov-

erty objectives in the development co-operation budget lines (Reisen, 2002). This
was also the major rationale for a renegotiation of the legal instrument that gov-
erned EU co-operation with Asia and Latin America. In 2002, the Commission

The Enlarged EU and the Developing World 

Mold - [Link] 57 15-6-2007 14:37:26

 proposed a very loose legal instrument, justifying this on the grounds that in
that way Asia and Latin America could be dealt with under one set of guidelines.
Spanish opposition in the European Parliament focused on the need for specific-
ity in regional co-operation – as it had first demanded in 1988. Commissioner
Patten, in charge of negotiations on the legal instrument, threatened to withdraw
the proposal, an unprecedented way of exerting pressure, ultimately leading to
the early death of the proposal altogether.

The Commission also paved the way for further flexibility in the EU’s devel-
opment policy to incorporate non-development objectives in the development
programmes, in another new instrument negotiated under the Financial Per-
spectives for 2007-2013 – the Development Cooperation Instrument (DCI).
The initial proposal mixed assistance to developing and non-developing coun-
tries and lacked a clear legal basis, which has been resisted by the European
Parliament.22 The negotiations on this important legal instrument have been
concluded and the legislation is now based on the existing treaty articles for
development co-operation. These negotiations on the remit of the legislation
stalled the overall progress on the multi-annual finance agreement for the EU
for over a year.

A new direction was taken in the 2005 policy statement adopted by the Com-
mission, the Council, and the European Parliament confirming the Millennium
Development Goals as the main framework for the EU’s development policy,
and giving clear emphasis to the objective of poverty eradication. While it ex-
tends to all developing countries, the policy statement provides a strong new
direction in terms of bringing the EC and member states together in one overall
framework. Called the ’European Consensus on Development’ it expresses the
wish that this might provide a compromise solution for the EU’s development
policy in coming years.

The new Consensus is complemented by bold new agreements on financing EU

aid. In preparation for the UN Financing for Development Summit in Monter-
rey in 2003 the EU committed itself to jointly increasing aid to 39 billion by
2006, equivalent to 0.39 percent of the joint GNP of the 25 member states. In
May 2005, in preparation for the 2005 World Summit, EU ministers from the
25 member states agreed to a new collective target of 0.56 percent for 2010. If
achieved, this would provide an additional 20 billion in aid by that time. The EU
25 also set 2015 as the date for reaching 0.7 percent.

 Mirjam van Reisen

Mold - [Link] 58 15-6-2007 14:37:26

 14. Conclusions: Enlargement and Development: Is there a Future?

Development co-operation has been one of the major policy areas for the EU
since its inception. The relations between the EU and the developing world are
rooted in three major historical circumstances: Europe’s colonial past, the politics
of the Cold War, and the creation and expansion of the EU. The 2004 enlarge-
ment of the EU, incorporating ten new members, was a unique event that will not
only change the nature of the EU, but also its relations with the South.

The various actions taken by the European institutions and the member states
intended to prepare the EU for enlargement brought great pressure to improve on
both the quality and independence of the EU’s development co-operation, subor-
dinating it to the objectives formulated by the EU’s external relations policies and
the common foreign and security policy. At the same time the legal basis for devel-
opment co-operation in the EU treaties was strengthened. In the area of develop-
ment co-operation there was thus an increasing discrepancy between legal defini-
tion, political rhetoric, and reality. While the general tone of this chapter has given
little room for optimism, there are some positive observations that can be made.

First, every enlargement of the EU has so far increased the scope for development
co-operation – both in terms of regional coverage as well as the kind of approach-
es adopted. The specific experiences in the international arena of the acceding
member states have proven to be valuable assets for the expansion of the EU’s
activities abroad and development co-operation has played a vital part in forging
and enhancing these new links. The accession countries, with their specific ties
and history related to the east and elsewhere, might again prove a valuable asset
for a broadening of the Community’s actions abroad.

Secondly, it has been recognised since the inception of the EU that its prosperity
is dependent on and closely associated with the EU’s ability to co-operate with
countries of the South. The EU needs the South, it needs energy, raw materials,
primary products, and minerals; the EU needs the labour forces of the South, the
export markets they provide, and as locations for foreign direct investment. But
the EU also needs the South to promote the values on which it was founded – the
European values of social democracy, the promotion of human rights, and account-
able and transparent governance. Finally, the EU needs the South if it wants to
fulfil its aspirations of becoming a global player. If the EU rejects the notion of
a unipolar world that is dictated to by the United States it will need to seek alli-
ances with the South.

The Enlarged EU and the Developing World 

Mold - [Link] 59 15-6-2007 14:37:26

 Thirdly, the South has always had its own strategies towards the EU, recognising
it as a key player and potential ally in international affairs. This chapter has shown
that this was an important part of negotiations in all earlier enlargements, and
the competition between previous rivals has given space to the South to negotiate
its own agenda with the EU. In that context it is important that the development
policy of the EU is not just described in terms of a continuation of its colonial
past, but also as a new beginning of a multilateral approach towards developing
countries. With the eastward enlargement there is now an opportunity for the
countries east of the enlarged EU to be included in such a policy.

The recognition of this potential will not necessarily lead to a European develop-
ment policy that is focused on development and poverty eradication. This chapter
has demonstrated that EU development co-operation has, in the new millenni-
um, been continuously under the pressure of subordination to the EU’s Com-
mon Foreign and Security Policy and of being linked to other external priorities,
notably, migration, defence, and security. In the medium to longer term there is
a danger that the commitment to the poverty-oriented development policies of
the EU is seriously undermined. The lack of a tradition of development policy, a
development administration, and of ministerial-level political representation in
the new member states are impediments to a strong future for the development
agenda in the enlarged EU. This will have some influence on current member
states, particularly those whose development policies are already weak or domi-
nated by national political and commercial policy interests. It will surely be more
difficult for member states with strong development policy traditions to promote
these values and approaches effectively within the Union. Already it is apparent
that the pro-development group of ‘likeminded’ member states in the Council has
weakened because of opposition by a coalition of member states lacking a firm
national development policy.

Nevertheless, it is likely that the EU’s development policy will remain an im-
portant aspect of the EU’s external relations. Public opinion polls show consis-
tently that European citizens value EU development co-operation when focused
on poverty eradication, and the Constitutional Treaty reflects this priority. The
newly adopted ‘European Consensus on Development’, and the scope now set out
for the new legal Instrument for Development Co-operation (DCI), demonstrate
that development will remain an important area within the enlarged EU, even if
contradictory trends compete with a poverty-focused development policy. While
the EU development policy will have to adapt to regional priorities and thematic
concerns of the new member states, experience has also shown that it is more
than likely that the new member states will become increasingly important actors

 Mirjam van Reisen

Mold - [Link] 60 15-6-2007 14:37:27

 in international development. As members of the EU, the new member states
will absorb the European consensus on development, a consensus that has been
prominently on its agenda since its inception.

Notes

 The author would like to thank Carl Greenidge, Ambassador Harry Dyett, Guido van
Hecken, and Simon Stocker for their extensive advice on this chapter. I would also like to
thank Andrew Mold who helped in editing the chapter. The author is solely responsible
for its content. Parts of this chapter are based on research being undertaken for my Ph.D.
thesis and are being published in “ The Logic of Coincidence. Agenda-setting in EU devel-
opment policy”, by EEPA, Brussels.
 These policies were prepared in extensive studies undertaken during World War II, con-
ducted by the US Council on Foreign Relations, which brought together internation-
ally-oriented corporate and financial interests, and top US State Department planners
(Chomsky, :). At first, it was assumed that Germany (though not Japan) would
survive as a major power centre. The so-called ‘Grand area’ was initially to be a non-Ger-
man bloc, which was to initially incorporate the Western Hemisphere, the Far East, and
the former British Empire. The British Empire was to be dismantled (along with other
colonial systems) and subsequently incorporated under U.S. control.
 In figures:  percent of French imports originated from its colonies, and  percent of
the imports from the colonies originated from France in . Between  and  the
average annual growth of the French economy increased by . percent, and a significant
part of this growth was attributable to its trade with the colonies. The French colonies
were connected to France through a monetary and economic union, and, therefore, the
question of the future of these relations posed some serious questions.
 The constitutional reform after World War II intended, among other things, to give great-
er powers to the French colonies – the support and participation of whom had been cru-
cial for the successes of the army of the Free French. The Fourth Republic, which emerged
from this constitutional renewal, transformed the French empire into the French Union,
originating from the Conference of Brazzaville (). The French Union was directed by
the president of the Republic who presided over the National Assembly and the ‘Conseil
de la République’, two chambers of Parliament, to which the colonies had direct access
through deputies and senators representing the colonies.
 Kubursi A. and Mansur S. , ‘ The Political Economy of Middle Eastern Oil’, in: Stubbs
R. and Underhill G., (eds.) Political Economy and the Changing Global Order, London:
MacMillan, , pp. -. Kubursi and Mansur argue that the United States and
Saudi Arabia had a strategic understanding in which profits made from exports to Europe
were reinvested in the US, so as to avoid further devaluation and erosion of the dollar, as
inflation induced by the Vietnam war eroded the value of the dollar. See also M. Hubbert
(); ‘ Techniques of Prediction as applied to the Production of Oil and Gas’, in: Gass
S., (ed.), Oil and Gas Supply Modelling, National Bureau of Standards Special Publica-
tion , Washington DC, , p.-.
 For more details, see van Reisen (forthcoming), ‘ The Logic of Coincidence, Agenda-set-
ting in EU Development Co-operation’, doctoral thesis.

The Enlarged EU and the Developing World 

Mold - [Link] 61 15-6-2007 14:37:27

  During the negotiations these fears seemed well-founded, as observed by Guyanan Am-
bassador to the EEC Lawrence E. ‘Bonny’ Mann: ‘ The Community was at one stage de-
manding the right to be consulted by any ACP state which contemplated taking measures
in the trade field which would affect the interests of any EEC Member State. This in
effect ... could have the result of requiring ACP finance ministers trotting up to Brussels
to discuss in advance their proposed annual budgets with the Commission – a departure
from sanity of altogether intolerable proportions’ (cited in Dyett :).
 Programmes were adopted by the United Nations General Assembly in  and .
Faber, G., op. cit.; See also: Dyett, op. cit, Grilli, op cit., Roon, van, ibid, op cit. Stevens,
C., Renegotiating Lomé, in: EEC and the Third World: a Survey, ODI, IDS, .
 The British floated a proposal for integrating the EDF into the Community budget during
the negotiations on the Lomé I Convention. In  the European Parliament also agreed
that the EDF should be incorporated into the EC Budget. The Commission issued a memo-
randum on EDF budgeting in April  in which it supported some form of ‘budgetisa-
tion’. On the other hand some developing countries looked on the arrangement of the EDF
outside the budget as a ‘safety valve’ and saw the EDF Committee as a ‘political representa-
tion on their behalf ’ (Dyett ). The European Council rejected proposals for integrating
the EDF into the budget. Since that time the European Commission has included the EDF
in its pre-budget proposals and since  the European Parliament has included the EDF
in the annual budget – even though the Parliament has no authority over it.
 The European Development Fund is a five-year fund containing the financial resources
designated by a particular Convention as agreed between the Community and the ACP.
It operates outside the Community budget. All EC members contribute to the Fund with
voluntary contributions. In , when the EC was endowed with its own resources, the
powers of the budgetary authority were shared between the Council and the Parliament.
However, as the EDF is outside the budget, the European Parliament does not have any
powers over the EDF or its disbursements. Additionally, the principle of ‘annuality’ does
not apply to the EDF and on average the implementation of the fund takes - years in-
stead of intended five years. Member states do not transfer the resources to a central fund
but retain them in their national budgets, so the slow disbursement of the funds reduces
the available resources for development aid in European member states. In earlier research
on this matter, I observed that: ‘In this way approximately  billion annually leaves the
EU budget for development co-operation and never reaches developing countries – a fig-
ure which is a staggering  percent of total CEC aid. This constitutes approximately 
percent of ODA from the EU as a whole’ (Reisen : -) These conclusions were
corroborated by DG- Director General Philip Lowe in a speech on January ,  to
the Development Committee and Poul Nielson, then the Danish minister for develop-
ment co-operation, on the Danish television news, January , .
 Data: European Commission () Courier, September, Special Issue, Cotonou Agree-
ment, p. ; Grilli, Enzo R. (), The European Community and the Developing Coun-
tries, Cambridge: Cambridge University Press, ,, p. , for per capita calculations; author’s
calculations for  and , data from [Link]
 Ex-Art.  and Art.  of the TEC were used, which is very broad: “If action by the
Community should prove necessary to attain, in the course of the operation of the com-
mon market, one of the objectives of the Community and this treaty has not provided the
necessary powers, the Council shall, acting unanimously on a proposal from the Com-
mission and after consulting the European Parliament, take the appropriate measures.” A
 legal opinion of the Court of Justice ruled that provisions being an integral part of

 Mirjam van Reisen

Mold - [Link] 62 15-6-2007 14:37:27

 an institutional system based on the principle of conferred powers, cannot serve as a basis
for widening the scope of Community powers beyond the general framework created by
the provisions of the Treaty as a whole. The Presidency argued that because of the sys-
tematic use of Art.  for co-operation with non-developing countries, and the fact that
the existing articles only covered co-operation with developing countries, a new legal basis
was required for non-developing countries (De Witte : -). See also: Presidency
Note, CONFER ., Brussels,  February .
 Martenczuk argues that Art. a applies to those countries for which previously recourse
was necessary to the very broad Art.  EC. The central objective of Art. a was: “not
to create a new Community competence, but to provide for a simpler procedure that was
previously exercised on the basis of Article  EC.(p. ).” Art. a differs from Art.
 in terms of procedure.
 For details on the analysis see [Link]
 Council of the European Union, Opinion of the Legal Services, Commission proposal
for a Council Regulation establishing an instrument for Stability – legal basis – scope of
Community competence, / Jur,  April  . Council of the European Union,
Opinion of the Legal Service, Jur , .. also defines Art - as applying to
all developing countries.
 The OECD Development Assistance Committee (DAC) regularly decides whether a
country is eligible for ODA (Official Development Assistance) or for Official Assistance
(OA). This list is regularly revised, and is organised on objective needs-based criteria. It
includes all low and middle income countries, except those that are members of the G or
the European Union (including countries with a firm date for EU admission; i.e., Bulgaria
and Romania). OECD DAC ‘European Community’s aid at a glance’, [Link]
org/dataoecd///.pdf [accessed th August ].
 See for instance: Council of the European Union () ‘European Security Strategy. A
Secure Europe in a Better World?’  December, p. .
 This includes Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Leba-
non, Libya, Moldova, Morocco, Syria, Tunisia, Ukraine and the Palestine Authority.
 This covers candidate countries (Turkey and Croatia) and potential candidate countries
(Albania, the Former Yugoslav Republic of Macedonia, Bosnia and Herzegovina, Serbia
and Montenegro, and Kosovo).
 For further information see: [Link]
 Statement by Benita Ferrero-Waldner on her objectives as lead Comisssioner on develop-
ment co-operation, given at the unveiling of a poster campaign launched in airports across
Europe.
 The first proposal from the Commission was called the ‘Economic Co-operation and
Development Co-operation Instrument’, clearly prioritising economic co-operation over
development co-operation. The original proposal was based on the articles concerning
developing and non-developing countries and included a regulation for economic co-op-
eration with industrialised countries. The European Parliament refused to consider the
proposal and judged it un-amendable. After the UK presidency had presented a new text
that clearly defined the legal base and split the co-operation between developing and non-
developing countries, the European Parliament adopted a decision to amend the Commis-
sion proposal. For details see: Eurostep briefings at [Link].

The Enlarged EU and the Developing World 

Mold - [Link] 63 15-6-2007 14:37:27

 References

Bocquet, Dominique and Viallon, Stéphane (2003), La Budgétisation du FED,

Une Étape dans la modernisation de l’Aide. Rapport pour le Ministre de
l’Economie, des Finances et de l’Industrie, Paris.
Bretherton, Caroline and John Vogler (1999), The European Union as a Global
Actor, London: Routledge.
Chomsky, Noam (1992), What Uncle Sam Really Wants, The Real Story, Tuscon,
Odonian Press.
Chomsky, Noam (1994), World Orders Old and New, New York: Columbia Uni-
versity Press.
Commission of the European Communities (1985), ‘Nineteenth General Report
on the Activities of the European Communities’, Brussels – Luxembourg.
Commission of the European Communities (2000), ‘ The European Community’s
Development Policy’, Communication from the Commission to the Council
and the European Parliament, Brussels.
Commission of the European Communities (1981), Fourteenth General Report on
the Activities of the European Communities in 1980, Brussels – Luxembourg.
Council of the European Union (2000), Conference of the Representatives of
the Governments of the Member States, Presidency Note, CONFER 4711/00,
Brussels, 22 February.
Council of the European Union (2003), European Security Strategy. A Secure Eu-
rope in a Better World, Brussels.
Department for International Development (DFID) (2001 revised),‘Working in Part-
nership with the European Community’, Institutional Strategy Paper, London.
Dyett, Harry (1998), ACP Diplomacy. The Caribbean Dimension, Georgetown,
Guyana: Lahama Gardens.
Dyett, Harry (2002), personal note to the author dated 20 July 2002.
European Commission (2003), ‘Flexibility versus systemic constraints of the EDF
system’. DG-Development Paper for the DEV DG’s meeting, DEV/A/1/D
(2003), Brussels 13 June 2003.
European Commission (2005), ‘ The European Consensus on Development’,
Communication, Brussels.
European Parliament (1999), ‘Questionnaire for Nominee Commissioners with
special responsibility for Development Co-operation and Humanitarian Aid’.
Reply from Commissioner designate Poul Nielson, Brussels/Strassbourg.
Eurostep (2003), ‘IGC Toolkit’, Brussels.
Gorbachev, Mikhail (1996), Memoirs, London: Bantam.
Grilli, Enzo R. (1993), The European Community and the Developing Countries,
Cambridge: Cambridge University Press.

 Mirjam van Reisen

Mold - [Link] 64 15-6-2007 14:37:27

 Lanning, G. and M Mueller (1979), Africa Undermined, A History of the Mining
Companies and the Underdevelopment of Africa, Middlesex: Penguin Books.
Martenczuk, Bernd (2002), ‘Co-operation with Development and Other Third
Countries: Elements of a Community Foreign Policy’, in: Griller, Stefan, and
Wiedel, Brigit (eds.) External Economic Relations and Foreign Policy in the Eu-
ropean Union, Wien, New York: Springler, pp. 385-417.
Mollet, Howard and van Reisen, Mirjam, et. al., (2002), Tackling Poverty in Asia,
London: BOND.
Ortoli, François-Xavier (1975), President of the commission of the European
Communities, Address to the European Parliament on 18 February 1975, in
Commission of the European Communities, Eight General Report of Activities of
the European Communities 1974, Brussels-Luxembourg.
Ortoli, François-Xavier (1976), President of the commission of the European
Communities, Address to the European Parliament on 10 February 1976, in
Commission of the European Communities, Ninth General Report of Activities of
the European Communities 1975, Brussels-Luxembourg.
Reisen, Mirjam van (1999-2000), EU ‘Global Player’, The North-South Policy of the
European Union, Zeist: International Books.
Reisen, Mirjam van (2002), Directing EU Policy Towards Poverty Eradication:
From Commitments to Targets to Results, ECDPM Discussion Paper No. 35,
Maastricht.
Reisen, Mirjam van (2002), ‘Tackling Poverty: A Proposal for European Union Aid
Reform’, London: BOND.
Reisen, Mirjam van (2005) ‘ To the Farthest Frontiers: Women’s Empowerment in
an Expanding Europe’, Brussels: Eurostep and Social Watch.
Soetendorp, Ben (1994), ‘EC/EU as a single foreign policy actor’, in: Carlsnaes et
al. (eds.) European Foreign Policy, London: Sage, pp. 103-119.
Uribe, Armando (1984), ‘Le Général de Gaulle et l’Amerique Latine’, in Institut
du Droit de la Paix et du Développement et Institut Charles de Gaulle, De
Gaulle et le Tiers Monde, Paris: Editions A. Pedone.
de Witte, Bruno (2001), ‘Clarifying the Delimitations of Powers. A Proposal with
Comments’, in European Commission Europe 2004 Le Grand Débat: Setting the
Agenda and Outlining the Options, Brussels, pp. 121-129.

The Enlarged EU and the Developing World 

Mold - [Link] 65 15-6-2007 14:37:27

Mold - [Link] 66 15-6-2007 14:37:28
 3 European Development Policymaking:
Globalisation and the Post-Lomé World

Marjorie Lister

1. Introduction: Globalisation and Development

Globalisation – the process of creating an integrated global economy, polity, and

society – is an inescapable theme of much of today’s academic literature. In fields
ranging from cultural studies to economics, sociology, and politics, scholars ad-
dress questions of what globalisation is, how it is occurring and who benefits and
who loses out. In development studies the analysis and categorisation of different
regions or groups of countries such as the richer countries of North America and
Western Europe, the formerly socialist countries of Central and Eastern Europe,
and poorer countries of Africa and Asia has been central, with the aim of getting
the poorer regions to ‘modernise’ or catch up to the living standards and develop-
ment levels of the richer ones.

Previous models or schools of thought of development studies divided the world

into ‘haves’ and ‘have-nots’ for the liberals, or in dependency terms, into the pow-
erful and developed ‘centre’ and the weak and marginalised ‘periphery’. From the
perspective of globalisation, there is a distinction to be made between the coun-
tries and individuals who are richer and more powerful in the new globalised
world system and the others. That is, some countries or individuals can be catego-
rised as the ‘globalisers’ – those who have agency and actively make the decisions
creating globalisation – and the ‘globalised’ who are powerless onlookers ‘or just
a mere prop in the play being staged’ (Ki-Zerbo, 2001). For Professor Ki-Zerbo,
Africa as a whole fell into the powerless and ‘globalised’ category; which, up until
now, also fits most of the rest of the developing and post-socialist world.

This chapter addresses the changing environment produced by globalisation

and how it affects the international development agenda, the concept of a ‘ Third
World’, and the post colonial approach to international politics. Furthermore,



Mold - [Link] 67 15-6-2007 14:37:28

 it analyses the positions of the eastern and central European states vis-à-vis the
developing countries in the European Union’s panoply of external relations and
compares their experiences. Finally, in the new globalising international system
both Central and Eastern Europe and the developing countries are known as
‘partners’ of the European Union (EU). In practice, what does this mean?

2. The End of Development?

Traditionally, development studies aimed at understanding and improving the lot

of the global poor and disadvantaged, but met with mixed success. Over the past
three decades, the Lomé Conventions and subsequent Cotonou Agreement between
the European Union and 77 African, Caribbean, and Pacific (ACP) states were
emblematic of this disjuncture between high development aspirations and limited
positive, measurable development performance (Lister, 1997). Since the 1980s the
whole project of international development and the discipline of development stud-
ies have been called into question. For some, the development agenda failed because
it could not prevent the increase in global poverty and inequality, coupled with the
destruction of the environment (Amin, 1997). The French post-structuralist au-
thor, Bruno Latour, succinctly expressed the anguish of the failure of the West’s
attempt to develop the Third World: ‘We might have done it; we thought we
could do it; we can no longer believe it possible’ (quoted in Lister 1998: 377). In
theoretical terms, the failure of development thinking to transcend the limita-
tions of the dependency and modernisation schools (representing socialist- and
capitalist-based approaches respectively) led in the 1990s to a period of stagna-
tion and introspection in development studies (Scott, 1996). Ankie Hoogvelt
(2001) argued that not only was ‘developmentalism’ (i.e., the pro-development
international agenda) dead, the disappearance of a definable Third World had
caused the disappearance of development studies as a discipline. Development
studies, she contended, had no coherent identity and no pretensions to being an
academic discipline in its own right. Development studies had fragmented and
virtually dissolved into area studies, gender studies, environmental studies, and
international political economy.

Nevertheless, the reported death of development studies is premature. The frag-

mentation of development studies lamented by Hoogvelt could instead be con-
sidered an enrichment of the field as insights from area studies, geography, gen-
der, and environmental studies and elsewhere are incorporated. The literature of
development studies, including numerous journals as well as books, is burgeon-
ing rather than decreasing and academic departments are successfully recruiting

 Marjorie Lister

Mold - [Link] 68 15-6-2007 14:37:28

 talented students at both undergraduate and post graduate levels. Professional
organisations and study groups are active in producing papers, holding confer-
ences, and creating networks.

While some disciplines such as economics become more and more rarefied,1 de-
velopment studies have kept a more grounded and empirical focus. Its interdisci-
plinarity and openness to incorporating new ideas and approaches constitute its
strength rather than its weakness. The explanations, for instance, of the relative
post-war economic success of the southeast Asian ‘tiger’ countries like South Ko-
rea, Taiwan, and Singapore are not merely due to the single factor of economic
neo-liberalism as contended by politicians such as Ronald Reagan, but to a va-
riety of causes ranging from government leadership to education, culture, social
policies, and export strategies (Broad, Cavanagh and Bello, 1995).

Another source of strength both for the global development agenda and, second-
arily, for the development studies discipline, is the widespread public support for
(if not always deep knowledge of ) development objectives as revealed in numer-
ous opinion polls (Lister, 1997; Spur, 1995; European Commission, 1999). This
support is also evidenced in the financial contributions from the public and gov-
ernments for development objectives. Even the EU-ACP relationship, which has
frequently struggled for political attention and legitimacy, and the Euro-Mediter-
ranean Partnership which has faced considerable criticism ( Joffe, 1999), have con-
tinued into the third millennium whilst carrying with them a mixture of political,
developmental, and other objectives.

To return to the central theme of this section, some scholars like McMichael have
contended that the development era is indeed over. The end of the development
era, with its emphasis on state-centred development and ‘modernisation’, was iden-
tified by McMichael as having occurred sometime in the post-war period, around
the 1970s according to his timeline (McMichael 2000). Its demise, he argued, took
place in the wake of the debt crisis and the popular disillusionment with tradition-
al development thinking. The development project was then replaced, McMichael
contended, with the globalisation project. The dominant idea of globalisation was
the rule of the free market at the global level. Nevertheless, McMichael himself
backtracked from this position, noting subsequently that the development project
had perhaps changed rather than disappeared (McMichael, 2000: 54).

In summary, the death of development argument is unconvincing: governments,

NGOs, and the public continue to take an interest in development aid and in in-
ternational development targets for reducing hunger, poverty, and illiteracy. Nei-

Globalisation and the Post-Lomé World 

Mold - [Link] 69 15-6-2007 14:37:28

 ther has the development agenda completely collapsed into the mere management
of crises in Africa or former Yugoslavia or the mere management of exclusion
(Amin, 1997; Hoogvelt, 2001). The European Union, for instance, bolstered its
development credentials with the signing of the Cotonou Agreement in 2000, an
extension of its longstanding Euro-African partnership for development with the
ACP group. The EU also hosted the Third United Nations Conference on Least
Developed Countries in 2001, promoting special trade concessions in ‘everything
but arms’ for 49 of the world’s poorest states. At the same time, conferences such
as the World Food Summit Plus 5 of 2001, Earth Summit Plus 10 of 2002; the
Beijing Plus 10 conference and the Millennium Development Summit of 2005
(the latter attended by an unprecedented number of heads of state and govern-
ment) continue to put forward development objectives at the global level.

3. Third World or Globalisation?

The emergence of the Third World, the assertion of its independence, and its
collective awareness of the historic role it has to play will appear as major facts in
the history of the twentieth century.
Edgard Pisani – speech to United Nations Conference on the Least
Developed Countries, Paris, 1-4 Sept. 1981.

The Third World has always been an ill-defined or ambiguous concept. It signi-
fied a political unity desired by the developing countries, but also a convenient
lumping together of the poorer countries by outsiders. In Cold War terms, the
Third World meant the countries that were neither part of the Western nor East-
ern camps, the so-called ‘grey areas’. Many academic authors struggled to get to
grips with the concept of the Third World and its implications. To Clapham,
for example, the Third World was defined by its economic, cultural, and social
peripherality – and their political repercussions (Clapham, 1985). Although this
formulation failed to put politics as firmly at the centre of the ‘ Third World’ idea
as it belonged, it did express the commonality of weakness, marginalisation, and
poverty which characterised much of the developing world. For reasons of politi-
cal ‘correctness’, the negative stereotype of being third rate or third class led many
authors to abandon the concept entirely, although it still persists extensively in
journalism, in popular usage and in many academic texts.

The emergence of ‘ Third World politics’, or the Third World as a political force,
was considered by European Development Commissioner Pisani (quoted above)
as one of the key facts of the twentieth century. The apparent power of the Third

 Marjorie Lister

Mold - [Link] 70 15-6-2007 14:37:28

 World as a voting bloc in the UN General Assembly, with its demands for politi-
cal, economic, social and cultural equality, and fair trade, challenged the thinking
of decision-makers in the developed countries, especially in the 1960s and 1970s.
However, it has been argued – in parallel to the death of development thesis
– that as we enter the new millennium, ‘the Third World as such no longer exists’
(Hoogvelt, 2001: xi). The Third World appears to have lost its political coherence
by acceding to Western neo-liberal orthodoxies and becoming fractionalised into
competing regions and states.

Alternatively, the Third World, it can be contended, has not disintegrated; it has
been globalised. This signifies that, since the end of the Cold War, more states
have become poor and marginalised, vulnerable to external political and eco-
nomic conditions. Notably, the formerly socialist countries have left their ‘Second
World’ status and now entered the ‘ Third World’. Like the poorer Third World
countries they depend economically and politically on the richer, developed coun-
tries. In addition, within all states both ‘First World and ‘ Third World’ condi-
tions exist (Thomas, 1999). For instance, the expansion of low-paid, sweatshop
garment industry jobs in developed countries such as the United States has been
compared to Third World conditions (McMichael, 2000). Thus the answer to
Caroline Thomas’ question, ‘where is the Third World now?’ would seem to be
– everywhere.

4. The Post Post-colonial Phase?

According to the EU’s green paper, which prepared the way for the Cotonou
Agreement of 2000, “the colonial and post colonial period are behind us” (Euro-
pean Commission, 1997a). Europe’s relations with the developing world would
henceforth be based on a new international environment. But to what extent is
this picture of non-colonial Europe true? Europe still has dependencies, although
they are greatly reduced in number from the high point of the colonial empires:
20 territories with varying legal status are covered by the Cotonou Agreement.
And some of them, like the Falkland Islands, are the subject of post-colonial dis-
pute. Thus, Europe’s colonial period is not entirely over.

The end of the post-colonial phase is also difficult to establish. Post colonialism
is a particularly broad concept or approach to contemporary social and political
conditions. On one hand, it refers to events from the colonial period and its after-
math, but on the other it also refers to viewing the present in terms of the effects
of the colonial experience. Emerging in the 1980s, post colonialism became largely

Globalisation and the Post-Lomé World 

Mold - [Link] 71 15-6-2007 14:37:28

 a discourse of identity, aiming to restore self-esteem to the colonised peoples
(Hoogvelt, 2001). Post-colonialism is also often associated with the work of the
Palestinian-American philosopher Edward Said. Said insisted on the importance
of the political dimension of imperialism in understanding not only politics but
also literature and philosophy. He argued that ‘the political dimension of impe-
rialism governs an entire field of study, imagination, and scholarly institutions’
(Said, 1991: 13-14).

In contemporary politics, the grievances of Zimbabwe’s President Mugabe,

for example, against the British government, or the political struggles of East
Timor cannot be fully understood without reference to the colonial and post-
colonial experience. Nevertheless, an alternative perspective on developed-de-
veloping country relations is currently emerging that places less emphasis on
the colonial period and could therefore more nearly be called post post-colonial.
According to this perspective, current levels of development are not based on
colonial or post colonial legacies, but depend largely on the quality of national
governance.

This mode of thinking is enshrined not only in the declarations of national equal-
ity between the EU and ACP states stretching back to Yaounde 1 in 1963, but
even more explicitly in the Cotonou Agreement of 2000 which places the pri-
mary responsibility for maintaining positive conditions for development on the
ACP side (Cotonou Agreement, preamble). Furthermore, the ACP states were
intended to be responsible for their own development strategies: ‘the partnership
shall encourage the ownership of the development strategies by the countries
and populations concerned’ (article 2). In a similar vein African presidents like
Uganda’s Museveni and Gambia’s Jammeh have acknowledged that many of their
continent’s problems are not the fault of Europe, but of Africa’s own making.

In 1976 William Zartman argued that the Lomé Convention was a step on the
road to real decolonisation and political development for Africa (Zartman 1976).
But by 2000, with the influence of post post-colonial thinking in the Cotonou
Agreement, few scholars saw the new system as particularly favourable to the Af-
rican, Caribbean, and Pacific side. Cotonou in fact represented the loss or rolling
back of some of the key benefits of Lomé I, including contractually guaranteed
levels of aid, non-reciprocal trade concessions, special trade provisions for com-
modities, and an interest in addressing the problems of commodity-dependent
economies (Raffer, 2001).

 Marjorie Lister

Mold - [Link] 72 15-6-2007 14:37:28

 5. Enlargement and Development

An important part of the end of the Cold War, with its division of the world
into Western, Eastern, and Third World camps, and the subsequent rise of glo-
balisation, is the change in the status of Eastern and Central Europe. They have
shifted since 1989 from socialist to transitional, or even developing countries as
argued above, and many are now set to join the developed world through the
European Union. The last major enlargement of the EU with the addition of
ten new members – Poland, Hungary, the Czech Republic, Slovakia, Slovenia,
Latvia, Lithuania, Estonia, Cyprus, and Malta – occurred in May 2004. How-
ever, the overall mood of the EU at the time of this enlargement was sombre,
with a notable lack of public enthusiasm for the project. Yet the importance to
the EU of this new millennium’s enlargement would be hard to overstate. Just as
the 1980s have been termed ‘the lost decade for development’ the failure of the
EU to act more swiftly to reunify Europe in the 1990s could be called ‘the lost
decade for enlargement’.

Timothy Garton Ash compared the 2004 enlargement to a wedding party ‘de-
layed for fifteen years by the meanness and prevarication of the bridegroom (EU)’
(2002). The lack of public interest from Western Europe, the complex and cost-
ly bureaucratic regulations imposed on the prospective new members, notably
some 80,000 pages of EU legislation, the miserly regional aid allocated to the
new members after joining (around half of the levels for existing members), and
limited benefits to their farmers suggested the EU was less than fully committed
to a successful enlargement process (The Times, 2002). Even the emergency aid
granted by the EU to the candidate members following the floods of 2002 was
originally not new funding, but reallocated from other projects (Benoit, Guer-
rera, and Wright 2002). A new aid fund of 500 million euros was allocated only
after intense public criticism of the EU’s stinginess (Dombey, 2002). Neverthe-
less, the 2004 enlargement did not dim other European countries’ interest in EU
membership. Romania and Bulgaria joined the EU in January 2007. Membership
talks with Croatia and Turkey opened in 2005, and Macedonia was granted can-
didate member status at the end of that year.

Four areas of comparison below illuminate the differences and similarities in EU

policy towards Central and Eastern Europe and the developing countries. These
are EU power, the importance of political versus economic links, the policies’
effects on the core EU political system, and the disappointment of the partner
countries with their relationship to the Union.

Globalisation and the Post-Lomé World 

Mold - [Link] 73 15-6-2007 14:37:28

 6. The European Union as a Powerful Attractor

The extent of the EU’s external influence has often been doubted. The EU is not a
state, its actions are often dismissed as not amounting to foreign policy, not coher-
ent, and not influential (Ginsberg, 2001). In terms of its Mediterranean partnership,
for instance, the EU has succeeded in paying the piper but not in calling the tune.
That is, although Europe is the biggest donor to the region its political influence in
the Middle East peace process is far outstripped by that of the United States.

In respect to both the cases of developing countries and Eastern and Central
Europe, the powerful attraction and influence of the EU is undeniable. As the
world’s largest trade bloc and, collectively with the member states, as the world’s
largest aid donor, the EU is the rich countries’ club almost every government
in Europe wants to join – or, in the case of the ACP group, at least to have as a
partner. Thus, the EU’s often-discussed powerlessness and lack of superpower
status is belied by its great influence in Central and Eastern Europe, and with its
African, Caribbean, and Pacific partners in the Cotonou Agreement.

For both Central and Eastern Europe and the developing countries, relations
with the EU have become overtly more political. For Africa, relations with the
EU extend back to the Treaty of Rome, to its various annexes dealing with de-
veloping countries, and the Part IV Association which prefigured the Yaounde
and Lomé Conventions. Links between Europe and the ACP were always post-
colonial and political links, despite the convenient fictions often invoked by the
European Commission that the Conventions were solely economic, neutral, or
non-political (Lister, 1988). Under the Cotonou Agreement the political element
has been explicitly recognised, enhanced, and turned from a vice into a virtue.

In contrast, relations between the EU and Eastern and Central Europe were not
mentioned in the Treaty of Rome. Links between the EU and Central and East-
ern Europe evolved only gradually under the common commercial policy and
originally aimed only at defending Europe’s trading interests. During the Cold
War, relations between Eastern and Western Europe were often strained. Not
until 1990 did association agreements signed with Eastern and Central European
countries call them ‘partners’ and begin to talk about shared values and close po-
litical relations (Grilli, 1993).

Ultimately, the Central and Eastern European countries accepted for member-
ship in the EU will achieve levels of power and influence in the organisation’s
structure and policies immeasurably greater than those of the developing world.

 Marjorie Lister

Mold - [Link] 74 15-6-2007 14:37:28

 For these countries, the challenge is to make membership – including aid from
the EU’s structural funds – as positive as it has been for previous new EU mem-
bers such as Spain, Greece, and the Republic of Ireland. The high degree of rela-
tive importance attached to the Central and Eastern European countries can be,
to a large extent, gauged by the levels of aid allocated by the EU. In 1999-2000,
middle income countries received more aid than the least developed and low in-
come countries together. The top ten recipients of ODA from the EU (1999-2000
average) were in descending order, Poland (which received more than twice the
amount of any other country), the Czech Republic, Romania, the Former Yu-
goslavia, Morocco, Bosnia and Herzegovina, Hungary, Slovakia, Ex-Yugoslavian
states, and Egypt (Development Assistance Committee, 2002).

Although per capita aid comparisons for different regions are not normally provid-
ed by the EU (see European Commission, 2000; European Commission, 2002a),
EU figures for 1996 showed EU aid per capita as US$ 0.7 for low income countries,
US$ 1.4 for middle income countries, and US$ 4.5 for Central and Eastern Europe
and the former Soviet Union. The EU’s relative generosity to the countries of Cen-
tral and Eastern Europe and the former Soviet Union is in itself commendable.
But it sat uncomfortably next to the European Commission’s and Council’s formal
policy statement on development which emphasises the importance of poverty
eradication and directing aid to low income countries (European Commission,
2002b, European Union, 2005). Nevertheless, in keeping with this policy objec-
tive, the percentage of EU aid devoted to the least developed (poorest) countries
did rise from 32 percent in 2000 to a high of 44.5 percent in 2003, before falling
back slightly to 43.7 percent in 2004 (European Commission, 2005: 16).

7. Effects on the Structure of the EU – Constituent Policies

Policies that affect the ground rules of the structure and functioning of the EU
are known as constituent policies (Wallace 1996). To what extent have the rela-
tions of the EU with the other regions examined here had effects on the structure
of the EU itself? In the case of development policy, effects were felt primarily at
the stage of negotiating the Treaty of Rome. In 1956 France made the association
of its colonial possessions an essential condition of membership of the European
Community. France got its way: the Association for developing countries was
established and France joined the Community. British accession to the Europe-
an Community in 1973 resulted in the enlarged system for developing countries
known as the Lomé Convention, but not in any fundamental changes to the struc-
ture of the Community.

Globalisation and the Post-Lomé World 

Mold - [Link] 75 15-6-2007 14:37:28

 The constituent effects on the EU of its relations with Central and Eastern Europe
are more complex and far-reaching. In order to create a solid Union of 25 member
states instead of the previous 15, a constitutional convention was launched in
2002. Chaired by Valery Giscard d’Estaing, it sought to make the fundamental
changes needed to create a constitution for Europe for the next 50 years. Key
topics under consideration included a common foreign policy, tax harmonisation,
power over national budgets, the respective powers of the European Parliament,
national parliaments and council of ministers (The Economist, 2002). The con-
vention completed its proposed constitutional treaty in late 2003, but referen-
dums in France and the Netherlands in 2005 rejected the document. However, it
is possible that a revised constitution could win acceptance in the future.

8. Disappointment

Many ACP countries have been disappointed with the mixed results of their three
or more decades of partnership with the EU and with Western development aid
in general (Lister, 1997). As Morrissey et al. point out in chapter 8 of this volume,
the current negotiations under the Cotonou Agreement for regional free trade ar-
eas between developing countries and the EU, scheduled for completion in 2008,
could well increase levels of disappointment as some regions or categories such as
least developed countries receive more favourable treatment than others.

Likewise, Eastern and Central European candidate members of the EU (as well
as Turkey) have been disappointed at the slow pace of membership negotiations,
strict conditions for membership, and the lack of full membership benefits upon
joining. A Eurobarometer poll found that support from the citizens of Central and
Eastern European countries for joining the EU averaged 59 percent, but ranged
from just 33 percent in Latvia and Estonia to 80 percent in Romania (which was
not included in the first wave of entrants). Only 49 percent of existing EU citi-
zens supported the expansion of the EU (European Commission, 2001).

9. Partnership: An Elusive Goal?

The meaning of partnerships among sovereign states has long been a subject of
some perplexity, given the number of widely different international partnerships
in operation (Lister, 1988; Raffer, 2002). Nevertheless, the usage of this termi-
nology is virtually universal today, having flourished, for example, in the EU’s
lexicon ever since it replaced ‘association’ to designate EU relations with develop-

 Marjorie Lister

Mold - [Link] 76 15-6-2007 14:37:28

 ing countries in the first Lomé Convention of 1975. At present ‘partnership’ can
be applied to almost any inter-state relations – from the close links between EU
partner states, the relations between Europe and the US in NATO, NATO’s
Partnership for Peace with Central and Eastern European states, to the US plans
for partnerships with poor countries in Africa (Lister, 1999b). The dissemination
of the contemporary discourse of ‘partnerships’ between countries is a part of the
process of globalisation.

Adjectives such as ‘uneven’, ‘unequal’, or ‘asymmetrical’ can be added to ‘partner-

ship’ to indicate its often unbalanced nature in practice. Even more graphic is the
description of partnership as stemming from the model of the partnership of the
horse and its rider (Lister, 1988) or the Orwellian model of partnership where the
stronger party (the EU) makes all the decisions and the weaker one (the develop-
ing world) is largely a historical burden (Raffer, 2001). In any case, relations of
equality seem much rarer in contemporary interstate partnerships than those of
inequality. Despite the vagueness of the term ‘partnership’ and the difficulty of
defining it precisely (Maxwell and Riddell, 1998), it does express for many people
an ideal of equality, equity, and harmonious cooperation. This ideal, for example in
the case of the Lomé Convention, is ‘known by everybody never to have existed but
to be necessary to create’ (Sebegnou, 1999). In the case of the Euro-Mediterranean
Partnership between the 27 members, the terminology and the ideal of partner-
ship can be juxtaposed against the problems of inequality between the wealthy and
powerful EU states and the poor countries of the southern Mediterranean littoral.
Instead of partnership, the basic power configuration in the region is one of Euro-
pean hegemony with Europe as the centre or hub of the system and the outlying
Mediterranean countries as the spokes ( Joffe, 1997; Joffe, 1999).

Francis Fukuyama emphasised the importance of trust in building social capital

and promoting economic development (Fukuyama, 1995). He argued that pros-
perity depends not only on free market economics and democratic government,
but also on an underlying social condition of trust. High trust societies such as
Japan and Germany experience greater economic development than those where
social trust is rarer. But Fukuyama’s argument could be further extended beyond
national societies to international relationships or regimes. That is, international
regimes based on trust, or at least based on predictable and consistent patterns
of state behaviour (Lister, 1997), for example between the EU and US or between
EU member states, could be expected to perform better than those based on
lower levels of trust. According to this expanded version of Fukuyama’s model,
under conditions of international trust, for instance around the Mediterranean
basin, economic prosperity would be a more likely outcome.

Globalisation and the Post-Lomé World 

Mold - [Link] 77 15-6-2007 14:37:29

 In discussing partnership, it is impossible to ignore an ambitious recent Afri-
can initiative. In July 2001, five African states – Nigeria, South Africa, Algeria,
Senegal, and Zambia – launched the New Partnership for Africa’s Development
(NEPAD). Its intention is to use peer pressure to evoke policy change in African
countries, to turn its back on the unsuccessful history of loans and aid to the con-
tinent while developing a more successful partnership with the international com-
munity. This does not mean NEPAD rejects aid from the developed world; rather
it rejects unproductive aid and the debt burden it caused (NEPAD, 2001).

NEPAD aims at creating a new Africa-led development agenda for Africa. It

seeks to build a comprehensive policy framework for the socio-economic renewal
of Africa (Obasanjo, 2002). The new partnership’s priorities are: peace and secu-
rity; democracy and good political, economic and corporate governance; regional
cooperation and integration; capacity-building; policy reform and increased in-
vestment in key sectors such as agriculture and human development; and mobil-
ising resources through a variety of means such as increasing domestic savings
and investment, and external capital flows (NEPAD, 2004). NEPAD plans to
cooperate closely with the European Union, to hold biannual meetings between
its executive committee and the European Commission, and to consider other
development issues such as how to coordinate the new initiative with the instru-
ments of the Cotonou Agreement (Mouradian, 2001).

Already a number of questions have been raised about the partnership, including
the potential membership, means of accountability, relations with the African
Union, proliferation of institutions and the top-down nature of the agreement,
which has had little public or civil society input (Maxwell and Christiansen,
2002; De Waal, 2002). Although hopeful about the future of NEPAD, Alex De
Waal argued at an early stage that, ‘the initiative can easily be read as either
Africa’s best hope or another futile grand plan’ (De Waal, 2002: 475). So far,
the successes of NEPAD include increasing its membership to 20 countries by
2003 (NEPAD, 2003) and attracting EU funding for its peacekeeping opera-
tions in Africa (Anyazawa, 2004). NEPAD has also gained the attention and
the financial support of the developed G8 countries. President Obasanjo, chair-
person of the NEPAD Heads of State and Government Committee emphasised
NEPAD’s accomplishments: ‘In response to NEPAD, the G8 countries have not
only produced the G8 Africa Action Plan, they have reversed the downward
trend in development assistance ... Africa features prominently in high-level in-
vestor conferences instead of featuring only on television screens as a centre of
conflicts, natural disasters, and human misery’ (Obasanjo, 2002: 11). NEPAD’s
African Peer Review Mechanism, which assesses member countries’ develop-

 Marjorie Lister

Mold - [Link] 78 15-6-2007 14:37:29

 ment performance, was initiated in 2003. Widely seen as the most important
instrument of the organisation, so far 26 countries have participated in the review
process (Oyuke, 2006).

10. Conclusion

For the EU, globalisation has several meanings. On one hand, it means becoming
a global actor, taking on a larger political role as its ‘richer but inevitably more
complex relations with the rest of the world’ unfold (European Commission,
1997b: 36). Globalisation also means more international economic integration,
but without ending the inequalities between the rich and the poor, ‘the globalis-
ers’ and ‘the globalised’ (Ki-Zerbo, 2001). For the EU, the advent of its single
currency, the euro, the external potential of the single market, and the Union’s
ability to act cohesively in international fora such as the World Trade Organiza-
tion (WTO) potentially offer it great power.

The effects of globalisation on the EU’s existing development and external poli-
cies are extensive. Globalisation also means facing global-level problems, includ-
ing poverty-alleviation, development, failures in governance, conflict, gender
inequality, and environmental mismanagement. But addressing these as global
problems does not necessarily mean the death of the international development
agenda, including aid, nor the demise of regional partnerships such as the Coto-
nou Agreement.

Not only the end of development, but also the demise of the Third World as a
cohesive political force have been widely discussed. The idea of the Third World
as a political and geographical unity is certainly greatly diminished. Developing
countries participate in organisations as varied as the North America Free Trade
Area (NAFTA), the Association of South East Asian Nations (ASEAN), and
NEPAD. But the fragmentation of the developing world has not achieved the end
of the conditions of poverty and marginalisation which characterised developing
countries and peoples during the Cold War period.

It can be argued that 40 years after most of the developing countries attained in-
dependence, the post-colonial approach to politics and society has now been su-
perseded. Initiatives like the Cotonou Agreement and the NEPAD stress that the
ownership (i.e., responsibility) for development programmes lies mainly with the
developing countries, not with the former colonisers. Yet the relationship, for in-
stance, between Britain and the 54-member Commonwealth, or the basis of the

Globalisation and the Post-Lomé World 

Mold - [Link] 79 15-6-2007 14:37:29

 Cotonou Agreement are impossible to understand without reference to the colonial
period. The post-colonial perspective on slavery and on political and economic de-
pendency is still valuable to complement an emerging perspective of globalisation.

The changed status of Eastern and Central European countries from socialist to
developing or transitional countries is one of the outstanding features of post-
Cold War politics. A comparison of the respective experiences of the develop-
ing countries and the Central and Eastern European candidate members of the
EU shows the powerful influence of the Union on these regions, the increasing
politicisation of relations in both cases, the effects of these external relationships
on the internal structure of the EU, and the disappointment these relations have
often occasioned. Whether the changes in aid programming, the regional free
trade areas scheduled to emerge under the Cotonou Agreement, or the full EU
membership achieved for ten Central, Eastern, and Mediterranean European
countries in 2004 will eradicate past disappointments remains to be seen.

The 2005 British EU Presidency oversaw the formal reaffirmation of the prin-
ciples of partnership and political dialogue with developing countries. Perhaps
more importantly, these principles were supplemented by a commitment to in-
creasing aid volume to 0.56 percent of gross national income by 2010 and 0.7 per-
cent by 2015, as well as improving aid effectiveness (European Union, 2005). But
EU plans to increase pressure on poor countries to implement anti-terrorism and
migration control measures (Bounds, 2006) and to pursue regional trade agree-
ments following the failure of the WTO Doha Round have attracted substantial
criticism (Oxfam, 2006).

In this era of globalisation, creating a real partnership for development constitutes

a significant challenge. From NATO’s Partnership for Peace to the New Partner-
ship for Africa’s Development, ‘partnership’ is the international discourse of choice.
Yet the term is most remarkable for its flexibility in operation, and for its aspira-
tional qualities. ‘Partnership’ appeals to an ideal of equity, equality, and harmoni-
ous cooperation among states and peoples which has to be realised in practice.

Note

 For example, the failure of economic theories to apply successfully to real world situations
was evidenced in the disastrous collapse of the Long Term Capital Management hedge
fund in , despite the contribution of two Nobel prize-winning economists to its man-
agement.

 Marjorie Lister

Mold - [Link] 80 15-6-2007 14:37:29

 References

Amin, Samir (1997), Capitalism in the Age of Globalization, London and New
Jersey: ZED Books.
Anyazawa, J. (2004), ‘EU gives for Peace Plan’, April 15, [Link].
Benoit, B, Guerrera, F, and Wright, R. (2002), ‘EU nations agree aid as floods hit
north’, The Financial Times, 19 August, p. 5.
Bounds, A. (2006), ‘EU under fire for attaching strings to aid’, Financial Times,
August 7, p. 6.
Broad, R., Cavanagh, J. and Bello, W. (1995), ‘Development: The Market is not
Enough’ in Frieden, J. and Lake, D. (eds) International Political Economy,3rd ed.,
London and New York: Routledge and St. Martin’s Press.
Clapham, Christopher (1985), Third World Politics, London and Sydney: Croom
Helm.
Cotonou Agreement (2000), ‘ACP-EU Partnership Agreement signed in Coto-
nou on 23 June 2000’, The Courier, Brussels, special issue, September.
De Waal, Alex (2002), ‘What’s New in the “New Partnership for Africa’s Devel-
opment?”’, International Affairs, vol. 78, no. 3, July, pp. 477-492.
Development Assistance Committee (2002), ‘Development Cooperation Review:
European Community’, Paris: OECD.
Dombey, D. (2002), ‘Commission plans flood relief for central Europe’, Financial
Times, 29 August, p. 5.
The Economist (2002), ‘Europe’s Constitutional Convention’, vol. 364, no. 8282,
July 20-26, pp. 31-32.
European Commission (1997a), Green Paper on relations between the European
Union and the ACP countries on the eve of the 21st century, Luxembourg: Office
for Official Publications of the European Communities.
European Commission (1997b), ‘Agenda 2000: 1. For a Stronger and Wider Union’,
COM (97) 2000 final, vol. 1, Brussels, 15 July.
European Commission (1998), The Future of North-South Relations, Luxembourg
and London: Official Office of Publications of the European Community and
Kogan Page.
European Commission (1999), ‘Europeans and Development Aid’, Eurobarometer,
Report no. 50.1, Brussels, 8 February.
European Commission (2000), ‘Communication from the Commission to the
Council and the European Parliament: The European Community’s Develop-
ment Policy’, Brussels, COM (2000) 212 final, 26 April.
European Commission (2001), ‘Public Opinion in the Countries Applying for
European Union Membership’ in Eurobarometer, Brussels, December.
European Commission (2002a), Annual Report 2001 from the Commission to the

Globalisation and the Post-Lomé World 

Mold - [Link] 81 15-6-2007 14:37:29

 Council and the European Parliament ON the EC Development Policy and the
Implementation of the External Assistance, Brussels, COM (2002) 490 final, 12
September.
European Commission (2002b), ‘ The European Community’s Development Pol-
icy – Statement by the Council and the Commission’, October 15, available at
[Link]/comm/development/lex/en/council20001110_en.htm
European Commission (2005), Annual Report 2005: The European Community’s
Development Policy and the Implementation of External Assistance in 2004, Lux-
embourg, Office for Official Publications of the European Communities.
European Union (2005), ‘Joint Statement by the Council and the Representa-
tives of the Governments and Member States meeting within the Council, the
European Parliament and the Commission on European Development Policy’
20 December, available at [Link]/comm/development/body/de-
velopment_policy_statement.
Fukuyama, Francis (1995), Trust: The Social Virtues and the Creation of Prosperity,
London: Hamish Hamilton.
Garton Ash, Timothy (2002), ‘ The grim wedding’, The Guardian, June 27, p. 19.
Ginsberg, R. (2001), The European Union in International Politics, Oxford and
Boston: Rowman and Littlefield.
Grilli, E. (1993), The European Community and the Developing Countries, Cam-
bridge: Cambridge University Press.
Hoogvelt, A. (2001), Globalization and the PostColonial World, 2nd ed., Hound-
mills: Palgrave.
Joffe, G. (1997), ‘Southern Attitudes towards an Integrated Mediterranean Re-
gion’, in Gillespie, R., (ed.), The Euro-Mediterranean Partnership, London and
Portland OR: Frank Cass.
Joffe, G. (1999), ‘ The Euro-Mediterranean Partnership Initiative: Problems and
Prospects’, in Joffe, G., (ed.), Perspectives on Development: The Euro-Mediter-
ranean Partnership, London: Routledge, 1999.
Ki-Zerbo, J. (2001), ‘Porto Alegre or Davos?’, The Courier, no. 186, May-June
2001, pp. 9-10.
Lister, Majorie (1988), The European Community and the Developing World, Al-
dershot: Avebury.
Lister, Majorie (1997), The European Union and the South, London and New York:
Routledge and St. Martin’s Press.
Lister, Majorie (1998), ‘ The European Union’s Green Paper on Relations with the
African, Caribbean and Pacific Countries’, Oxford Development Studies, vol. 26,
no. 3, pp. 375-390.
Lister, Majorie, ed. (1999), New Perspectives on European Union Development Co-
operation, Boulder and Oxford: Westview Press.

 Marjorie Lister

Mold - [Link] 82 15-6-2007 14:37:29

 Maxwell, Simon. and Christiansen, K. (2002), ‘“Negotiation as Simultaneous
Equation”: Building a New Partnership with Africa’, in International Affairs,
vol. 78, no 3, July, pp. 477-492.
Maxwell, S., and Riddell, R. (1998), ‘Conditionality or Contract: Perspectives on
Partnership for Development’, Journal of International Development, 10, March-
April, pp. 257-268.
McMichael, P. (2000), Development and Social Change, 2nd ed., Thousand Oaks:
Pine Forge Press.
Mouradian, A-M, (2001), ‘Europe Supports the African Renaissance’, The Cou-
rier, no. 189, Nov-Dec, pp. 10-11.
NEPAD (2001), ‘ The New Partnership for Africa’s Development’, October.
NEPAD (2003), ‘Report on the Expanded NEPAD/G8 Dialogue Meeting on 10
November in Paris’, available at [Link].
NEPAD (2004), ‘NEPAD in Brief ’, April 15, available at [Link].
Obasanjo, O. (2002), ‘Statement of H.E. Chief Olusegun Obansanjo, President
of the Federal Republic of Nigeria and Chairperson of the NEPAD Head of
State and Government Implementation Committee’, in NEPAD, Annual Re-
port 2002: Towards Claiming the 21st Century.
Oyuke, J. (2006), ‘NEPAD Reviews Taking Too Long, Say Experts’, The East Af-
rican Standard (Nairobi), 28 April, 2006, available at [Link]/sto-
ries/[Link].
Oxfam (2006), ‘Oxfam warns of threat of regional trade deals for poor countries’,
August 4, available at [Link]/news/pressreleases2006/pr060804_wto.
Raffer, Kunibert (2001), ‘Cotonou: Slowly Undoing Lomé’s Concept of Partner-
ship’, European Development Policy Study Group, Discussion Paper no. 20,
February.
Said, Edward (1991), Orientalism, London: Penguin, pp. 13-14.
Scott, C. (1996), Gender and Development, Boulder and London: Lynne Rienner.
Segbenou, R. (1999), ‘About the ongoing negotiations’, contribution to internet
forum; forum-e@[Link], 1 September (M. Lister trans).
Spur (1995), ‘Only 1 in 10 people would support cuts in ODA’, November/December.
Thomas, C. (1999), ‘Where is the Third World Now?’ Review of International
Studies, December, pp. 225-243.
The Times, Editorial (2002), ‘Seams Showing’, 9 August, p. 23.
Warakaulle, C. (2002), ‘In and Out’, The World Today, vol. 58 no 7, July, pp 16-17.
Wallace, W. (1996), ‘Government without Statehood: The Unstable Equilibrium’,
in Wallace, H. and Wallace, W., (eds), Policy-making in the European Union, 3rd
ed., Oxford: Oxford University Press.
Zartman, I.W. (1976), ‘Europe and Africa: Decolonization or Dependency?’ Inter-
national Affairs, January, vol. 54, no. 2, pp. 326-343.

Globalisation and the Post-Lomé World 

Mold - [Link] 83 15-6-2007 14:37:29

Mold - [Link] 84 15-6-2007 14:37:29
 4 Clash of Civilisations or Intercultural Dialogue?
Challenges for EU Mediterranean Policies

Roderick Pace

1. Introduction

Since Samuel Huntington published his theory that world politics in the post-
Cold War era should be understood from the perspective of a ‘clash of civilisa-
tions’, it has become customary when discussing Mediterranean politics to refer to
this theory. Huntington’s theory (Huntington, 1993; 1998) has a measure of appeal
because it is simple, compressing a very complex reality into a simplified and com-
prehensible framework of world politics. It achieves therefore what is expected of
theory. But as is the case with many other theories it has also proved to be contro-
versial. Does it have explanatory value? Is it reductionist in its simplicity? Ques-
tions like these and others, which strike at the core of Huntington’s premises, are
clearly warranted. However, for the purpose of the present analysis, Huntington’s
theory is addressed because it is often cited to explain contemporary events in the
Mediterranean region, particularly since the latter is a point of contact, or alter-
natively as others see it, a fault line between the world’s three main monotheistic
religions and the civilisations/cultures that they have given rise to.1

What explanatory relevance does Huntington’s theory have for Euro-Mediterra-

nean relations? Significantly, the European Union (EU) has attached importance
to the ‘dialogue of cultures’ and the need for developing stronger links between
the civil societies on both sides of the Mediterranean. This was supposed to be
one of the main innovations of the Barcelona Process which was initiated in 1995.
This dialogue was intensified after the terrorist attacks of September 11, 2001 and
following the attacks carried out in Turkey, Morocco, Madrid, and London. Fol-
lowing decisions taken by the Euro-Mediterranean foreign ministers in successive
meetings in 2002-2004, the Anna Lindh Euro-Mediterranean Foundation for the
Dialogue Between Cultures was established. This foundation, whose main aim
is to promote dialogue between cultures and to contribute to the visibility of the



Mold - [Link] 85 15-6-2007 14:37:29

 Barcelona Process, has its headquarters in the Alexandria Library in conjunction
with the Swedish Institute in Alexandria, Egypt. The EU accepts that cultural
and civilisation cleavages exercise a strong influence on the politics and the trans-
national relations of the Mediterranean region, though it is reluctant to concede
the ‘logic’ of a ‘clash of civilisations’. By and large, the governments of the Muslim
states of the region share the same view.

Indeed, following the events of September 11, 2001 the governments of the Euro-
Mediterranean region proclaimed that the attacks should not be equated with
Islam. This was reassuring in so far as it showed that the political elites of the
countries on the Mediterranean littoral shared a similar world view about the
motivations behind these terrorist attacks. The late Edward W. Said, critical of
Huntington’s theory and of those who claimed that September 11 proved it, had
this to say: ‘ The carefully planned and horrendous, pathologically motivated sui-
cide attack and mass slaughter by a small group of deranged militants has been
turned into proof of Huntington’s Theory.’ He further described the ‘clash of ci-
vilisations’ as a gimmick (Said, 2001). That said, however, religious identity and
‘anti-Western’ sentiments remain heightened in many strata of Muslim societies,
and the latter sentiments have also intensified in the wake of the war in Iraq. For
example, a public opinion survey in four key Islamic countries found that the
people there identified more with religion, claiming to be Muslims above all, than
with nationality. The same survey found that following the events of September
11, 71 percent of those questioned in Egypt, the most populous Arab country,
singled out the ‘Western cultural invasion’ as a very serious problem (Moaddel,
2003). A much discussed and controversial opinion poll carried out by Gallup
in December, 2001 and January, 2002 in nine Islamic countries found amongst
other things that only 12 percent thought that the ‘West’ respects Arab or Islamic
values.2

The aim of this chapter is to further expand on the above arguments, to explore
whether indeed a ‘clash of civilisations’ explains relations in the region, and to
review some of the salient efforts pursued in the Mediterranean region to encour-
age the dialogue of cultures. The analysis is divided in three sections:
1. A review of the EU perspective of the Mediterranean region;
2. A discussion of some of the more salient theoretical ways of analysing interna-
tional relations in the region; and
3. Some implications for EU policies.

 Roderick Pace

Mold - [Link] 86 15-6-2007 14:37:29

 2. The EU’s Perspectives of the Mediterranean Region

The Mediterranean region is crucial for the EU. Any instability there can spill
over and affect the EU itself. Lacking the means and often the will to conduct a
military-based foreign policy towards the region, the EU has traditionally opt-
ed to act as a ‘civilian power’.3 But in recent years the limitations of this policy
have increasingly become apparent and since 1993 the EU has been developing
its Common Foreign and Security Policy (CFSP) and the Common European
Security and Defence Policy (ESDP). If and when it is fully developed, the CFSP
and ESDP may enable the EU to play a more credible role in meeting the region’s
security challenges and in helping resolve its long-standing problems since it will
have the capabilities of deploying peacekeeping forces and of gathering informa-
tion on regional threats.4 The Mediterranean security challenges can be grouped
together under two main headings – ‘hard’ and ‘soft’.5 Both sets of security chal-
lenges are interconnected. They are separated here only for analytical purposes
and because each requires different responses: military means being the most
efficacious in the case of ‘hard’ threats, non-military responses in the case of ‘soft’
threats.

With respect to the ‘hard security’ questions, the likelihood of a North-South

confrontation seems remote; South-South crises are more likely. The main hard
security regional threats perceived by many European governments are the pro-
liferation of weapons of mass destruction and international terrorism.6 The pres-
ence of US and North Atlantic Treaty Organization (NATO) naval and military
forces in the region provide a credible defence shield. However, long-term reli-
ance on the US is not a cherished goal for many European governments. This
explains the effort to develop the CFSP and ESDP which, if achieved, will enable
the EU to take on more of the military burden of its own security, including in
the Mediterranean region. The main question in this case is whether the EU’s ac-
tions will match its rhetoric. However, it must also be added that challenges such
as the proliferation of weapons of mass destruction and terrorism cannot be met
by military means alone but require North-South collaboration, the sharing of
information, diplomatic effort, and confidence-building measures.

It is when dealing with the Mediterranean ‘soft’ security challenges, involving

mostly non-military measures and where the EU is using its ‘civilian power’ ap-
proach, that the EU is more likely to encounter a number of cultural cleavages in
its relations with its Mediterranean partners. This is where notions of a ‘clash of
civilisations’ (within the parameters discussed in this chapter) or of different cul-
tural values may become more relevant. It is important to keep this in mind since

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 87 15-6-2007 14:37:29

 the EU’s ‘civilian power’ approach is also likely to remain the most widely used
approach in the foreseeable future. Furthermore, the relevant EU external policy
instruments, namely the Euro-Mediterranean Partnership (EMP) and more re-
cently the European Neighbourhood Policy (ENP), are both based on the liberal
world view that regional stability is enhanced by encouraging democracies and
market economies. This ‘Western’ liberal model clashes with some of the views
of Islamic ‘fundamentalists’, who are in opposition in most of the Mediterranean
Muslim states. But it also clashes with the authoritarian governments of these
countries who accept economic liberalisation (to varying degrees) but not de-
mocracy since the latter entails their loss of political and economic power. Yet
the evidence does not suggest that the liberal model and Islam are intrinsically
incompatible (El Fadl et al., 2004).

3. The EU’s Policy Response

The EU’s main response to its Mediterranean security challenges is the decade-
old Euro-Mediterranean Partnership launched in Barcelona in 1995. This was
followed by the Common Strategy towards the Mediterranean region adopted by
the Feira European Council (Common Strategy, OJ L183 2000). In 2004, the EU
launched the new Neighbourhood Policy (ENP), which reinforces the Partner-
ship without displacing it. The Euro-Mediterranean Partnership succeeds previ-
ous EU policies pursued since the early 1970s. It consists of initiatives gathered
under three main ‘baskets’ comprised of political and security issues; economic
and financial co-operation; and social, cultural, human, and civil society matters.
It was agreed from the start that progress in the three areas had to be ‘balanced’,
i.e., that the partners would aim towards simultaneous and even progress on all
three fronts (Barcelona Declaration, 1995). This is still the main policy objective
as was reiterated by all the partners in April 2002 during the Fifth Mediterranean
Foreign Ministers’ meeting held in Valencia.

Actual achievements on the ground, however, have been much less impressive.
Progress in the economic sphere clearly seems to be running smoothest, though
there are still problems of proper implementation. At the mid-term Euro-Medi-
terranean conference of foreign ministers held in Crete at the end of May 2003, a
total of 35 foreign ministers participated as a result of the impending EU enlarge-
ment, compared 27 ministers at the previous conference. The conference led to
no substantial new initiative (Mid-Term Euro-Mediterranean Conference, Crete,
2003). Nor was progress made with regard to the Euro-Mediterranean Charter
for Peace and Stability. Similarly at the meeting which was held in Barcelona on

 Roderick Pace

Mold - [Link] 88 15-6-2007 14:37:30

 27-28 November 2005 to mark the tenth anniversary of the Barcelona Declara-
tion, only two political leaders from the 10 partner countries attended, namely
the prime minister of Turkey and the president of the Palestinian Authority.
The representatives present approved an anti-terrorism code of conduct and
agreed on a work programme for the next five years, but failed to adopt a com-
mon declaration.

Overall there has been a general failure to achieve meaningful progress in the
whole of the political and security basket of the Euro-Mediterranean Partnership
and only limited results have been registered in the cultural/civil society one. In
the meantime, a reasonable amount of progress has been achieved in the econom-
ic area, consisting of the conclusion of the bilateral free trade accords between
the EU and all the Mediterranean partners except Libya (which has the status of
observer). Relations with Libya are likely to improve as the country continues to
move out of its international isolation. Libya wishes to develop relations with the
EU but does not want to join the Euro-Mediterranean Partnership.7

For the free trade area to be completed, the main challenge lies in concluding free
trade agreements between the southern littoral states themselves. To make this
feasible, the southern Mediterranean countries need to establish (among other
things) a common system of rules of origin and on fair competition, so as to make
it easier for these countries to increase their export potential by taking advantage
of cumulative rules of origin.8 The longer-term implications of this are that as one
stage leads to another in the evolution of the Euro-Mediterranean free trade area,
a substantive part of the EU internal market legislation may have to be extended
to the Mediterranean partners. This increasingly appears to be a more realistic
possibility.

The launching of the so-called Agadir Initiative on May 8, 2001 aimed at creating
an Arab Mediterranean Free Trade Area, initially comprised of Tunisia, Morocco,
Egypt, and Jordan, is a positive step. The initiative has received the EU’s constant
support and encouragement. On January 11, 2003, the four Arab countries initiated
a formal free trade agreement in the Jordanian capital of Amman. Then on Febru-
ary 25, 2004 at a ceremony in Agadir, attended by Commissioner Chris Patten, the
four countries formally signed the agreement, which should have gone into effect
at the beginning of 2005 but to date has not. The Agadir free trade area, should it
come into being at some future date, will comprise a total population of around
100 million. The initiative is an open-ended one, and other Arab League member
states are free to join it when they are ready to do so. In addition, attempts have
been made from time to time to try and reinvigorate the Greater Arab Maghreb

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 89 15-6-2007 14:37:30

 Union (AMU), which aims at closer economic integration between Algeria, Mo-
rocco, Tunisia, Libya, and Mauritania. Since it was launched in 1989, the AMU
has been stifled by a number of adverse developments, beginning with the dete-
riorating relations between Algeria and Morocco, later by the internal situation in
Algeria itself, and the UN embargo against Libya. In 2003, an attempt was made to
re-launch the organisation, but a summit of leaders of the organisation scheduled
for 23-24 December 2003 had to be postponed primarily because of a dispute be-
tween Algeria and Morocco over the Western Sahara (Arabic News, 2003)

The failure of the AMU and the lack of progress on the Agadir free trade area
are very serious since South-South free trade agreements are envisaged in the
1995 Barcelona Declaration as an important step towards the creation of the
Euro-Mediterranean free trade area. It is argued that such South-South trade
arrangements could improve trade and the economic prospects for the countries
of the region (MENA, 2002: 57-60). However, the potential adverse social and
environmental ramifications of economic restructuring and trade liberalisation
could also be significant unless mitigating action is taken (SIA-EMFTA, 2005).
Nevertheless, since economic growth has picked up in the last two years 9 after a
long period of decline, stagnation, or low growth (1985-2005) a window of op-
portunity has opened up for the countries of the region to tackle the challenge
of poverty alleviation, particularly unemployment (for which the Arab Mediter-
ranean countries are notorious) (Iqbal, 2006). One other clear issue that emerges
from the lack of meaningful progress on South-South integration is what Ste-
phen Calleya has underscored as the main Achilles’ heal of progress in the region,
namely the lack of drive on the part of the Mediterranean countries to engage in
self-help (Calleya, 2005). The EMP, the EU Neighbourhood Policy, and the ‘tai-
lor-made’ Action Plans signed within this policy, provide the opportunities and
the incentives but it is the Mediterranean partners that must grasp them.

4. The Underlying Principles

The underlying rationale of EU policies links political stability in the southern

Mediterranean states to these countries’ economic performance. In the past, slug-
gish economic growth was blamed for the lack of foreign direct investment (the
Mediterranean region is the world’s second worst performer on foreign direct
investment, after sub-Saharan Africa) while Africa as a whole receives a dismal 3
percent of world flows (UNCTAD, 2005: 39-52). Other factors include bad gov-
ernance worsened by authoritarian rule, a lingering bias towards import substitu-
tion and state intervention, and bureaucratic bottlenecks (Nabli, 2005). The rate

 Roderick Pace

Mold - [Link] 90 15-6-2007 14:37:30

 of economic growth, though positive, has been insufficient to meet the demands
of the fast growing, relatively young population of these countries. The Marseille-
based research centre Forum Euro-Méditerranéen des Instituts Economiques
(FEMISE) estimates that in order to maintain unemployment rates as they are
the region has to create 35 million new jobs between 2000-2015 (Radwan and
Reiffers, 2005). According to the Commission this can only be achieved by a sus-
tained annual GDP growth rate of six to seven percent whereas the annual rate
in the 1990s was a mere four percent (Rabat-Skhirat, 2005). By employing an as-
sortment of bilateral, multilateral, and multi-level approaches, the aim of the Bar-
celona Process was to encourage faster economic growth to meet such targets. In
addition the Barcelona Declaration envisaged that economic restructuring, trade
liberalisation, regional integration, and the accompanying political reform, would
eventually entangle the region in a cobweb of economic, political, and cultural
relations and interdependencies which together would have a stabilising effect.

This approach requires two simultaneous and obviously well co-ordinated poli-
cies to be followed by the Mediterranean Partners, namely democratic and eco-
nomic transition, both considered to be mutually reinforcing. There is a belief
that economic reform will attack the root cause of the region’s socio-economic
problems, which in turn are the source of its political turbulence, while democ-
ratisation will underwrite the economic reforms and ensure their resilience in
the long-term. Such approaches to creating peace and stability are based on the
controversial liberal notion that ‘democracies are less likely to go to war’.

The second approach suggests that the establishment of free market economies
in each of the partner countries will result in irresistible pressure to set up demo-
cratic political institutions. This approach is more gradualist and confident that
a free market economy will precipitate democracy by a kind of ‘invisible hand’
process. The two approaches discussed entail the importation and assimilation
by the Muslim societies and their cultures of a substantial amount of Western or
liberal values. Most governments in the Mediterranean partner countries are pre-
pared to accept the economic liberalisation part of the ‘formula’ but are reluctant
to accept or take a longer-term view of the introduction of democratic freedoms.
It is also argued that Islamic culture resists such changes. In the political domain,
Huntington has already claimed that Islamic culture explains in large part the
failure of democracy to emerge in much of the Muslim world (Huntington, 1998:
29). However the advances made on the democratic front in Albania, Turkey, Ma-
laysia, and Indonesia as well as the more timid developments in some of the Arab
countries show that democracy and Islam are not incompatible.

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 91 15-6-2007 14:37:30

 In the economic domain, Mediterranean Muslim countries have shown a strong
tendency towards grafting imported economic models onto their societies. For
example, in the immediate post-colonial era, governments pursued to varying de-
grees a state-centric economic development path, an economic model imported
from Europe which was based on import substitution. In the mid-1980s when the
limitations of this approach began to be realised, they embarked, again at various
speeds and to varying degrees, on a liberalisation process. What many have iden-
tified as the main factors retarding the region’s economic development – such as
bureaucratic bottlenecks, corruption, patronage, political tensions, a deficit in the
rule of law, trade barriers, and a host of other problems linked to bad governance
– are not intrinsically related to Islam. Indeed Islamic culture has lived without
serious problems alongside many of the main approaches to organising the econ-
omy, whether it was a command or centrally planned approach, a liberal one or
a mixed economy. As Bernard Lewis points out, in Islamic societies the Western
notion of ‘secularism’, or better still la cisme, and the dichotomy of church and
state, do not exist except in Turkey. In sum: ‘Correct Islam is defined not so much
by orthodoxy as by orthopraxy. What matters is what a Muslim does, not what
he believes’ (Lewis, 1993: 178).

Differences in economic practice between Islamic and Western societies are thus
often exaggerated. Take for example the case of financial institutions and in par-
ticular in Islamic banking. The Sharia (Islamic Law inspired by the Koran) pro-
hibits the granting of interest and loans. Thus Islamic banks have to resort to
‘Sharia-friendly’ practices such as paying dividends on investment accounts but
not on current accounts and sharing profits when they provide capital to investors.
Islamic banking is not a widespread phenomenon in the Arab world and some key
countries still do not permit it (Wilson, 2002: 143-163). Although its practices are
different from Western banking, its objectives are the same. But going beyond
Islamic banking, the economic values of Islamic movements – such as respect
for private property, promotion of good fiscal management, and the discourage-
ment of corruption are clearly compatible. No serious objections of a religious
nature have been raised against privatisation or liberalisation, although there is
a tendency towards autarky in some Islamic economic programmes. Trade union
rights, social security, and equal pay for equal work are also compatible with the
Sharia. Differences are encountered in some cases as in the right of woman to
choose their own occupation (Baderin, 2003: 176-212). In sum, the evidence so
far does not appear to suggest that there are wide value differences between Islam
and the West that make the adoption of a liberal economic model based on a
market economy and private property impossible in Islamic states, though some
difficulties cannot be ignored.

 Roderick Pace

Mold - [Link] 92 15-6-2007 14:37:30

 Within the political domain of Euro-Mediterranean relations, it can be argued that
the partners’ reticence regarding democratic reform seems to owe more to consid-
erations of internal power politics than to a clash of cultural or civilisation values.
EU measures aimed at encouraging the growth of civil society encounter problems
because the governments of the partner states are apprehensive that ‘uncontrolled’
growth and expansion of civil society may lead to increased pressure for pluralism
and more democratic and accountable political institutions. Furthermore, as Yom
(2005) observes, the civil society approach is defective. First, because analysts have
reached little consensus in defining civil society in the Arab context. Secondly, the
recent expansion of the associational sector, seen in the West as positively encour-
aging the growth of civil society, is more a function of autocratic rulers’ strategy
of controlled liberalisation rather than its objective weakening, which means that
Arab states remain robust in their will and capacity to repress (Yom, 2005).

The EU has also been somewhat ambivalent on promoting democracy and hu-
man rights. Despite inserting so-called democracy clauses in the new generation
of association agreements of the Euro-Mediterranean Partnership, its actions on
this front certainly do not match its rhetoric. Expectations were high that the EU
could use its economic strength in the region to promote democracy and human
rights more strongly, particularly in the wake of the publication of the Human
Development Reports by the United Nations Development Programme (UNDP)
and the Arab Fund for Human and Social Development. Amongst other things,
these reports harshly criticised the poor state of democracy in most of the Arab
world and called for concrete measures to achieve positive change (UNDP, 2002;
2003; 2004). Taking the lead from this report, and in reply to criticism of the
EU’s perceived ambivalence, the European Commission issued a Communica-
tion in 2003 on ‘Reinvigorating EU Actions on Human Rights and Democratisa-
tion with Mediterranean Partners – Strategic Guidelines’ (Com 2003 294 final,
21.05.2003). In this Communication it listed a number of actions designed to
promote human rights in third countries. Although the Council concurs with the
Commission’s proposed actions, it has stated clearly that the ‘principal role of the
(democracy) clause is to provide the EU with a basis for positive engagement on
human rights and democracy issues with third countries’ (EU Council, 2005 point
3.5). In other words, the EU’s Mediterranean partners are unlikely to be punished
for their reticence in introducing human rights unless they commit human rights
violations on a massive scale. The EU’s Neighbourhood Policy may indeed close
this lacuna since the ‘action plans’ negotiated with each of the Union’s partners on
a bilateral basis include a number of reforms which the partner has to achieve in
return for enhanced privileges in the EU (such as increased aid, deeper integra-
tion in the internal market, and more participation in EU programmes).

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 93 15-6-2007 14:37:30

 A third goal of the Euro-Mediterranean Partnership is to promote mutual un-
derstanding between civil societies in Europe and the Arab world. This entails
strengthening the inter-cultural and inter-religious dialogue, the role of the me-
dia in promoting dialogue and mutual understanding as well as the development
of human resources in the cultural field. Since 1995, the Euro-Mediterranean
Partnership has also hosted the Euro-Mediterranean Civil Forum. The Commu-
nity’s TEMPUS programme on higher education has also been extended to the
Mediterranean partners since 2003. Although EU financial support for these ini-
tiatives under the MEDA instrument have often been criticised for being insuf-
ficient, nevertheless they do represent a substantive development over previous
EU policies in the Mediterranean region. Then there is the ‘Action Programme
for the Dialogue between Cultures and Civilisations’ approved at the Fifth Meet-
ing of the Ministers of Foreign Affairs held in Valencia between the 22-23 of April
2002 as well as the Anna Lindh Foundation in Alexandria charged with further
promoting this dialogue. Finally, the Euro-Mediterranean Parliamentary Forum
(Pace et al., 2004), which has now been developed further into a Euro-Mediterra-
nean Parliamentary Assembly (EMPA) adds a parliamentary dimension to these
initiatives.10

5. Is there a Clash of Civilisations in the Mediterranean Region?

It has already been argued that there has been an increased tendency to read a ‘clash
of civilisations’ into most adverse developments in the Mediterranean region. Th e
temptation is difficult to resist because the Mediterranean region, in addition to
being the point of contact between the world’s three most important monotheistic
religions – Judaism, Christianity, and Islam – is also the home of many terrorist
organisations that claim an Islamic basis. On the European side, not all political
leaders readily subscribed to the notion of a ‘clash of civilisations’, as was amply
testified by their public reactions to the events of September 11 and their criticism
of a statement by Italian Prime Minister Silvio Berlusconi on September 27, 2001
to the effect that the ‘West’ is superior to Islam.11 Nonetheless, a dialogue of civili-
sations is a sine qua non in the Mediterranean region in order to strengthen mutual
confidence and preempt the manipulation of religious sentiment by extremists. In
this respect the Mediterranean region is not so different from other regions of the
world where civilisations and cultures co-exist side by side.

The ‘clash of civilisations’ has often been intelligently manipulated by authoritar-

ian governments to block political reform by claiming that basic human rights
and democratic freedoms are ‘incompatible with Islam’ since Islam has a solution

 Roderick Pace

Mold - [Link] 94 15-6-2007 14:37:30

 for everything and is not in need of the implementation of ‘western democratic
rights’. Such claims can also at times be defended on the basis of ‘cultural plural-
ism’. Meanwhile, in Europe, the diversity and heterogeneity of Muslim opposition
movements and what they are really opposing in their respective countries are
either poorly understood or purposely misconstrued. Though undeniably there
are cultural and civilisation cleavages in the Mediterranean region, their veracity
needs to be examined closely.

One can start with Huntington’s theory itself. It is clear that his theory seems to
challenge the classical realist perception of world politics based on the centrality
of the nation-state, claiming that while states were and continue to be important
protagonists in international relations, the other important actors have been ‘ci-
vilisations’. His approach is still a realist one, paradoxically both accepting and re-
jecting the centrality of states in foreign affairs, replacing states by civilisations or
‘macro-states’. He accepts that civilisations are dynamic, changing, and adapting,
and that they can also lose the struggle for survival, in this respect he undertakes
a brief survey of world history showing that many civilisations have lost out to
their competitors and disappeared (Huntington, 1993: 24-25; 1998: 43-45). The
writer identifies three phases in the history of civilisations: a first phase in which
they had no contact at all and evolved separately; a second phase characterised not
only by intense inter-civilisational contact but also the unidirectional impact of
Western civilisation over the rest, which commenced around the seventh century
AD; and a third phase beginning in the twentieth century whose main features
are ‘intense, sustained and multidirectional interactions among all civilisations’
(Huntington, 1998: 53). Huntington’s other main contribution is that he banishes
Fukuyama’s rashly optimistic judgement that the ‘end of history’ ushered in the
universalisation of Western civilisation. Lastly, his central thesis is that world
politics from here onwards will be increasingly characterised by clashes along the
fault lines that separate civilisations. He summarised it thus:

In the emerging world, the relations between states and groups from differ-
ent civilisations will not be close and will often be antagonistic. Yet some
inter-civilisational relations are more conflict-prone than others. At the mi-
cro level, the most violent fault lines are between Islam and its Orthodox,
Hindu, African and Western Christian neighbours. At the macro-level,
the dominant division is between ‘the West and the rest’, with the most
dominant conflicts occurring between Muslim and Asian societies on the
one hand and the West on the other. The dangerous clashes of the future
are likely to arise from the interaction of Western arrogance, Islamic intol-
erance and Semitic assertiveness. (Huntington, 1998: 183)

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 95 15-6-2007 14:37:30

 This pessimistic assessment spells out a very catastrophic scenario for the world
and the Mediterranean region in particular, where the Islamic and Western civili-
sations meet and interact. The theory’s credibility is enhanced by the perceived
radicalisation of Muslim societies and the rise of the so-called Islamic funda-
mentalist movements. From the moment that these were singled out as the main
threat to stability in the region, the ‘clash of civilisations’ appeared deterministi-
cally inevitable. Huntington’s assessment clashes markedly with that of Latouche
(1996). While the former perceives the world as a clash of civilisations competing
‘freely’ in the world, Latouche sees Western civilisation as a destructive force of
all other cultures across the globe (Latouche, 1996). For Latouche the game is as
good as won. For Huntington it has just started.

Huntington’s main assessment however needs to be addressed. Historically, the

realities in the Mediterranean region show evidence of a mixture of co-operation
and conflict that is probably neither better nor worse than the co-operation and
conflict in other regions, not least within Europe itself. Conflict and co-opera-
tion, war and trade have been an essential feature of the Mediterranean for mil-
lennia. The radicalisation of politics exhibit patterns of development experienced
elsewhere. It is doubtful whether the manner in which the civilisations which
border the Mediterranean are currently adapting to the global changes, to the
global culture, and to each other differs markedly from previous epochs. It is true
that the risks are higher today because the technology of war is more destructive.
But this counts for all the other regions of the world as well. In addition many of
the conflicts in the Mediterranean region not only predate Huntington’s theory
but owe more to other sources such as nationalism, the struggle for power and
interests, and the problems generated by the penetration of the ‘global culture’
rather than to a ‘clash of civilisations’. More terrorist attacks by so-called Muslim
fundamentalists have been directed at targets within Muslim countries than at
targets outside of them.

Furthermore, the differences differentiating the Mediterranean region’s civilisa-

tions are not so glaring as some make them out to be. Religious leaders have fre-
quently referred to the many commonalities between the three monotheistic re-
ligions, which need not be repeated here. Besides, proximity does not necessarily
breed contempt. It can also lead to mutual influences. As Fernand Braudel point-
ed out ‘civilisations continually borrow from their neighbours, even if they rein-
terpret and assimilate what they have adopted’ (Braudel, 1995: 29). A civilisation
may also stubbornly reject or resist assimilating a particular import, sometimes
after a long period of hesitation and experimentation. It may also reject some of
its own values, a rejection which may be lasting or short-lived. This means that

 Roderick Pace

Mold - [Link] 96 15-6-2007 14:37:30

 civilisations evolve and assume a shape such that they are never wholly new but
never quite the same as before (Braudel, 1995: 29-30). Braudel’s assessment of
civilisations shows their dynamic nature, a point with which Huntington would
also agree. Historic evidence supports this since it can be shown that every civili-
sation or culture that has made its impact in the Mediterranean region seems to
have left its mark on those around it and those which succeeded it, from pre-his-
tory down to the present. Indeed, although some civilisations (such as the ancient
Greek, Roman, Carthaginian, and Arabic) have disappeared their influences have
been grafted onto those that succeeded them.

Thus, although misunderstandings and prejudices may still exist on both sides of
the Mediterranean littoral, influences have indeed been criss-crossing the region
and mutually influencing the countries and civilisations. Throughout the post-
war period Islamic countries have been ‘importing’ a number of elements of the
‘global culture’ and assimilating them because they are essential to the continued
economic development of their societies. This in itself may have created a crisis
in a culture long accustomed to the idea that Islam has the answer to everything.
The process of the globalisation of the world economy and the growth in com-
munication networks imply that as the Mediterranean countries liberalise their
economies and integrate more in the global system, the more they will have to
adopt to this ‘global culture’.

This point can be illustrated by reference to the economic changes that the
Mediterranean Muslim countries have had to confront. Beginning first with the
financial and economic crisis of the 1980s, largely instigated by the collapse of
oil prices, it is clear that this has led them to gradually abandon post-colonial
economic policies, which they had imported from Europe, in favour of more
market-oriented ones. This shift has led to the importation and assimilation of
liberal economic principles that have long-term economic and cultural effects on
the region in general. For example, in the fiscal field the historic preference for
customs duties as a source of public revenue had had a long-standing distorting
effect on government incomes in the region while at the same time constituting
a significant barrier to South-South integration. However, the adoption of value-
added tax (VAT)12 was not only positive because it is a more efficient tax system
leading to more effective fiscal policies if properly implemented, but also because
it facilitates North-South and more importantly South-South economic integra-
tion amongst the Mediterranean non-EU countries. The oft-criticised ‘Western-
imposed’ economic models, promoted by the International Monetary Fund, the
World Bank, and the European Union do not only lead to economic changes but
also instigate cultural changes in the long term. Furthermore, increased integra-

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 97 15-6-2007 14:37:31

 tion in the regional and global economies requires the adoption of other measures
such as competition laws, business law to improve the business environment,
copyright and data protection, consumer protection laws, the establishment of
regulatory authorities, and eventually health and labour standards if these states
wish to protect their citizens against the worse excesses of globalisation while
increasing their attractiveness to FDI.

Change, whether slow or rapid, is bound to provoke reactions, particularly when

traditional values and principles have to temporarily or permanently make way
for new or imported ones. But it would be a mistake to conflate the populist
protest movements in the southern Mediterranean countries with a more funda-
mental reaction to ‘Western’ imports in their cultural milieus, as has often been
done in the past. Western analysis of the Islamic movements has confusingly
been prone to make such false judgements, often leading to policy failures. The
so called fundamentalists have shown no aversion to adopting technological in-
novations in the Muslim societies and many of the socio-economic values and
rights which they foster are similar to the ones that many of us have been enjoy-
ing in the West for decades. Obviously there are values that raise disagreements,
such as the position of women in Islamic society. But even in this case the argu-
ment can be made that the differences may not be as wide as some would de-
pict them to be. One cannot generalise about Islamic movements. But although
broadly speaking they are critical of the ‘West’, the main purpose of resorting
to Islam seems to be to criticise and oppose their authoritarian governments,
which have also resorted to Islam to justify their policies, because they have
failed in building more egalitarian societies (Zoubir, 1998: 123). It is claimed that
in Algeria, the Front Islamique du Salut FIS and other main Islamic movements
did not repudiate political pluralism (Zoubir, 1998: 147-150). It is interesting
for example that the government that is spearheading political and economic
reforms in Turkey in preparation for eventual EU membership is headed by the
Justice and Development Party of Recep Tayyip Erdogan, which is an Islamic
party. That said, one must also bear in mind that Turkey is already a secular
state in which religion and politics have been separated since the founding of the
modern Turkish Republic.

Similarly it would be detrimental to a clear assessment of the actual challenges

posed by the present international conjecture to equate international terrorism
with ‘Islamic fundamentalism’ even when the terrorists themselves may employ
Islamic slogans or appeal to Islamic unity. It would be like claiming that the ter-
rorism that has been assailing some countries in Europe has the religious basis
that it sometimes claims.13 It is apt to recall in this context the words of Abde-

 Roderick Pace

Mold - [Link] 98 15-6-2007 14:37:31

 louahed Belkeziz, secretary general of the Organisation of the Islamic Confer-
ence at the joint OIC-EU Forum on Civilisation and Harmony held in Istanbul
February, 2002:

The events in question (September 11th) have indeed nothing to do what-

soever with either the Western or Islamic civilisations ... to outstretch the
implications of such a criminal individual act indiscriminately and attri-
bute it to the followers of an entire faith or civilisation who are numbered
in hundreds of millions is a totally unjustified tort if not a premeditated act
of malevolence aimed at maligning Islam...(Belkeziz, 2002)

The discussion so far has served to establish that there seems to be no intrin-
sic incompatibility between Islamic principles and liberal democratic freedoms
and economic principles. The cultural foundations of Islam are being shaken
because it has for centuries been based on the belief that Islam has the answer
for everything while the process of modernisation is leading to new dilemmas.
It has also been argued here that the resistance to democratic reform most prob-
ably developed out of the interests of the elites in the region to maintain politi-
cal power. This point is illustrated by the ups and downs of political reforms.
It can be argued that some of these reforms have been introduced in order to
placate strong internal pressures. In other words they may be no more than
carefully aimed adaptations intended to ensure that regime change does not
occur, at least in the foreseeable future, let alone countenance changes in a truly
democratic direction. Consider in this respect that the same ruling elites (or
their chosen successors) have been at the helm since or immediately after their
countries’ independence.

Electoral reform has had a mixed but generally sorry history. By and large the
press is muzzled, controlled either by blatant censorship or self-restraint, the ju-
diciary is not independent, the forces of law and order are often manipulated, the
political opposition is outlawed and/or harassed, fundamental human rights are
not respected (though some improvements have recently been registered due to
international scrutiny), and the peaceful change of government is an anathema.
The only democratic states in the region apart from those belonging to the EU,
are Israel and Turkey, although some important improvements have still to be
registered by both countries.

Naked repression has been discarded by the majority of the governments of the
region, which due to the force of world public opinion have preferred to use other
methods of control. Forms of representative government have been tried in many

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 99 15-6-2007 14:37:31

 of them: Jordan has introduced municipal elections. Parliamentary elections in
Morocco in 2002 and municipal elections in 2003 were mostly free. Elections to
the Majlis al-Sha’abi Al-Watani in Algeria in May 2002 were also considered to
have been reasonably well conducted – although the turnout at 46.2 percent was
19.4 percent down on the previous elections June 1997 due to a boycott by the
main opposition movements including the FIS, who were banned from contest-
ing. The election held in Algeria on April 8, 2004 was described by an observer
of the Organisation for Security and Co-operation in Europe (OSCE) as ‘one of
the best-conducted elections, not just in Algeria, but in Africa and much of the
Arab World’ (Washington Post, 2004: 12). Some progress was also registered in
Egypt where the first contested presidential elections were held in September
2005. President Mubarak was re-elected, with 88 percent of the vote while his
two main challengers, the much harassed Ayman Nour and No’man Gom’a, ob-
tained seven percent and three percent of the vote respectively. The government’s
interference in the November and December 2005 parliamentary elections was
heavy handed and in January 2006 municipal elections were postponed for two
years in order to block further electoral gains by the Muslim Brotherhood. In the
Tunisian presidential and legislative elections, held in October 2004, President
Ben Ali, in power since 1987 and running against three opposition candidates,
won no fewer than 94.49 percent of the popular vote, with official turnout quoted
as higher than 90 percent. Reports stated that there were indications that voter
turnout figures were artificially inflated (US Country Reports on Human Rights,
2004). Indeed, in most of the Arab world, the electoral process leaves much to
be desired. The only Arab ‘state’ to hold free elections is the Palestinian state.
But when Hamas won a majority in the Palestinian Parliament in January 2006,
after winning a similar majority in the West Bank municipal elections the previ-
ous month, a political impasse developed between the US and the EU, members
of the Middle East ‘Quartet’ (the USA, EU, Russia and the UN) and the new
Hamas-dominated Palestinian government.

The Arab stance towards economic and political reform remains an ambivalent
and fragile one: in March 2004 an Arab League summit due to take place in Tu-
nis had to be postponed primarily because of disagreements on the Middle East
‘problem’ but most of all because of a deeper discord on the issue of Arab reform.
Two years later the evidence suggests that the drive for democracy has stalled
throughout the Arab world (Fattah, 2006). Economic considerations must not
be ignored when analysing the inertia in political reforms: in non-democratic
societies, economic liberalisation and free market principles are often turned into
opportunities for the ruling elites and their families and friends to muster im-
portant economic interests which in turn help to keep them in power. Power is

 Roderick Pace

Mold - [Link] 100 15-6-2007 14:37:31

 further employed to decide how the resources of the economy are shared: and
who gets what and when. A liberalised economy provides an ideal setting in the
absence of real democratic control and institutional checks and balances for such
patronage and clientalism to be employed.14 This provides an added reason why
ruling elites in the EU’s Mediterranean partners are frightened by the EU’s em-
phasis on human rights and democratic principles, realistically perceiving such a
policy as a recipe for losing political control (EUROMESCO, 2002).

The war against terrorism also provides serious obstacles to the reform process.
Following the events of September 11, the terrorist attacks in Morocco, Egypt,
Turkey, Indonesia, Spain, and the UK the new policy emphasis on fighting ter-
rorism seems to have been allowed to eclipse the priority of political reforms. An
article published in the Chicago Tribune of September 4, 2002, drew attention to
the fact that ‘the terror war has US in dubious alliances’ (Witt, 2002). The corre-
spondent’s main argument was that in securing the co-operation of many states
in the global war against terrorism, the US had aligned itself with some of the
worst human rights transgressors in the world. As Europe and the Mediterranean
Basin states strengthen their efforts against terrorism, there is a danger that the
whole exercise transforms itself into an alliance of convenience where under the
pretext of fighting terrorism, some governments take the opportunity to attack
their opposition – among them human rights activists – while Europe watches
helplessly. This is apart from the danger to democracy posed by the introduction
of anti-terrorist measures in the EU and other ‘Western’ democratic countries.
Human rights groups have drawn attention to the enactment of new anti-terror-
ism laws and a reinvigorated campaign against extremists in many Muslim states
after 9/11 and following terrorist attacks such as those that occurred in Egypt and
Morocco, pointing out that these measures also erode human rights. 15

6. Conclusions

This analysis has tried to demonstrate that there are reasonable doubts as to
whether relations in the Mediterranean region can be characterised by a ‘clash
of civilisations’. I have argued that conflicts arising in the region that are attrib-
uted to cultural differences or a ‘clash of civilisations’ are no more than clashes of
interest or worse a ‘clash of ignorance’, an expression employed by Said (2001).
Since the region is a point of contact between the three principal monotheistic
religions and their cultures, there are bound to be some frictions emanating from
the different values that they espouse. However, within the Mediterranean con-
text, proximity allows civilisations to borrow and assimilate from one another

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 101 15-6-2007 14:37:31

 and to adapt to one another. It is significant that the civilisations on all sides of
the Mediterranean region exhibit several common points, values that they have
borrowed from each other, in addition to their well-known differences, which are
too often exaggerated.

Many Muslim scholars argue that there do not appear to be major intrinsic ob-
stacles in Muslim culture that make it incompatible or incapable of absorbing
democratic values and the liberal market economy. On the other hand it appears
that the main obstacles, or the rejection of certain liberal political and economic
values, are linked to the political and economic aims of political elites and their
opponents.

Reference has been made to the models of economic and political transition in the
Mediterranean, the bottom-up model that is based on civil society, and the eco-
nomic development model whereby the creation of market economies will create
the conditions for the establishment of democratic institutions. I remarked that
both processes may be at work, albeit to a limited and uneven extent in the Medi-
terranean region. Constant attention must be paid to the effectiveness of reforms.
Gestures of political liberalisation do not necessarily mean anything unless real
powers are transferred from current political elites to democratically accountable
institutions. Economic restructuring is ineffective without the implementation of
the norms of good governance that help create the right business and economic
environment. A longer-term view of the effects of reforms that are introduced
also needs to be taken.

Economic liberalisation without parallel progress on the democratic reform front

leads to the creation of an unfettered economic regime for ruling elites to exploit
by increasing their patronage. Thus incompatibility of cultural values may often
be invoked to protect vested interests. In short care must be taken when attrib-
uting conflicts in the Mediterranean region to a ‘clash of civilisations’. Of course
since the term has entered the political discourse there is also the possibility of
its manipulation – by terrorist groups or by European advocates of more radical
policies towards the Arab world. Cultural conflicts exist everywhere and are not
limited to the Mediterranean region. If left uncontrolled they can escalate. But
this is not to say that every skirmish in the Mediterranean is one such conflict.
Traditional values are being challenged everywhere by the process of globalisa-
tion as well as by economic liberalisation and the focus should therefore not be
limited to the political domain.

 Roderick Pace

Mold - [Link] 102 15-6-2007 14:37:31

 Notes

 For example, during the violent protests which erupted in some European and Muslim
countries in the wake of the publication of the cartoons in the Danish newspaper Jyllands-
Posten on September , , frequent reference was made to a ‘clash of civilisations’.
 The  Gallup Poll of the Islamic World consisted of a total sample of , people and
was carried out in the following countries, with sample size indicated: Pakistan (,),
Iran (,), Indonesia (,), Turkey (,), Lebanon (,), Morocco (,), Ku-
wait (), Jordan (), Saudi Arabia (). Important aspects of the poll, including the
sample size and composition have been criticised and its findings are probably relevant
only as general indicators.
 This signifies a marked shift in European attitudes considering that up until the 
Suez Crisis many European countries considered intervention in developing countries a
policy tool they could utilise if necessary. This of course created a negative attitude among
the populations of these countries towards Europe.
 The old problems such as the Arab-Israeli question, Greek-Turkish rivalries, the Cyprus
problem and the difficult relations between Algeria and Morocco amongst others, have a
destabilising effect on the whole region and their peaceful resolution will obviously en-
hance the region’s overall stability.
 The term ‘soft power’ often contrasted to ‘hard power’, the latter referring to tangible mili-
tary force, was originally introduced by Joseph S. Nye in  (see Nye, ). It refers to
the ability of a state to employ non-military means in order to induce other states to com-
ply with its demands or to share its approach/ world view in confronting international
problems.
 The General Affairs and External Relations Council (GAERC) of the European Union
adopted a declaration on the proliferation of weapons of mass destruction which was later
endorsed by the European Council meeting in Thessaloniki on June -, . The
EU’s policy to combat terrorism was adopted by the European Council meeting in Seville
on June -,  and recommendations were made by the GAERC on December  of
the same year.
 In a reply to an oral parliamentary question submitted by the Maltese member of the
European Parliament (MEP), Simon Busuttill (H-/, ..), Commissioner
Franco Frattini confirmed (..) that following his talks in Tripoli in May -,
including a meeting with Colonel Gaddaffi, it was made clear to him that although Libya
wanted to enhance co-operation with the EU and to help in controlling illegal immigra-
tion from its shores it did not wish to join the Euro-Mediterranean Partnership.
 Because regional trade agreements cut tariffs only on goods originating in those states
that have signed the agreement, rules of origin are used to determine which goods benefit
from the tariff cut. In essence, they are used to avoid ‘tariff jumping’ – i.e., the illegal tran-
shipment of goods from outside the region in order to take advantage of the lower tariffs
between members of the agreement. For an empirical analysis of their importance for
North African countries, and also how European rules of ‘cumulation’ can impact regional
integration in North Africa, see Augier, Gasiorek, and Lai-Tong ().
 According to a paper circulated by the European Commission at the Euro-Mediterra-
nean ECOFIN Ministerial Meeting, Rabat-Skhirat, - June , real growth in the
Mediterranean partner countries averaged . percent in , compared to . percent in
.

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 103 15-6-2007 14:37:31

  The website of the Euro-Mediterranean Parliamentary Assembly is [Link]/
intcoop/empa/[Link].
 Silvio Berlusconi was reported to have said: ‘We must be aware of the superiority of our
civilisation, a system that has guaranteed well-being, respect for human rights – in con-
trast with Islamic countries – respect for religious and political rights... the West will
continue to conquer peoples, even if it means a confrontation with another civilisation,
Islam, firmly entrenched where it was  years ago.’ Radio Netherlands,  September
, available at [Link]
 Both as a result of pressures to improve fiscal yields and correct fiscal imbalances and as a
result of pressure to remove customs tariffs in response to new World Trade Organization
(WTO) agreements and free trade with the EU.
 The most specific example of terrorism linked to a religious motive would perhaps be the
IRA, an organisation with roots in the Catholic community in Northern Ireland. How-
ever even in this case it would be very difficult to establish a clear religious motivation for
the terrorist actions of this group.
 For a more detailed and thorough assessment of this side of the problem, see Murphy,
.
 Arab Press Freedom Watch (APFW) () ‘ The State of the Arab Media : The
Fight for Democracy’, May, London, available at [Link]
ports//english/[Link] :
‘Some Arab governments have used the euphoria of the so-called anti-terrorism poli-
cies that resulted from Sept. attacks on the USA to restrict freedom of expression.
Extending emergency laws and applying what is described as national security measures
on every aspect of daily life, is threatening freedom of expression and the march for de-
mocracy.’

References

Augier, Patricia, Michael Gasiorek and Charles Lai-Tong (2005), ‘Rules of Origin
– The Trade Effects’, Economic Policy, vol. 20, no. 43, pp. 569-624.
Baderin, Mashood A. (2003), International Human Rights and Islamic Law, Ox-
ford and New York: Oxford University Press.
Belkeziz, Abdelouahed (2002), speech to the ‘OIC-EU Forum on Civilisation and
Harmony – The Political Dimension’, Istanbul, February, available at http://
[Link]/Sg/Statements/2002/[Link].
Braudel, Fernand (1995), A History of Civilisations, London and New York: Pen-
guin Books.
Calleya, Stephen (2005), Evaluating Euro-Mediterranean Relations, London and
New York: Routledge.
Fattah, Hassan M. (2006), ‘Drive for Democracy Stalls in the Arab World’, The
New York Times, 10 April.
Huntington, Samuel P. (1993), ‘ The Clash of Civilizations?’, Foreign Affairs, vol.
72, no. 3, Council for Foreign Relations, New York.

 Roderick Pace

Mold - [Link] 104 15-6-2007 14:37:31

 Huntington Samuel P. (1998), The Clash of Civilisations and the Remaking of
World Order, London and New York: Touchstone Books.
Iqbal, Farruk (2006), ‘Sustaining Gains in Poverty Reduction and Human Devel-
opment in the Middle East and North Africa,’ Washington: The World Bank,
available at [Link]
TRIES/MENAEXT/
Khaled, Abou El Fadl with Jermey Waldron, John J. Esposito, Noah Feldman
et al. (2004) in Joshua Cohen and Deborah Chasman (eds.), (2004), Islam
and the Challenge of Democracy, Princeton and Oxford: Princeton University
Press.
Latouche, Serge (1996), The Westernisation of the World, Cambridge: Polity Press.
Lewis, Bernard (1993), Islam and the West, New York and Oxford: Oxford Uni-
versity Press.
Moaddel, Monsoor (2003), ‘Public Opinion in Islamic Countries: Survey Results’,
Footnote, vol. 31, no. 1, January, American Sociological Association.
Murphy, Emma C. (ed.) (2001), Mediterranean Politics, vol. 6, no. 2, special issue,
Frank Cass.
Nabli, Mustapha K. (2003), ‘Challenges to Private Investment in the Middle East
North Africa Region ... and what the World Bank is doing’, presentation Cairo,
5 February [Link]
ro-Panel-PI/$File/[Link]
Nye, Joseph S. (1990), Bound to Lead: The Changing Nature of American Power,
New York: Basic Books.
Pace Roderick, Stavridis Stelios and Xenakis D. K. (2004), ‘Parliaments and Civil
Society Co-Operation in the Euro-Mediterranean Partnership’, Mediterranean
Quarterly, vol. 15, no. 1, winter.
Radwan Samir and Reiffers Jean-Louis (eds.) (2005), The Euro-Mediterranean
Partnership: 10 Years After Barcelona – Achievements and Perspectives, Mar-
seille: Forum Euro-Méditerranéen des Instituts Economiques (FEMISE),
February.
Arabic News (2003) ‘Maghreb summit postponed until indefinite time’, available
at [Link]
Said, Edward W. (2001), ‘ The Clash of Ignorance’, The Nation, 22 October, 2001,
available at [Link]
Washington Post (2004) ‘World In Brief: Algeria’s President Wins with 83’, April
10, p. A 12.
Wilson, Rodney (2002), ‘Arab Government Responses to Islamic Finance: The
Case of Egypt and Saudi Arabia’, Mediterranean Politics, vol. 7, no. 3.
Witt, Howard (2002), ‘ Terror War Has US In Dubious Allances’ Chicago Tribune
4 September.

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 105 15-6-2007 14:37:31

 Yom, Sean L. (2005), ‘Civil Society and Democratisation in the Arab World’, The
Middle East Review of International Affairs, vol. 9, no. 4, December.
Zoubir Yahia H. (1998), ‘State, Civil Society and the Question of Radical Funda-
mentalism in Algeria’, in Moussali Ahmad S., (1998) Islamic Fundamentalism:
Myths and Realities, Reading: Ithaca Press.

EU Documentation
‘Common Strategy of the European Council on the Mediterranean Region’, (2000),
19 June Official Journal of the European Communities, L 183, 2000, pp 5-10.
Barcelona Declaration and Work Programme, (1995), Bulletin of the European
Union, no. 11, 1995, pp. 136 forward.
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL
AND THE EUROPEAN PARLIAMENT: Reinvigorating EU actions on
Human Rights and democratisation with Mediterranean partners – Strategic
guidelines, Com 2003 294 final, 21 May 2003.
Council of the EU (2005) EU Annual Report on Human Rights – 2005, point 3.5.,
p. 33.
Presidency Conclusions, Mid-Term Euro-Mediterranean Conference, Crete, 26-
27 2003, Euromed Report, 59, European Commission, Brussels, 28 May, 2003.

UNDP Reports
Arab Human Development Report 2002: Creating Opportunities for Future Gen-
erations, UNDP, Arab Fund for Economic and Social Development, UNDP,
New York.
Arab Human Development Report 2003: Building a Knowledge Society, UNDP,
Arab Fund for Economic and Social Development, UNDP, New York.
Arab Human Development Report 2002: Towards Freedom in the Arab World, UNDP,
Arab Fund for Economic and Social Development, UNDP, New York.

Other Documents / Studies

Economic Trends in the MENA Region 2002, The Economic Research Forum for
the Arab Countries, Iran and Turkey, Cairo and New York: The American
University in Cairo Press, pp 57-60.
Colin Kirkpatrick, Clive George, Balsam Ahmad, Sergio Alessandrini, Carol
Chouchani Cherfane, Raymond Colley, Lydia Richardson, Dirk Willem te
Velde (principal authors) (2005), Preliminary Consultation Draft, Sustain-
ability Impact Assessment Study of the Euro-Mediterranean Free Trade Area,
Final Report on Phase 2 of the SIA-EMFTA Project, Impact Assessment Re-
search Centre, Institute for Development Policy and Management, University
of Manchester.

 Roderick Pace

Mold - [Link] 106 15-6-2007 14:37:32

 UNCTAD (2005) World Investment Report 2005, New York and Geneva.
US State Department (2005), Country Reports on Human Rights Practices – 2004,
released by the US Department of State Bureau of Democracy, Human
Rights, and Labor, 28 February, available at [Link]
hrrpt/2004/[Link].
EUROMESCO (2002), Report of Working Group 1, Security and Common
Ground in the Euro-Mediterranean Partnership, Paper 17, June.

Clash of Civilisations or Intercultural Dialogue? 

Mold - [Link] 107 15-6-2007 14:37:32

Mold - [Link] 108 15-6-2007 14:37:32
 5 To Reciprocate or Not to Reciprocate? Is that
the Question? – A CGE Simulation of the
Euro-Mediterranean Agreements

Andrew Mold 1

1. Introduction

After the post-Cold War expansion of the European Union (EU) to the east,
Southern-tier members of the EU started to argue that this needed to be balanced
by looking to the south as well. Many observers were particularly alarmed by the
socioeconomic rift dividing Europe and North Africa. The European Commis-
sion noted that European-Mediterranean income disparities stood at 1 to 12 and
would increase to 1 to 20 by 2010 if no measures were taken. The Commission
also estimated that the Mediterranean countries’ populations would grow from
220 million in 1995 to 300 million by 2010. North Africa’s population explosion
and lack of economic opportunity heightened European fears of massive illegal
immigration that would destabilise Europe (Nsouli, 2006). The tragic events of
11 September 2001, and the terrorist attacks in Madrid in March 2004 only drove
home further the importance of achieving greater economic and social prosperity
within the Mediterranean region.2

Despite the depth of these concerns, however, up until now the treatment re-
ceived by the region in international negotiations has arguably been less than
generous. In this chapter, we will suggest that this has been the case of the Euro-
Mediterranean agreements (EMAs), an undertaking made at the conference of
Barcelona in June 1995 to create a free trade zone between the EU and the South-
ern and Eastern Mediterranean (SEM) countries by 2010.3 Although the conclu-
sions drawn here probably have a broader relevance for all the signatory countries
of the EMAs (and we will frequently refer to the SEM countries collectively),
this chapter focuses more specifically on the implications of the EMAs for three
North African countries – Egypt, Morocco, and Tunisia.



Mold - [Link] 109 15-6-2007 14:37:32

 The objectives of the Barcelona Declaration are broad and in fact go far beyond
the establishment of a simple free trade area. These are:
1. To establish a common Euro-Mediterranean area of peace and stability based
on fundamental principles including respect for human rights and democracy
(political and security partnership),
2. To create an area of shared prosperity through the progressive establishment
of free trade between the EU and its partners and among the Mediterranean
partners themselves, accompanied by substantial EU financial support for eco-
nomic transition in the partner countries and for the social and economic con-
sequences of this reform process (economic and financial partnership), and
3. To develop human resources, promote understanding between cultures and
rapprochement of the peoples in the Euro-Mediterranean region, as well as to
develop free and flourishing civil societies (social, cultural, and human part-
nership).4

In its totality, then, the EMAs represent an ambitious attempt to integrate the
Southern and Eastern Mediterranean countries firmly into the economic and po-
litical sphere of influence of the EU.

After more than a decade since the Barcelona process was initiated, however, most
analysts concede that progress has been painfully slow. Although some partner
countries have progressed much faster than others in dismantling their trade bar-
riers (Tunisia being the most obvious example),5 the original prospect of a fully
fledged free trade area by 2010 is now virtually out of reach (Dombey and Khalaf,
2005). More importantly, despite a general improvement in indicators of macro-
economic stability, economic performance has generally been disappointing, and
overall living standards in Euro-Mediterranean countries have failed to converge
towards EU levels. Indeed, on average, and for most of the partner countries,
GDP per capita of the region adjusted for purchasing power parity has actually
declined relative to the EU since 1995 (Nsouli, 2006). Even though most social
indicators (such as life expectancy and literacy rates) have continued to improve
over the last decade and, in relative terms, poverty rates in the region remain low
compared to other developing regions, there are few compelling reasons to attri-
bute this to the Euro-Mediterranean agreements. Rather, it is more probably the
result of a combination of a relatively equal distribution of income, high levels
of international remittances, and government employment, which cushion the
impact of a relatively sluggish economic performance (Adams and Page, 2003).
Unemployment continues to be a serious problem in all countries of the region,
and migratory pressures are still very much in evidence.6 Progress has been below
par for all parties concerned, to say the least.

 Andrew Mold

Mold - [Link] 110 15-6-2007 14:37:32

 Why this is so has been the subject of much debate. Some blame the SEM coun-
tries themselves for the lack of resolve to tackle their structural problems. Is it
possible, for example, that the long transition periods for implementing liberali-
sation and other measures has undermined the will of the North African coun-
tries to reform? Nsouli (2006) argues that the slowness in moving ahead with
the association agreements may partly have reflected the fact that some countries
were not ready to take full advantage of the partnership in the first place. With
a combination of unstable macroeconomic conditions, high external debt, heavy
reliance on trade taxes, excessive regulation, and weak social safety nets, some
partner countries may not have perceived strong gains from rapidly pursuing free
trade with the EU, and even less from liberalising trade within the region.

While not wishing to negate the importance of these underlying problems of eco-
nomic structure and governance, it is also possible to argue that the design of the
EMAs themselves has been flawed and is in fact far less generous on paper than
the rhetoric of a Euro-Mediterranean partnership would suggest. This is mainly
because the degree of economic integration with the EU that was initially on offer
under the EMAs was rather limited. Despite some studies which suggest a quite
considerable scope for expanding agricultural exports from North Africa (e.g.,
Muaz et al., 2004; Mold, 2003), agricultural produce and fisheries were excluded
from the original agreements. Moreover, under the previous bilateral cooperation
agreements of the 1970s, the EU had already unilaterally removed its protection
on manufactured goods. The EMAs thus constituted a de facto opening of the
SEM countries to industrial imports from the EU (Kuiper and van Tongeren,
2004: 2).

Given the relative lack of international competitiveness of SEM industry, 7 the

spectre quickly arose of a possible sharp contraction of domestic industry and
further rises in unemployment in a region where unemployment already con-
stitutes a serious social problem. There have been similar concerns regarding
whether the amount of financial support to deal with the adjustment costs (the
mise-au-niveau programmes) was sufficient. Understandably, this situation un-
dermined the resolve of the SEM countries to fully implicate themselves in the
reform process. Moreover, it was generally felt that the original agreements were
selective, in the sense of leaving off the agenda such important areas for the SEM
countries as the free movement of labour (even though this was provided for in
the Barcelona Declaration). As the UN’s Economic and Social Commission for
Western Asia (UN, 1999: 10) noted, ‘it is issues such as these that lie behind the
groundswell of dissatisfaction manifest within the SEM region’.

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 111 15-6-2007 14:37:32

 To some extent, such scepticism on the part of the SEM countries was clearly
warranted. Early on in the process, even generally enthusiastic proponents of the
EMA (e.g., Hoekman and Djankov, 1996) recognised that the liberalisation pro-
cess might be welfare-reducing in the short to medium term. Reading between
the lines, there has been sufficient caution in most of the studies to suppose that
the long-term benefits may well not materialise. According to some critics, as a
response to the profound problems of the region the EMAs might not only prove
to be insufficient, they may even aggravate some existing problems. Thus Joffe
(2000: 40) for example warned that

under present plans, the danger is that the alternative will be that enclave
economies will be created in South Mediterranean states, designed to serve
the European market and that the national economies will merely become
states of the European Union without experiencing genuine economic de-
velopment and the prosperity which should accompany it.

In 2004, the European Commission responded to such criticisms by introduc-

ing a new European Neighbourhood Policy (NP). The Neighbourhood Policy
(which also applies to non-Mediterranean neighbours of the EU) was intended
to complement rather than to replace the Barcelona process for the Euro-Medi-
terranean countries. In particular, via its national action plans, which are negoti-
ated with the EU, the NP provides a bilateral mechanism to leverage accelerated
structural reforms and offers additional rewards in the form of closer integra-
tion into the EU single market (e.g., by adopting common technical norms and
standards, rules for protecting intellectual property rights, and competition and
consumer protection regulations). Nonetheless, on one of the key revindica-
tions of the North African countries – a greater opening to their agricultural
exports – little movement has been made. Indeed, the EMAs do not mention
any calendar for tariff elimination on the whole agricultural sector. While a
few concessions have been included for specific products, the EU has remained
inflexible on sensitive products such as beef meats, milk, wheat, sugar, flowers,
and rice.8

Against this backdrop, in this chapter we will argue that the key challenge is to
provide economic opportunities to the North African and other Euro-Med part-
ner countries that go beyond the simple elimination of trade barriers between the
two groups of countries. The EU’s programme of financial support (MEDA) to
accompany the reform of economic and social structures is an explicit recognition
of this, but in its present form it is argued here that it is inadequate in scope and
depth. The EU also needs to re-examine the whole case for reciprocity as the ma-

 Andrew Mold

Mold - [Link] 112 15-6-2007 14:37:32

 jor driver of reform – trade liberalisation in itself is neither a sufficient nor nec-
essary condition for the kind of structural change required in the North African
economies. That requires a deeper rethink on the part of the partner countries on
both sides of the Mediterranean. Finally, at a time when the EU is also pursuing
an ambitious set of trade agreements with the ACP countries (see chapter 8 on
the EPAs), the success or failure of the EMAs may also be taken as an indicator
of the desirability of this kind of agreement. In short, there is a lot at stake not
only for the SEM countries, but also for the EU itself with regard to the way in
which it uses trade as the main instrument in its development policy. The current
analysis begins with a short review of the previous experience of trade liberalisa-
tion in the SEM countries.

2. The Historical Experience of Liberalisation in the Region

There is an important precedent to the EMAs in the guise of the bilateral coop-
eration agreements signed with the European Community by a number of SEM
countries in the 1970s. These agreements, which included Algeria, Morocco,
Syria, Jordan, Lebanon, Egypt, and Tunisia, granted a series of preferential trad-
ing arrangements for each of these countries. They included the following basic
points:
– Customs duties on industrial products were phased out one year after the sig-
nature of the agreements;
– All quantitative restrictions were abolished at the same time, except for agri-
cultural products and some textiles and clothing products; and
– Selected agricultural products were subject to tariff concessions (Inama and
Jachia, 2000: 2).

From the point of view of the SEM countries, these agreements had several
advantages over the current EMAs. In exchange for the aforementioned conces-
sions, little was required of the Mediterranean countries other than granting
the European Union most-favoured nation (MFN) status. Indeed, SEM coun-
tries were even entitled to introduce new customs duties and/or taxes having an
equivalent effect to customs duties or quantitative restrictions where such mea-
sures are necessitated by development of local industries or development issues
in general. In other words, it could be argued that the bilateral agreements were
both more flexible in content and more generous in spirit than the subsequent
EMAs.

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 113 15-6-2007 14:37:32

 Did these earlier agreements achieve their objectives? Only to a limited extent.
Exports of some products from the region to the EU did increase quite sharply
in the 1970s and 1980s. But although some countries like Tunisia and Morocco
were allotted fairly generous quotas with regard to products such as textiles,
they were often unable to fully use those quotas, finding themselves gradually
undercut by more efficient, lower-wage countries from outside the region, such
as China. Moreover, duty-free access to the EU was to some degree an ‘empty
concession’ since manufacturers needed high quality, expensive European fabric
and technical aid in order to manufacture products acceptable to European con-
sumers. Because of the reciprocal granting of duty-free imports of EU fabric to
the Maghreb, this arrangement was highly favourable to European textile com-
panies (White, 2001: 67).

The other fundamental problem with the co-operation agreements of the 1970s
was that, by leaving out agriculture products, the SEM countries were deprived
of important export markets. Before the second enlargement of the EU (Greece
in 1981, and Portugal and Spain in 1986), the EU still had a significant deficit in
certain kinds of agricultural products where the SEM countries have an impor-
tant comparative advantage – olive oil, tomatoes, wine, citrus fruits, etc. But the
gradual assimilation of Spain and Portugal into the Common Agricultural Policy
(CAP) raised the degree of agricultural self-sufficiency to unprecedented levels
(from 51 to 98 percent in citrus fruits, for example, and 88 to 109 percent in olive
oil), implying a loss of export markets for the SEM countries. In other words,
SEM countries have found themselves in direct competition with the subsidised
agriculture of Southern Europe (White 2001: 76).9 Moreover, the application of
protectionist measures on agricultural products by the EU was highly discretion-
ary, making it difficult for SEM countries to develop coherent export strategies.
In 1976, for example, Italy invoked safeguard clauses against the importation of
Tunisian olive oil. Similarly, in 1996, shortly after the EU signed a partnership
agreement with Morocco, French farmers implemented a safeguard clause against
Moroccan tomatoes.

To sum up, then, the previous experience of bilateral trade agreements with the
EU has hardly been encouraging. Bolbol (1999: 12) is particularly critical of these
earlier agreements:

A cynical but correct view would argue that the European Union knew
that even with zero tariffs, Arab industrial products could never compete
on European markets, and where they could, as in textiles and agriculture,
the competition would be curtailed by quantitative controls. Not that the

 Andrew Mold

Mold - [Link] 114 15-6-2007 14:37:32

 European Union had not done that: it restricted Morocco’s and Tunisia’s
agricultural quotas when they threatened Portugal and Spain and Egypt’s
when it threatened Turkey – not even a full European Union member. In
other words, the European Union’s one-sided trade policy ensured that it
would remain the main beneficiary.

The European Commission for its part now argues that the fundamental Achil-
les’ heel of these earlier agreements was not the partial and selective liberalisa-
tion of access to the EU market, but the lack of reciprocity, in the sense that the
agreements provided no incentives or momentum for domestic reform (much
as it is currently argued by the European Commission that the non-reciprocal
Lomé/Cotonou Agreements did not provide the impetus for reform in the ACP
countries, and thus need to be replaced by the EPAs). Whether this argument
is valid or not will be the subject of the simulation exercise in section 4 of this
chapter.

3. Potential Comparative Advantages of the SEM Region

One of the principal objectives of the EMAs is to facilitate the integration of the
SEM countries into the global economy. Yet it is neither immediately obvious
that the EMAs are the best way to achieve this objective, nor that these coun-
tries necessarily need to integrate themselves further into the world economy
at the present time. It is true, of course, that their tariffs on imports are high
in international terms (see table 3). Nevertheless, to use this as evidence of the
‘closed’ nature of their trade regimes is to confuse policy measures with policy
outcomes. Relatively speaking, their trade to GDP ratios are in fact quite high
(table 1).10

Table 1 Trade to GDP Ratios, 2003*

Algeria 63.3 Tunisia 90.3
Egypt 45.3 Turkey 58.6
Israel 81.4 Middle East & North Africa 61.6
Lebanon 51.8* High income OECD 42.2*
Jordan 114.6 World 47.6*
Morocco 68.7 United States 23.4*
Source: World Bank Development Indicators on CD-ROM (2005).
* indicates figures for 2002

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 115 15-6-2007 14:37:32

 Of course, this is due in part to the importance of some SEM countries as ex-
porters of oil and other primary products. But it also reflects the relative success
of some countries in the region to promote manufacturing exports (particularly
Tunisia and Turkey). Moreover, to the extent that openness to trade is lower than
it might be, this structural characteristic should be seen (in part at least) as a logi-
cal reaction to the protectionist policies adopted in the past against SEM exports
in the industrialised countries, particularly in Europe. In such a context, it was
hardly surprising that many SEM countries adopted inward-oriented develop-
ment strategies in the region during the post-war period.

One recurrent argument of this chapter is that greater openness to international

trade has not always been advantageous to the SEM countries and is not neces-
sarily the best vehicle for resolving the deep-seated structural problems of the
SEM countries. In its dealings with developing countries, the European Com-
mission has tended to increasingly treat trade as the principal catalyst of change.
But it could be argued that by deepening the dependence of the SEM countries
on external trade, the EMAs may simply intensify the vulnerability of these coun-
tries to external shocks.11 Successful integration in the world economy requires
more than simply applying tariff cuts – it implies a creative search for developing
competitive niches. Unfortunately, for various reasons that are explained below,
the EMAs may make it more, not less, difficult for the SEM countries to develop
those niches.

Traditionally, the countries of the region have tended to rely on natural re-
source exports and, in particular, on mineral and petroleum products. This is
still true for a number of the SEM countries. For Algeria, Egypt, and Libya,
oil represents around 45, 25, and 76 percent of export earnings respectively.
Even for Morocco, a country that has successfully decreased its dependency
on mineral exports, phosphate still represents around 12 percent of total ex-
port earnings (Mold, 2003). The economic arguments regarding the dangers
of relying on mineral and petroleum exports are well versed and need not be
repeated in detail here. 12 Suffice it to say, in the SEM countries, this pattern
of exports has had a number of negative consequences, including overvalued
exchange rates (the ‘Dutch disease’ phenomena), instability of earnings, and
environmental degradation. Less commented upon is the impact that it has had
on democratic control. As an easily accessible source of income, these resources
have meant that governments in the region have generally remained unaccount-
able to their respective populations. Political participation has remained low
and governments have remained unresponsive to pressure from below (UNDP,
2004). Moreover, the tax base has remained weak, something which will have

 Andrew Mold

Mold - [Link] 116 15-6-2007 14:37:33

 important repercussions when taxes on trade with the EU are finally eliminated
under the EMAs.

Diversification towards other sectors should therefore be a priority for the gov-
ernments of the region. Exports are currently excessively concentrated in prod-
ucts of a low or negligible technological content. Unfortunately, the SEM coun-
tries are caught in the awkward situation of falling between two stools – they
face fierce competition in low-skilled labour intensive manufacturing from more
populous Asian countries, yet do not possess the necessary workforce required to
specialise in more skill-intensive manufacturing (Karshenas, 2001; Lall, 2000).
With the entry of Poland, the Czech Republic, and Hungary into the EU, East-
ern Europe also represents a significant competitive threat to the SEM coun-
tries. To show this, Mold (2003) calculates the simple correlations of the indices
of revealed comparative advantage, based on data from the International Trade
Centre (ITC). These correlations give a broad measure of the degree to which the
export structure of countries overlap, and therefore an idea of the potential for
competitive clashes. The correlations are surprisingly high in a number of cases
for Morocco, Tunisia, and Turkey, in particular with the lower income countries
of Eastern Europe (Bulgaria and Romania). The less diversified economies of
the EU (Portugal and Greece) are also potential competitors. In addition, as the
SEM countries gradually loose their preferential advantages in the EU markets
through preference erosion, they will find their export markets under even greater
competitive pressures. This is particularly true in textiles, where a large propor-
tion of the regional workforce in manufacturing is concentrated.13

Despite these points, it would be wrong to fall into an attitude of complete de-
spondency regarding the future perspectives of these countries as exporters of
manufactured and industrial products. An interesting analysis of relative compar-
ative advantages at a regional level is provided by Wood and Mayer (1999). These
authors regress data regarding relative factor endowments of land and human
capital on the share of manufactured exports vis-à-vis primary exports. Although
the results are subject to certain limitations, the regression analysis does suggest
that the share of manufactured products in total exports in the MENA region is
about what would be expected, given the current endowments of human capital
and land (figure 1).14 The expansion of manufacturing exports was particularly
rapid during the 1980s (Haddad, 2000). In Turkey, the share of manufacturing in
total exports increased from about 27 percent in the 1980s to almost 69 percent
in 1990; in the case of Tunisia, it increased from 35 percent to 69 percent, in Mo-
rocco from 26 percent to 53 percent, in Syria from 6 percent to 40 percent, and in
Egypt from 11 to 66 percent (Karshenas, 2001: 71).

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 117 15-6-2007 14:37:33

 Figure 1 Export Structure (Manufactured/Primary) by Region, 1990

Source: Wood and Mayer, 1999: 14

Other SEM countries may have a comparative advantage under a free trade re-
gime in agricultural and other primary products, but it is a line of specialisation
that is currently being blocked due to the EU’s protective policies in agriculture.
The idea that some SEM countries could specialise more in agricultural products
may at first sight seem counterintuitive – after all, with the exception of Morocco,
these are all countries which have accumulated large agricultural trade deficits
(see table 5). Moreover, one of the binding constraints on agricultural production
is the shortage of water (rather than the lack of cultivable land per se): in recent
years, the countries of the Mahgreb have been particularly vulnerable to drought.
As Karshenas (2001: 78) points out, however, these constraints should not

preclude the possibility of restructuring agricultural output and trade to-

wards more export oriented products. The efficiency gains resulting from
such restructuring may even give rise to a lower agricultural trade deficit
while maintaining the current per capita food consumption levels.

To some extent, the apparent weakness of these countries in agricultural produc-

tion is anyhow more illusory than real. It is more the result of a combination of

 Andrew Mold

Mold - [Link] 118 15-6-2007 14:37:33

 poorly applied domestic policies and the closing off of the European market to
agricultural imports rather than due to an intrinsic comparative disadvantage.15
There may, in other words, be significant potential for the expansion of agricultural
production in some countries of the region, particularly in the cases of Syria, Mo-
rocco, and Lebanon where water resource constraints are less binding (Mubarak,
1998). An empirical analysis carried out by Muaz et al. (2004), focused on the
scope for expanding horticultural exports. For the five crops studied (strawberries,
grapes, dates, green beans, and sweet melon) the researchers estimate that meeting
the EU demand will result in 119,000 new job opportunities, an economic profit to
Mediterranean partner country producers and exporters of US$ 498 million, and
a value added to the economies of the five countries of US$ 756 million.16

Nor does such an agricultural expansion threaten in any significant way agricul-
tural production in the EU. Even in the case of products which are considered
‘sensitive’ by Southern Europe, the overall scale of production in all the SEM
countries is usually of little relative significance. In the case of olive oil, for ex-
ample, Spain produces around half of the total world production (at around 1.1
million tons of a total of 2.4 million tons in 2003). This volume of production is
almost 18 times higher than the production of SEM countries such as Tunisia and
Turkey (60,000 tons each).17 This vastly superior production is also apparent in
the volume of exports of fruits and vegetables from Europe vis-à-vis North Af-
rican production (Mold, 2003). Given the limited size of the agrarian flows, it is
not surprising that the European Commission itself does not consider the SEM
countries as a threat to EU farmers (Kuiper and van Tongeren, 2004: 1).

Against this backdrop, the insistence of the EU to cling to its protectionist agri-
cultural policy has been a source of constant frustration to the SEM countries.
Critically, what liberalisation has occurred has primarily involved products for
which poorer farmers in the southern Mediterranean countries have no com-
parative advantage. Crops like olives (and olive oil), grapes, tomatoes, wine, and
apples, for example, are well suited to the southern Mediterranean climate and
can be produced more cheaply there, but are not freely allowed into the European
market as trade is regulated through quotas. For example, Jordan’s climate means
that it can produce crops like beans, tomatoes, strawberries, sweet peppers, roses,
and carnations competitively, but the EU has put limits on its imports of these
crops by the use of tariffs, quotas, or timetables (Oxfam, 2005).

The attitude of the EU on this issue also contrasts starkly with the more gener-
ous treatment received by the Central and Eastern European countries (CEEC)
in their negotiations with the EU in this area, which did provide detailed pro-

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 119 15-6-2007 14:37:33

 visions granting CEEC farmers preferential access to EU markets (Ghesquiere,
1998; Hoekman and Djankov, 1996). The imbalance of resources is also patently
clear when comparing the funds dedicated to agricultural policy and the funds
made available under the MEDA scheme. Projected expenditure under MEDA
for 2002 was 600 million, compared with 39,570 million set aside for EU ag-
ricultural policy (plus an additional 4,330 million for rural development). In
other words, the total MEDA programme represented a mere 1.4 percent of the
resources dedicated to support European farmers.

Thus the nature of the liberalisation has so far been imbalanced and inequitable.
Yet agricultural development is clearly a priority for the SEM countries. Through-
out the region, poverty has driven large numbers of rural workers towards urban
centres. Cities like Cairo, with 16 million inhabitants, have been, in the words of
the city’s governor, Abdel Reheem Shehata, ‘completely overwhelmed by rural mi-
gration’.18 As far as possible, European policy should facilitate rural development
on the southern shore of the Mediterranean, not impede it as has been the case
up until now.19 As Chahberli and El-Said (2000: 16) comment:

Despite the resource constraints ... the region still enjoys a great potential
for agricultural production given the abundant agricultural skills acquired
over many generations (water harvesting techniques, soil conservation,
etc.). Its geographical diversity makes it possible to produce commodities
that do not necessarily make it a direct or unfair competitor to its main
trading partners (especially the EU).

4. Trade Creation and Diversion within the SEM Region

Apart from the immediate objective of increasing trade between members, re-
gional trade agreements are increasingly being sold as an instrument (or even
the instrument) for accelerating poverty reduction. This is patent in the way in
which the European Union has vigorously promoted regional trade agreements
with developing countries over the last decade or so, ostensibly with the objective
of promoting faster growth and poverty reduction. The underlying logic for this
approach is quite straightforward – free trade is good for growth; growth is good
for poverty; regional agreements create more trade; therefore regional agreements
are useful as a policy tool for reducing poverty. Yet most professional economists
acknowledge, if pressed, that free trade provides a relatively small contribution to
overall growth of an economy. Typical empirical analyses put forward estimates
in the range of two to three percent of GDP, disappointingly low if one considers

 Andrew Mold

Mold - [Link] 120 15-6-2007 14:37:33

 that these gains are spread across the whole implementation period of the free-
trade regime (Dunkley, 2004).20

The popular emphasis on free trade agreements as a way of accelerating economic

growth and helping to resolve the problems associated with widespread poverty
may therefore be largely misplaced. As Paul Krugman (1994) has asserted,

‘the growth of living standards essentially equals the growth rate of do-
mestic productivity – not productivity relative to competitors, but simply
domestic productivity. Even though world trade is larger than ever before,
national living standards are overwhelmingly determined by domestic fac-
tors rather than by some competition for world markets.’

This does not mean that trade policy is unimportant. But the enormous emphasis
evident in contemporary discourses on trade policy as a way of lifting countries
out of poverty may be exaggerated.

The traditional perspective on measuring the welfare impact of forming a region-

al trading block is based on the seminal work of Viner (1950), who distinguished
between trade-creating and trade-diverting effects. The intuitive idea behind this
approach is that a regional trading agreement should promote trade between
member countries, but not at the expense of reducing trade with more efficient
(i.e., lower cost) trading partners outside the agreement. A priori, therefore, or-
thodox trade theory leads to an agnostic stance regarding the potential benefits of
regional trading agreements, because there is no guarantee that trade creation will
indeed be higher than trade diversion. An important critique of the traditional
theoretical framework was provided by Cooper and Massel (1965). Cooper and
Massel point out that a developing country may value industrialisation as an end
in itself, so that it is willing to give up a certain amount of achievable national in-
come for this end. In other words, $1 worth of home-produced industrial output
is weighted as more valuable than $1 worth of imports of industrial product, a
weighting which market pricing does not reflect. Free trade between the partners
may, on the other hand, raise the problem of an unacceptable share-out of com-
mon industries, and the possibility of ‘de-industrialisation’.21

This danger is certainly inherent in the EMAs. The fact that the MFN tariffs
of most SEM countries are, on average, high (more than 25 percent in Jordan or
Egypt) points to large trade diversion effects and shifting losses that will have
to be borne by the SEM countries (Tovias, 2000: 158). This is particularly true
of the countries at the eastern end of the Mediterranean, which have a relatively

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 121 15-6-2007 14:37:33

 low share of imports originating from the EU, resulting in even higher levels of
trade diversion (Ghesquiere, 1998:3). Lebanon, for instance, is highly dependent
on budgetary revenue from import duties and its agreement is seen as yielding a
positive result only if accompanied by foreign investment and technology trans-
fers to its services sector. For Egypt and Jordan, the relatively low share of imports
originating in the EU also results in substantial trade diversion. Trade diversion
is also likely to be intensified by European rules of origin, which undermine the
potential to source from third countries (Augier et al., 2005).

Table 2 Simulation of the Impact of Trade Liberalisation with the EU on Algeria,

Egypt, Morocco, and Tunisia, 1995 (in Millions US$)
Country Gains from Losses from Net effect
Trade Creation Trade Diversion on Welfare
Egypt (a) 87.6 307.8 -220.2
Egypt (b) 35.2 307.8 -272.6
Morocco 204.7 266.2 - 61.5
Tunisia 104.7 363.0 -258.3
Source: Tovias (2000)

A study into the impact of the EMAs on the economies of Egypt, Morocco and
Tunisia is provided by Tovias (2000), using a partial equilibrium model. The re-
sults were not at all encouraging (table 2). Although generally relatively small, the
net welfare effects of the EMAs were clearly negative. The largest loss would be
for Tunisia, with a fall of welfare due to net trade diversion equivalent to 1.5 per-
cent of GDP. For Morocco, the EMA would cause a net fall of trade of US$ 61.5
million, resulting in a net welfare loss equivalent to -0.2 percent of GDP. Finally,
in the case of Egypt, the corresponding loss would be -0.5 percent.22

Of course, as well as all the standard limitations of partial equilibrium analysis

(see chapter 8), this kind of analysis does not include dynamic effects due to
greater competition or scale economy effects. But a recent critical review of the
literature on trade liberalisation by Deraniyagala and Fine (2001: 810) reaches
the conclusion that the theoretical arguments on these dynamic effects are often
based on questionable assumptions and, moreover, are generally not backed up
with empirical evidence. It should not, therefore, be so surprising that policy-
makers frequently take an agnostic view of claims by economists that dynamic
benefits may outweigh static gains (or losses) several fold.

 Andrew Mold

Mold - [Link] 122 15-6-2007 14:37:33

 5. A CGE Simulation Scenario
Summary of previous studies
An alternative way of estimating the potential costs and benefits to the kind of
partial equilibrium analysis cited above is by using a computable general equi-
librium (CGE) model. These models have been used extensively to gauge the
possible impact of trade liberalisation. However, in recent years there has been a
critical (and probably well-deserved) reassessment of the utility of these model-
ling techniques.23 Crucially, the results of the CGE models of trade liberalisation
depend on a set of assumptions about demand- and supply-side responses to
trade liberalisation. By building optimistic responses into the models (partic-
ularly with respect to what are called ‘Armington elasticities’, which determine
the relative elasticity of substitution between alternative sources of supplies for
traded commodities), and by not making the underlying assumptions sufficiently
explicit, these models run the risk of producing a kind of self-fulfilling prophecy
– in other words, providing the results that the modeller is searching for. As the
World Bank (2000: 50) concedes,

[These models] have the major weakness that they are not usually fitted
to data as carefully, nor are they subject to the same statistical testing as
econometric models. The cost of the microeconomic detail is a complexity
that makes rigorous econometric estimation impossible.

One particular area of concern for the analysis of the impact of liberalisation
on the SEM countries is that CGE models tend to assume that there will be
full pass-through of tariff changes to import and domestic prices. However, the
SEM economies are characterised by market imperfections, such as monopolistic
power by importers, price rigidities in domestic markets, and other government
interventions. If these rigidities are large and sustained, the effects on consumer
welfare could be lower than estimated by CGE models, because of lower changes
in domestic prices. At the same time, the effects on domestic production would
also be lower than estimated by the models (SIA, 2006: 15).

A number of summaries of previous CGE studies into the impact of the EMAs
on the North African economies have been carried out elsewhere (e.g., SIA, 2006;
Kuiper, 2004; Mold, 2003), so it is not our intention here to repeat these assess-
ments. However, a few of the most salient results are worth highlighting. Com-
parisons between the different simulation results is not easy, due to differences
in the scale of tariff reductions, treatment of non-tariff barriers, harmonisation
of standards, and how the models deal with loss of tariff revenue, exchange rates,

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 123 15-6-2007 14:37:34

 investment decisions, long-run productivity gains, and technology transfer. But
the broad conclusions are fairly consistent. The majority indicate that the change
in economic welfare is generally positive but small. In the EU, welfare is estimated
to rise by about 0.2 percent of GDP, with little difference between the short and
long term. Most of the results for welfare changes in SEM countries lie in the
range minus one to plus two percent of GDP. The average change estimated is a
rise of about 0.8 percent, which corresponds to about three or four month’s eco-
nomic growth at typical rates (SIA, 2006: 17).

Thus it is probably fair to say that the results from CGE modelling hardly pro-
vide a resounding endorsement of the EMA process. Indeed, even in studies that
report a positive static welfare gain from the trade effects, when one reads be-
tween the lines the overall results are far less impressive. For instance, in one of
the earliest studies Rutherford et al. (1993) estimated static welfare gains for Mo-
rocco in the range of 1.5 to 2 percent of GDP. But the adverse budgetary revenue
impact was projected at two percent of GDP after 12 years, more than sufficient
to wipe out any gains through enhanced trade (and bearing in mind the fact that
the static gains are one-off increments in GDP, whereas the revenue effect will
be permanent). Likewise, under fairly generous assumptions, Konan and Maskus
(1997) estimate that free trade between Egypt and the EU would result in a wel-
fare gain of only 0.2 percent of GDP.24

It is also important to note that even the most optimistic studies show that in ab-
solute terms the share-out of potential benefits accruing from the EMA is highly
unequal. Using a computational general equilibrium model for the case of Tuni-
sia, for instance, Brown et al. (1997) estimate that, although in relative terms the
welfare impacts are marginal, in absolute terms the gains are eight times larger for
the EU than for Tunisia, the principal beneficiaries being the economies of France,
Italy, and Spain. An analysis by Alessandri (2000) arrives at a similar conclusion,
with gains accruing to the EU that are more than three times larger than for Tur-
key, six times larger than Morocco, and 45 times larger than the gains for all the
other countries of North Africa combined (where absolute gains are considered
negligible). The author concludes “the actual agreements – due to their bilateral
nature – tend to create a core-periphery system; the EU captures bigger gains
because it is the only subscriber able to freely access all the involved national mar-
kets”. Although the magnitude of these estimates could be called into question,
there seems little doubt that the lion’s share of the potential benefits of the EMAs
will accrue to the European exporting firms.

 Andrew Mold

Mold - [Link] 124 15-6-2007 14:37:34

 Model specification and closure
If so many previous CGE simulations have been carried out into the potential
impact of liberalising trade on the North African economies, why repeat this
analysis here? Two reasons stand out. One is the inclusion in the Global Trade
Analysis Project (GTAP) version 6.0 of tariff data that includes tariff reductions
due to preferential market access. Previous versions of GTAP did not include
data on preferential tariffs, and this typically resulted in an overestimate of the
potential gains from trade liberalisation for preference-receiving countries. This
is particularly the case for the North African countries which, as we have seen
earlier, already benefited from preferential market access to the EU. A second
reason is the inclusion, for the first time with GTAP 6.2., of Egypt in the GTAP
database. As the largest economy in the region, Egypt accounts for too much of
the North African economy to be ignored.

The standard GTAP model used in this exercise is a static, multiregional, multi-
sector, CGE model that assumes perfect competition and constant returns to scale.
Input-output tables reflect the links between sectors. This assumes that investment
adjusts endogenously to changes in savings, although the trade balance can vary, so
that at a national level the change in exports need not equal the change in imports.
Real exchange rates are implicit in the model and are assumed to be fully flexible.
In the labour market it is assumed that the amount of skilled and unskilled labour
is fixed and cannot move between regions (although it can move readily between
sectors). In line with standard neoclassical assumptions, wage rates are assumed to
be flexible (see Hertel, 1997, for a full description of the GTAP model).

In order to allow a more precise view of the impact of liberalisation on the in-
dustrial sectors, our own model involves a 20-sector aggregation derived from
the standard 57-sector GTAP aggregation. 25 Sixteen of these are industrial sec-
tors, and in addition a distinction is made between processed and non-processed
agriculture. Finally, fuel and services are aggregated into separate sectors. The
share of each of these sectors in total value-added for each country (ranked in
descending order) is shown in annex table 7. Five regions are defined in the model
– Egypt, Morocco, Tunisia, the EU-25, and the rest of the world (ROW). As a
baseline, we use the GTAP model to simulate the impact of a 100 percent re-
ciprocal reduction in tariffs, excluding the agricultural sector.26 In addition, the
kind of socio-economic context discussed in earlier sections lead us to adopt a
non-standard closure for the model. Firstly, it is assumed that countries will have
to substitute losses in tariff revenue with an equivalent value tax on consump-
tion.27 Secondly, in view of the high unemployment rates in the region (especially

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 125 15-6-2007 14:37:34

 for unskilled labour), we modify the standard closure for wages according to a
Keynesian-type assumption, and assume that wages are fixed over the short run
for the North African economies.

The scale of the asymmetry in the tariff cuts can readily be appreciated in table
3. Even prior to the simulation exercise, it is patent that there is very little to be
gained from the EMAs on the part of the Egyptian, Tunisian, and Moroccan

Table 3 Pre-simulation Percent Ad Valorem Tariffs on Imports

Egypt, Tunisia, Morocco, and ROW, 2001
EU tariffs on imports from... Tariffs on imports from EU....
Egypt Tunisia Morocco ROW Egypt Tunisia Morocco ROW

1. Agriculture 6.48 7.87 2.45 6.8 8.13 27.96 73.53 10.45

2. Processed agriculture 22.11 3.5 42.27 18.26 15.78 48.81 40.31 17.57
3. Fuel 0.01 0.00 0.03 0.02 14.18 3.98 7.31 1.24
4. Textiles 0.12 0.14 0.19 4.73 52.03 36.71 17.77 8.41
5. Wearing apparel 0.21 0.08 0.09 6.43 387.54 49.9 19.09 10.04
6. Leather products 0.07 0.10 0.04 5.94 35.95 44.41 14.51 8.17
7. Wood products 0.10 0.01 0.14 0.78 13.88 35.02 18.5 4.92
8. Paper products, 0.51 0.03 0.02 0.39 17.2 34.99 16.04 4.25
publishing
9. Petroleum, coal 0.02 0.00 0.00 1.76 14.54 20.3 4.19 5.1
products
10. Chemical, rubber, 0.25 0.02 0.04 2 12.67 21.37 5.55 4.22
plastic products
11. Mineral products, nec 0.21 0.03 0.06 2.82 21.65 31.77 14.47 7.2
12. Ferrous metals 11.52 0.00 0.00 4.25 14.49 7.68 3.14 5.18
13. Non-ferrous metals 0.05 0.01 0.00 0.88 19.61 10.39 6.27 4.62
14. Metal products 0.17 0.04 0.03 2.01 24.85 31.76 16.47 6.26
15. Motor vehicles and 0.4 0.04 0.00 6.33 44.08 26.06 8.55 8.01
parts
16. Transport equipment 0.19 0.11 0.00 1.67 6.19 7.02 5.42 2.59
nec
17. Electronic equipment 0.09 0.15 0.17 0.97 9.23 0.27 4.92 3.56
18. Machinery and 0.08 0.04 0.17 1.24 12.9 11.58 8.02 4.63
equipment nec
19. Manufactures nec 0.05 0.07 0.04 1.4 22.45 17.3 21.78 7.17
20. Services 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.01
Source: GTAP database, version 6.02

 Andrew Mold

Mold - [Link] 126 15-6-2007 14:37:34

 economies in terms of better access to the EU market. In contrast, the scale
of the cuts on tariffs on imports from the EU is very considerable indeed. 28
Notice also that, with the exception of Tunisian products, the average tariff
imposed on EU imports of processed agricultural products from the North
African economies is much higher. This can be seen as vindicating commonly
made criticisms of EU policy regarding tariff escalation (i.e., imposing higher
tariffs at the higher stages of processing so as to protect domestic manufactur-
ing industries).

Results of simulation exercise

Table 4 summarises the results in terms of per capita welfare for the different
model closures and scenarios in terms of the comprehensiveness of the tariffs
cuts. These summary results from the simulation reveal a number of impor-
tant things. First, the welfare results hinge significantly on the type of closure
specified. Under a full liberalisation scenario, GTAP’s standard closure does
provide welfare gains for two of the three North African countries, but except
in the case of Tunisia, the gains can be considered negligible. Under an argu-
ably more realistic closure assumption (unemployment of unskilled labour and
tax replacement of lost tariff revenue), the situation changes quite significantly.
The simulation that most closely mirrors the current state of liberalisation (i.e.,
excluding agricultural liberalisation) produces an exceedingly high welfare loss
of -3.06 percent for Morocco, but also with a major decline for Egypt (-1.33
percent).29

Table 4 Results of Simulation in Terms of Percent Change in Per Capita Welfare

(Equivalent Variation of Household Income)
Standard closure Non-standard closure

Without With Without With

agriculture agriculture agriculture agriculture
Egypt -0.60 -0.55 -1.42 -1.33
Morocco -0.18 -0.10 -2.80 -3.06
Tunisia -0.04 -0.94 -1.54 -0.31
EU -0.03 -0.03 -0.03 -0.03
ROW -0.00 -0.01 -0.00 -0.01
Source: Simulation results

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 127 15-6-2007 14:37:34

 Secondly, the oft-made claim that with the inclusion of agriculture, welfare im-
pacts would be significantly different is not borne out by the simulation analysis.
This is to some extent unsurprising – although North Africa may benefit from
the expansion in certain crops, the region is a net food-importing region (table
5). The removal of subsidies from European agriculture is also unlikely to benefit
North African economies, for the very same reason. Although Morocco’s agricul-
tural trade is more or less evenly balanced (with a small surplus with the EU),
that is not the case for Egypt and Tunisia. The 2001 data in the GTAP database
reveals that approximately 25 percent of the total trade deficit is due to imported
foodstuffs. But in actual fact most of that deficit does not accrue through food
imports from the EU, but rather is due to imports from outside the region. De-
spite very legitimate concerns about the future of small-holders and agricultural
workers in the North African countries (Oxfam, 2005), it would thus be wrong to
overestimate the impact of EMAs on North African agriculture. The key conclu-
sion is that it is not the exclusion of agriculture, per se, which causes the seriously
imbalanced welfare impact of the EMAs, but rather reciprocity itself.30

Table 5 Pre-simulation Net Balance in Food Trade,

Egypt, Morocco, and Tunisia, 2001
Egypt Morocco Tunisia
In millions US$ 2001
EU -274.6 16.9 -200.1
World -3475.2 -2.1 -578.2
As % share of total trade deficit
EU 7.4 -1.0 11.6
World 25.8 0.1 24.6
Source: GTAP 6.02 database

In this sense, there is a lot in these simulations to support the ‘deindustrialisation’

hypothesis that was noted in the introduction (table 6). Most of the manufac-
turing sectors contract under the EMAs. The most notable case here is Tunisia,
where manufacturing output declines in 15 of the 18 defined industrial sectors,
the only exceptions being for textiles and apparel. Both Morocco and Egypt are
also affected negatively by the same phenomenon. To gauge the relative import
of these shifts, it is important to refer to the annex table 7 where the pre-simula-
tion output of each sector is listed by its relative contribution to total output. For
Morocco, for instance, the processed agricultural sector represents 20 percent
of total industrial output. Consequently a fall of -6.8 percent in output is highly

 Andrew Mold

Mold - [Link] 128 15-6-2007 14:37:34

 significant for the Moroccan economy. Similarly, in Egypt the estimated -11.6 and
-26.7 percent fall in the output of textiles and wearing apparel respectively would
have a major impact on an industry which contributes around 23 percent of total
industrial output. This is especially so in the case of an industry which is so la-
bour intensive as wearing apparel, and there are consequently important implica-
tions for employment.31

Table 6 Percent Change in Output by Sector

Egypt Morocco Tunisia EU ROW
1. Agriculture -1.4 -1.4 -4.7 -0.0 0.0
2. Processed agriculture -1.1 -6.8 -0.9 0.0 0.0
3. Fuel 0.7 -7.7 -3.9 -0.0 0.0
4. Textiles -11.6 41.9 7.2 1.7 -0.3
5. Wearing apparel -26.7 49.9 49.0 0.7 -0.5
6. Leather products -11.8 -30.1 -6.2 0.4 0.0
7. Wood products -1.4 -19.9 -14.2 0.1 0.0
8. Paper products, publishing -2.7 -23.6 -14.3 0.1 0.0
9. Petroleum, coal products 0.4 -7.6 -7.6 0.1 -0.0
10. Chemical, rubber, 1.9 -12.8 -7.8 0.0 0.0
plastic products
11. Mineral products, nec -1.2 -13.5 -23.1 0.1 0.0
12. Ferrous metals 10.6 -16.0 -4.6 -0.1 0.0
13. Non-ferrous metals 0.8 -10.7 -4.3 -0.1 0.1
14. Metal products -2.8 -27.7 -14.7 0.1 0.0
15. Motor vehicles and parts -2.3 -18.0 -9.5 0.0 0.0
16. Transport equipment nec 8.4 1.9 -12.0 -0.3 0.1
17. Electronic equipment -2.2 0.3 -11.0 -0.3 0.1
18. Machinery and 15.8 -10.3 -5.2 -0.1 0.1
equipment nec
19. Manufactures nec -0.9 -13.5 -4.7 -0.1 0.1
20. Services 1.6 -2.3 -2.2 -0.0 0.0
Capital goods (CGDS) 4.9 6.9 9.5 0.0 -0.0
Source: Simulation results

Given the unilteral nature of the tariff liberalisation, the pattern of deindustriali-
sation is being provoked in part by the sharp increase in the imports of industrial
and manufactured products from the EU (table 7), but also by the rise in the

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 129 15-6-2007 14:37:34

 costs of intermediate inputs, as North African firms begin to switch sourcing
from relatively inexpensive suppliers outside the Euro-Med area towards higher
cost inputs from the EU (the trade diversion impact). Particularly worrying is the
way in which the EMAs lock the North African manufacturing sectors even more
firmly into their current pattern of specialisation, favouring a few labour-inten-
sive sectors such as clothing and apparel, for which preferential access to the EU
has been significant. While this may have been attractive in the past, it appears
to be a far less satisfactory strategy today, with international trade barriers con-
tinuing to fall and the North African economies facing the inevitable erosion of
their trade preferences with the EU. Such concerns are particularly relevant in the
textile and apparel sectors, where the phasing out of quotas since January 2005
under the elimination of the Multi-Fibre Arrangement is sure to have a highly
significant impact (Elbehri and Hertel, 2006; Soderling, 2005).32

Table 7 Increase in Imports from the EU (Millions US$ 2001)

Egypt Morocco Tunisia
1. Agriculture -8.5 -4.8 6.6
2. Processed agriculture 181.6 335.5 144.0
3. Fuel 113.2 22.6 27.2
4. Textiles 735.7 849.6 800.6
5. Wearing apparel 1935.9 301.0 126.8
6. Leather products 60.5 197.9 73.0
7. Wood products 118.2 152.8 71.8
8. Paper products, publishing 128.8 147.6 56.9
9. Petroleum, coal products 23.1 62.0 10.0
10. Chemical, rubber, plastic products 502.2 460.6 82.6
11. Mineral products, nec 169.7 174.2 44.7
12. Ferrous metals 177.7 20.6 7.5
13. Non-ferrous metals 125.3 22.1 23.2
14. Metal products 229.3 200.8 35.4
15. Motor vehicles and parts 359.1 161.4 63.2
16. Transport equipment nec 63.9 19.0 37.7
17. Electronic equipment 221.8 17.2 49.6
18. Machinery and equipment nec 757.0 362.2 269.3
19. Manufactures nec 108.6 53.8 59.4
20. Services -140.2 -9.8 15.4
Source: Simulation results

 Andrew Mold

Mold - [Link] 130 15-6-2007 14:37:35

 What about the impact of the agreements on the trade balance (annex table 5)?
Given the unilateral nature of the liberalisation on the part of the North African
countries one would initially expect a sharp increase in the bilateral trade deficit.
In fact, only Egypt suffers a significant increase in the trade deficit with the EU
(figure 2). In the case of Morocco and Tunisia, exports expand sufficiently to com-
pensate for the increase in imports. In this context, it is important to bear in mind
that Egypt’s trade pattern is in fact entirely different from Morocco’s and Tunisia’s
(Soderling, 2005: 18). Overall, Egypt’s current export composition appears less sus-
ceptible to trade creation with the EU than that of Morocco and Tunisia. Although
Egypt is a slight net oil importer, hydrocarbons still represent a major share of
exports. Egypt’s textiles exports to the EU have fallen dramatically since the mid-
1990s, and manufactured goods are in relatively low value-added sectors, such as
metal goods. Moreover, it is necessary to take into account the extent to which the
Egyptian economy is not tied in with the EU economy, but rather that of the US.33

Figure 2 EU – North African Trade Balance (Millions US$ 2001)

Source: Simulation results

In summary, these simulations cannot satisfactorily answer all the pertinent ques-
tions raised by the EMAs. In particular, it would be prudent to further investigate
the welfare impacts associated with a deeper liberalisation of agricultural trade.
However a much greater disaggregation than the GTAP database would be re-
quired to analyse that impact with precision. Ideally, such an analysis would dis-
tinguish between Mediterranean and temperate-zone crops, and if possible also
distinguish between rain-fed and irrigated production to account for constrained
water availability. It would also be important to distinguish between Northern
and Southern EU countries, as the North African exports would expect to come
into direct competition with producers on the other side of the Meditteranean
(Kruiper, 2004: 18). Nevertheless, it is possible to hypothesise some additional
impacts of agricultural trade liberalisation. By increasing international trade in
food products and increasing the incentives for commercial food production,

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 131 15-6-2007 14:37:35

 for example, the EMAs might increase the vulnerability of both rural and urban
households to fluctuations in EU and world market prices. Effects would be in-
significant for households whose expenditure on basic foods is a small proportion
of their incomes, but may be important for poorer households. Such effects may
be particularly significant in countries such as Egypt which are already highly
dependent on food imports (SIA, 2006: 38).

6. Conclusions and Recommendations

It should by this stage be fairly clear that, in their present form at least, the po-
tential advantages of the EMAs from the point of view of the SEM countries are
limited, and some of the potential costs, in terms of lost manufacturing and in-
dustrial capacity, quite large. Our simulation results suggest that it is reciprocity
itself, rather than the exclusion of certain sectors (particularly agriculture) from
the agreements, which is responsible for the potential welfare losses.

None of this is to deny that the North African economies are clearly in need of
reform. Given their natural resources and achievements in terms of human devel-
opment, their economies are clearly underperforming. Thus there is little doubt
that some of the reform agenda which the EMAs hope to catalyse is merited.
But even a fairly neutral impact of the Euro-Med agreements is condemnation
enough – it would mean that the Euro-Med agreements were not achieving their
goals. That is exactly what the simulation exercise in this chapter, and in other
similar recent studies (e.g., Elbehri and Hertel, 2006) show – negligible, or pos-
sibly even negative, impacts.

That being the case, the benefits of the EMA seem to hinge on the rather weak
argument that these countries need to be locked into the discipline of a free trade
agreement, so as to make the reform process ‘credible’.34 This provokes the ques-
tion ‘credible to whom?’ Outside investors? The International Monetary Fund?
The EU? What about the respective electorates of these countries? Certainly,
the experience with the countries that have acceded to EU membership suggests
that accession is a uniquely powerful tool to leverage reform and convergence.
But as accession is not on offer either in the Barcelona Process or the European
Neighbourhood Policy, it is natural to question whether the sort of rapid trans-
formation of economies and strong productivity growth achieved in Eastern and
Southern European accession countries can be replicated in the Mediterranean
region (Nsouli, 2006). As Tovias (2001: 159) has observed,

 Andrew Mold

Mold - [Link] 132 15-6-2007 14:37:35

 The Euro-Mediterranean Partnership in its economic basket has all the
ingredients of the relatively outdated North-South approach. The EU al-
locates massive development aid to Arab Mediterranean and non-Mediter-
ranean countries ... In exchange, the EU wants market access to MENA
countries for its industrial products, and that is all.

From a European perspective, the EMAs have generally been presented as a suc-
cessfully negotiated package of agreements. Seen from the SEM countries, the
perspective is quite different. It was very much a negotiation between unequal
partners. To a substantial extent, the problems identified in this study stem from
the lack of bargaining power of the SEM countries vis-à-vis the EU. For instance,
the so-called Singapore issues became a key bone of contention during the Doha
round of multilateral trade negotiations. However, after considerable pressure
from developing countries, the EU was forced to abandon pursuing these issues.
The suspicion is that the EU is now using bilateral trade deals like those embod-
ied in the Euro-Mediterranean agreements to advance the same agenda on issues
such as intellectual property rights and protection for EU investments, above and
beyond the disciplines implied by the multilateral system.

The basic point is, therefore, that the SEM countries need greater room to ma-
noeuvre, something that the EMAs do not currently offer them. On the contrary,
the current agreements simply reinforce the principal of reciprocity embodied in
WTO arrangements. In this paper, we have tried to argue that this is both un-
necessary and, in the long run, counter to the interests of SEM countries and
Europe itself. In their present format, there is a very real danger that the EMAs
degenerate into a NAFTA-type arrangement, bereft of all social and develop-
mental content. Thus a shift in emphasis in European policy towards the SEM
countries is clearly needed.

All this also gives rise to some important strategic questions for the SEM coun-
tries themselves. SEM exports are already highly concentrated in Europe, a mar-
ket that is growing more slowly than the rest of the world (UN, 2001: 15). Given
the reluctance of European firms to invest in the region, direct investment from
Asia should also be encouraged. This would complement the increase in Asian
trade that has been taking place since 1980 and that is bound to continue, if only
because Asia has been the fastest growing region in the world. In strategic terms,
therefore, ‘the Arab world should take renewed advantage of its geographical po-
sition as an “open” trading region between European and the rest of Asia – some-
thing that it did with remarkable success in pre-modern times’ (Bolbol, 1999: 15).

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 133 15-6-2007 14:37:35

 Similarly, within the SEM countries, there is a keen awareness of the need to pro-
mote regional integration among themselves. To this end, the Agadir Agreement,
concluded in March 2004 and signed by Morocco, Tunisia, Jordan, and Egypt,
marks an important step toward building a Euro-Mediterranean free trade zone,
creating an integrated market of more than 100 million people in the four signa-
tory countries. It is true that intra-regional economic links are currently limited.
But there is plenty of scope for deepening those links. Local markets are too small
to be attractive to foreign investors, and the regulatory and administrative norms
are excessively diverse. There is also need for greater coordination in a context of
increasing concern over ‘competitive bidding between countries’, where countries
become locked in a ‘race to the bottom’ in terms of salaries, environmental legisla-
tion, workers’ rights, etc. Yet despite the importance of the issue, it remains the
case that there is no mechanism under either the EMA or the Neighbourhood
Policy to encourage such regional agreements.35

Finally, there is the thorny question of financial aid. While MEDA funds have been
complemented by additional investments through the European Investment Bank
(EIB) (Nsouli, 2006), the financial help provided to assist with the structural ad-
justments required in the SEM countries’ economies has proved inadequate.36 Ac-
cording to the European Commission’s own external evaluation of the programme
(EC, 2005: 15), ‘MEDA resources can be considered as low relative to the ambition
levels for the three pillars in the Barcelona Declaration and given the increasing
political relevance of MEDA countries development for the European Union. The
average amounts per year available for programming in MEDA II are not higher
than under MEDA I.’37 Moreover, because of bureaucratic and administrative errors
and delays, a high percentage of assigned resources are not currently distributed.
In the first five years of the EMAs, only 26 percent of the amount committed to aid
under the MEDA programme was actually disbursed (Yaboubian, 2004). With its
multi-year budget cycles and volumes of paperwork, the MEDA programme is ex-
ceptionally cumbersome bureaucratically. The EU needs to resolve these problems
of disbursements and make financial commitments that correspond with the scale
of the social and economic problems faced by the region.

Notes

 The views expressed herein are those of the author and do not necessarily reflect the
views of the United Nations. The author is grateful to Mohammed Chemingui for use-
ful comments on an earlier draft of this chapter. Any remaining errors are of course the
responsibility of the author.

 Andrew Mold

Mold - [Link] 134 15-6-2007 14:37:35

  Some critics argue that these and other terrorist attacks led to the regrettable situation
whereby security considerations have taken precedence over those of economic and social
development. Although clearly a resolution of the Arab-Israeli dispute is at the heart of
problem, a more enlightened view would also stress that these objectives are closely inter-
twined, and that without progress in the social, economic, and political spheres, and an
improvement in the well-being of the disaffected populations of North Africa, progress
on security will inevitably be limited.
 Negotiations for agreements already concluded include those with Tunisia (), Israel
(), Morocco (), Jordan (), Egypt (), Algeria (), Lebanon (),
Syria (), and the Palestinian Authority. Those with Tunisia (), Morocco (),
Israel (), Jordan (), and Egypt () have been ratified and are in force.
 European Commission, External Relations, available at [Link]
ternal_relations/euromed/
 Tunisia was the first country in the region to sign an association agreement with the EU
in  and began dismantling tariffs in , even before the agreement came into force
in . Tariffs have been totally dismantled for capital goods since  and for raw ma-
terials and intermediate goods since . Import duties on consumer goods had been cut
by about a half by the end of , and  percent of EU industrial products had duty-free
access by . By , tariff rates on imports competing with local production had been
cut to  percent of their level in , and  percent of the tariff reductions scheduled
under the association agreement were in place (SIA, : ).
 It has been estimated, for example, that around  percent of Morocco’s population now
lives in Europe (Yacoubian, ).
 Such a statement does not preclude acknowledging the existence of dynamic competitive
sectors in the SEM countries, such as the electronics industry in Tunisia. Prior to the
phasing out of the Multi-Fibre Arrangement, Egypt and Syria had succeeded in building
up their textile industries, and Tunisia and Morocco their clothing industries.
 These concessions deal more with quantitative restrictions than tariffs. Some significant
increases in quotas have been granted to the North African economies on products like
olive oil and cut flowers, these new quotas being calculated on a floating basis or granted
in a seasonal manner. The increase in quotas is still being negotiated with most North
African countries.
 For example, between  and s European wine imports from the Maghreb and
Cyprus dropped by  percent, while imports from Spain increased by  percent.
 To the extent that high tariffs do not impede high levels of imports, this can be taken as
indirect evidence of the lack of competitiveness of producers in the SEM countries. This
reveals an important (but often neglected) truth about tariff protection – as part of a
policy to promote or protect domestic industry a given tariff is only effective in so much
as it impedes imports. It is thus misleading to talk about a particular ad valorem tariff
between trading partners as ‘high’ or ‘low’, this depending on the relative productivities of
the industries in the two countries. Thus whereas a  percent tariff might be considered
as exceedingly high for an EU industry (with very high rates of productivity), except from
the point of raising government revenue it might be meaningless for a developing country
to impose such a tariff as it will have no protective effect for domestic industry and simply
raises costs for consumers.
 To cite just one example, between  and , the terms of trade with the rest of the
world (i.e., the units of imports that one unit of exports can buy) for the MENA group of
countries as a whole declined by more than  percent (Bolbol, : ). This forced these

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 135 15-6-2007 14:37:35

 countries to undertake harsh adjustment policies that adversely affected living standards
for the vast majority of their populations.
 See, for instance Auty ().
 In Tunisia, for instance, the textile sector accounts for around  percent of total exports,
and  percent of manufacturing employment. Approximately  percent of the exports
are destined for the European market. In the case of Morocco, in  there were ,
firms employing a total of , employees (Ben Hammouda et al., : -).
 The principal problems with the analysis are the data limitations regarding relative en-
dowments. Wood and Mayer use the average annual years of schooling as a proxy for
human capital, and land area as a proxy for resource endowments. This second variable is
particularly problematic for the MENA countries – in Egypt, for example, only  percent
of the total land mass is under cultivation. On the other hand, the MENA countries are
richly endowed with mineral resources, which compensates for the lack of cultivable land.
As Wood and Mayer concede, these problems are fairly intractable in this kind of analysis,
but the results are at least suggestive.
 Historically, the Nile Valley and Delta were considered perhaps the richest and most
productive agricultural land on earth. Similarly, during the time of the Roman Empire,
Tunisia was known as the ‘granary of Rome’.
 As the SIA () study notes, however, these effects would be countered by a shift of
production out of products for which the North African countries open their markets to
imports from the EU (notably cereals, meat and dairy products), implying that the net
effect on value added and welfare might be smaller.
 See ‘Los precios del aceite de oliva se recuperan por la baja producción’, El País,  Novem-
ber .
 Cited in ‘Finding Jobs for the Masses’ by Mark Husband, Egypt-Survey,  May ,
Financial Times Online, available at [Link]
 In a CGE analysis of the liberalisation of the Tunisian agricultural sector, Chemingui and
Desuss () conclude that reform of Tunisian agriculture can be viable only if accom-
panied by greater access to the European market for the country’s exports. Under such a
scenario, not only would the EU itself benefit from greater export opportunities for both
manufactured and agricultural goods, but the corresponding increase in rural household
incomes in Tunisia would make the necessary reforms politically palatable.
 For instance, if the whole process of policy change takes place over a period of  years,
those gains represent at best an additional . percent of GDP, something which could be
considered trivial in macroeconomic terms.
 In this case, the common external tariff should be set at the highest level consistent with
protecting the industry in the least ‘efficient’ country. As Andic et al. (: ) point out,
‘ Trade creation and trade diversion are misleading terms in the context of less-developed
countries, deriving as these terms do from conventional comparative cost theory. What a
customs union of the style outlined here is maximising is development creation, not trade
creation, and minimizing development diversion which means diverting development po-
tential to an already developed country.’
 Moreover, Tovais stresses that these losses would be far higher if EU exporters managed
to form a cartel to raise export prices. Tovias also acknowledges that the losses calculated
for Tunisia are also considerably lower than in an earlier partial equilibrium study by
Boudhiaf (), who predicted static losses of as much as  percent of Tunisian GDP.
 See, for instance Taylor and von Arnim (). For a less disparaging review, see Piermar-
tini and Teh ().

 Andrew Mold

Mold - [Link] 136 15-6-2007 14:37:36

  Dessus and Suwa-Eisenmann (: ) comment that if the pessimistic predictions of the
static models were accurate, neither Egypt, Morocco, nor Tunisia would have signed the
agreements. As we shall see later, however, this ignores the important political component
in the negotiations. The basic argument here is that the motivation on the part of the
SEM countries was not economic, but political.
 For a definitions of each sector and how these correspond to the ISIC Rev.  system, see
[Link]
 Processed agricultural products pose somewhat of a problem for the simulation, in the
sense that tariffs are not reduced for the raw materials. Here we follow the procedure
adopted by Elbehri and Hertel () – tariffs for processed food products were pro-
portionately adjusted for the content of primary agricultural inputs, since only the non-
agricultural components of processed products are imported duty-free into the EU (and
the same has been supposed of North African imports of processed agricultural prod-
ucts from the EU). It is worth noting that because primary agricultural inputs suppose
a relatively smaller share of total value added for the EU processed agricultural products
(around  percent of value added, vis-à-vis approximately  percent for the North Af-
rican economies), the corresponding tariff reduction is relatively higher for EU exports to
North Africa compared to North African exports to the EU market.
 There is, in fact, some evidence to suggest that such a process is already underway – Tu-
nisia, for instance, has been replacing tariffs on imports from the EU with domestic taxes
to substitute for the lost tariff revenue, thereby leaving the overall tax take more or less
unchanged.
 It might also be considered that tariffs are low on EU imports of agricultural products
from Egypt, Tunisia, and Morocco, especially compared with the very high tariffs that
Tunisia and Morocco impose on their own agricultural imports from the EU. But this
is perhaps misleading, for two reasons. GTAP generates trade-weighted tariffs and ex-
ports from the North African economies are concentrated in a few products. That does
not mean that prohibitively high tariffs do not exist in other product lines. Secondly,
the GTAP database does not adequately capture restrictions to trade caused by quotas
and seasonal restrictions, one of the major bones of contention within the context of the
agreements.
 It is important of course to analyse what is driving these results. Annex table  shows
the breakdown for the welfare results. One important factor here are the terms of trade
losses, which more than offset the gains through the better allocation of resources derived
from the trade liberalisation. An important part of the welfare losses also derive from
the assumption built into the model regarding fixed wages. The reliability of the results
therefore hinge on the realism of this closure.
 The irony of this all is that, according to some CGE studies (e.g., Mold and Fosu, ),
the North Africa region is the one with the most to gain from multilateral liberalisa-
tion. The logic behind this might, to the uninitiated to this kind of model, seem rather
contradictory, but it is precisely because the North African economies have retained very
distorted trade structures (whereas in other regions tariffs have come down quite sharply
due to the Uruguay Round and bilateral pressures). Thus they subsequently have the
most to gain from multilateral (or indeed unilateral) liberalisation.
 Soderling (: ) notes that Egypt’s textile exports to the EU are predominately inter-
mediate inputs, in addition to raw cotton. Although the data do not permit the exact trac-
ing of commodities, about ¾of the textile exports to the EU are directed to Italy, France,
Germany, and the United Kingdom, the very same countries that export intermediate

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 137 15-6-2007 14:37:36

 textile inputs to Tunisia. It is plausible, therefore, that we are witnessing a ‘hub-and-spoke’
type effect, whereby a European firm which imports intermediate inputs from Egypt,
provides a design, and subsequently outsources the final stages of assembly to Moroccan
and Tunisian firms.
 Note also that the simulation does not take into account the MFA phase-out. Potential
losses are thus likely to be far larger than those indicated here.
 Drysdale (: -) notes how, between  and , Egypt received approximately
 billion in economic assistance from the United States, and an additional  billion in
military aid, to such an extent that ‘Egypt is indisputably hooked on foreign finances’. The
aid has been heavily tied to the purchase of US goods, especially agricultural products. In
, for example, more than  percent of funds made available for economic assistance
were spent in the US for goods and services.
 For instance, the former Moroccan minister of industry, Hasan Abouyoub, claimed that
trade liberalisation in his country “would have been infeasible without first entering into
a free trade arrangement with the EU. These arguments apply both for initial tariff cuts,
and for the commitment not to reverse policy” (World Bank, : ).
 This is not to deny that there have been some steps in the right direction. For example, by
an October  decision of the European Council, the system of cumulation of origin
was extended to Mediterranean countries, permitting goods processed in one or more
countries to benefit from the same preferential access to the EU market as goods exported
directly from the country of origin, provided that the countries involved have a free trade
agreement in place (Nsouli, ).
 MEDA I (-) was budgeted for a total amount of , million. For MEDA
II this was stepped up to , million. European Investment Bank (BEI) funds made
available to the EuroMed countries were also stepped up, from , million for -
to , million for -.
 The total resources made available under MEDA II (-) are in fact only equiva-
lent to half the aid provided to Eastern Europe under the PHARE programme. It is also
less than the aid received by Egypt and Israel annually from the United States.

References

Alessandri, Piergiorgio (2000), ‘European and Euro-Mediterranean Agreements:

Some Simulation Analysis on the Effects of the EU Trade Policy’, Centro Stu-
di sui Processi di Internazionalizzazione, Milan, Working Paper no. 110, June.
Adams Jr, Richard H. and John Page (2003), ‘Poverty, Inequality and Growth in
Selected Middle East and North Africa Countries, 1980-2000’, World Devel-
opment, vol. 231, no. 12, pp. 2027-2048.
Andic, Fuat, Suphan Andic and Douglas Dosser (1971), A Theory of Economic
Integration For Developing Countries, London: George Allen and Unwin
Ltd.
Augier, Patricia, Michael Gasiorek and Charles Lai-Tong (2005), ‘ The Impact of
Rules of Origin on Trade Flows’, Economic Policy, July, pp. 567-624.

 Andrew Mold

Mold - [Link] 138 15-6-2007 14:37:36

 Auty, Richard (ed.) (2001), Resource Abundance and Economic Development,
UNU/WIDER Studies in Development Economics, Abingdon: Routledge.
Bacaria, Jordi and Alfred Tovias (eds.) (2000), Librecambio euromediterráneo-
Impacto del área de libro comercio en el horizonte 2010, Barcelona: Icaria An-
trazyt.
Ben Hammouda, Hakim Karima Bounemra Ben-Soltane, Nassim Oulmane,
Stephen Karingi, Mustapha Sadni-Jallab, Aissatou Gueye, and Abdelilah
Ouaqouaq (2005), ‘Comment sauver le textile maghrébin?’, African Trade Pol-
icy Centre Working Paper, no. 17, United Nations Economic Commission for
Africa, Addis Ababa.
Bolbol, Ali A. (1999), ‘Arab Trade and Free Trade: A Preliminary Analysis’, Inter-
national Journal of Middle East Studies, 31, pp. 3-17.
Boudhiaf M. (1997), ‘Impact de la Xonde de Libre-Échange Tunis-Union euro-
péen sur le revenu national tunisien’, cited in Alfred Tovias (with Jordi Bacaria)
(2000), Librecambio Euromediterraneo, Barcelona: Icaria.
Brown, Drusilla K., Alan V. Deardorff and Robert M. Stern (1997), ‘Some Eco-
nomic Effects of the Free Trade Agreement between Tunisia and the European
Union’, in Ahmed Galal and Bernard Hoekman, Regional Partners in Global
Markets: The Limits and Possibilities of Euro-Med Agreements, London and
Cairo: The Egyptian Center for Economic Studies (ECES) and the Centre for
Economic Policy Research (CEPR), pp. 71- 97.
Chahberli, Nabil and Moataz El-Said (2000), ‘Impact of the WTO Agreement on
MENA Agriculture’, Economic Research Forum Working Paper 2007, Cairo.
Chemingui, M. A. and S. Dessus (2000), ‘ The Liberalization of Tunisian Ag-
riculture and the European Union: A Prospective Analysis’, in S. Dessus, J.
Devlin and R. Safadi (eds.), The Dynamics of New Regionalism in MENA
Region, OECD Development Centre and World Bank.
Cooper C. and Massell B.F. (1965), ‘ Toward a General Theory of Customs Unions
for Developing Countries’, Journal of Political Economy, vol. 73, October, pp.
461-477.
Deraniyagala, Sonali and Ben Fine (2001), ‘New Trade Theory versus Old Trade
Policy: A Continuing Enigma’, Cambridge Journal of Economics, 25, pp. 809-
825.
Dombey, Daniel and Roula Khalaf (2005), ‘Euro-Med leaders look to build on
Barcelona process’, The Financial Times online, 26 November.
Dunkley, Graham (2004), Free Trade – Myth, Reality and Alternatives, Zed
Books, London.
European Commission (2005), ‘Mid-term evaluation of the MEDA II pro-
gramme. Final report.’ Report carried out by ECORYS-NEI at the request
of European Commission, EuropeAid Co-operation Office. 18 July, available

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 139 15-6-2007 14:37:36

 at [Link]
2005_en.pdf
Elbehri, Aziz and Thomas Hertel (2006), ‘A Comparative Analysis of the EU-
Morocco FTA vs. Multilateral Liberalization (Revised Version)’, Global Trade
Analysis Project, Purdue University.
Fosu, Augustin and Andrew Mold (2005), ‘ The Gains from Trade for Africa:
Implications for Labour Markets and Poverty Reduction’, paper presented at
UNU-WIDER Third Project Conference ‘ The Impact of Globalisation on
the Poor in Africa’, Johannesburg, South Africa, 1-2 December, 2005.
Galal, Ahmed and Bernard Hoekman (eds.) (1997), Regional Partners in Global
Markets: Limits and Possibilities of the Euro-Med Agreements, Centre of
Economic Policy Research, London, and the Egyptian Center for Economic
Studies.
Ghesquiere H. (1998), ‘Impact of European Union Association Agreements on
Mediterranean Countries’, IMF Working Paper WP/98/116, August.
Haddad, Mona (2000), ‘Export Competitiveness: Where does the Middle East
and North Africa Region Stand?’, Economic Research Forum for the Arab
Countries, Iran, and Turkey (ERF), Working Paper 2030, available at http://
[Link]/.
Hertel, Thomas W. (ed.) (1997), Global Trade Analysis – Modeling and Applica-
tions, Cambridge: Cambridge University Press.
Hoekman, Bernard and Simon Djankov (1996), ‘ The EU’s Mediterranean Initia-
tive’, World Economy, vol. 19, no. 4, July, pp. 387-406.
Inama, Stefano and Lorenza Jachia Inama (2000), ‘Assessing Market Access Pref-
erences for Mediterranean Countries in the EU Market for Industrial Goods’,
Economic Research Forum for the Arab Countries, Iran and Turkey (ERF),
Working Paper 2013, available at [Link]
Karshenas, Massoud (2001), ‘Structural Obstacles to Economic Adjustment in
the MENA Region: The International Trade Aspects’, in Hassan Hakimian
and Ziba Moshaver (eds.), The State and Global Change: The Political Econ-
omy of Transition in the Middle East & North Africa London: Curzon Press,
pp. 59-79.
Konan, Denise Eby and Keith E. Maskus (1997), ‘A Computable General Equi-
librium Analysis of Egyptian Trade Liberalization Scenarios’, in Ahmed Galal
and Bernard Hoekman (eds.), Regional Partners in Global Markets: Limits
and Possibilities of the Euro-Med Agreements. London: CEPR.
Kuiper, Marijke (2004), ‘Fifty Ways to Leave your Protection – Comparing Ap-
plied Models of the Euro-Mediterranean Association Agreements’, European
Network of Agricultural and Rural Policy Research Institutes (ENARPRI),
Working Paper no. 6, April.

 Andrew Mold

Mold - [Link] 140 15-6-2007 14:37:36

 Kuiper, Marijke (2006), ‘An Economy-wide Perspective on Euro-Mediterranean
Trade Agreements with a Focus on Morocco and Tunisia’, European Network
of Agricultural and Rural Policy Research Institutes (ENARPRI) Conference
Paper, May.
Kuiper, Marijke and Frank von Tongeren (2004), ‘Mediterranean Association
Agreements and European Security’, European Network of Agricultural and
Rural Policy Research Institutes, Policy Brief no. 9, October.
Krugman, Paul (1994), ‘Competitiveness: A Dangerous Obsession’, Foreign Af-
fairs, March/April, pp. 28-44.
Lall, Sanjaya (2000), ‘ Turkish Performance in Exporting Manufactures: A Com-
parative Structural Analysis’, QEH Working Paper Series no. 47, available at
[Link]
Maresceau, Marc and Erwan Lannon (eds.) (2001), The EU’s Enlargement and
Mediterranean Strategies: A Comparative Analysis, Basingstoke: Palgrave
MacMillan.
Mold, Andrew (2002), ‘Liberalización del comercio y acceso a los mercados:¿Hacia
una postura más coherente?’ in José Antonio Alonso, Finanzas para el Desar-
rollo, Civitas, Madrid.
Mold, Andrew (2003), ‘Regional Trading Blocks as a Response to Global Poverty?
A Critique of the Euro-Mediterranean Agreements’, Documentos de Trabajo
Serie Desarrollo y Cooperación DT-DC-03-02, Julio, Instituto Complutense
de Estudios Internacionales, Madrid.
Mold, Andrew and Augustin Fosu (2005), ‘ The Gains from Trade for Africa:
Implications for Labour Markets and Poverty Reduction’, paper presented at
the UNU-WIDER Conference on ‘ The Impact of Globalization on the Poor
in Africa’, 1-2 December, 2005, Johannesburg.
Mubarak Jamil A. (1998), ‘Middle East and North Africa: Development Policy in
View of a Narrow Agricultural Natural Resource Base’, World Development,
vol. 26, no. 5, pp. 877-895.
Nsouli, Saleh M. (2006), ‘ The Euro-Mediterranean Partnership Ten Years On:
Reassessing Readiness and Prospects’, statement by Saleh M. Nsouli, Director,
IMF Offices in Europe, at Crans-Montana Forum, Monaco, 23 June.
Oxfam (2005), ‘Euro-Med: Ensuring a Fair Deal’, Oxfam Briefing Note, 26 No-
vember.
Piermartini, Roberta and Robert The (2005), ‘Demystifying Modelling Methods
for Trade Policy’, WTO Discussion Paper no. 10.
Rutherford, Thomas F., E.E. Rutström and David Tarr (1993), ‘Morocco’s Free
Trade Agreement with the European Community – A Quantitative Assess-
ment’, Policy Research Working Papers WPS 1173, World Bank, September.
Soderling, Ludvig (2005), ‘Is the Middle East and North Africa Region Achiev-

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 141 15-6-2007 14:37:36

 ing its Trade Potential?’, International Monetary Fund, Working Paper
WP/05/90.
Sustainability Impact Assessment (SIA) (2006), ‘Sustainability Impacts of the
Euro-Mediterranean Free Trade Area – Final Report on Phase 2 of the SIA-
EMFTA Project’, Institute for Development Policy and Management, Univer-
sity of Manchester.
Taylor, Lance and Rudiger von Arnim (2006), ‘Modelling the Impact of Trade
Liberalisation: A Critique of Computable General Equilibrium Models’, Ox-
fam International Research Report, July.
Tovias, Alfred (2000), ‘Impacto Comercial de las Futuras Zonas de Libre Com-
ercio’, in Bacaria and Tovias, [Link]. pp. 57-101.
Tovias, Alfred (2001), ‘ The Optimum Strategy for a Spoke: Linking with Other
Spokes or Other Hubs?’, in Maresceau and Lannon, [Link]., pp. 141-152.
United Nations Economic and Social Commission for Western Asia (1999),
Euro-Mediterranean Partnership Agreements: A Critical Assessment, New
York.
United Nations Development Programme (2004), Arab Human Development
Report 2004, available at: [Link].
White, Gordon (2001), A Comparative Political Economy of Tunisia and Mo-
rocco – On the Outside of Europe Looking In, New York: State University of
New York Press.
Wood, Adrian and Richard Mayer (1999), ‘Africa’s Export Structure in Compara-
tive Perspective’, Institute of Development Studies, available at [Link]
[Link]/ids/global/[Link].
World Bank (2000), Trade Blocs, World Bank, Washington.
World Bank (2001), Global Economic Prospects and the Developing Countries
2002, World Bank, Washington.
World Bank (2005) World Bank Development Indicators on CD ROM, Wash-
ington: World Bank.
Yacoubian, Mona (2004), ‘Promoting Middle East Democracy: European Initia-
tives’, United States Institute of Peace, Washington, Special Report, available
at [Link].

 Andrew Mold

Mold - [Link] 142 15-6-2007 14:37:36

 Statistical Annex
Annex Table 1 Summary Data on the Economies of Egypt, Morocco, and Tunisia (1995-
2005)
Egypt Morocco Tunisia
1995 2005 1995 2005 1995 2005
Inflation 9.4 11.4 10.3 0.3 6.2 2.0
Government balance -1.3 -10.5 -5.5 -6.7 -4.2 -2.8
Agriculture, value added 16.8 16.1 14.6 16.8 11.4 12.1
(% of GDP)
Industry, value added 32.3 34.0 33.0 29.6 29.0 28.1
(% of GDP)
Services, etc., value added 50.9 49.8 52.4 53.6 59.6 59.8
(% of GDP)
GDP per capita 1320 1622 1060 1278 1655 2215
(constant 2000 US$)
GDP per capita, PPP 3025 3732 3214 3783 5083 6765
(constant international
2000 US$)
Foreign direct investment, 1.0 0.3 1.0 5.2 1.5 2.2
net inflows (% of GDP)
Rural population (% of 56.9 57.2 48.0 42.6 38.1 32.6
total population)
Current account balance 0.6 2.8 -3.6 0.9 -4.3 -1.3
(% of GDP)
Trade taxes (as % of 12.9 5.5 17.9 11.9 15.8 3.7
total revenues)
Average tariff rates 24.3 18.9 20.6 19.3 28.5 29.6
(% ad valorem)
External debt 47.1 38.6 67.6 42.9 51.5 61.0
(as % of GDP)
Unemployment, total 11.3 9.0 22.9 11.6 na 15.6
(% of total labour force)
Sources: Nsouli, 2006; World Bank Development Indicators 2005; EIU 2006

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 143 15-6-2007 14:37:36

 Annex Table 2 Pre-Simulation Destination of Exports
Source/ Egypt Morocco Tunisia EU25 US ROW Total
Destination
Egypt 0.0% 0.5% 0.4% 35.8% 26.2% 37.2% 100.0%
Morocco 0.4% 0.0% 0.5% 60.3% 9.5% 29.3% 100.0%
Tunisia 0.5% 0.6% 0.0% 70.9% 6.3% 21.7% 100.0%
EU25 0.3% 0.3% 0.3% 58.7% 11.2% 29.1% 100.0%
US 0.6% 0.1% 0.1% 29.6% 0.0% 69.6% 100.0%
ROW 0.4% 0.1% 0.1% 23.5% 27.9% 48.0% 100.0%
Total 0.4% 0.2% 0.2% 37.8% 17.9% 43.5% 100.0%
Source: Simulation results

Annex Table 3 Pre-Simulation Source of Imports

Source/ Egypt Morocco Tunisia EU25 US ROW Total
Destination
Egypt 0.0% 0.5% 0.4% 0.2% 0.3% 0.2% 0.2%
Morocco 0.2% 0.0% 0.5% 0.3% 0.1% 0.1% 0.2%
Tunisia 0.2% 0.4% 0.0% 0.2% 0.0% 0.1% 0.1%
EU25 33.1% 61.2% 71.3% 58.9% 23.7% 25.4% 37.9%
US 18.7% 6.0% 5.4% 10.0% 0.0% 20.4% 12.8%
ROW 47.8% 31.9% 22.4% 30.3% 75.9% 53.8% 48.8%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Source: Simulation results

Annex Table 4 Welfare Breakdown

Allocative Fixed wages Terms of Investment/ Total
efficiency trade effect Savings
balance
1 Egypt 326.0 -732.7 -500.2 -355.9 -1262.8
2 Morocco 161.4 -674.9 -326.0 -15.0 -854.4
3 Tunisia -3.4 -165.1 -101.7 1.9 -268.3
4 EU 272.4 0.0 1850.0 75.7 2198.2
5 ROW -353.0 0.0 -908.6 295.1 -966.5
Total 403.4 -1572.6 13.6 1.9 -1153.8
Source: Simulation results

 Andrew Mold

Mold - [Link] 144 15-6-2007 14:37:36

 Annex Table 5 Change in Trade Balance (millions US$ 2001)
Egypt Morocco Tunisia EU ROW
1. Agriculture 105.0 -26.3 -48.3 -151.4 126.8
2. Processed agriculture 56.7 -153.6 71.9 64.2 -66.3
3. Fuel 6.1 93.1 -17.1 -57.9 -45.2
4. Textiles -327.1 -160.5 -647.2 1574.5 -585.9
5. Wearing apparel -1593.4 1243.1 1059.0 705.5 -1565.2
6. Leather products 1.6 -166.0 -36.7 143.0 44.7
7. Wood products -30.5 -107.4 -61.1 174.4 -10.4
8. Paper products, publishing -15.4 -124.9 -43.1 151.4 13.2
9. Petroleum, coal products 9.7 -28.6 3.6 66.4 -54.6
10. Chemical, rubber, plastic 185.7 -236.7 -66.8 -63.0 149.4
products
11. Mineral products, nec -81.0 -138.9 -26.4 244.6 -27.0
12. Ferrous metals 125.4 14.7 6.9 -48.6 -103.3
13. Non-ferrous metals 17.5 4.6 -16.4 -47.1 37.1
14. Metal products -96.6 -175.3 -11.5 249.9 13.9
15. Motor vehicles and parts -84.8 -99.8 -49.0 123.2 103.2
16. Transport equipment nec -3.4 -1.1 -22.7 -293.4 318.6
17. Electronic equipment -45.5 -15.4 -37.4 -699.1 788.5
18. Machinery and equipment 116.8 -185.3 -179.9 -456.2 696.7
nec
19. Manufactures nec -18.5 -39.2 -16.2 -140.5 201.9
20. Services 1188.6 -74.7 -293.2 -1813.3 1530.3
Total trade balance -483.3 -378.2 -431.5 -273.4 1566.4
Source: Simulation results

Annex Table 6 Post-Simulation Change in Bilateral Exports (millions US$ 2001)

Exports/imports 1 Egypt 2 Morocco 3 Tunisia 4 EU 5 ROW Total
1. Egypt 0.0 -15.0 -4.1 1101.1 1391.7 2473.8
2. Morocco -7.3 0.0 -11.0 2388.6 189.7 2560.0
3. Tunisia -14.3 -18.5 0.0 1533.2 -161.2 1339.2
4. EU 5862.8 3546.5 2004.7 -3787.4 -5557.1 2069.6
5. ROW -3453.5 -1088.7 -470.6 3048.7 1970.6 6.6
Total 2387.8 2424.4 1519.0 4284.2 -2166.2 8449.1
Source: Simulation results

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 145 15-6-2007 14:37:37

 Annex Table 7 Structure of the Egyptian, Moroccan, and Tunisian Economies, 2001
Egypt Value % Morocco
output
Total 68750.90 100.0 Total
Processed agriculture 18539.58 27.0 Processed agriculture
Textiles 8122.41 11.8 Chemical, rubber,
plastic products
Wearing apparel 8070.68 11.7 Wearing apparel

Fuel 5922.34 8.6 Mineral products, nec

Chemical, rubber, plastic 4865.39 7.1 Fuel
products
Mineral products, nec 4119.63 6.0 Leather products

Petroleum, coal products 3852.57 5.6 Machinery and

equipment nec
Motor vehicles and parts 2225.23 3.2 Petroleum, coal products
Electronic equipment 2063.17 3.0 Textiles
Metal products 2052.31 3.0 Paper products,
publishing
Ferrous metals 1940.54 2.8 Electronic equipment
Wood products 1878.19 2.7 Metal products
Paper products, 1589.94 2.3 Motor vehicles and
publishing parts
Non-ferrous metals 1517.7 2.2 Wood products
Manufactures nec 698.83 1.0 Ferrous metals
Leather products 497.47 0.7 Manufactures nec
Machinery and 464.03 0.7 Non-ferrous metals
equipment nec
Transport equipment 330.89 0.5 Transport equipment
nec nec
Source: Calculated from the GTAP 6.02 database

 Andrew Mold

Mold - [Link] 146 15-6-2007 14:37:37

 Value % Tunisia Value %
output Output
27357.60 100.0 Total 15956.05 100.0
5368.18 19.6 Wearing apparel 2833.55 17.8
3577.45 13.1 Processed agriculture 2279.35 14.3

3190.95 11.7 Chemical, rubber, plastic 2064.85 12.9

products
2106.71 7.7 Fuel 1958.35 12.3
1347.59 4.9 Textiles 1217.01 7.6

1313.4 4.8 Machinery and equipment 1103.2 6.9

nec
1309.46 4.8 Wood products 715.47 4.5

1290.17 4.7 Leather products 706.25 4.4

1185.52 4.3 Non-ferrous metals 517.88 3.2
1153.82 4.2 Motor vehicles and parts 458.77 2.9

1090.61 4.0 Paper products, publishing 456.44 2.9

1016.61 3.7 Electronic equipment 337.01 2.1
956.69 3.5 Petroleum, coal products 313.16 2.0

851.27 3.1 Ferrous metals 309.65 1.9

645.88 2.4 Manufactures nec 219.19 1.4
487.59 1.8 Mineral products, nec 204.71 1.3
340.17 1.2 Metal products 166.86 1.0

125.6 0.5 Transport equipment 94.35 0.6

nec

To Reciprocate or Not to Reciprocate? 

Mold - [Link] 147 15-6-2007 14:37:37

Mold - [Link] 148 15-6-2007 14:37:37
 6 Challenges of Forging a Partnership Between
the European Union and Latin America

Christian Freres1

1. Introduction: The EU’s Enlargements and Ties with

Latin America

The European Union’s relations with developing regions have evolved consider-
ably with successive enlargements since the early 1970s. In this regard, the first
enlargement (United Kingdom, Ireland, and Denmark) is linked with the cre-
ation of the Lomé Convention and the emergence of the Africa, Caribbean, and
Pacific (ACP) group of countries which formed the core of European Commu-
nity (EC) development policy until recently.2 However, as the United Kingdom
was not able to incorporate its former Asian colonies in this scheme, these were
placed in a residual category of ‘non-associated’ developing countries, together
with Latin American nations. This latter group of countries increased its profile
within the EC’s scheme of external relations as a result of the second, ‘Southern
widening’ (1981-1986: Greece, Spain, and Portugal), when the Community finally
incorporated a member state interested in championing deeper ties with Latin
America. This enlargement also led to a stronger, more visible policy towards the
southern nations of the Mediterranean.

The third enlargement in the mid-1990s coincided with greater EU interest in

strengthening links with Central and Eastern Europe, as a result of the post-Cold
War political opening up of that zone. This also started a process of re-shaping
the prevailing development policy focused largely on the ACP group. Its impact
was compounded by the most recent – and largest in terms of the number of
countries – EU enlargement in 2004, which contributed to the creation of the
new Neighbourhood Policy. Although this is not a development policy instru-
ment as such it does deal with relations with various developing countries in the
Mediterranean basin.



Mold - [Link] 149 15-6-2007 14:37:37

 From this quick overview it is clear that European Union relations with Latin
America increased particularly as a result of Spain’s accession in the 1980s, but
it also seems that later EU enlargements may have diluted the progress achieved
in those ties. In a sense, it is too early to tell how great an impact they have had,
but some indirect effects are already evident. Overall, the enlargement from 15
to 27 members has increased the internal heterogeneity of the EU. As such, it
is no longer the same partner that Latin America – or any other region – dealt
with just five or ten years ago. To what extent are the Latin American countries,
or the EU itself, aware of this and to what degree have they considered the im-
plications?

In this regard, one of the conclusions of this chapter is that the changes brought
about by the latest enlargement are part of a series of transformations in both re-
gions that have contributed to a growing divide between the European Union and
Latin America. This situation was particularly evident at the IV European Union
– Latin American and Caribbean summit held in Vienna, Austria, in May, 2006.
In this context, what does the future hold for bi-regional relations? Is there any
possibility to convert the Euro-Latin American ‘strategic partnership’ rhetoric
into reality, or will this relationship be yet another casualty of the EU’s inability
to forge a truly global development policy?3

This chapter is organised into two main parts. The first section looks at the ef-
forts to date to build a bi-regional partnership. It begins by describing the con-
text after the Vienna Summit, followed by a review of the three ‘pillars’ of Euro-
Latin American relations. The partnership concept is then analysed in general
and through the summits and the main policy documents. This section ends with
reflections on changes that have taken place in both regions over the past de-
cades and on whether the European Union has something special to offer Latin
America. The second major part of this chapter analyses the extent to which it
is possible to construct a partnership between the two regions. The chapter ends
with brief conclusions that summarise the main points and reflect on prospects
for the next EU-Latin America summit in 2008.

2. Building the ‘Partnership’: Progress to Date

Overview of bi-regional ties after the Vienna Summit
In the months and weeks leading up to the 2006 Vienna Summit, it became clear
that no one expected much in terms of results from this Fourth Summit of Heads
of State and Government of the European Union, Latin American and Carib-

 Christian Freres

Mold - [Link] 150 15-6-2007 14:37:37

 bean. A significant outcome that could have proven false, these low expectations
would have been an advance in negotiations for association agreements (AA),
key tools for a true bi-regional partnership. Although the proposal of European
Parliament member José Ignacio Salafranca for a ‘European-Latin American free
trade zone’ to be in place by 2010 (European Parliament, 2006) was an unlikely
outcome of the Vienna Summit, a ‘network of association agreements’ was seen as
a possible result within a few years after the summit.

In any case, to date association agreements are only in effect with two countries
in the region, Chile and Mexico. With regard to pending agreements, the key
accord under consideration is that between the European Union and Mercosur.
However, no progress was made on this in Vienna, nor were the parties able to
set a deadline to complete negotiations. There are two main obstacles in achieving
the goal of finalising talks. The first is that key decisions depend on the outcome
of global trade negotiations and as long as the Doha Round does not advance,
little progress may be made in these bi-regional deals. This factor is related to the
EU’s denial of greater market access to Mercosur agricultural goods. The second
obstacle is the divisions within the Mercosur and the limited progress in its inte-
gration process (despite the incorporation of Venezuela in 2006). The only clear
decision taken in Vienna was to start AA negotiations with Central American
countries. Meanwhile negotiations with the Andean Community (CAN) were
postponed mainly due to divisions in this sub-regional scheme.

Even if they were approved, the pending AAs face a fundamental limitation: they
fail to take into account different Latin American realities. That is, there is a ten-
dency to try to impose a ‘one-size-fits-all’ model, regardless of the developmental
differences among Latin American partners. The agreement with the Mercosur
could be similar in design to the AAs with Chile and Mexico, although in the
Mercosur case it would be necessary to include clauses related to regional inte-
gration, with the possibility of developing sectoral dialogues with the sub-region.
Meanwhile, in the cases of CAN and Central America, agreements would have
to take into account the greater assymetries existing between these countries and
the EU in order to avoid excessive negative effects. This means that these AAs
should also include more ambitious co-operation chapters than the agreements
currently in effect.

In the political realm, Vienna did produce two interesting achievements. First, it
established the basis for advancing focused sector dialogues, which may contrib-
bute to reviving this component of EU-Latin American relations.4 Secondly, the
leaders of both regions decided to support the proposal to create a Euro-Latin

Partnership Between the EU and Latin America 

Mold - [Link] 151 15-6-2007 14:37:37

 American Assembly. In early August 2006, members of the European Parliament
and of several Latin American regional parliaments constituted this assembly in
a ceremony in Cartagena, Colombia.

Finally, this summit did not result in any advance in the field of development co-
operation, the third pillar of bi-regional relations. This may not be surprising as
the lack of agreement on the main policy areas makes it difficult to move forward
on what is often seen as a secondary aspect of EU-Latin American ties. In ad-
dition, this instrument’s potential may have been adversely affected by the EU’s
interest in pushing a social cohesion agenda over the past few years which met
with considerable resistance from a number of Latin American countries who see
it as a form of interventionism. Although some analysts may regard the Vienna
meeting as an outright failure, it should not be seen as such. The summit dem-
onstrated how far relations have advanced (considerably since the early 1980s),
but also how much further they need to progress before these ties can considered
a true partnership. In that sense, Vienna was but a small step in a long, and not
necessarily continuous, process.

Brief review of EU-Latin American relations

To have a better idea of just how far EU-Latin American ties have advanced since
the early 1980s until now this section provides a brief overview of economic rela-
tions, co-operation, and political dialogue, the ‘three pillars’ of EU-Latin Ameri-
can relations, to determine the nature of these ties and the trends in relations
over recent years. Economic relations between the two regions are stagnant today
after a period of relative dynamism in the second half of the 1990s.5 Although the
EU is currently Latin America’s second largest trading partner, total commerce
between the two regions is just over half of trade between Latin America and
the United States. In addition, Asia – particularly China – is rising rapidly as a
destination and source of trade in goods. Since the 1990s the European Union has
dropped from representing 20 percent of total Latin American trade to just over
15 percent in 2004 (see figure 1). New trends are beginning to emerge for some
Latin American countries that have traditionally had the EU as its main trading
partner. The case of Uruguay is worth noting, where the US has surpassed the
EU as its major foreign partner, explaining Uruguay’s interest in exploring the
possibilities of a bilateral free trade agreement (FTA) with the US. There is a
positive note in this panorama: the current EU-Latin American balance of trade
favours Latin American countries, probably a result of the strength of the euro
and higher prices for many Latin commodities.

 Christian Freres

Mold - [Link] 152 15-6-2007 14:37:37

 Figure 1 European Union Trade with Latin America

70000 7,0%
60000 6,0%

% of Extra-EU trade
Millions of euros

50000 5,0%
40000 4,0%
30000 3,0%
20000 2,0%
10000 1,0%
0 0,0%
2001 2002 2003 2004 Jan-Nov 2005
Exports Imports % of Extra-EU Exports % of Extra-EU Imports

Source: Eurostat

For the EU, Latin America has never been a very significant trading partner, but
its relative importance has decreased slightly in recent years (from 6 percent of
extra-EU trade in 1994 to less than 5 percent in 2003). Thus, while European
imports from Latin America grew by 180 percent from 1991 to 2000, EU pur-
chases from Southeast Asian and Mediterranean countries grew by 807 percent
and 354 percent, respectively. A similar trend can be seen with respect to foreign
direct investments (FDI). Since 2000 there has been a significant drop in FDI
going to Latin America from the EU, with flows going from more than US$40
billion in 2000 to less than US$5 billion in 2003. There has also been a process of
disinvestment during this period in which the total FDI stock has also dropped.
At any rate, even at its highest point, investment in Latin America was less than
15 percent of extra-EU FDI (Eurostat, 2005: 60-65). Furthermore, there has been
a clear tendency to concentrate flows in a few Latin American countries via both
investment and trade. Indeed, 75 percent of EU-Latin America trade involves the
four Mercosur countries, Chile, and Mexico. The concentration of investments
is even greater, with more than 80 percent of European FDI going to Argentina,
Brazil, Chile, and Mexico.

When describing relations with Latin America, European representatives tend

to emphasise the fact that the EU is the region’s largest donor. Indeed, as can
be seen in figure 2, official development assistance (ODA) provided jointly by
EU member states and the European Commission accounts for more than half
of the resources Latin America receives from Development Assistance Commit-
tee (DAC) members. This fact is undoubtedly important for demonstrating the

Partnership Between the EU and Latin America 

Mold - [Link] 153 15-6-2007 14:37:37

 relative generosity of the EU, but does it say anything about the nature of the
partnership existing between the two regions? Obviously not, for at least two
reasons.

Figure 2 Net Flows of ODA to Latin America and the Caribbean, 1990-2003

7000
6000
5000
US$ Millions

4000
3000
2000
1000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

DAC T otal EU Members Spain European Commission

Source: OECD

First of all, because ODA flows for this region are of limited relevance. Inter-
national aid represents a significant part of the GDP or the national budget in
only two or three Latin American countries. For several countries other foreign
inflows, such as remittances from emigrants, are much higher than aid.6 In addi-
tion, in the current context of the Millennium Declaration (and the Millennium
Development Goals), which is clearly skewed in favour of the poorest countries
(most of which are outside of Latin America), development aid levels will prob-
ably prevail for many more years. Even if the EU maintains its relative share, it is
likely that development co-operation aid will decline in absolute terms. Secondly,
European development co-operation aid for Latin America is the sum of close to
20 bilateral programs and that of the European Community (European Commis-
sion and the European Investment Bank/EIB). That is, the EU is not a single do-
nor, and in practice each agency operates with its own goals, interests, and focus.7
It is not easy to see how the EU can work as a unified actor in this situation.

On the other hand, European co-operation is also seen – and is an important fac-
tor – in the differentiated approach dominating EU policy towards Latin America
since the mid-1990s: the division between partners and ‘co-operation countries’.
The first group consists of countries with relatively high levels of development; the

 Christian Freres

Mold - [Link] 154 15-6-2007 14:37:38

 second is made up of the CAN, Central American countries (where three quarters
of EU ODA is concentrated), and Paraguay. In essence, in this way – together
with the concentration of economic ties pointed out earlier – the EU is fostering a
two-speed partnership (or three, if the differentiated approach for the Caribbean
countries in the African, Caribbean, and Pacific group is taken into account8).

The third pillar, political dialogue, is where the summits come in (taken up in the
next section), as well as diverse mechanisms for relations such as the so-called
San José Dialogue between the EU and Central American countries (since 1984),
the political dialogue between the EU and the Río Group (since 1990), the po-
litical dialogues with the Mercosur, Chile, Mexico, and the Andean Community
(since the 1990s), and specialised dialogue, such as on drugs (since 1996). Added
to these official dialogues are EU-Latin American inter-parliamentary confer-
ences, held since 1973, and various dialogues among civil and social stakeholders
that have taken place since the 1990s.

This is a complex set of relations that has included some highly active periods,
such as during the Central American crisis of the 1980s. Since the end of the
1990s, however, it has shown signs of slowing down (Freres and Sanahuja, 2006).
Indications of this include the lack of high-level representatives at ministerial
and presidential meetings (especially as regards to representatives from Europe),
limited efforts to follow up on agreements, meagre resources assigned for joint
activities, and the lack of a truly bi-regional effort to increase the institutional
level of dialogue (see Freres, et al., 2006). In sum, the three pillars of EU-Latin
America relations do not appear to sustain a very sturdy building, in spite of the
huge steps made from the early 1980s to the present.

The strategic partnership through the summits and key documents9

The concept of ‘strategic partnership’ in bi-regional relations was originally in-
troduced at the First Latin American, Caribbean, and European Union (LAC-
EU) Summit in Rio de Janeiro in June 1999. However the term was not precisely
defined at the time. On the contrary, the Rio Declaration refers very generally to
the concept, which is based on shared cultural heritage, the principles of interna-
tional law, the multilateral system, the common goals of democracy and human
rights, a shared vision of the importance of regional integration, etc. The Decla-
ration was accompanied by a document of ‘action priorities’ (55 priorities, which
later had to be cut to a more manageable 11 priorities), which was more a list of
good intentions than a plan of action.

Partnership Between the EU and Latin America 

Mold - [Link] 155 15-6-2007 14:37:38

 In a sense, the Rio Summit was a high point for the strategic partnership, because
the growing gap between the two parties was already evident at the following
summit meeting in Madrid in May 2002. This was mainly a result of the inability
of the EU to offer an ambitious response (or even a strong gesture) to the acute
economic crisis in several Southern Cone countries. Another key factor was the
host country’s efforts to impose security issues on the bi-regional agenda, in con-
trast to the other side’s desire to emphasise topics more closely linked to their
development challenges. This tension was somewhat eased at the Guadalajara
Summit in 2004, but no progress was made on a definition of the partnership.
The concentration on multilateralism, integration, and social cohesion appeared
to reflect a desire to advance towards a definition, but the final statement once
again did not reach that goal.

In its Communication of December 2005 the European Commission (2005) does

not fully acknowledge this situation or truly admit the generalised danger of stag-
nating Euro-Latin American relations (Freres and Sanahuja, 2006). Instead, it
affirms that relations have developed considerably and it set about to reverse the
erroneous perception that the EU does not have much interest in Latin America
(European Commission, 2005: 4). The Communication established the goal of
providing a fresh impetus to the partnership which currently faces a number of
challenges. The Commission goes on to reaffirm that the association with Latin
America is not merely a matter of fact but is also vital for the interests of both
regions, for both the present and the future (European Commission, 2005: 5).
The objectives of the Communication are to contribute to:
– The establishment of an enhanced strategic partnership through a network of
AAs;
– Achieving more effective political dialogues in order to increase the influence
of both regions on the international scene;
– Developing effective sectoral dialogues with a view to sustainable reduction of
inequalities and promoting sustainable development;
– Contributing to a stable framework to attract more European investment which
will ultimately contribute to the economic development of Latin America;
– Tailoring aid and co-operation more to the needs of the countries concerned;
and
– Increasing mutual understanding through education and culture (European
Commission, 2005: 6).

The member states of the EU, through the Council, gave their approval to this
Communication in their Conclusions of February 27, 2006, without adding any
new ideas (Council, 2006: 12-14). Undoubtedly, reaffirming the relevance of the

 Christian Freres

Mold - [Link] 156 15-6-2007 14:37:38

 relations for the EU is important, especially since some time had passed since the
EU’s last strategic document on Latin America (1994). However, the Communi-
cation in itself does not seem sufficient to provide the desired impetus. In fact, it
merely reflects the European vision and illustrates the unarguable fact that Latin
America has not articulated its own vision.10 Indeed, a call is made in the Com-
munication for this region to provide a firm commitment in return (European
Commission, 2005: 5).

The problem is that Latin America as such has no institutional mechanism for
this purpose. Even the sub-regional schemes with a limited organisational struc-
ture have not been able to fulfil this function (Fanzio, 2006). This limitation is
aggravated in the context of the summits, because the Caribbean countries are
also included, thus considerably increasing the heterogeneity of interests (Ale-
many, 2006). The Vienna Summit was a clear example of the increasingly frag-
mented Latin American position on many issues (Maihold, 2006). On the other
hand, even though it includes some new, fairly concrete proposals, it is not clear
if the Communication is ambitious enough in aspects such as resources and fol-
low-up mechanisms. In effect, it does not propose a fundamentally new model of
relations. Although it includes some improvements, such as the introduction of
sectoral dialogues, they do not constitute a different framework.

Changes in the two regions and the world

The lack of a truly new approach could be a problem to the extent that the reality
for both regions has changed notably since the ‘golden decade’ of relations – the
mid-1980s to the Rio Summit in 1999 – and there have also been many changes in
the world in general. The EU has expanded twice in this period so that there are
twice as many member states in 2006 as there were in 1985; in the last expansion
10 countries joined the EU with per capita incomes well below that of the Com-
munity average and with little interest or history of relations with Latin America.
Aside from enlargement, the EU has undergone several internal changes and
since 2005 has been involved in an ongoing process of reflection to define a more
adequate institutional structure. In addition, various differences have arisen on
what direction EU external relations should take (especially as a result of the
military intervention in Iraq).

For its part, Latin America has gone through a new economic crisis and a se-
ries of predominantly leftist governments have come to power in South America.
In the realm of foreign relations, integration schemes have entered a period of
crisis due to a lack of progress in reaching established goals and internal con-

Partnership Between the EU and Latin America 

Mold - [Link] 157 15-6-2007 14:37:38

 flicts among Latin American countries. The fact that the Free Trade Area of the
Americas (FTAA) has given way to bilateral free trade agreements with Central
American countries and the Dominican Republic (CAFTA-DR) and some An-
dean countries has also contributed to a growing division in the entire region11
in terms of positions with respect to the US, reflected in open conflict at the
hemispheric summit in Mar de Plata in 2005. The emergence of Venezuela as a
regional actor, with its leadership of the so-called Bolivarian Alternative for the
Americas (ALBA) as an alternative to the FTAA and its entry into the Merco-
sur, has had profound repercussions – still undefined– in the area. Although it
remains largely a political project, the South American Community of Nations
also has enormous potential for transforming the region. Finally, the armed con-
flict in Colombia continues, and there is no regional initiative to deal with it. In
economic terms, relatively low growth rates have been the norm and the region’s
share of world trade has fallen to very low levels over the past few decades.

On an overall level two issues should be emphasised. One is the intensification

of globalisation, which has facilitated transnational interconnections, but at the
same time has led to a series of social (such as dislocation or emigration) and
economic problems (financial shocks), with serious political implications. The
second issue is the predominance of the security doctrine, which since 9/11 has
radically transformed the international agenda. Global governance structures, es-
pecially the United Nations system, have demonstrated a clear inability to find
sustainable solutions for these twin challenges. One example of this is the lack of
progress in global trade negotiations at the World Trade Organization (WTO).
The main reason for this failure is the head-on clash between wealthy countries
wishing to extend trade regulations to new areas and the leading countries of the
South fighting to improve access to prosperous markets. Both parties are unwill-
ing to cede ground to the other, and at the same time criticism and doubts over
trade liberalisation are growing among not only non-governmental organisations
(NGOs) and ‘alter-globalists’ but also an increasing number of independent ana-
lysts who question the existence of a direct link between globalisation and re-
duced poverty. This debate adds an extra layer of complexity to EU-Latin Ameri-
can relations, which have been dominated by trade concerns since the 1990s.

3. Does the EU Offer Something Different for Latin America?

In sum, EU-Latin America relations face a complex panorama of challenges. The

world is not the same as it was 20 or even ten years ago and neither are the two
regions. If a decade or more ago the European Union appeared to provide an

 Christian Freres

Mold - [Link] 158 15-6-2007 14:37:39

 alternative or counterweight to the hegemonic power of the United States, today
it is not so clear what its ‘comparative advantage’ in political (or moral) terms is.
There are legitimate doubts about whether the European approach is so differ-
ent from that of the United States. Indeed, despite reference to the association
agreements going ‘beyond trade’ – an ‘FTAA with a soul’, as one European politi-
cian put it – the fact is they continue to be free trade agreements in essence. In
theory, they are not the same as the FTAs with the US because the EU has a less
domineering negotiating style, but EU interests are not so different from those of
Washington. Although in its rhetoric the EU has defended the importance of re-
gional integration promoted through the AAs, the truth is that it has only signed
accords with two countries who do not participate in any sub-regional schemes
and have no intention of doing so (Mexico and Chile). In contrast, despite the
fact that it has negotiated country-by-country, the United States was the first to
sign an FTA (CAFTA) with a group of Latin American countries, in effect beat-
ing out the EU, which has been talking with the Mercosur for seven years with
still no agreement in sight.

With respect to development assistance, the EU appears to lead, but only in

terms of combined volume of Community and member state aid. In addition, the
vision governing the Community’s co-operation policy has not lead to a differen-
tiated strategy for this region of middle-income countries. Instruments requiring
less management such as budget support receive increasing interest, although a
clear understanding of their advantages and disadvantages seems to be lacking in
Commission services. The biggest problem is that no progress has been made to-
wards the goal of achieving greater complementary between the Commission and
member states, which would be especially desirable given the reduced presence of
several European donors in the region.

One topic that came out of the Guadalajara Summit which indicated somewhat
of a difference between the EU-Latin America process and other systems is that
of social cohesion. However, in both the Hemispheric and the Ibero-American
summits, issues such as employment and education, both closely linked to social
cohesion, have been emphasised. It is also not so clear that the so-called ‘Europe-
an social model’ is as promising for Latin America as it seemed at the time, partly
because its viability is being questioned in Europe itself and partly because in
reality there are various models coexisting in the EU. In addition, EU-level social
cohesion mechanisms, such as cohesion funds, would be hard to apply in Latin
America given their high cost. Even so, inspired by the European experience,
the Andean Community promoted the Integrated Plan of Social Development
(PIDS), which has received technical support from the European Commission.

Partnership Between the EU and Latin America 

Mold - [Link] 159 15-6-2007 14:37:39

 Another difficulty with this concept is the growing perception among official
Latin American representatives that social cohesion is a European imposition,
or even a new way to avoid addressing the need to open the European market to
Latin American goods.

With regards to political dialogue between the EU and Latin America, this does
not appear to offer any special advantages over other schemes in which Latin
American countries participate (Freres, 2006). The Ibero-American Summits are
more institutionalised, with inter-government and quasi-community implemen-
tation and follow-up structures for Ibero-American programs. Even the hemi-
spheric system, with all its core problems, is much more developed, with mecha-
nisms such as the Summit Implementation Review Group providing it with the
greatest degree of transparency of the three systems.

In addition, the participation of non-official stakeholders in the Euro-Latin

American political dialogue is not as visible as in the other schemes (Freres,
2006). The involvement of civil society organisations (CSOs) has increased in re-
cent years with respect to association agreements or sub-regional relations (EU-
CAN, EU-Mercosur, EU-Central America) and bilateral relations (EU-Mexico
and EU-Chile). The same can be seen in the support for civil society forums prior
to the summits. All these examples show a desire to give CSOs a certain role in
the different processes, but it is also true that CSOs do not actively participate
in these processes. Instead, the EU has promoted a sort of ‘parallel participation’
whereby CSOs marginally influence without directly affecting official processes.
In addition, participation depends greatly on the will of officials in both regions,
and even though there has been a tendency to favour some participation in the
EU, many Latin American governments resist it (which explains why hardly any
of the meetings initiated in the EU have been continued in Latin America).

In response to these criticisms, the EU notes that it is a global actor seeking to

foment a rules-based international system and that Latin America could be a key
partner in this venture. The EU also repeatedly states that the two regions are the
only two that truly ‘believe in’ regional integration models that go beyond mere
free trade agreements, as a phenomenon intrinsic to their identities. These are
undoubtedly powerful intellectual arguments, but is the European Union able to
convert these common values into something real and convincing, so that Latin
American countries choose this extra-regional alternative – not as a substitute to
others, but as a complement to them?

 Christian Freres

Mold - [Link] 160 15-6-2007 14:37:39

 4. Is Another Bi-regional Partnership Possible?

Given the situation described above, is it possible to envision a new model of

relations that would contribute to a true partnership (or something that comes
closer to this concept than that which now exists) between Latin America and
the European Union? To answer this, it is first necessary to ask whether there
is a true alternative to AAs with FTAs. That is, is it possible to think of an AA
without the FTA?

In fact, this ‘alternative’ already exists: the situation that the Andean Community
and Central American countries currently have through their Political Dialogue
and Co-operation Agreements signed in 2003, together with the new Generalized
System of Preferences (GSP) that went into effect in January 2006. However, as
they are aware that the GSP does not offer a very attractive medium- or long-
term outlook for their economies,12 both groups of countries have demanded an
AA which includes an FTA. The European Union took a long time to respond
clearly to these demands. At the Guadalajara Summit in 2004 both sides agreed
to start a joint evaluation of the state of preparation of the two schemes in terms
of regional integration, a condition the EU imposed for signing FTAs with the
groups. The evaluation was completed in late 2005. Finally, at the Vienna Sum-
mit, the EU agreed to start negotiations for an AA with an FTA with Central
America, but it was not possible to do the same with the Andean Community
at that point. Negotiations between the EU and the Mercosur, however, did not
progress at Vienna.

Andean and Central American countries are somewhat anxious not be left out
of the FTAs signed by the main global powers with developing nations. For this
reason they responded positively to the CAFTA-DR and the bilateral agreements
Peru and Colombia each signed with the United States. What would their alter-
natives be? The basic problem is that the Doha Round is still uncertain, so some
market access problems that could be better resolved within the global framework
have to be dealt with using less favourable options such as bilateral agreements or
a GSP (which responds to a fully unilateral design and implementation).

This leads to the question of whether those same AAs with FTAs could be im-
proved to take into account the large imbalances between European and Latin
American economies. In the Economic Partnership Agreements (EPAs) the EU
hopes to sign with the ACP group, there is a possibility of incorporating some
sort of ‘variable geometry’ that would take into account the different development
levels within the sub-regional groups (and with respect to the EU itself ) ( Jessop,

Partnership Between the EU and Latin America 

Mold - [Link] 161 15-6-2007 14:37:39

 2006). This reflects the surprising fact that detailed evaluations of the possible
effects of AAs, especially for relatively less developed countries such as several
Andean and Central American states have not been carried out – or at least they
have not been made public.13 There is also a lack of in-depth analysis of the differ-
ent alternatives that could exist for AAs with FTAs.14

In any event, it is worth remembering that AAs are not limited to the economic
dimension. These agreements should lead to more in-depth political dialogue
and improved development co-operation. The agreement in effect between the
EU and Chile shows that if the Latin American party is interested and able to
articulate interests forcefully, it can substantially expand the scope of political
dialogue. Chile has been able to open sectoral dialogues with departments in the
European Commission and member states that were not used to dealing with
third party countries. This achievement is due to the fact that the Chilean gov-
ernment interpreted its AA partnership in the broadest manner possible.

The Chilean experience shows that AAs can lead to many additional benefits
as long as Latin American countries and groups know how to take advantage of
them. The December 2005 Communication of the Commission, based on this
positive precedent, includes the strengthening of sectoral dialogues at the re-
gional level. AAs offer the possibility of maintaining much more highly-focused,
specialised dialogues based on goals determined by Latin American countries.
However, if this channel is expanded too much, a problem might arise in terms
of the capacity of the Commission’s services to respond to new demands, and ap-
propriate measures would have to be created to deal with this contingency.

Another topic is the introduction of conditions linked to development goals

(including but not limited to the Millennium Development Goals) in the AAs.
The GSP+ that went into effect in 2006 forces countries that wish to benefit
from the regime to sign a series of international agreements on labour and so-
cial rights. This is a unilateral instrument that has not excluded any Andean or
Central American country and could stimulate progress in these areas. However,
the Commission does not appear to have made an in-depth evaluation of the is-
sues. Instead, it limits itself to determining if the agreements have been signed
and ratified. The problem is that international instruments in these areas have
deficient mechanisms for determining the level of compliance with the commit-
ments undertaken by signatories, so if the EU is serious about promoting social
and labour rights through this market access regime, it ought to develop better
monitoring tools.

 Christian Freres

Mold - [Link] 162 15-6-2007 14:37:39

 Latin American countries may resist applying this type of conditionality within
AAs since, unlike the GSP+, the AA is an international treaty and non-compli-
ance could be sanctioned (in theory). A precedent exists in the North American
Free Trade Agreement (NAFTA), although in this case the labour and environ-
mental clauses were imposed unilaterally by the US on Mexico. If such clauses
were decided jointly it could become a truly differentiating element of the AAs,
and would relate extremely well to the social cohesion priority that the EU would
like to put at the forefront of EU-Latin American relations.

This last topic of social cohesion is an important action area for CSOs in this
bi-regional partnership. In addition to providing critical follow-up on the Euro-
SociAL programme, which has been slow in getting underway and seems to fol-
low an excessively technocratic approach, civil society organisations could more
actively participate in the initiatve. They could also contribute ideas on how to
better incorporate the social cohesion goal into the association agreements. Since
there are many entities in civil society with extensive experience in carrying out
development and co-operation programmes, their voice will be important for en-
suring that changes proposed for greater budgetary support have clearly positive
effects on human development. Their watchdog task is essential and must be
reinforced now as aid flows into Latin America are being reduced. To this effect
it would be a good idea to reexamine some strategies for the fight against poverty.
For Latin America this is not a medium-term objective, since it is the end goal of
all action in the region; it must be considered together with other goals of insti-
tutional strengthening (including market institutions), reduction of horizontal
inequality (among groups and territories), and measures aimed at improving the
region’s international integration (see Alonso, 2006).

5. Final Reflections: Looking Towards the Lima Summit

What kind of partnership is possible in the medium- and long-term? As stated

above, it should be possible to have a network of AAs that covers all the countries
in the region. However, achieving this will depend on how Latin America develops,
as well as on international system factors (i.e., the WTO), and on the EU itself. The
December 2005 Communication of the European Commission appears to show
Europe’s political will to achieve this objective. Over the past decade, AAs have defi-
nitely become an essential element – not optional – for a bi-regional partnership.

Nevertheless, these agreements do not have to be the same as those that have
been signed to date. In the case of Mexico they barely go beyond an FTA, largely

Partnership Between the EU and Latin America 

Mold - [Link] 163 15-6-2007 14:37:39

 due to a lack of Mexican initiative, but also because the EU does not have many
resources available for other purposes. The EU’s agreement with Chile is more
advanced in many economic matters, but perhaps the most interesting aspect is
the possibilities that have opened up by establishing specialised dialogues re-
sponding to concrete Chilean demands. This shows that AAs hold much more
potential than simply expanding trade, investments, or even aid, in the case of
relatively less-developed countries. A partnership implies opening up new fields
of co-operation, which in turn provides possibilities for new stakeholders on both
sides to get involved. Future AAs should base themselves on this principle.

To this end, civil organisations can play a pivotal role. They have the interest
and ability to influence Latin American states, particularly so that they increas-
ingly aim their agreements at solving their development challenges. The main
contribution of CSOs to a bi-regional partnership will definitely be along this
line. Another essential role is to ensure that negotiators take into account imbal-
ances between the parties and seek measures to cushion any adverse effects on the
weaker party, the Latin American countries. CSOs also have to insist that Latin
American countries entering into these negotiations come prepared with policies
for addressing the needs of those groups and sectors adversely affected by trade
liberalisation that come with AAs.

Finally, CSOs should insist on improving channels for participation in the Euro-
Latin American political dialogue. While this dialogue is kept at a low institu-
tional level with little transparency, other stakeholders will find it difficult to
participate. CSOs, therefore, will have to insist on greater institutionalisation,
implying greater transparency and more integrated participation of CSOs. As
many expected, the Vienna Summit did not bring about major changes in Euro-
Latin American ties. However, the small advances that did take place should not
be underestimated. If the association agreement with Central America moves
forward and is able to establish a different model of relations, it could prove that
the European Union truly has something special to offer to Latin America. The
agreement with the Andean Community will be more challenging, mostly be-
cause the CAN needs to define its goals and its membership more clearly before
undertaking such a serious commitment.

The next bi-regional summit in Lima, Peru, in 2008 will provide a chance to see
whether the modest advances in Vienna are converted into real progress in rela-
tions between Latin America and the EU. The initiative by the regional parlia-
ments in Cartagena to create the Euro-Latin American Assembly ought to pro-
vide renewed political drive, needed to mobilise states in both regions that fail to

 Christian Freres

Mold - [Link] 164 15-6-2007 14:37:39

 see the opportunities that a strategic partnership has to offer. Finally, the election
of Alan Garcia as president of Peru – and, therefore, host of the Lima Summit
– is a positive factor in that he is solidly in favour of regional integration, he is a
defender of close ties with the EU, and he is a firm member of moderating forces
in Latin America. It remains to be seen, however, whether on the European side
there will be sufficient leadership actively engaged in this process. If not, Lima
will be another failed opportunity.

Notes

 Associate Researcher, Instituto Complutense de Estudios Internacionales (ICEI), Ma-

drid, Spain. The opinions expressed in this text are the exclusive responsibility of the
author and do not reflect the position of ICEI or of any other organisation to which he is
connected.
 Indeed, the ACP group was considered to be at the top of what came to be known as the
‘pyramid of privilege’ which the Community had implicitly established as a way of hierar-
chically organising its relations with the Third World.
 Over a decade ago, Enzo Grilli (: ) disputed the claim by Eurocrats that EC
development policy had become global in scope. He noted the regional focus on Africa
was never fundamentally altered. In his opinion, the weight of colonial ties (and the pre-
dominant role of more ‘regionalist’ member states such as France) came at the expense of
relations with other developing areas, especially Latin America. The situation may have
changed somewhat but his analysis remains useful today.
 For an in-depth analysis of political dialogue, see Freres, et al., .
 Data used in this subsection on economic ties is mainly from the Directorate General for
Trade of the European Commission. See [Link]
eral/[Link].
 A recent report by the Latin American Economic System (SELA, ) provides ample
evidence on how private flows are outdistancing official flows, and within these latter
flows, how aid is declining in relevance.
 The variety of perspectives can be seen in a simple comparison of two extreme cases:
Spain and the United Kingdom. While the Spanish government is committed to spend-
ing around two fifths of its aid in Latin America, in the UK, the bilateral programme
with Latin America has been practically dismantled and Latin America was hardly even
mentioned in it’s the government’s latest White Paper on development policy (DFID,
).
 This chapter focuses on EU-Latin America relations, so it will not go into depth on the
specifics of relations between the EU and the Caribbean which, as stated, are clearly dif-
ferent. However, the dominant framework in the summits is that of the EU-Latin Amer-
ica, and in fact the Caribbean’s role here has not been satisfactorily resolved.
 These documents can be found on the website of the External Relations Directorate Gen-
eral: [Link]
 This is a common argument in much recent analysis of bi-regional relations. See, for in-
stance, Freres and Sanahuja,  and Fanzio, .

Partnership Between the EU and Latin America 

Mold - [Link] 165 15-6-2007 14:37:39

  See analysis of Shifter and Jawahar () on different divisions in the Americas.
 See the analysis of Freres and Mold () on the previous GSP and its impact on the fight
against poverty. They argue its benefits for poverty reduction are, at best, unclear, and most
probably, marginal. In addition, as the new regime introduced in  includes a number of
conditionalities related to social and labour policies, some Latin American countries may
not be able to continue enjoying its benefits once the present transition period expires.
 In this light, the EU did recently carry out an impact assessment on the EU-Mercosur
agreement, focusing on environmental factors.
 See Bilar and Rampa () for an exercise carried out with respect to the ACP countries
and their EPA with the EU.

References

Alemany, Cecilia (2006), ‘Balance de los distintos mecanismos de diálogo’, paper

for the seminar ‘¿Para qué sirve el diálogo político entre la Unión Europea y
América Latina?,’ ICEI/FRIDE/Fundación Carolina, Casa de América, Ma-
drid, 9-10 March (mimeo).
Alonso, Jose Antonio (2006), ‘América Latina Las trampas del progreso’ in C.
Freres and J.A. Sanahuja (eds.) América Latina y la Unión Europea. Estrategies
para una asociación necesaria. Barcelona: Icaria, pp. 321-341.
Bilal, Sanoussi and Francesco Rampa (2006), ‘Alternative (to) EPAs: Possible Sce-
narios for Future ACP Trade Relations with the EU’, ECDPM Policy Man-
agement Report 11, February, Maastricht: European Centre for Development
Policy Management, available at [Link]/pmr11.
Council of the European Union (2006), EU-Latin America Relations – Council
Conclusion, General Affairs and External Relations, 2711th Council Meeting,
27 February.
Department for International Development/DFID (2006), Eliminating World
Poverty: Making Governance Work for the Poor, London: Her Majesties Sta-
tionary Office, available at [Link].
European Commission (2005), Communication of the Commission to the Coun-
cil and the European Parliament: Una Asociación reforzada entre la Unión
Europea y América Latina. Estrategia para una Asociación reforzada entre la
Unión Europea y América Latina: presentación detallada, COM (2005) 636
final, available at: [Link]
com05_636_es.pdf
European Parliament (2006), ‘Informe sobre una Asociación reforzada entre la
Unión Europea y América Latina’, speaker: José Ignacio Salafranca, Brussels,
available at: [Link]
pr/598/598579/[Link].

 Christian Freres

Mold - [Link] 166 15-6-2007 14:37:39

 EUROSTAT (2005), European Union Foreign Direct Investment Yearbook 2005.
Data 1998-2003, Luxembourg: Office of Official Publications of the European
Communities, available at [Link]
OFFPUB/KS-BK-05-001/EN/[Link].
Fanzio, Hugo (2006), ‘Unión Europea y América Latina: ¿Interacciones en lugar
de relaciones?’ Bogotá, Colombia, OBREAL/EULARO Specialist Paper.
Freres, Christian (2006). ‘¿Hay Lecciones para el Dialogo Euro-Latinoamericano
de otros Foros Internacionales de Participacion Latinoamericana? Un Anali-
sis Comparativo Preliminar’, paper for the seminar ‘¿Para qué sirve el diálogo
político entre la Unión Europea y América Latina?,’ ICEI/FRIDE/Fundación
Carolina, Casa de América, Madrid, 9-10 March (mimeo).
Freres, Christian and Andrew Mold (2004), ‘European Union Trade Policy and
the Poor: Towards Improving the Poverty Impact of the GSP in Latin Amer-
ica’, Working Paper WP 02/04, ICEI, Madrid, available at: [Link]
es/info/icei/pdf/WP[Link].
Freres, Christian and Jose Antonio Sanahuja (2006), ‘Hacia una nueva estrategia
en las relaciones Unión Europea-América Latina,’ in C. Freres and J.A. Sana-
huja (eds) América Latina y la Unión Europea. Estrategies para una asociación
necesaria, Barcelona: Icaria, pp. 23-104.
Freres, Christian, Gratius, Susanne, Mallo, Tomas, Sanahuja, Jose Antonio and
Ana Pellicer (2006), ‘What Purpose does the Political Dialogue between the
European Union and Latin America Serve? Recommendations for the Euro-
Latin American Summit in Vienna’, Madrid, ICEI/Fundación Carolina/
FRIDE/Casa de América, available at: [Link].
Grilli, Enzo (1993), The European Community and the Developing Countries, Cam-
bridge: Cambridge University Press.
Inter-American Development Bank/IADB (2006), Inclusive Integration for Glob-
al Competitiveness. Strengthening the EU-LAC Partnership, Washington, DC,
IADB.
Jessop, David (2006), ‘ The Week in Europe,’ 17 February, Caribbean Council.
Maihold, Gunter (2006), ‘La Cumbre de Viena entre América Latina/Caribe y la
UE: El éxito relativo de un encuentro de bajas expectativas’, ARI Nº 59/2006,
Madrid, Real Instituto Elcano.
Sanahuja, Jose Antonio (2004), ‘La Cumbre de Guadalajara (México, 2004) y el
Interregionalismo en las Relaciones Unión Europea-América Latina y el Ca-
ribe,’ Circunstancia, Año II, Número 5,Septiembre, available at: [Link]
[Link]/circunstancia/numero5/[Link]2.
– (2006a). ‘Regiones en construccion, interregionalismo en revision. Las relaciones
Union Europea-America Latina y el cambiante mapa de la integracion en America
Latina’, for the seminar ‘¿Para qué sirve el diálogo político entre la Unión Euro-

Partnership Between the EU and Latin America 

Mold - [Link] 167 15-6-2007 14:37:40

 pea y América Latina?,’ ICEI/FRIDE/Fundación Carolina, Casa de América,
Madrid, 9-10 March (mimeo).
– (2006b). ‘Hacia el Logro de un Verdadero Multilateralismo en las Relaciones en-
tre la Unión Europea y América Latina’, Working Paper for the European Par-
liament, Brussels (mimeo).
Shifter, Michael and Vinay Jawahar (2006), ‘The Divided States of the Americas’,
Current History, vol. 105, no. 688, pp. 51-57.
Sistema Económico Latinoamericano/SELA (2005). La Ayuda Oficial para el De-
sarrollo en América Latina y el Caribe: Contexto y perspectivas, XXXI Reunión
Ordinaria del Consejo Latinoamericano, Caracas, Venezuela, 21-23 November
(SP/CL/XXXI.O/Di Nº 10 – 05), available at [Link].

 Christian Freres

Mold - [Link] 168 15-6-2007 14:37:40

 7 The EU and Democracy Promotion in Africa:
High on Rhetoric, Low on Delivery?

Gordon Crawford

1. Introduction

This chapter contrasts EU democracy promotion policy in Africa with the real-
ity of its efforts in Ghana. It focuses on sub-Saharan Africa in the context of EU
relations with the African, Caribbean and Pacific (ACP) nations; North Africa
is not covered. The chapter argues that the policy is high on rhetoric but remains
low on delivery. Although it is not possible to generalise from the one example,
Ghana provides a particularly favourable context for external actors to support
democratisation efforts. Therefore, if policy performance is poor here, it is argued
that it is unlikely to be better elsewhere in Africa where the political environment
is less conducive to external democracy promotion.

This chapter locates itself in the tradition of critical accounts of aid policy that
contrast the principled rhetoric of bilateral and multilateral aid ‘donors’ with the
reality of their practices.1 Such critiques frequently focus on hidden agendas in
aid policy and this piece aims to look beneath the surface at the less idealistic
motives that alternatively may underpin or undermine EU democracy promotion
policies.2

The chapter is divided into six main parts. After this brief introduction, the sec-
ond part outlines the rhetorical vigour of EU democracy promotion policy in Af-
rica, examining the evolution and operationalisation of policy at different institu-
tional levels, including in the recent development policy statement, the European
Consensus, and in the new EU Strategy for Africa. The third part then looks at
democracy promotion in practice through an investigation into EU democracy
assistance in Ghana, inclusive of both European Community (EC) and member
states’ programmes. Findings are of remarkably little attention to this area by EU
actors, despite the strong policy statements and the favourable political context



Mold - [Link] 169 15-6-2007 14:37:40

 that Ghana provides. The rhetoric-reality gap is most evident within the Euro-
pean Community’s own aid programme, but levels of member states’ democracy
assistance also remain low, with the possible exception of Denmark. Fourth, in
seeking to explain this rhetoric-reality gap, two propositions are outlined. These
suggest: (1) that democracy promotion policies will be at a low level where the EU
has few economic or security interests3 and (2) that the EU is promoting a limited
form of democracy, one that is compatible with neo-liberalism. Fifth, these two
propositions are considered in relation to evidence from Ghana, suggesting that
both have significant explanatory value. The low volume of assistance tends to
confirm the first proposition, while the content of (limited) democracy assistance
provides support for the second. Finally, conclusions are two-fold. One is that the
EU’s motivation in promoting democracy in Africa is more instrumentally than
normatively driven. The other is that democracy is narrowly conceived by the
EU, more concerned with limiting state power than extending popular control,
consistent with hegemonic neo-liberalism.

2. EU Democracy Promotion Policy: High on Rhetoric4

The promotion of democracy and human rights has been a stated priority objec-
tive of EU development policy for more than 15 years. This section explores this
rhetoric, initially within external relations policy generally and then specific to
sub-Saharan Africa. It looks at the most recent pronouncements first, then briefly
traces policy emergence and its operationalisation.

Democracy promotion in EU development policy

Democracy promotion continues to be prominent in the most recent statement
of EU development policy, the European Consensus on Development, adopted
in November 2005 by the Council, the European Parliament, and the Commis-
sion.5 It is claimed that this document provides ‘for the first time ever, a com-
mon framework of objectives, values and principles’ for the EU, inclusive of the
25 member states, the Commission, and the European Parliament, as a global
player in international development (European Commission, 2005a: 18). The
document is divided in two main parts. The first outlines the ‘EU vision for
development’, inclusive of the promotion of common values of ‘human rights,
fundamental freedoms, peace and democracy’ (Council, 2005: 6). This ‘vision’ is
applicable to development co-operation programmes of both member states and
the Commission. The second part is specific to Community development policy
(i.e., Commission programmes), with the primary objective of EC programmes

 Gordon Crawford

Mold - [Link] 170 15-6-2007 14:37:40

 stated as ‘the eradication of poverty ..., including pursuit of the MDGs, as well
as the promotion of democracy, good governance and respect for human rights’
(Council, 2005: 15). It is further stated that such ‘objectives will be pursued in
all developing countries and applied to the development assistance component
of all community co-operation strategies with third countries’ and that ‘progress
in the protection of human rights, good governance and democratisation is fun-
damental for poverty reduction and sustainable development’ (Council, 2005:
25, citing the 2003 Commission Communication on ‘Governance and Develop-
ment’).

Such statements are the latest in a long line that stretches back to the landmark
Council Resolution of November 1991 on ‘Human Rights, Democracy and De-
velopment’, which introduced the promotion of human rights and democracy as
an objective and a condition of development co-operation, applying uniquely at
the time to both Community programmes and those of the member states. This
resolution emerged in the immediate post-Cold War context of a shift in rela-
tions with African governments, signalled in particular by the French and Brit-
ish governments. In June 1990, almost simultaneously, important speeches had
been made by French and British politicians that indicated the introduction of
this ‘new policy agenda’ (Robinson, 1994). At the French-African Summit at La
Baule, President Mitterand stated that France ‘will link its financial efforts to the
efforts made towards liberty’ and would be less generous towards ‘those regimes
that conduct themselves in an authoritarian manner without accepting evolu-
tion towards democracy’ (cited in Crawford, 1994: 3). In the same month, the
British foreign secretary, Douglas Hurd, speaking at an international conference
on Africa, introduced the concept of ‘good government’ and stated the intent to
base aid allocation on the criteria of ‘pluralism, public accountability, respect for
the rule of law, human rights and market principles’ (cited in Crawford, 1994:
6). A second key landmark for EU policy was the Treaty on European Union
(the ‘Maastricht Treaty’), entering into force in November 1993, with far-reaching
implications. Regarding the external policies of the EU, efforts to ‘develop and
consolidate democracy and the rule of law, and respect for human rights and fun-
damental freedoms’ (article 11) were stated as objectives of the Common Foreign
and Security Policy (CFSP), while article 177 provided a legal basis for Commu-
nity development co-operation and included the promotion of democracy and
human rights as a priority aim.

Since the Maastricht Treaty, the promotion of democracy and human rights with-
in development policy has been operationalised on a number of different fronts.
First, democracy promotion has been incorporated into the EU’s regional co-

The EU and Democracy Promotion in Africa 

Mold - [Link] 171 15-6-2007 14:37:40

 operation agreements, purportedly as a shared value and objective, for example,
in the Cotonou Agreement with ACP nations. A human rights and democracy
clause has also been inserted into agreements with individual countries, stan-
dardised since May 1995, where the breach of such ‘essential elements’ can trigger
punitive measures (Crawford, 1998).

Second, increased importance has been attached to the notion of ‘political dia-
logue’ in external relations, especially with regard to addressing human rights and
democracy issues (Council, 2003: 31). Indeed, EU agreements with other regions
and countries are now commonly seen as having ‘three pillars’, with political dia-
logue a relatively new addition to the traditional elements of trade and develop-
ment co-operation.

Third, attempts have been made to ensure the coherence and consistency of de-
mocracy promotion policy between different EU actors. This was most evident in
the Commission’s Communication of May 2001 on ‘ The EU’s Role in Promoting
Human Rights and Democratisation in Third Countries’, which attempted both
to increase the profile of democracy and human rights promotion and to provide
for a more coherent approach. It aimed at ‘placing a higher priority on’ and de-
veloping a ‘more strategic approach to’ human rights and democratisation in rela-
tions with third countries (European Commission, 2001: 5). Measures to achieve
such aims included the mainstreaming of democracy promotion activities into
regional development co-operation programmes, as well as a more focused ap-
proach to the European Initiative on Democracy and Human Rights (EIDHR),
the Commission’s own democracy-assistance fund (see below). Democracy and
human rights issues were to be integrated into all regional and country strategy
papers, and indeed to ‘permeate all Community policies, programmes and proj-
ects’ (European Commission, 2001: 3).

Fourth, funds for positive support for democratisation have been made available
from two main sources. A legal basis for democracy and human rights expendi-
ture from mainstream regional aid programmes was provided by two Council
regulations in 1999.6 Additionally, Commission-managed thematic budget lines
are available to all regions, of which the EIDHR is clearly the most significant in
this area. The EIDHR was created by the European Parliament in 1994, bring-
ing together a number of Commission budget headings (Crawford, 2000). Since
2000, the EIDHR budget has been approximately 100 million per annum, ris-
ing in 2004 to 125 million (Youngs, 2006: 62). Distinctly, EIDHR funds can
be provided without the agreement of the host country government and are dis-
bursed mainly to NGOs and international organisations (Council, 2003: 44).

 Gordon Crawford

Mold - [Link] 172 15-6-2007 14:37:40

 Other budget lines available to non-state actors, notably ‘co-financing operations
with EU NGOs’, could in principle support human rights and democracy-related
projects. Budget-line funds are complementary to the main regional instruments
of development co-operation.

These four elements of EU democracy promotion policy are examined further

below with regard to EU-Africa relations.

3. Democracy Promotion in EU-Africa Policy

There have been many explicit references to the promotion of democracy in Af-
rica, particularly in the context of EU-ACP relations, a number of which are out-
lined below. However, in the recent EU Strategy for Africa, adopted by the Eu-
ropean Council in December 2005, a shift in language was discernible. Although
the emphasis on democracy effectively remained, it was expressed more implicitly
through the language of security and governance. Claimed as the first practical
implementation of the European Consensus on Development, the principal ob-
jective is the achievement of the UN Millennium Development Goals (MDGs)
in Africa, in line with the Consensus document’s emphasis on poverty eradica-
tion. In order to achieve such objectives, however, prerequisites are perceived as,
first, ‘peace and security’ and, second, ‘good and effective governance’ (European
Commission, 2005a: 3-4). Clearly issues of democracy are intrinsic to both, and
the first priority (of three) of the new EU Strategy for Africa is to strengthen its
support, from both the European Community and the member states, in these
prerequisite areas (European Commission, 2005a: 21). There are also direct refer-
ences to democracy, notably in the context of promoting good governance. It is
noted that ‘there is a strong linkage between the promotion of development and
the promotion of democracy’, while recognising that ‘the path towards sustainable
democracy in Africa is difficult, long and rarely straight’ (European Commission,
2005a: 24). It is also acknowledged that democracy cannot be imposed from out-
side and that ‘the appropriate role of external actors is to support and encourage
domestic efforts to build, strengthen and sustain democratic norms, procedures
and institutions’ (European Commission, 2005a: 24).

While the EU Strategy for Africa represents the most recent policy document,
the emphasis on democracy and human rights promotion in Africa has a sig-
nificant recent history. This is examined briefly below, using the same four-fold
structure as above.

The EU and Democracy Promotion in Africa 

Mold - [Link] 173 15-6-2007 14:37:40

 Regional agreements and democracy clauses
First, for sub-Saharan Africa the most significant agreement has been the Lomé
Convention (1975-2000), succeeded by the Cotonou Agreement (2000-2020).
This agreement between the EU and the ACP nations now includes all 48 coun-
tries of sub-Saharan Africa as signatory states.7 Originally an aid and trade agree-
ment, the political dimension of the Lomé Convention, and now the Cotonou
Agreement, has become increasingly prominent over the past 15 years. A political
element was first introduced in Lomé IV in 1989, preceding the general policy
statements that came in the post-Cold War period, making ‘respect for human
rights’ a fundamental clause of the agreement (article 5). Subsequently, in ac-
cordance with the Maastricht Treaty, this political dimension was extended and
strengthened in the mid-term review of Lomé IV in 1995. Respect for democratic
principles, the rule of law, and good governance were added to human rights, with
all but good governance becoming ‘essential elements’ of the convention, backed
up by a non-execution or suspension clause in the event of a serious violation
(Crawford, 1996: 506-7). Similarly, the Cotonou Agreement affirms ‘respect for
human rights, democratic principles and the rule of law’ as essential elements of
the Agreement (article 9), while ‘good governance’ becomes a ‘fundamental and
positive element’ (Salama and Dearden, 2001: 7).8 A new consultation procedure
(article 96) was introduced to deal with violations of essential elements, including
the taking of ‘appropriate measures’ where an acceptable solution is not forth-
coming, while stressing that ‘suspension would be a measure of last resort’.

Political dialogue
The political dimension of development co-operation has been emphasised as a
separate ‘pillar’ within the Cotonou Agreement. It has been enhanced in particu-
lar by the introduction of regular political dialogue between the EU and the ACP,
described as a ‘key element in the new partnership’ (David, 2000: 14). The inten-
tion is stated to undertake dialogue at regional, sub-regional, and national levels
(article 8(6)), including ‘a regular assessment of the developments concerning the
respect for human rights, democratic principles, the rule of law and good gover-
nance’ (article 8(6)), presumably focusing on individual country performance. It
is intended that dialogue will involve regional and sub-regional organisations as
well as representatives of civil society (article 8(7)), the general inclusion of whom
is a further innovation of the Cotonou Agreement. The first five-yearly revision
of the Cotonou Agreement, signed in June 2005, has enhanced processes of politi-
cal dialogue through establishing a more systematic and formal dialogue on the
three essential elements of the agreement (human rights, democratic principles,

 Gordon Crawford

Mold - [Link] 174 15-6-2007 14:37:40

 and the rule of law). It is claimed that these revisions make political dialogue ‘more
structured, more permanent and potentially more effective’ (European Commis-
sion, 2005c). A related amendment makes formal political dialogue a requisite step
before the consultation procedure provided for by article 96 can be launched. This
amendment emphasises the Commission approach that essential element clauses
covering democracy and human rights, integrated here into the overall Cotonou
Agreement instead of into individual country agreements, should serve a ‘positive’
purpose to prevent violations rather than a ‘punitive’ purpose (Youngs, 2006: 54).

Coherence and consistency

Prior to the Commission Communication of 2001, the internal coherence of
member states’ democracy promotion policies in Africa was addressed through
the adoption of a ‘common position’ by the Council on 25 May, 1998 concerning
‘human rights, democratic principles, the rule of law and good governance in Af-
rica’ (Council, 1998). A common position is one of the main legal instruments of
the CFSP, defining the position of the EU on a particular issue. Its significance
is that all member states must subsequently ensure that their national policies
conform to the declared position. The intention is that the various EU actors
should speak with one voice and act in a consistent manner.9 The stated aim of
the common position of May 1998 was to enhance the coherence of EU activi-
ties and policy responses to political trends in individual African countries. The
common position also reaffirmed that positive support for democratic political
change in Africa is a priority objective of the EU. Significantly, it stated that ‘de-
mocratisation is a process which can be assisted by appropriate support from the
international community’ (article 1) and commits the Union ‘to encourage and
support the on-going democratisation process in Africa’ (article 2), working with
both government and civil society (article 3). Additionally, the intent is stated to
consider increased support ‘for African countries in which positive changes have
taken place’ (article 3), with Ghana falling into such a category.

Funding sources
The most substantial Community resource for sub-Saharan African countries is
the European Development Fund (EDF), the financial instrument of the Coto-
nou Agreement. A country strategy and national indicative programme is nego-
tiated by the government of each ACP state with the European Commission,
determining the focal sectors for assistance and potentially including ‘democracy
and governance’. Additionally, other Commission-managed thematic budget lines
are available to all regions, with clearly the EIDHR as the most significant.

The EU and Democracy Promotion in Africa 

Mold - [Link] 175 15-6-2007 14:37:40

 As regards funding from EU member states, each has its own bilateral aid pro-
gramme within which democracy and governance assistance has become an in-
creasingly prominent element. Most member states have made their own aid pol-
icy declarations in support of democracy, human rights, and good governance, but
even if not, they remain committed to support democratisation efforts through
their EU obligations, for example, the ‘common position’ of May 1998 on democ-
ratisation issues in Africa (Council, 1998).

4. EU Democracy Assistance in Africa: Low on Delivery?

It is evident that democracy promotion has repeatedly been asserted as a priority

objective of EU development policy, including in the recent European Consensus
policy statement and its Strategy for Africa. But what has been the reality of
democracy assistance in Africa? To what extent has the EU translated its policy
rhetoric into support for democratisation on the ground? This is a difficult ques-
tion to answer from the available statistical information on EC aid, given that
sectoral classifications of EC assistance do not include a democracy and human
rights category.10 Therefore a case-study approach is adopted here, assessing EU
democracy assistance to Africa through a study of Ghana. This also has the ad-
vantage of examining EU assistance as a whole, in other words from both the
EC and member states. The information presented here was gathered through
fieldwork interviews and document reviews. In this section, background infor-
mation on Ghana is provided first, including the reasons for its selection as an
appropriate case study, followed by the presentation of EU democracy assistance
in Ghana in tabular form.

Ghana: democratisation and democracy assistance

Like many other African countries, Ghana embarked on political reform in the
early 1990s, with constitutional and democratic government restored in 1992 after
11 years of (quasi-)military rule under the Provisional National Defence Council
(PNDC) led by Jerry Rawlings. Subsequently, while democratisation has stalled
or reversed in many countries of sub-Saharan Africa, it is generally recognised
that democratic processes in Ghana have qualitatively improved with regard
to, for instance, electoral processes (Lyons, 1999; Gyimah-Boadi, 2001), human
rights protection (Map Consult, 2002) and civil-military relations (Agyeman-
Duah, 2002).11 Post-transition, four sets of multiparty elections have been held
since 1992 on a four-year cycle. While the first two rounds of presidential and
parliamentary elections in 1992 and 1996 were won by Rawlings and his National

 Gordon Crawford

Mold - [Link] 176 15-6-2007 14:37:41

 Democratic Congress (NDC), the unprecedented peaceful transfer of power be-
tween political parties following the elections in December 2000 represented a
very significant moment in Ghana’s political history, claimed as ‘mark(ing) a real
step toward democratic consolidation’ (Gyimah-Boadi, 2001: 104). The closely-
contested presidential and parliamentary elections were won by John Kufuor and
his National Patriotic Party (NPP), with the new government taking office in
January 2001. The Afrobarometer survey of public opinion reports widespread
public support for democracy in Ghana.12 The strengthening of democratic values
was again confirmed by the virtually trouble-free elections of December 2004,
with President Kufuor and the NPP re-elected for a second term.

Nevertheless, despite this significant democratic progress, it is uncontroversial to

state that much remains to be done in difficult circumstances if democratisation is
to be sustained. Ghana is a low-income country with a per capita national income
of US$ 320 per annum (World Bank, 2004, table 1), where public expenditure re-
mains severely constrained after more than two decades of structural adjustment.
Yet a democratic political system is expensive to construct, entailing not only the
cost of elections but also the considerable expenditure involved in strengthening
the range of democratic institutions and processes required at national and local
levels. A number of commentators, mainly Ghanaians, have highlighted various
shortcomings and weaknesses in key institutions of democratic governance, ones
where external financial assistance could play an important role. Some examples
are given here.

Regarding the electoral system, key problems for the Electoral Commission to
address include the bloated Voters’ Register and the malapportionment of parlia-
mentary seats (Smith, 2002: 623-8), with failure to do so potentially threatening
the legitimacy of future elections. Another source describes voter registration
as the ‘Achilles’ heel of election administration in Ghana’ (Map Consult, 2002:
18). Yet the Electoral Commission’s ability to implement such reforms depends
largely on its capacity, with its funding from government described as ‘well below
the requirements and subject to unpredictable timing’ (Map Consult, 2002: 6).
Since independence, Parliament has suffered greatly at the hands of military in-
tervention, with Oquaye (2001: 12) observing that parliament’s dissolution ‘on the
occasion of every military coup (1966, 1972, 1979, 1981) has checked the system-
atic and sustained development of the institution’. Assessments of parliament’s
performance in the Fourth Republic since 1992 have noted improvements while
simultaneously emphasising continued weaknesses, especially in its legislative
and oversight functions (Center for Democratic Development-Ghana / Fried-
rich Naumann Stiftung, 2000a: 4); (Oquaye, 2001: 12).13 Parliamentary capac-

The EU and Democracy Promotion in Africa 

Mold - [Link] 177 15-6-2007 14:37:41

 ity is regarded as weak in both material and human terms, largely perceived as
a resource issue stemming from Parliament’s ‘low priority in the governmental
budget’ (Oquaye, 2001: 16). Similarly the judiciary is weakened by its ‘lack of the
basic tools of the trade’, including a lack of a complete set of Ghana Law Reports
and law journals (Center for Democratic Development – Ghana / Friedrich Nau-
mann Stiftung, 2000b: 36). More thorough judicial reform is also required to
renew and strengthen the judicial system, yet a workshop on this subject noted
that ‘the lack of resources was a common theme running through all discussions’
( Center for Democratic Development – Ghana / Friedrich Naumann Stiftung,
2000b: 40). Indeed this ‘common theme’ of financial constraint can be applied to
all institutions of democratic governance examined here. Regarding the protec-
tion and promotion of human rights, the Commission for Human Rights and
Administrative Justice (CHRAJ) is described as ‘woefully under-resourced’ (Cen-
ter for Democratic Development – Ghana, 2002: 7), while the effectiveness of the
National Media Commission has been constrained by ‘a lack of human and mate-
rial resources to fulfil its mandate’ (Oquaye, 2001: 44). A comment by Oquaye
concerning the plight of the National Media Commission, but one that could be
generalised to all the above areas, is that ‘this [issue] should be addressed by those
who seek the deepening of democracy in Ghana’ (2001: 44).

Within sub-Saharan Africa, Ghana was perceived as a suitable case-study for

examining the EU’s democracy promotion policies for two main reasons. First,
Ghana is a major recipient of EU development assistance. In 2004, Ghana was
the fifth largest recipient of EU aid in sub-Saharan Africa and the eighth largest
globally (European Commission, 2006: 26), despite being a relatively small coun-
try. Disbursements from the EU, both member states and the EC, totalled US
$706 million in 2004 (European Commission, 2006: 21). Given the nature of the
policy pledges outlined above regarding democracy promotion in all third coun-
tries, it is anticipated that such commitments would certainly be implemented in
Ghana as a major recipient of EU aid.

Second, Ghana’s political context offers a favourable situation for the provision of
democracy support. Not only is the context positive for ongoing democratisation
efforts, but also there is a significant demand for external democracy assistance,
entailing a clear (and potentially legitimate) role for external actors. The Ghana-
ian case resonates well with the EU’s acknowledgement in its Strategy for Africa
that ‘the path towards sustainable democracy in Africa is difficult, long and rarely
straight’ and that ‘the appropriate role of external actors is to support and encour-
age domestic efforts’ (European Commission, 2005a: 24). Democratic progress
has been achieved in Ghana, led by domestic actors, but external support could

 Gordon Crawford

Mold - [Link] 178 15-6-2007 14:37:41

 help to maintain a positive engagement with democratisation. Further, the EU’s
acknowledgement of Ghana’s regional role as ‘an example of what can be achieved
in a favourable political climate’ (European Commission, 2005a: 10) would imply
a particular concern to ensure that democratisation is sustained and further con-
solidated.

For these reasons, therefore, the study of Ghana provides a good test for EU
democracy assistance in Africa, involving what might be considered a best-case
scenario.14 The implication, however, is that if the reality does not live up to the
rhetoric in Ghana, then it is unlikely to do so elsewhere in Africa.

EU Democracy Assistance to Ghana

Financial and technical support provided to Ghana in the areas of democracy,
human rights, and good governance is investigated here, described in shorthand
as ‘democracy assistance’. Such support is provided as part of the development co-
operation programmes of the European Community and of the member states,
four of whom are major aid donors in Ghana, namely Denmark, Germany, the
Netherlands, and the United Kingdom.15 What activities have they undertaken in
the democracy and governance field? The democracy assistance programmes of
these five EU actors are outlined here, with information presented in table 1.

Table 1 EU Democracy and Governance Assistance to Ghana

European Under the Cotonou Agreement, the National Indicative Programme
Community (€311 million over 2002-07) contains virtually no political aid. The
promotion of good governance is not a focal area, but identified as a
non-focal area ‘for a series of possible interventions’ (Republic of Ghana
– European Community, 2002: 22), though none had been undertaken
under this heading to date.16 Governance projects within focal areas are
limited to support to the Ghana Audit Service (1999-2004, € 3.6 million,
second phase commenced 2005) and training to local government
personnel (1997-2003, € 3.8 million, with € 3 million earmarked for further
decentralisation support). Electoral support was provided for the 2000
and 2004 presidential and parliamentary elections. No democracy and
human rights projects have been funded in Ghana from Commission
thematic budget lines.17
Denmark Human rights and democracy support has been relatively significant, with
60 projects from 1990-99 involving expenditure of 225 million Danish
crowns (DKK), three-quarters (76 percent) of which was focused on civil
society, including support for pro-market think tanks like the Institute
of Economic Affairs (Ministry of Foreign Affairs / Danida, 2000: 37). It was
acknowledged, however, that assistance was ‘mainly on an ad hoc basis’

The EU and Democracy Promotion in Africa 

Mold - [Link] 179 15-6-2007 14:37:41

 Denmark (Ministry of Foreign Affairs / Danida, 2003: vii). Consequently, a thematic
(continued) programme in ‘good governance and human rights’ was introduced as a
focal area in Danida’s current Country Assistance Strategy (2004-08). This
governance programme has four components: 1. multi-donor budget
support (MDBS) (70 million DKK), i.e., financial assistance for the Ghana
Poverty Reduction Strategy (GPRS); 2. decentralisation (58 million DKK);
3. key governance institutions (59 million DKK), e.g., Parliament, the
judiciary, Commission on Human Rights and Administrative Justice; 4.
civil society (19 million DKK) (Ministry of Foreign Affairs / Danida, 2003:
viii – xi).18 The civil society component has two elements. One strengthens
community-based organisations involved in governance and human
rights activities, especially advocacy work in relation to district assemblies.
The other contributes to a multi-donor programme, the Ghana Research
and Advocacy Programme (discussed below)
Germany ‘Democracy, civil society and public administration’ is stated as one of three
priorities of GTZ’s programme in Ghana, though implementation only
seriously commenced in 2004. The two activities, the ‘Good Governance
Programme’ (GGP) and the ‘Local Governance and Poverty Reduction
Support Programme’ (LG-PRSP), are largely focused on government at
central and local levels respectively. GGP has four components, with
a clear emphasis on public administration. These are: legal pluralism,
land management and administration, support to the Serious Fraud
Office and to the Inland Revenue Service. LG-PRSP aims to strengthen
the capacity of district assemblies to plan and implement local poverty
reduction programmes, with the statement that it ‘does not focus much on
democracy per se, but more on poverty reduction at the local level’.19
The Netherlands ‘Good governance’ plays a paradoxical role in Dutch development co-
operation in Ghana. It is a key selection criterion for focus countries, of
which Ghana is one. Yet, until recently, a democracy and governance
component has been virtually absent from the Dutch co-operation
programme.20 Support was negligible before 2004, limited to: electoral
assistance in 2000; one-off sponsorship of Ghana Integrity Initiative
workshops in 2001; core funding since 2002 for two market-oriented
advocacy NGOs, the Institute of Economic Affairs and the Centre for Policy
Analysis. From 2004, a governance component has been included in the
aid programme, though only amounting to € 0.5 million per annum out of
a total budget of € 28 million. Almost all of this is expended on the Ghana
Research and Advocacy Programme (G-RAP), a multi-donor project.
Commencing in 2005, 17 research and advocacy organisations are being
funded,21 all Accra-based, professionalised NGOs, including many of the
most well-established Ghanaian NGOs.
United Kingdom The Department for International Development’s (DFID) governance
activities are significant but limited in scope, largely focused on public
sector reform. Three large programmes were supported during the 1990s.
First, from 1995, a Civil Service Performance Improvement Programme
(US$5 million) was funded (Map Consult, 2002: 40). Second, launched in

 Gordon Crawford

Mold - [Link] 180 15-6-2007 14:37:41

 United Kingdom 1999, the Public Sector Management Reform Project, supported by
(continued) both the World Bank and DFID, entailed overall funding of US$ 150
million over 11 years (Map Consult, 2002: 41-2). Third, the UK supported
a Public Financial Management Reform Project, again co-ordinated by
the World Bank, with DFID’s contribution including a new government
payroll system (Emerging Market Economics Ltd., 2002: 22-23). Two
smaller projects were also in the area of public sector reform, focusing
on financial management: the ‘Value for Money’ project was concerned
with government procurement, while the ‘Ghana Reintroduction of
Revenue Project’ supported the introduction of value-added tax (VAT).
Decentralisation assistance was provided through the Brong-Ahafo
District Support Project (2000-2004), a capacity-building project aimed
at improving planning and financial management in five of Ghana’s
(then 110) districts. The current Country Assistance Plan (2003-06) shows
a broadening of governance activities, with support extended to civil
society organisations through two activities: a contribution to the multi-
donor G-RAP programme; a ‘Rights and Voice Initiative’, aiming to support
smaller NGOs in advocacy and empowerment work, which commenced
in 2005.
Source: data collected by author

From the information in table 1, it is evident that EU democracy assistance in

Ghana has not lived up to expectations created by its democracy promotion
policy rhetoric. The reality is of limited support for democratisation processes
in Ghana, despite the conducive political environment. This rhetoric-reality gap
is most evident within the European Community’s own aid programme. Aston-
ishingly, there is no democracy promotion element in the National Indicative
Programme (NIP), with the exception of one-off grants towards the cost of hold-
ing national elections in December 2000 and December 2004. Nor does Ghana
receive any funding from thematic budget lines that encompass democracy and
human rights projects, including EIDHR. Such minimal attention is quite re-
markable given the policy rhetoric about supporting democratisation processes
that has emanated from Brussels institutions for well over a decade, including
the Commission (2001: 3) statement that democracy issues would ‘permeate all
Community policies, programmes and projects’, reiterated in the recent European
Consensus on Development (Council, 2005: 15).

The current EDF-funded NIP in Ghana, ongoing until 2007, shows little change
from a traditional aid programme focusing on rural development, road transport,
and macroeconomic support. Detailed examination of the NIP’s focal areas was
also undertaken in order to ensure that no concealed elements of democracy sup-
port were missed. Yet this only uncovered a decentralisation project involving

The EU and Democracy Promotion in Africa 

Mold - [Link] 181 15-6-2007 14:37:41

 human capacity building at local government level and support to the Ghana Au-
dit Service, categorised under ‘rural development’ and ‘macroeconomic support’
respectively. Of the four member states, levels of democracy assistance remain
generally low with relatively little emphasis on this area, though clearly there
are variations between governments. Denmark is the one exception, having given
significant attention to this area for over a decade, though, acknowledged as ad
hoc support until fairly recently. Danida’s current ‘Good Governance and Hu-
man Rights’ programme (2004-08) is more strategically-based, but with propor-
tionately more assistance now provided to government institutions than to civil
society.

Regarding the other three bilateral agencies, those of Germany, the Netherlands,
and the UK, at best it can be said that they have begun to give more attention to
democracy promotion activities, largely since 2004. Before this, despite the policy
statements emanating from agencies’ headquarters since the early 1990s, democ-
racy assistance from these three countries was insignificant. GTZ in Ghana was
not involved in this area prior to the adoption of its current strategy paper (GTZ,
Ghana, 2003). Rather bizarrely, the Netherlands uses the criterion of good gover-
nance for selecting Ghana as a focal country, but, until fairly recently, disregarded
democratisation and governance as key areas for ongoing support and assistance.
The UK’s preoccupation with public sector reform, in alliance with the World
Bank, has a more tenuous link with democratisation issues, with such measures
relating to bureaucratic effectiveness, whatever the political regime, and more di-
rectly connected to economic reform programmes.

As a proportion of overall overseas development assistance (ODA), democracy

and governance support remains relatively small. One source from the late 1990s,
covering all the major donors in Ghana, indicates that only US $23.3 million went
to the generic ‘governance’ sector out of a total of $724.8 million disbursed to ten
sectors in a 30-month period (December 1995 to May 1998) (CIDA, 1999: 27). 22
This is little over three percent of total ODA, with governance assistance ranked
ninth out of ten sectors, with only the ‘environment’ receiving less. Although de-
mocracy and governance support has increased recently, it remains highly un-
likely that it amounts to more than five percent of overall ODA. Regarding EC
and Dutch democracy assistance, the figure seems to be in the region of two
percent of overall aid. Governance projects currently allocated from the EC’s NIP
amount to approximately two percent of EDF funds for 2002-2007. Similarly, the
new governance component in the Dutch aid programme amounts to just less
than two percent of total aid.

 Gordon Crawford

Mold - [Link] 182 15-6-2007 14:37:41

 5. Explaining the Rhetoric-Reality Gap: Two Propositions

The reality has not lived up to the rhetoric. Within sub-Saharan Africa, Ghana
offers a best-case scenario where positive measures in support of democratisation
could in principle be implemented effectively. Yet this has not happened. Why is
this? Two general propositions are outlined that aim to explain the Ghana case, one
relating the low level of democracy assistance to the EU’s own lack of economic and
security interests and the other pertaining to the EU’s understanding of the concept
of democracy and its relationship with economic liberalisation. These are outlined
below, followed by an analysis of their explanatory value in the Ghana case.

The first proposition suggests that the implementation of democracy promotion

policies is likely to be at a low level where the EU has few interests, either of
an economic or security nature. This is based on an understanding that EU de-
mocracy promotion policy is not normatively oriented, as presented, but has in-
strumental underpinnings. Therefore declared policy will be pursued with more
vigour where EU interests exist and are perceived as compatible with democracy
promotion and less so where such interests are either largely absent or political
stability is deemed more important than democratisation to protect EU inter-
ests.23 Two related developments, one post-Cold War and the other post-9/11,
contribute to generating this proposition. In the post-Cold War period, EU in-
terests in sub-Saharan Africa have waned, while its interests in the ‘near abroad’
of Central and Eastern Europe and the southern Mediterranean countries of the
Middle East and North Africa have increased. The EU Donor Atlas shows a no-
table shift in the regional allocations of EC aid in the 1990s in comparison with
previous decades. Aid to sub-Saharan Africa declined from 62 percent of total
EC aid in the decades 1973-82 and 1983-92 to 40 percent in 1993-02 (European
Commission, 2004a: table 9).24 In contrast, aid to the Middle East and North
Africa doubled from eight and nine percent in 1973-82 and 1983-92 respectively
to 17 percent in 1993-02 (European Commission, 2004a: table 9). Such trends in
EC aid allocations may well continue as the European Neighbourhood Policy
is progressively implemented. In the post-Cold War period in Africa, the EU
is no longer concerned with providing support and maintaining close relations
with ideological allies, while its economic interests are largely confined to trade
in primary commodities, notably minerals and tropical agricultural products. Re-
sidual political interests in sub-Saharan Africa focus mainly on stability, espe-
cially conflict management, given that the instability arising from civil conflict
can have adverse effects on the EU itself (Olsen, 2003: 10-12). Such concerns are
expressed in particular through the EU’s Common Foreign and Security Policy
(CFSP), with a number of ‘common positions’ declared and ‘joint actions’ taken

The EU and Democracy Promotion in Africa 

Mold - [Link] 183 15-6-2007 14:37:41

 since the mid-1990s regarding civil wars in Africa.25 Clearly the EU fears the bur-
dens in military and financial terms of having to contribute to resolving conflicts
and to providing humanitarian assistance, as well as the attendant consequences
of increased migration and asylum applications to Europe. Thus, it is suggested
that the EU places more emphasis on political stability in Africa than on democ-
racy (Olsen, 2003: 10-12). The second development has come post-9/11, with the
EU’s democracy promotion policy increasingly interpreted as security policy, in
contrast to democracy being promoted simply as a desirable goal in itself. The
perceived compatibility between security interests and democracy promotion is
most evident in the EU’s European Security Strategy, with the statement that
‘the best protection for our security is a world of well-governed democratic states’
(European Council, 2003: 10).26 One consequence is that, since September 2001,
the Middle East has become a major focus for EU (and US) democracy promo-
tion efforts, with the EU stating an intent to increase resources for Middle East
political reform (Council and Commission, 2003).27

The second proposition suggests that EU actors are promoting a limited form
of democracy, one that encompasses the political component of the neo-liberal
development model. Again this questions the motives of EU democracy promo-
tion policy and points to a perceived mutuality between economic and politi-
cal liberalisation. This proposition is based on the argument that the EU is less
interested in promoting democracy and good governance in Africa as an end in
itself, but more as a means of sustaining economic liberalisation and of maintain-
ing neo-liberal hegemony.28 Whereas the first proposition is based on ‘real world’
events, this second proposition stems from an understanding that the actions of
the EU, in common with other international actors, are largely driven by an ac-
ceptance of neo-liberal theoretical premises. Advocates and critics alike generally
acknowledge the continued dominance of neo-liberalism in development policy,
including within such initiatives as the New Partnership for African Develop-
ment (NEPAD) (Owusu, 2003). Over the past two decades most attention in
Africa has been placed on the economic aspects of neo-liberalism, notably struc-
tural adjustment programmes and their recent rebranding as ‘poverty reduction
strategies’ (World Development Movement, 2001; Zack-Williams and Mohan,
2005: 501-03). But critics remind us that neo-liberalism is both an economic and
political theory. Ronaldo Munck (1994: 35) notes that, ‘the neo-liberal concep-
tion of freedom virtually equates political democracy and the “free” market’, while
Adrian Leftwich (1994: 368) comments that ‘neo-liberalism is not only an eco-
nomic theory but a political one as well’. The accuracy of such statements by
critics is confirmed in the work of Milton Friedman, the guru of contemporary
neo-liberals, who asserted in the early 1960s that:

 Gordon Crawford

Mold - [Link] 184 15-6-2007 14:37:41

 Historical evidence speaks with a single voice on the relation between po-
litical freedom and a free market. I know of no example in time or place of
a society that has been marked by a large measure of political freedom, and
that has not also used something comparable to a free market to organize
the bulk of economic activity. (Friedman, 1962: 9)

Thus, as suggested by this proposition, the EU and other international organisa-

tions are influenced by a neo-liberal development model that emphasises ‘demo-
cratic politics and a slim, efficient and accountable public bureaucracy (as) not
simply desirable but necessary for a thriving free market economy, and vice ver-
sa’ (Leftwich, 1994: 368-9). Such a form of democracy is oriented less towards
strengthening popular control over public decision-making and removing an elite
monopoly (Beetham et al., 2002: 13), but instead is more concerned with chal-
lenging the power of the state. By this interpretation, democratic politics is per-
ceived as a means to:

a) limit state power and its sphere of decision-making, including its ability
to intervene in the economy and regulate capital; and
b) bring residual state power under formal democratic control, through elec-
tions for instance, as a safeguard against any tendencies towards the ar-
bitrary exercise of that power.

It is a conception of liberal democracy where the tension and struggle between

its liberal and democratic components, either to limit or extend the spheres of
democratic control (Beetham, 1993: 56-8), has resulted in the predominance of
the liberal over the democratic element.

6. Propositions Explored: Learning from Ghana

Returning to the Ghana case, do these two propositions help to explain why the
democracy promotion rhetoric expressed at EU policy-making levels has not
been translated into democracy assistance in practice?

The Ghanaian case provides some support for the first proposition that EU de-
mocracy promotion policy is instrumentally driven by self-interests and that low-
level implementation is likely where few direct interests (economic or security)
exist. Evidence here relates to the volume of democracy assistance. If the EU was
seriously committed to assisting democratisation in Africa as an intrinsic goal,
then Ghana should receive substantial support given the favourable context and

The EU and Democracy Promotion in Africa 

Mold - [Link] 185 15-6-2007 14:37:42

 the excellent opportunity for contributing to the consolidation of relatively new
and fragile democratic institutions. Yet low levels of actual democracy assistance
suggest that the rhetoric cannot be taken at face value. It would appear that Gha-
na does not attract significant support for ongoing democratisation because the
EU has few direct interests there. Ghana is politically stable, offers no threat to
European security, and the sustained extraction of primary resources, notably
cocoa and gold, is reasonably secure. Despite Ghana’s important role within West
Africa as a relative haven of democracy and political stability, and as a potential
model for its neighbours, its security and economic interests for the EU are low.
EU attention is focused elsewhere within Africa, notably on situations of conflict,
where its own interests are more likely to be directly affected. In North Africa
and the Middle East, perceived threats to EU security interests are more likely
to generate greater attention to democratisation issues, despite the less condu-
cive context. Thus, the lack of EU interests is at least a partial explanation of
why Ghana attracts such a low volume of democracy assistance, contradicting
the stated intentions by the Council in their ‘common position’ of May 1998 to
provide significant support to countries making ‘positive changes’ and their more
recent pledges in the Strategy for Africa to support domestic efforts in the ‘dif-
ficult, long and rarely straight’ road to sustainable democracy (European Com-
mission, 2005a: 24).

Therefore can the multiple references to ‘respect for human rights and democratic
principles’ made at various institutional levels of the EU, including in the Ghana
country strategy, simply be understood as largely symbolic? Or do they fulfil oth-
er purposes? It is Olsen’s view (2002: 145) that the policy declarations themselves
serve to enhance the EU’s international moral profile and hence contribute to
its status in international affairs, while incurring limited financial commitments.
Therefore the instrumentality of democracy promotion policy seems evident in
two distinct respects. One is that the lack of EU interests partly explains low-
level implementation in Ghana, while the policy declarations themselves serve
the EU’s own purposes by, ironically, promoting its international profile as a nor-
matively-oriented actor (Olsen, 2003).

As regards the second proposition, to what extent are EU actors promoting a lim-
ited form of democracy in Ghana, one that is oriented at challenging state power
rather than extending popular control over decision-making? This requires an
examination of the content of the EU’s democracy assistance. Although levels of
assistance are low, two priorities are clearly discernible in table 1 from amongst
the range of democracy and governance themes. These are decentralisation and
public sector reform. Additionally, the limited assistance to civil society is con-

 Gordon Crawford

Mold - [Link] 186 15-6-2007 14:37:42

 centrated on a narrow sub-set of civil society organisations. What does this the-
matic prioritisation tell us about the form of democracy being promoted?

Four of the five EU agencies examined here are involved in support for decentral-
isation. Two member states have a particular focus on decentralisation – Den-
mark and more recently Germany – while the European Commission and the
UK’s DFID have smaller capacity-building projects at district assembly level. At
face value, the contributions of EU actors to the strengthening of decentralisa-
tion reforms would appear to have positive implications for democratisation in
Ghana, given the claims that decentralisation enhances opportunities for po-
litical participation and that local government can be more responsive to local
needs. Yet, why are international actors so universally keen on promoting de-
centralisation? A key reason appears to be the compatibility of decentralisation
with the anti-statism of neo-liberalism. Decentralisation entails further pres-
sure on the central state to relinquish and to fragment its power. The concern
to also limit local state power is demonstrated in the facilitation of bottom-up
demands on district assemblies in Ghana. For example, Danida’s emphasis on
‘popular participation’ within the decentralisation process. Although this can
be interpreted in pro-democratic terms, it also entails the intensification of de-
mands on relatively fragile local government institutions, operating under severe
financial and administrative constraints, ones which require prior, or at least
simultaneous, strengthening.

The United Kingdom has concentrated its governance assistance on public sector
reform for a considerable number of years, while GTZ’s recent ‘good governance’
programme has a public sector reform focus. Valuable as such activities may be,
the democratic component of such programmes is questionable in two respects.
First, many measures aim to strengthen the efficiency and effectiveness of the
public bureaucracy, irrespective of the type of government, democratic or oth-
erwise. It can be contended that public sector reforms in Ghana have done little
to enhance democratic oversight mechanisms such as strengthening checks and
balances and holding the executive to account.

Second, DFID’s public sector reform agenda, in collaboration with the World
Bank, has been more aligned to structural adjustment and to economic liberalisa-
tion than to strengthening democratic institutions and processes. Measures have
aimed at slimming down the state, for example civil service downsizing, and at re-
conceptualising it in a form that is deemed appropriate for a free market economy.
Further, it can be argued that the particular interest of international agencies in
improved public financial management is partly to ensure that expenditure of

The EU and Democracy Promotion in Africa 

Mold - [Link] 187 15-6-2007 14:37:42

 their own grants and loans can be adequately accounted for. In other words, this
prioritisation reflects a concern by international agencies for upward account-
ability to themselves rather than downward accountability to Ghanaian society,
as democratic processes would entail.

The nature of EU civil society assistance also indicates an underlying concept of

the relationship between civil society and the state that is derived from neo-lib-
eral thought, one where the primary role of civil society is perceived as a counter-
weight to state power. This is evident in two respects. Firstly, the direct support
provided in recent years by the Dutch and Danish governments to Ghanaian pro-
market reform think-tanks such as the Institute for Economic Affairs and the
Centre for Policy Analysis, both based in Accra, themselves acting as advocates
for the preferred donor policy option of sustained economic liberalisation. Ongo-
ing financial support to these organisations has been reinforced recently through
the provision of G-RAP core grants (2005-2007). Secondly, although encom-
passing a broader range of interests than market-orientation, the channelling of
the bulk of civil society assistance through the multi-donor G-RAP programme
entails a narrow focus on a particular type of civil society organisation, those
professionalised, advocacy organisations that are based in the capital city. Such
organisations are primarily oriented towards keeping a check on state activities
and exerting influence on government policy-making, and it would seem that the
main intent of EU civil society support is to strengthen the capacity of a core
group of advocacy organisations in Accra to perform such functions. Although
EU civil society assistance is relatively limited, a small amount of funds can have
a significant impact when concentrated on this sub-set of civil society actors, with
this elite group of NGOs in Accra having ‘the possibility of exercising inordinate
influence’ (Carothers and Ottaway, 2000: 16), especially when strengthened by
donor funding. Yet the representative nature of such ‘trustee organisations’, them-
selves deciding what is in ‘the public interest’ or in ‘the interests of the poor’, is
questionable. In contrast, membership organisations such as trade unions and
student associations have been relatively disregarded in EU civil society support,
despite their credentials as more democratic and representative bodies. The pat-
tern of inclusion and exclusion evident in EU civil society assistance suggests less
of an interest in strengthening civil society as a means of democratic participa-
tion, and more of a concern to consolidate that segment of NGOs that can keep
watch over a perceived arbitrary and capricious state.

In sum, through examining both the volume and the content of EU democracy
assistance in Ghana, there is evidence to support both explanatory propositions.
First, the limited volume of assistance confirms that democracy assistance is at a

 Gordon Crawford

Mold - [Link] 188 15-6-2007 14:37:42

 low level where there are few EU self-interests, despite favourable conditions in a
particular country. This indicates the instrumentality behind the implementation
of democracy promotion policy, despite its presentation as motivated by norma-
tive principles. Second, examination of the three priority elements of democracy
assistance in Ghana (decentralisation, public sector reform, and civil society)
supports the proposition of an intent to promote a limited form of democracy,
one oriented at challenging state power and sustaining economic liberalisation
rather than extending popular participation and control.

7. Conclusion

The European Commission’s communication on human rights and democratisa-

tion stated that it ‘wants to be judged on its performance in meeting the EU’s
policy goals’ (2001: 3). Through a case study of Ghana, this chapter has sought a
favourable test for the democracy promotion efforts of EU actors in Africa, one
where conditions are particularly favourable. The high profile of democracy pro-
motion policy was noted within the framework of EU-Africa relations. But the
reality of democracy assistance in Ghana was rather different, with relatively low
levels of support. In particular the EU delegation in Accra has given astonishingly
little attention to democracy and governance issues. At best, the member states
examined had begun to give more emphasis to this area, well over a decade after
both their own policy statements in this field and the democratic transition in
Ghana. Denmark was the only member state that had provided more consistent
support and had moved from ad hoc assistance to programmatic support. Further,
it was noted that the provision of democracy assistance has been concentrated
on two main sectors, decentralisation and public sector reform, with a relative
neglect of key national level institutions of democratic governance, such as Par-
liament and the judiciary, as well as political society (especially political parties)
and civil society.29 Thus, from the evidence in the Ghana case, the assessment of
the EU in meeting its stated policy goals of promoting democratisation can only
be one of weak implementation and poor performance. Although it is not pos-
sible to generalise from one case study, it is suggested that if policy performance
is poor in Ghana, then it is unlikely to be better elsewhere in Africa where the
political context resonates less well with the EU’s purported democracy promo-
tion objectives.

Subsequent to these empirical findings in Ghana, the EU has continued to ar-

ticulate the same democracy promotion rhetoric, for example, in its influential
development policy statement, the European Consensus (2005), and in the recent

The EU and Democracy Promotion in Africa 

Mold - [Link] 189 15-6-2007 14:37:42

 Strategy for Africa (2005). While aware of the limitations of findings from a
single study, the experience of Ghana suggests, nevertheless, not only that Afri-
can countries cannot expect much support from the EU for domestic attempts to
extend democratic practices, but also that the limited measures undertaken are
oriented more to limiting state power than extending democratic control over
decision-making. It is argued that this constitutes the political dimension of neo-
liberalism and can be seen as part of wider efforts by the EU and other Western
governments to re-constitute the state and state-society relations in Africa in a
manner consistent with the maintenance of neo-liberal hegemony.

Notes

 Teresa Hayter’s classic Aid as Imperialism () was probably the first of this genre, as
well as her later Aid: Rhetoric and Reality ().
 The critique of EU democracy promotion policies may be a contemporary example of
espoused principles being compromised in practice. But again the longer history should
be recalled where ‘European ideals’ expressed through aid policy have been perceived as
tarnished, for example, the critique that EC assistance during the Ethiopian famine of
- was used to support the Derg, the ruling military junta, itself largely respon-
sible for the full effects of the famine.
 A related proposition, though not one that is relevant to the case of Ghana, is that de-
mocracy promotion policies will be downplayed where there are significant economic and
security interests, with ‘political stability’ taking precedence over democratisation. This
may appear converse to the proposition considered here, but in fact there is consistency in
the argument that economic and/or security goals regularly trump democracy promotion
in the hierarchy of competing foreign and development policy objectives. In other words,
democracy will be promoted where it is perceived as compatible with economic and secu-
rity interests and downplayed or ignored when it is not.
 This section examines the democracy promotion policies emanating from EU institu-
tions, many of which apply to both Commission programmes and those of member states.
Additionally member states often have their own similar policies, but these are not exam-
ined here.
 This revised and replaced the European Community’s Development Policy Statement of
November , jointly issued by the Council and Commission.
 Regulation  covered developing countries and Regulation  other third countries.
 Four North African countries – Morocco, Tunisia, Algeria, and Egypt – belong to the
Euro-Mediterranean Partnership concluded in Barcelona in . Within the African
continent, only Libya has not entered into a formal agreement with the EU.
 Discussion concerning the inclusion of good governance in the Cotonou Agreement was
one of the most controversial aspects of the negotiations between the ACP states and
the EU. The ACP resisted the introduction of good governance as an ‘essential element’,
subject to a non-execution or suspension clause. The compromise of good governance as
a ‘fundamental and positive element’ entails linguistic contortions, with good governance
becoming a theme for regular dialogue and an area for positive support. The main differ-

 Gordon Crawford

Mold - [Link] 190 15-6-2007 14:37:42

 ence is that good governance is not subject to a non-execution clause, with the exception
of ‘serious cases of corruption’ where significant funds provided by the Community are
involved (article ).
 It can also be argued that a ‘common position’ is often illusory. This was evident, for exam-
ple, in the differing reactions by EU member states to the post-election crisis in Ethiopia
in . Whereas the EU itself took a very critical position, the UK government (espe-
cially Prime Minister Blair) took a ‘softly-softly’ approach, tacitly supporting the election
results, while mildly criticising the ‘over-reaction’ of Ethiopian authorities to the demon-
strations.
 In the statistical tables in its Annual Reports on Development Policy, the European Com-
mission uses the purpose codes of the OECD DAC for its sectoral breakdown. This in-
cludes the category of ‘government and civil society’, as an element of ‘social infrastructure
and services’, but there is no specific ‘democracy’ category. ‘Government and civil society’
is clearly broader than democracy assistance, presumably encompassing all assistance to
governments, including budget support, and all assistance to NGOs, including service
provision activities. Rather confusingly, in the breakdown of EU aid by sector in the EU’s
Donor Atlas, ‘democracy’ is included in the catch-all ‘multi-sector’ category, along with en-
vironment and others (European Commission, : ). In -, such multi-sector
assistance amounted to eight per cent of EU aid, including both EC and member states
(ibid.). Therefore, even though accurate figures are not available, one can confidently state
that democracy assistance as a proportion of overall EU aid has been no more than five
per cent over the past decade. A more exact figure is that EIDHR funds amount to just
under two per cent of total Commission aid annually (Youngs, : ).
 Of the approximately  countries in Africa that were involved in attempted democratic
transitions in the early s, Thomas Carothers (: ) cited Ghana as the only Afri-
can country that had made significant democratic progress and remained positively en-
gaged in democratisation.
 The second Afrobarometer survey, undertaken in , indicates strong support for de-
mocracy among Ghanaians, with  percent of respondents agreeing that democracy is
always preferable to any other kind of government (Gyimah-Boadi and Mensah, :
).
 Financial constraints translate into a lack of support staff, research assistants, library fa-
cilities, access to independent data, and so forth.
 It could be argued that EU support should be concentrated on those countries where
the political situation is worst and the need greatest, for example, countries in conflict or
with serious governance problems. It is acknowledged that one priority of donors’ democ-
racy assistance to Africa should be post-conflict societies, such as Liberia or the Congo
(DRC). However, it should also be noted that democracy promotion in such societies
is both complex and potentially hazardous. Important pre-conditions are security and
stability, notably the (re-)establishment of the state’s monopoly of power and the political
inclusion of warring factions, and that the premature introduction of political competi-
tion and democratic processes could heighten social and political divisions. In contrast, a
country like Ghana offers a favourable context where the usual criteria for the successful
utilisation of limited aid resources – effectiveness, efficiency, relevance, and sustainability
– can be met more easily.
 Globally these four member states, plus Sweden, appear to be main providers of democ-
racy assistance, contributing  percent of EU aid for ‘government and civil society’ (Eu-
ropean Commission, a: ).

The EU and Democracy Promotion in Africa 

Mold - [Link] 191 15-6-2007 14:37:42

  Fieldwork research, including interviews, was undertaken in .
 European Commission official, Brussels, personal correspondence,  January, ; Euro-
peAid Co-operation Office official, Brussels, personal correspondence,  January .
 The categorisation of MDBS as good governance support appears to entail some mislabel-
ling. Although good governance is one of five priority areas in the GPRS, it is the one that
receives least emphasis and therefore MDBS is far from exclusively good governance sup-
port.
 Interview with GTZ official, Accra, Ghana,  March, .
 The paradoxical argument runs as follows: because Ghana is perceived as already ‘having
good governance’, then support for governance and democracy is not a priority. However,
this contradicts the idea of improving the quality of governance as an ongoing process,
similar to that of democratisation, one that is never complete.
 Ghana Research and Advocacy Programme (G-RAP) Newsletter No.,  April, .
 Additionally, of the US . million, a Japanese programme of US . million is cat-
egorised dubiously as governance assistance, despite being described as ‘promotion of the
economy’.
 See footnote .
 In  and  (averaged), sub-Saharan Africa only received  percent of total EC
ODA (European Commission, a: table ). The regional allocation to sub-Saharan
Africa of all EU aid (member states plus EC) has declined less dramatically over the same
time period, averaging  percent in -, increasing to  percent in -,
and then decreasing back to  percent in - (ibid.: table ). Additionally, the
aid policy decisions taken at the G Summit at Gleneagles in July  should lead to an
increase in overall EU aid allocations to sub-Saharan Africa.
 For example, the EU deployed troops outside of Europe for the first time in the Demo-
cratic Republic of the Congo (DRC) in June  (Olsen, : ).
 Similarly BMZ has also stated that, ‘Since functioning democratic states are a key factor
for the security interests of the people in the North and South, we must make developing
and strengthening them a focus of international policy’ (BMZ, : ).
 Thomas Carothers (: ) states that the US government ‘now ranks a democratic
transformation of the Middle East as one of its top foreign policy goals’.
 See, for example: Abrahamsen (); Barya ().
 Again, Denmark is the exception to whom this criticism of neglect does not apply.

References

Abrahamsen, Rita (2000), Disciplining Democracy: Development Discourse and

Good Governance in Africa, London: Zed.
Agyeman-Duah, Baffour (2002), ‘Civil-Military Relations in Ghana’s Fourth Re-
public’, Critical Perspectives, no. 9, Accra: CDD-Ghana.
Barya, John-Jean B. (1993), ‘ The New Conditionalities of Aid: An Independent
View from Africa’, IDS Bulletin, vol. 24, no. 1, pp. 16-23.
Beetham, David (1993), ‘Liberal Democracy and the Limits of Democratisation’,
in D. Held (ed.) Prospects for Democracy, Cambridge: Polity Press, pp.55-73.

 Gordon Crawford

Mold - [Link] 192 15-6-2007 14:37:42

 Beetham, David, S. Bracking, I. Kearton, and S. Weir (2002), International IDEA
Handbook on Democracy Assessment, The Hague: Kluwer Law International.
BMZ (German Federal Ministry for Economic Co-operation and Development)
(2004), ‘On development-based and military responses to new security chal-
lenges’, BMZ Discourse No.002, Bonn: BMZ.
Canadian International Development Agency (CIDA) (1999), ‘Ghana: Program-
ming Framework 1999/00 to 2004/05’, Hull, Quebec: CIDA.
Carothers, Thomas (2002), ‘ The End of the Transition Paradigm’, Journal of De-
mocracy, vol. 13, no. 1.
Carothers, Thomas (2004), Critical Mission: Essays on Democracy Promotion,
Washington DC: Carnegie Endowment for International Peace.
Carothers, Thomas and Marina Ottaway (2000), ‘ The Burgeoning World of
Civil Society Aid’, in Marina Ottaway and Thomas. Carothers (eds.), Funding
Virtue: Civil Society Aid and Democracy Promotion, Washington DC: Carnegie
Endowment for International Peace.
Center for Democratic Development – Ghana (2002), Human Rights and Admin-
istrative Justice in Ghana, Accra: CDD-Ghana.
Center for Democratic Development – Ghana / Friedrich Naumann Stiftung
(2000a), Parliament and Democratic Governance in Ghana’s Fourth Republic,
Accra: Friedrich Naumann Stiftung.
Center for Democratic Development – Ghana / Friedrich Naumann Stiftung
(2000b), The Judiciary and Democratic Governance in Ghana’s Fourth Republic,
Accra: Friedrich Naumann Stiftung.
Council of Ministers (1991), ‘Resolution of the Council and the Member States
meeting in the Council on Human Rights, Democracy and Development,’ 28
November, 1991 [Doc. No. 10107/91], Brussels: European Commission.
Council of the European Union (1998), ‘Common Position of 25 May, 1998 con-
cerning human rights, democratic principles, the rule of law and good gover-
nance in Africa’ (98/350/CFSP), Official Journal of the European Communi-
ties, L 158/1, 2 June.
Council of the European Union and the European Commission (2000), ‘ The Eu-
ropean Community’s Development Policy – Statement by the Council and the
Commission’, Brussels: European Commission.
Council of the European Union (2003), ‘EU Annual Human Rights Report for
2003’, 10 October, Brussels: Council of the European Union.
Council of the European Union and the European Commission (2003), ‘Strength-
ening the EU’s Relations with the Arab World’¸ 4 December, available at:
[Link]
Council of the European Union (2005),‘The European Consensus on Development,’
joint statement by the Council and the Representatives of the Governments of

The EU and Democracy Promotion in Africa 

Mold - [Link] 193 15-6-2007 14:37:43

 the member states meeting within the Council, the European Parliament and
the Commission: November, Brussels: Council of the European Union.
Crawford, Gordon (1994), ‘Promoting Democracy, Human Rights and Good
Governance through Development Aid: A Comparative Study of the Policies
of Four Northern Donors’, Working Papers on Democratisation, no. 1, Leeds:
Centre for Democratisation Studies, University of Leeds.
Crawford, Gordon, (1996), ‘Whither Lomé? The Mid-Term Review and the De-
cline of Partnership’, Journal of Modern African Studies, vol. 34, no. 3, pp. 503-
518.
Crawford, Gordon (1998), ‘Human Rights and Democracy in EU Development
Co-operation: Towards Fair and Equal Treatment’, in M.R. Lister (ed.), Euro-
pean Development Policy, Basingstoke: Macmillan, pp. 131-78.
Crawford, Gordon (2000), ‘European Union Development Co-operation and
the Promotion of Democracy’, in P. Burnell (ed.), Democracy Assistance: In-
ternational Co-operation for Democratization, London: Frank Cass, pp. 90-
127.
Danish Ministry of Foreign Affairs / Danida (2000), ‘Evaluation of Danish Sup-
port to Promotion of Human Rights and Democratisation 1990-1998: Vol. 6
Ghana’, Copenhagen: Danish Ministry of Foreign Affairs.
Danish Ministry of Foreign Affairs / Danida (2003), ‘Ghana: Thematic Pro-
gramme Support Document – Programme for Good Governance and Human
Rights’, Accra: Royal Danish Embassy.
David, Dominique (2000), ‘Forty Years of Europe-ACP Relationship’, The Cou-
rier, special issue on the Cotonou Agreement, September, Brussels: European
Commission.
Emerging Market Economics Ltd. (2002), ‘Ghana Country Strategy Paper 1998-
2001: End of Cycle Review – “Recognising Reality”’, January 2, Accra: UK De-
partment for International Development.
European Commission (2001), ‘ The European Union’s Role in Promoting Hu-
man Rights and Democratization in Third Countries’, Communication from
the Commission to the Council, COM(2001) 252 final, 8 May, Brussels: Euro-
pean Commission.
European Commission (2003), ‘Governance and Development’, Communication
from the Commission to the Council, the European Parliament and the Eu-
ropean Economic and Social Committee, COM(2003) 615 final, 20 October,
Brussels: European Commission.
European Commission (2003), ‘EU relations with Ghana’, updated 17 November,
available at [Link]
European Commission (2004a), ‘EU Donor Atlas, Mapping Official Develop-
ment Assistance’, May, Brussels: European Commission.

 Gordon Crawford

Mold - [Link] 194 15-6-2007 14:37:43

 European Commission (2004b), ‘European Neighbourhood Policy – Strategy
Paper’, Communication from the Commission to the Council, COM(2004)
373 final, 12 May, Brussels: European Commission.
European Commission (2005a), ‘EU Strategy for Africa: Towards a Euro-Afri-
can pact to accelerate Africa’s development’, Communication from the Com-
mission to the Council, the European Parliament and the European Economic
and Social Committee, COM(2005) 489 final, 12 October, Brussels: European
Commission.
European Commission (2005b), ‘Implementing and Promoting the European
Neighbourhood Policy’, Communication to the Commission:, 22 November,
SEC(2005) 1521, Brussels: European Commission.
European Commission (2005c), ‘Information Note on the Revision of the Coto-
nou Agreement’, available at [Link]
cotonou/pdf/negociation_20050407_en.pdf.
European Commission (2006), ‘EU Donor Atlas 2006, Volume I, Mapping Of-
ficial Development Assistance’, February, Brussels: European Commission.
European Council (2003), ‘European Security Strategy: A Secure Europe in a Bet-
ter World’ adopted by European Council meeting in Brussels on 12 December.
European Union, Delegation of the European Commission (2004), ‘Coopera-
tion between the Republic of Ghana and the European Union: Annual Report
2003’, Accra: Delegation of the European Commission.
Friedman, Milton (1962), Capitalism and Freedom, Chicago: University of Chi-
cago Press.
German Technical Co-operation (GTZ) (2003), ‘Ghana: Priority Area Strategy
Paper – Democracy, Civil Society and Public Administration’, draft, Novem-
ber, mimeo.
German Technical Co-operation (GTZ) (2004), untitled document on ‘Local
Governance and Poverty Reduction Support Programme’, mimeo.
German Technical Co-operation (GTZ) website: [Link]
political-reforms/english.
German Technical Co-operation (GTZ) Ghana website: [Link]
laender/[Link]?ProjectId=55&spr=2&Thema=8.
Gyimah-Boadi, E. (2001), ‘A Peaceful Turnover in Ghana’, Journal of Democracy,
vol.12, no.2, pp.103-17.
Gyimah-Boadi, E. and Kwabena Amoah Awuah Mensah (2003), ‘ The Growth
of Democracy in Ghana Despite Economic Dissatisfaction: A Power Alterna-
tion Bonus?’, Afrobarometer Working Paper No.28, available at http//www.
[Link].
Leftwich, Adrian (1994), ‘Governance, the State and the Politics of Development’,
Development and Change, vol.25, pp.363-86.

The EU and Democracy Promotion in Africa 

Mold - [Link] 195 15-6-2007 14:37:43

 Lyons, Terrence (1999), ‘Ghana’s Elections: A Major Step Forward’, in Larry Dia-
mond and Marc F. Plattner (eds.), Democratization in Africa, Baltimore: John
Hopkins University Press, pp.157-69.
Map Consult Ltd. (2002), ‘Good Governance in Ghana: Lessons Learnt from
Donor Support to Governance in Ghana 1992-2002’, Accra: Royal Danish Em-
bassy.
Munck, Ronaldo (1994), ‘Democracy and Development: Deconstruction and
Debates’, in L. Sklair (ed.), Capitalism and Development, London: Routledge,
pp.21-39.
Olsen, Gorm Rye (2002), ‘ The European Union: An Ad Hoc Policy with a Low
Priority’, in P.J. Schraeder (ed.), Exporting Democracy: Rhetoric vs. Reality,
Boulder, CO: Lynne Rienner, pp. 131-45.
Olsen, Gorm Rye (2003), ‘ The Africa Policy of the European Union: Challenges
to Traditional Policy Options, Opportunities for New Choices’, paper deliv-
ered at the European Consortium for Political Research (ECPR) conference,
Marburg, Germany, 18-21 September.
Oquaye, Mike (2001), ‘Government and Politics in Contemporary Ghana (1992-
1999) – A Study’, Accra: Africa Governance Institute.
Owusu, Francis (2003), ‘Pragmatism and the Gradual Shift from Dependency to
Neo-liberalism: The World Bank, African Leaders and Development Policy in
Africa’, World Development, vol.31, no.10, pp.1655-72.
Republic of Ghana – European Community (2002), ‘Country Strategy Paper and
Indicative Programme for the Period 2003-2007’, Accra: European Commis-
sion.
Robinson, Mark (1994), ‘Governance, Democracy and Conditionality: NGOs
and the New Policy Agenda’, in A. Clayton (ed.) Governance, Democracy and
Conditionality: What Role for NGOs? Oxford: INTRAC.
Salama Clara Mira and Stephen Dearden (2001), ‘ The Cotonou Agreement’, Eu-
ropean Development Policy Study Group Discussion Paper No. 20, February,
available at [Link]
Smith, Daniel A. (2002), ‘Consolidating Democracy? The structural underpin-
nings of Ghana’s 2000 elections’, in: Journal of Modern African Studies, vol. 40,
no. 4, pp. 621-50.
UK Department for International Development Ghana (2002) Country Assis-
tance Plan’, draft, November, mimeo, Accra: DFID Ghana.
World Bank (2004), World Development Report 2005: A Better Investment Climate
for Everyone, Washington DC: World Bank.
World Development Movement (2001), ‘Policies to Roll-Back the State and Pri-
vatise: Poverty Reduction Strategy Papers Investigated’, available at http://
[Link]/cambriefs/debt/[Link].

 Gordon Crawford

Mold - [Link] 196 15-6-2007 14:37:43

 Youngs, Richard (ed.) (2006), Survey of European Democracy Promotion Policies
2000-2006, Madrid: FRIDE.
Zack-Williams, Tunde and Giles Mohan (2005), ‘Africa from SAPs to PRSP:
Plus Ca Change, Plus C’est La Meme Chose’, in: Review of African Political
Economy 106, pp. 501-03.

The EU and Democracy Promotion in Africa 

Mold - [Link] 197 15-6-2007 14:37:43

Mold - [Link] 198 15-6-2007 14:37:43
 8 A Critical Assessment of Proposed EU-ACP
Economic Partnership Agreements

Oliver Morrissey, Chris Milner and Andrew McKay

1. Introduction

The European Union (EU) has a long history of providing trade preferences to
selected developing countries – the African, Caribbean, and Pacific (ACP) for-
mer colonies – under the Lomé conventions. Irrespective of the question of how
beneficial these preferences actually were (they are viewed by many commenta-
tors to be of limited value, e.g., Langhammer, 1992), a core feature was that they
were granted to selected countries that were not required to grant trade conces-
sions to the EU in return. Such non-reciprocated preferential access to the EU
for ACP countries was challenged under the rules of the World Trade Organiza-
tion (WTO). Preferences granted to specific developing countries can only be
maintained in a General Agreement on Tariffs and Trade (GATT)- or WTO-
consistent manner if there is reciprocity. In order to continue preferences, the
EU has proposed introducing reciprocity through the establishment of a series
of economic partnership agreements (EPAs), under which the EU and regional
groupings of ACP countries offer reciprocal trade preferences to each other. The
principle of EPAs is included in the Cotonou Agreement for future EU-ACP re-
lations. Negotiations between the EU and ACP regional groups formally started
in 2003 and enter what is intended to be the final stage in March 2007, with a
view to agreements being implemented from 2008. Therefore it is timely to con-
sider the potential impact of EPAs on regional groupings of ACP countries as, if
agreed, they are due to be phased in after 2007.

Three features of the Cotonou Agreement are of particular relevance. First, the
EU argued from the outset of the negotiations that groups of ACP countries form
regional integration arrangements among themselves and these regional groups
negotiate with the EU. The EU did not want to negotiate an EPA with the ACP
as a whole nor with individual ACP countries. Second, the EPA is reciprocal so



Mold - [Link] 199 15-6-2007 14:37:43

 the regional ACP groups ultimately have to remove tariffs and barriers to imports
from the EU. Third, EU aid programmes will be linked, in an as yet unspecified
way, with the EPAs (there is also a promise of a development agenda and that in-
vestment from the EU will be attached). The analysis in this chapter concentrates
on the first two of these features.

At face value, EPAs offer little to ACP countries. Least-developed ACP coun-
tries already qualify for preferential access under the EU’s Everything But Arms
(EBA) initiative. These least developed would be granting tariff-free access to
the EU in return for preferences to which they are already entitled, although the
conditions of access may be less restrictive and more assured under an EPA (the
EBA, for example, could be unilaterally revoked by the EU). Developing ACP
countries, however, are not entitled to preferences and are, to the extent that they
compete in the same products, at a disadvantage relative to least-developed coun-
tries. For such countries, preferential access to the EU plus any net benefit from
regional integration would have to be weighed against the cost of giving the EU
preferential access to their own regional market. The approach outlined in sec-
tion three is designed to evaluate these effects.

The ACP countries appear fully aware that EPAs offer questionable benefits
to them and were reluctant at the outset to begin active negotiations, origi-
nally scheduled to start in September 2003. The Pacific islands argued that they
would not be ready to begin negotiations until November 2004 and the Com-
mission accepted that they face particular capacity constraints. The Caribbean
probably made the most initial progress of any ACP region by at least putting
in place some regional negotiating machinery. The Economic and Monetary
Union of West Africa, (UEMOA) and the Economic Commission of West Af-
rican States (ECOWAS) actually walked out of the initial negotiations in late
2003, and demanded an EU aid commitment up-front before re-entering nego-
tiations. A specific problem for most African countries is that they do not yet
know which countries will come together to negotiate as a region with the EU.
Most existing regional trade agreements in Africa are, at best, weak. Thus, in
addition to the administrative costs of negotiating with the EU, African coun-
tries face additional costs (economic and political) of forming effective regional
trade agreements. A further complication has been that some African countries
are members of more than one regional grouping that is negotiating with the
EU, e.g, Tanzania and Zambia are potentially members of the East and South-
ern Africa Region (ESA) and the Southern African Development Community
(SADC).

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 200 15-6-2007 14:37:43

 The EU has acknowledged that ACP countries needed to assess the potential
impact of an EPA in order to be prepared for negotiations. The European Com-
mission financed and commissioned studies of the impact of EPAs on ACP re-
gions. As completed studies are not publicly available, there are few assessments
in the literature of the impact of EPAs. Karingi et al., (2005) use a combination
of general and partial equilibrium modelling and find that the potential impacts,
especially in terms of revenue foregone and adjustment costs, will be costly for
African countries. This paper draws on the work of a much earlier study, also
commissioned by the European Commission for a sub-set of the negotiating re-
gions (see McKay et al., 2000), to provide a relatively simple and tractable partial
equilibrium method to identify the trade, revenue, and welfare impacts for indi-
vidual countries. A more detailed version of the empirical evidence discussed here
can be found in McKay et al., (2005).

The aim of this chapter is to consider the trade and welfare implications of the
EPA proposal for ACP countries, both from first principles (i.e. in theory) and
empirically. For the former we extend the analytical framework used by Pana-
gariya (1998) to investigate the effects on the ACP members of a regional integra-
tion agreement (RIA) of moving from non-preferential to preferential treatment
of EU imports. For the empirical analysis, we apply the analytical framework to
estimate the trade and welfare effects on the East African Co-operation (EAC)
comprising Kenya, Tanzania, and Uganda. The EAC countries signed a treaty
to establish a Customs Union in November 1999 and agreed to negotiate as a
block (within the WTO and with the EU) in April 2002, although subsequently
Tanzania, at least, has indicated its intention to negotiate with other Southern
African countries. The EAC captures a feature common to most potential RIAs
amongst ACP countries in that most members are least-developed whilst at least
one member is classed as a developing country (Kenya in this case). Thus, our
results can be considered as illustrative of a more general case.

The remainder of the chapter is organised as follows. In section 2 we further

explore the origins and institutional context of the EPA proposal. Section 3 pres-
ents a simple partial equilibrium method to analyse the potential trade and wel-
fare effects of introducing an EPA between a large (EU) and a small (ACP) RIA.
This is followed in section 4 by an application of the model, with estimates of the
(hypothetical) impact of an EPA on the EAC. The estimates are indicative of the
direction and order of magnitude of effects for any grouping of ACP countries.
Finally, section 5 sets out the implications of the analysis and summary conclu-
sions.

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 201 15-6-2007 14:37:43

 2. The Nature of EPAs

A partnership agreement between the EU and 71 ACP partners states was con-
cluded in February 2000 (the Cotonou Agreement), covering various dimensions
including economic relations, aid programmes, and trade co-operation. On the
latter, the general principle of a WTO-compatible EPA arrangement for the fu-
ture was agreed. The EU applied to the WTO for an eight-year waiver to pro-
vide a transition period for the arrangement and this was granted at the Doha
Ministerial. Over this period the EU and ACP states are to negotiate and agree a
new WTO-compliant trade agreement, which would then be implemented over a
transitional period starting by 2008 at the latest. Such an arrangement could al-
low asymmetry, in other words more gradual liberalisation by ACP countries (the
EU proposed a further 10-15 year transition period before the EU could export
duty free to ACP countries in an EPA).

The EU’s long-term aim to establish free trade areas with the ACP regions
as a replacement for the Lomé agreements was to be approached in several
stages. A key stage was the negotiation of EPAs with groups of ACP coun-
tries already engaged in a regional integration process. The Cotonou Agree-
ment formed the basis for negotiation over the period 2000-2005 to set up
the different regional partnership agreements. As regards the long-term aim of
EPAs, GATT’s article XXIV does allow for the negotiation of customs unions or
free trade areas that offer preferential treatment to member countries, subject to
certain conditions. The most important of these is that the free trade area should
‘eliminate duties and other restrictive regulations of commerce ... on substantially
all the trade between constituent territories in products originating in such ter-
ritories’ (GATT article XXIV, paragraph 8(b)).

There appeared to be no agreed definition of what ‘substantially all the trade’

means in practice. Qualitative and quantitative aspects are important. On the for-
mer, exclusion of whole sectors such as agriculture or textiles was unlikely to be
acceptable. On the latter, full liberalisation of 80-90 percent of trade between the
partners was likely to be required (although it may be acceptable for ACP coun-
tries to liberalise as little as 70 percent of trade, at least initially), but this raises
a number of measurement questions. For example, should the quantitative target
refer to the number of tariffs or value of trade before or after liberalisation?

Any interim arrangements leading up to the full establishment of the free trade
areas ‘shall include a plan and schedule for the formation of such a customs union
or such a free trade area within a reasonable length of time’ (GATT article XXIV,

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 202 15-6-2007 14:37:43

 paragraph 5(c)). In this context, ‘a reasonable length of time’ is likely to mean not
more than ten years. This implies that if an EPA is to begin in 2007 full liberali-
sation of ‘substantially all the trade’ should be achieved by 2017. Within this time
period there do not appear to be any symmetry requirements; the ACP partner
countries can liberalise much more slowly than the EU, subject to them meet-
ing the ‘reasonable length of time’ criterion. Given the present non-reciprocity of
trade relations between the EU and ACP countries, some asymmetry is likely to
be desirable (and has been accepted in principle by the EU).

However, before they begin these negotiations with the EU, the ACP countries
have, in effect, to form themselves into regional integration arrangements (RIAs).
While there are theoretical arguments that integration can contribute to growth
and development, notably by increasing the size of the market and attracting foreign
direct investment (FDI), most of the evidence for beneficial effects of RIAs relate
to integration among developed or middle-income countries (Schiff and Winters,
2003). The experience of low-income countries with integration is not very encour-
aging, with few cases of sustained deep integration, especially in Africa (Lyakurwa
et al., 1997). East Africa is a good example of the problems even where the political
will exists: Kenya is relatively more industrialised and exports manufactures to
Tanzania and Uganda, whereas the letter two export little to Kenya or each other.
This reflects the general problem that most of the benefits accrue to the largest and
richest member, while few economic benefits accrue to the poorest members. This
explains why deep integration has been difficult to achieve or sustain.

West Africa provides an example of where the difficulties are even greater. The EU
is negotiating with the Economic Commission of West African States (ECOW-
AS). However, the level of integration within ECOWAS is minimal, especially
among the Anglophone countries (the Francophone countries have fairly deep
integration among themselves). Furthermore, Nigeria is a dominant economy
while Liberia and Sierra Leone are unstable. The EU proposals for an EPA with
the region therefore are imposing a burden on the countries. Not only are they
under pressure to negotiate an RIA they may have little commitment to, but also
they have to devote the limited time of their few trade officials to negotiations
on three fronts – regional, EU, and WTO. This is a high cost given the limited
institutional capacity.

Even if all the ACP regions manage to form RIAs, there will be many negotiating
difficulties. Specifically, the requirement to liberalise ‘substantially all trade’ refers
to the RIA, but individual members may disagree on which sensitive products
should be excluded. The larger countries in the RIA have an interest in protecting

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 203 15-6-2007 14:37:44

 their markets for manufactures in the smaller countries. In contrast, the smaller
countries wish to protect whatever viable domestic manufacturing they have. The
domestic political considerations that cause strain in agreeing an RIA are exacer-
bated in negotiations of an EPA with the EU.

The EU may counter that these problems can be addressed in the long time pe-
riod allowed for the ACP countries to liberalise imports from the EU, during
which period increased aid and FDI from the EU can benefit the ACP countries.
However, it is worth noting that ten years is not really a long time for complex
negotiations. For example, negotiations of a customs union for the EAC have
progressed very slowly over the past five years (and progress in ECOWAS has
been even slower). We will return to this in the final section. In the next section
we turn to quantifying the possible welfare effect of trade integration between
particular ACP groupings and the EU.

3. Modelling Framework

The theoretical framework for analysing the economic (welfare) effect of regional
integration is well established (e.g., Balassa, 1974; Lyakurwa et al., 1997). In the
standard approach, members remove barriers to trade between themselves and
impose a common tariff on imports from outside the RIA. Two effects are of par-
ticular importance. The first is trade creation as inefficient production by domes-
tic firms in a member country is displaced by tariff-free imports by more efficient
producers in another member country. This is an economic benefit, as welfare is
increased through a more efficient allocation of production within the RIA. The
second effect is trade diversion; this imposes a welfare loss as the common exter-
nal tariff diverts trade from more efficient extra-regional suppliers to less efficient
intra-regional suppliers. In general, integration increases welfare provided that
trade creation is greater than trade diversion. As domestic producers in low-in-
come countries tend to be less efficient than producers in the rest of the world, an
RIA rarely increases welfare because ‘RIAs between small economies are likely to
be trade diverting’ (Schiff and Winters, 2003: 263). Thus, in general, integration
amongst ACP countries would not give rise to static (welfare) gains. There may
be dynamic gains if the increased size of the regional market encourages competi-
tion and efficiency gains and attracts FDI.

The situation is complicated in analysing EPAs as the RIA of the ACP coun-
tries then integrates with the (larger) EU. To analyse this situation we extend the
model of Panagariya (1998) and examine the welfare effects of an EPA from the

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 204 15-6-2007 14:37:44

 perspective of a small home country member (denoted H) of the RIA. Assume
the larger partner country (R) in the RIA has an upward sloping supply curve and
there are two extra-regional suppliers, the EU and the rest of the world (ROW),
both with infinitely elastic supply curves. The analysis is partial equilibrium in
nature, markets are assumed to be perfectly competitive, and there is perfect sub-
stitutability between imported and domestically produced import substitutes
(allowing for imperfect substitutability would probably require a general equi-
librium framework). The assumptions of perfect competition and homogeneity
are reasonably appropriate in the case of agriculture and primary products. Al-
though less appropriate in the case of manufacturers, for ACP countries fairly
standardised and undifferentiated products are common.

Assume that H and R have already formed an RIA and that it is small relative
to the EU and ROW. The possible situation is illustrated in figure 1 (for a given
product): DH represents the home country’s demand for imports, SR the partner’s
(upward sloping) supply of exports (to H), and SEU and SW are the respective ex-
tra-regional export supply functions. As the EU and ROW have infinitely elastic
supply they can supply at constant cost (prices PEU and PW respectively). In the
case of figure 1 we assume for expositional convenience that PEU > PW, there-
fore subsequent discriminatory trade policies by the RIA towards the outside
countries can have both trade-creating and diverting effects. We also assume, for
convenience, that the EU can meet all demand at PEU (i.e., SEU is below SR). Other
possibilities will be considered later.

Figure 1 Effect of an EU-ACP EPA

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 205 15-6-2007 14:37:44

 Initially, the RIA has a non-discriminatory (ad valorem) tariff (t) on extra-re-
gional imports, where PtW = PW (1 + t) and PtEU is not shown as the EU is as-
sumed for the present to be the higher cost supplier prior to the EPA. Initially,
H imports OM2 in total, with OM1 coming from R and M1M2 from ROW. For
convenience we assume no domestic production capability and can define welfare
(W’ and change in welfare denoted ΔW) by reference to consumer surplus with
respect to the import demand function, DH. Thus WRIA for H is given by the con-
sumer surplus triangle (the area below DH and above StW) plus the tariff revenue
on extra-regional imports (area a + b).

When the EPA with the EU is formed, the RIA continues to impose tariff t on
imports from ROW but allows duty free imports from the EU. The relevant sup-
ply price is now PEU with the total quantity of imports expanding from OM2 to
OM3 and imports coming now wholly from the EU. There are strictly three com-
ponents of this trade-welfare effect of the EPA: a consumption expansion effect
M2M3, a trade diversion effect M1M2, and a trade creation effect OM1. The first of
these is straightforward as the lower price (PEU < PtW) allows increased consump-
tion (with consumer surplus gain, due to this increase, of triangle e). The last two
effects deserve explanation.

In standard RIA analysis trade diversion relates to efficient extra-regional suppli-

ers being displaced by less efficient intra-regional suppliers. The EPA, however,
diverts between extra-regional suppliers; M1M2 is imported from the less efficient
EU rather than the ROW. The resource cost of this is represented by the area b,
with total tariff revenue lost by the home country being area (a + b). However,
as imports M1M2 are cheaper (PEU < PtW) there is a consumer surplus gain of
area a to add to the consumption gain of area e. The less inefficient the EU rela-
tive to ROW, the smaller the costs of trade diversion (area b is smaller as PEU is
‘lowered’ towards PW). This increases the probability of a welfare-improving EPA,
if (a + b)<(a + e), or b < e. If SEU = SW (prices converge), or if the EU is more
efficient than the rest of the world, then the EPA tends toward the ‘free trade’ out-
come. In this case there is no resource loss b and the consumption gain e is much
larger (although the tariff revenue loss is still a + b).

Trade creation, in standard RIA analysis, usually describes inefficient home pro-
duction being replaced by more efficient intra-regional production. In the case
illustrated, however, the EPA involves the replacement of imports from regional
member R by more efficient imports from the EU. The resource saving on this
trade creation (or import source substitution) effect is shown by area c in figure 1.
This and the loss in producer surplus for exporters in R (area d) allows consumer

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 206 15-6-2007 14:37:44

 surplus on this component of the trade effect of the EPA to increase by area (c +
d). This benefit (area c) is increased the less inefficient the EU is relative to ROW,
and is maximised if PEU = PW.

In the case illustrated in figure 1 we assumed the EU was less efficient than ROW
but more efficient than R. If we assume PEU < PW the situation would be different,
as initially all extra-regional imports would be from the EU. As indicated above,
there would be no trade diversion resource loss (there would be a tariff revenue
loss). The trade creation effect would depend on the position of SEU relative to SR.
Figure 1 depicts the extreme where the EU replaces all imports from R. Another
extreme would be where R is the globally efficient producer. In this case H de-
rives all the welfare gains in forming the RIA, importing wholly from R (standard
trade creation gains). An intermediate position is possible – after the EPA, R may
be able to meet part of H’s import demand, with the EU meeting the rest – but
would be difficult to identify empirically.

As is often the case with theory, the welfare implications for H of shifting from
the RIA to the EPA are ambiguous: the consumption and trade creation effects
increase welfare whereas the trade diversion effect reduces welfare, i.e., W = (c +
d + e) - b. The more efficient the EU is relative to other suppliers (ROW and R)
the more likely is the net effect to be positive. There will always be a tariff revenue
loss (a + b) but if the EU is the globally efficient producer the net welfare gain
may exceed even this loss. However, welfare is not cash and ACP governments
may expect compensation for the revenue loss. It will be convenient to assume
that the EPA includes a net addition of aid at least sufficient to cover the revenue
loss (and this loss is a useful guide to the additional aid that may be requested
in negotiations). Consequently, in the next section we focus on estimating the
welfare (trade) effects.

So far we only considered the welfare effect from the perspective of H, which can
be interpreted as the perspective of all ‘small’ ACP members of the RIA. How-
ever, there will also be a large member (R) that is likely to lose some of its intra-
regional market share and some of its domestic market to imports from the EU.
In figure 1, replace DH with DR and treat SR as domestic supply to illustrate one
such case. The trade diversion and consumption expansion effects are basically
the same, but the source substitution is standard trade creation as imports from
the EU (OM1) replace less efficient domestic production so that d is a welfare loss.
Ignoring the revenue loss, W = (d + c + a + e) – (b + d) and there is also a loss
of intra-regional exports. The net effect could well be a welfare loss, but there is
a potential benefit of preferential access to the EU (H-countries do not get this

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 207 15-6-2007 14:37:44

 benefit as we assume they are least developed and already entitled to preferential
access). Thus, ACP countries that are not least developed will have to evaluate
the benefit of preferential access to the EU and consumer surplus gains against
the costs of increased imports (loss of producer surplus and tariff revenue) and
loss of regional market share under an EPA.

4. Illustrating the Welfare Effects: An EU-EAC EPA

We use the methodology set out above to estimate trade and welfare effects of an
EU-EAC EPA on members of the EAC. This is a convenient example as it is a
‘small’ RIA, we only have to consider three countries, but has a pattern of intra-
regional and EU trade typical of many ACP regions. In 1995, the year for which
our estimates are based, the EU was their major trading partner. For Kenya, 30
percent of imports were from the EU, but less than one per cent from other EAC
countries; just over 30 percent of exports were to the EU, but almost 10 were to
the EAC. In Tanzania, 52 percent of imports were from the EU and almost five
per cent from the EAC (mostly Kenya); 40 percent of exports were to the EU
and about five per cent to EAC. The EU accounted for 30 percent and the EAC
(again mostly Kenya) for 22 percent of Ugandan imports, but the EU absorbed 36
percent of exports and the EAC four per cent.

In volume terms, Kenyan exports to the EAC were more than twice the level of
Tanzanian and Ugandan intra-regional exports combined. Kenyan exports to the
EU, however, were about equal to combined Tanzanian and Ugandan exports
to the EU. Intra-regional exports are clearly important to Kenya, while the EU
market is very important to all countries. The pattern is different for imports.
In volume terms, Tanzania imports as much from the EU as Kenya and Uganda
combined. The volume of Kenyan imports from the EAC is negligible compared
to that of Tanzania, and especially Uganda. We have the typical pattern: the re-
gional market is important to the exports of the ‘big’ country and the imports of
the small countries; the EU is the major trade partner of all countries. Results for
the EAC should therefore be illustrative of the impact of EPAs with other ACP
groups.

For convenience we assume full liberalisation of trade flows in both directions,

and as such we represent a ‘long-run’ maximum welfare impact (sensitive sectors
are discussed below). The analytical framework in the previous section could be
conceived of as the aggregate picture for a homogenous single sector economy,
where all three trade effects associated with a move from an RIA to an EPA occur

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 208 15-6-2007 14:37:44

 simultaneously. In practice there is both product and tariff rate heterogeneity to
accommodate in any application. As a result, in specific sectors there may only be
one of the trade effects illustrated in the previous sector. Given data constraints,
in particular about production and export supply conditions and elasticities
within the EAC region, we adopt a framework that distinguishes between those
sectors where the ROW is the dominant supplier and those where the EU is the
dominant supplier prior to EPA formation. We estimate three particular cases
(see the appendix for the formulae used, and McKay et al., 2000 for details).

Consumption effects only: In those sectors where the EU is globally efficient and
therefore the dominant supplier (accounts for more than half of imports) to
a particular EAC market prior to the formation of the EPA, we assume that
only consumption effects would follow from the EPA. In terms of figure 1 this
is equivalent to assuming that SW lies above SEU and that there is no competitive
regional supply capability (i.e., no SR). Let PtEU = PtW so that after the EPA PEU
= PW prevails and we estimate area e and the revenue loss relative to the existing
EU import levels.

Trade diversion with consumption effects: For those trade sectors in EAC imports
where the ROW is the dominant supplier, we are constrained by data limitations
to make further assumptions about the competitiveness of EU supply to the EAC
market. If we assume PEU < PtW then, given a constant cost technology over the
relevant range, the EPA will divert all imports for the ROW to the EU. This gives
the upper limit of the value of trade diversion. For these sectors there will also be
consumption effects. The same general approach is used here as above. As we do
not have information about where the price of EU imports may lie between PW
and PtW , we assume that on average PEU lies halfway between the two. It is this
case that is depicted in figure 1.

Trade creation with consumption effects: For those sectors where other EAC coun-
tries are not relatively minor suppliers (i.e., provide greater than 25 percent of
imports) we estimate the effects of trade creation (i.e., source substitution) with
consumption effects in analogous fashion to the trade diversion case. We assume
now that the EU is a more efficient supplier than the rest of the world (if it is
not, we would have a variant of the trade diversion case). If the duty-free supply
price from the EAC lies over the relevant range between PW and PEU then all of
the current imports from the EAC to the home country will be replaced by more
efficient production from the EU. This gives the maximum value of the trade
created for the EU by this deflection from EAC sources. In order to estimate
consumption effects in these sectors, we assume that the price from the EAC is

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 209 15-6-2007 14:37:44

 as high as the tariff-inclusive price from the EU. In this case the pre-EPA tariff
rate against EU imports provides an (upper) estimate of the extent to which the
import price can fall as a result of the EPA.

Implementation
Our EPA scenario is a relatively simple one. We use 1995 values to establish the
baseline and assume the EAC forms an RIA with zero internal tariffs (the revenue
loss on intra-regional imports from doing this is included under the trade creation
case). Then, we assume imports from the EU are allowed tariff-free. Using prevail-
ing trade patterns, we identify products in each of the three cases to derive esti-
mates of the value of trade effects due to consumption, trade diversion, and trade
creation. The corresponding revenue and welfare effects are then aggregated.

Given data availability, detailed analysis is only possible for Tanzania and Uganda
(see McKay et al., 2000). The import data is obtained from locally published
trade statistics aggregated to obtain EAC-EU and EAC-ROW trade at the two-
digit HS (harmonised system) level. Tariff data are obtained from two sources.
Figures relating to Tanzania are calculated directly from customs records as the
ratio of duty collected to total imports. For Uganda (and Kenya) we used data
from the scheduled tariff. In this sense, the Tanzanian estimates are somewhat
more reliable.

It is evident from the trade data that Kenya is the dominant intra-regional sup-
plier. For example, Kenya supplies all products where intra-regional imports by
Tanzania account for over 25 percent of the market. A similar pattern emerges
with regard to Ugandan imports from the EAC. Kenya is the source of over 80
percent of imports to Tanzania and Uganda in several commodities. It follows
that the ‘source substitution’ effects of an EPA could be considerable. This is re-
alistic for Tanzania and Uganda as their exports within EAC are not generally
of products that compete with imports from the EU. Both countries would, in
principle, benefit from the EPA by being able to avail of cheaper imports of in-
termediate and raw material inputs from the EU. The situation is different for
Kenya. In general, allowing for differences in product quality, imports from the
EU could displace Kenyan exports to other EAC members (and indeed displace
Kenyan local production).

Table 1 summarises the estimation results. In those sectors where the EU is al-
ready the dominant supplier, we allow only for the possibility of trade creation via
consumption expansion (the first set of results). There may also be trade diversion

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 210 15-6-2007 14:37:44

 Table 1 Summary of Trade, Revenue, and Welfare Effects
(Percent change relative to 1995 values)
Tanzania Uganda
a) Consumption effects only
Imports from EU 11.1 10.3
Tariff revenue - 41.1 - 16.4
Welfare (% base imports) 0.81 0.84

b) Trade diversion and consumption effects

Imports from EU 65.5 122.3
Tariff revenue - 31.7 - 44.2
Welfare (% base imports) - 2.7 - 8.7

c) Trade creation and consumption effects

Imports from EU 1.2 55.5
Tariff revenue - 0.04 - 8.5
Welfare (% base imports) -- 3.2

d) Overall effect
Value of imports 77.6 188.6
Tariff revenue - 73.2 - 69.1
Net welfare effect (%1995 GDP) - 0.5 -0.3
Notes: Values are given as percentage change relative to the base (1995) value of imports
from the EU or tariff revenue, as indicated, and of GDP in the case of the net welfare effect.
Individual values may not add up exactly to the overall totals due to rounding.

effects in these sectors. Given that maximum possible levels of trade diversion are
identified in other sectors, this will be an offsetting source of measurement er-
ror. The EPA is estimated to increase imports from the EU in these sectors over
base levels by about 11 percent in the case of Tanzania and 10 percent in the case
of Uganda. This would benefit local consumers considerably (a positive welfare
effect), but the direct loss of tariff revenue on imports (base and additional) from
the EU is considerable. The base volume of imports from the EU for Tanzania is
about twice the level for Uganda, so this could reduce Tanzanian tariff revenue
by over 40 percent. There would only be limited scope to recoup this revenue
by shifting to non-trade taxation (even if the latter were more efficient). Thus,
although welfare is increased for both countries (area e in figure 1), the revenue
loss will more than offset this.

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 211 15-6-2007 14:37:45

 The second set of results show that the largest effects are associated with diverting
to the EU trade in products for which the ROW was initially the dominant sup-
plier. Although the initial value of ROW imports of these products was similar for
the two countries, Tanzania had base imports from the EU almost twice the level of
Uganda. EU exports to Uganda more than double while those to Tanzania increase
by almost two-thirds. Our approach allows for the welfare gains from consumption
effects, but this welfare-raising trade expansion is swamped by the potential welfare
cost of trade diversion. The potential loss of tariff revenue is again very high.

The approach estimates the maximum potential for trade diversion in these sec-
tors. This potential will not be reached if the EU does not have an export capabil-
ity, or if EU suppliers experience increasing costs or a cost disadvantage relative
to the ROW that exceeds the non-preferential external tariff of the EAC. On the
other hand, if the EU is almost as efficient as the ROW, the welfare cost (area b)
may be over-stated. Note, however, that the scope for trade diversion might also
increase prior to the establishment of an EPA if the external tariff is lowered in
the process of creating an EAC customs union, and some intra-EAC trade is de-
flected to the ROW. Thus although the estimated value of trade diversion in table
1 is likely to be upwardly biased, the results certainly identify the potential for a
net trade-diverting EPA, which is welfare and tariff-revenue lowering.

The third set of results identifies the scope for trade creation involving source
substitution from less efficient EAC (Kenya in all cases) to more efficient EU
suppliers as a result of an EPA. For those sectors where there is significant intra-
EAC trade only we identify the maximum potential for trade deflection; again
a potential that will not be reached if EU suppliers experience increasing costs
or are not competitive with EAC suppliers. If the effect of the creation of an
EAC custom union – full liberalisation of intra-regional trade and changes in
the external tariff – is to increase intra-regional trade, then the scope for trade
deflection may be increased. The potential for trade deflection is particularly sig-
nificant for Uganda, given its current heavy dependence on Kenya for imports
in some sectors. Consumers would gain substantially if under an EPA there was
scope to shift to lower-cost EU suppliers. Indeed, despite a significant potential
loss of tariff revenue (almost 10 percent), the net positive welfare effect from this
source is potentially much greater than from consumption effects of tariff reduc-
tion against EU imports. The effects are negligible for Tanzania as it does not
import significantly from other EAC countries.

The final set of results reports the overall effect. Increased imports from the EU
are predicted for both Tanzania (a 78 percent increase) and Uganda (189 percent),

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 212 15-6-2007 14:37:45

 but this is associated with large potential tariff revenue losses (roughly 70 percent
in both cases). Although consumer and national welfare increases as a result of
trade creation and consumption effects, the potentially large costs of trade di-
verted from efficient non-EU sources means that net welfare in both countries is
likely to fall as a result of the static trade effects of an EU-EAC EPA.

In line with other evidence from empirical trade policy analysis the net welfare
effects are small relative to GDP – no more than 0.5 percent in either case, less
for Uganda because it benefits from trade creation. We exclude from the estima-
tion procedure those sectors where EU exports to Africa are relatively small. This
reduces the trade and welfare effects, but not markedly so. One would anticipate
similar welfare effects relative to GDP in Kenya, although in the case of Kenya
there are export losses to the other EAC members without any consumption
gains as Kenya does not import large amounts from other EAC countries.

The net effects, of course, tend to obscure larger potential distribution effects
within countries. Consumers gain significantly as a result of trade creation and
consumption effects but at the expense of local producers and in particular gov-
ernment tax revenue. As table 1 shows, the base estimates of potential tariff reve-
nue losses associated with the EPA are non-negligible. Although this is a potential,
not necessarily actual, revenue loss (in the case of Uganda, we are identifying what
could have been collected, given scheduled tariff rates on imports from the EU
rather than actual collection values), it has important budgetary implications.

Identifying Sensitive Sectors

In order to identify potential adjustment implications of an EPA, we set out the
sectors where major potential trade effects are indicated in table 2. The two ‘con-
sumption effects’ columns identify, respectively, those sectors in Tanzania and
Uganda where local producers can anticipate greater import competition from
EU suppliers – these will be sensitive sectors in the countries. The two ‘trade
creation’ columns identify those markets in which Kenyan producers might an-
ticipate greater competition from EU suppliers; this increased competition being
particularly important in the Ugandan market. These will be sensitive sectors for
Kenya. The middle two columns identify the sectors where there are the greatest
market opportunities for EU suppliers to displace ROW suppliers.

As the requirement is to liberalise ‘substantially all trade’ this allows for particu-
larly sensitive products in EAC countries to be excluded. The pattern suggests
that EAC countries would differ somewhat in the sectors they consider sensitive.

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 213 15-6-2007 14:37:45

 Table 2 Sectors Subject to Potential Major Trade Effects
Consumption effects Trade diversion Trade creation
Sector Tanzania Uganda Tanzania Uganda Tanzania Uganda
Food products   
Animal products 
Forestry products  
Mining  
Sugar *   
Manufactured food    
Beverages & tobacco  
Textiles, clothing &    
footwear
Chemicals     
Metal products &     
machinery
Other manufacturing      
Transport equipment   
Notes: A tick indicates the presence of one or more products in the sector that experience
significant trade effects.
* Sugar includes coffee and cotton, but these products are unlikely to be affected.

All may have sensitive products, although not the same ones within the manufac-
turing sectors (chemicals, metal products, machinery, transport equipment, and
other manufacturers) and Kenya and Uganda may have specific textiles, clothing,
and footwear products of concern. Only Kenya is likely to have sensitive products
in mining and food manufacturing (where it exports to the others), only Tanzania
appears to have concerns for local producers in beverages and tobacco, whilst only
Uganda appears to have concerns in sugar and forestry products. Obviously, trade
patterns have changed since our 1995 base (e.g., Uganda recently exports food to
Kenya), but this is sufficient to demonstrate that members of the EAC will each
have different views on which products should be excluded from the EPA.

Assessing the Effects on Kenya

Comparable trade data were not available to apply the empirical method for Ke-
nya. The results for Tanzania and Uganda provide a basis for qualitative compari-
son with Kenya. For instance, the pattern of Kenya’s imports from the EU and the
ROW is very similar to that of the other EAC countries. One would anticipate

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 214 15-6-2007 14:37:45

 similar magnitudes for the expansion of Kenya’s imports from the EU following
an EPA arising from consumption and trade diversion (from the ROW) effects,
with corresponding net welfare losses given the potential dominance of trade di-
version over positive consumption effects. By contrast, with Tanzania and Ugan-
da there is minimal scope for ‘trade creation’ displacement of EAC imports by EU
imports because there is limited existing penetration of the Kenyan market by
Tanzanian and Uganda suppliers, especially for products where displacement by
EU suppliers is likely. Therefore, there is no scope for consumer welfare gains in
Kenya from this source.

In addition to the import effect, in the case of Kenya there is a need to consider
export effects. The earlier analysis of import effects in Uganda and Tanzania has
established the scope for considerable displacement of Kenyan imports by EU
imports, with corresponding scope for producer losses in Kenya. To the extent,
however, that the EPA protects Kenya’s preferential access to the EU market,
these producer losses would need to be weighted against the export and producer
losses avoided by the retention of this preferential access to the EU. If the EAC
did not achieve an EPA, Kenya would only enjoy access to European markets on
GSP terms from 2005 onwards. The costs of non-participation in an EPA would
then be borne disproportionately by Kenya. Kenya has the strongest incentive to
make the EAC work so it can participate in an EPA, even if the gains from the
EPA are quite limited.

5. Conclusions

This paper has considered the static welfare or impact effects on EAC countries
of forming an EPA with the EU. Whether the net welfare effects are positive or
negative varies from sector to sector, depending on the relative production costs
of imports from the EU compared to the rest of the world and local produc-
tion. However, the approach allows one to estimate the direction of effects by
distinguishing the relative importance of three cases. First, products for which
the EU is the dominant supplier (hence globally efficient); in these cases there is
a clear welfare (consumption) gain. Second, cases where intra-regional supply is
displaced by the EU; the importing countries gain but the exporter loses. Third,
cases where the EU displaces more efficient ROW suppliers. In this case the wel-
fare effect is clearly negative, and the more so the less efficient the EU relative to
the ROW. In all three cases there will be a loss of tariff revenue, probably quite
significant.

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 215 15-6-2007 14:37:45

 Although no more than illustrative, our estimates suggest that the effect on the
EAC is likely to be adverse – a net welfare loss of up to 0.5 percent of GDP and a
loss of up to 70 percent of tariff revenue. There is no reason to consider this un-
representative of RIAs amongst ACP countries. In principle, the EU could offer
a net increase in aid to ACP countries to compensate for losses and adjustment
costs. The net welfare effect may still be negative, as the trade diversion effect (from
ROW to EU) is likely to be much greater than the consumption- and trade-cre-
ation effect. Note, furthermore, that the trade-creation gain is at the expense of
another ACP country, while the consumption gains may be at the expense of local
producers (increasing market dominance by the EU). It remains unlikely that the
static welfare effect for the ACP countries will be positive. Many of the benefits
of an EPA may be dynamic. Formation of an EPA may have beneficial impacts
by making trade-liberalisation measures undertaken by ACP countries irrevers-
ible and therefore credible (Collier and Gunning, 1995). This in turn may bring
benefits in terms of increased domestic and foreign investment. While there may
be dynamic effects, these are only potential effects and there is no evidence of such
effects being significant in RIAs among low-income countries in the past.

One should not understate the cost of the negotiating burden imposed on ACP
countries, few of which have more than a handful of trade officials experienced
in the issues and in negotiating. The most protracted and contentious part of
negotiations will be over sensitive products – those not fully liberalised in the
RIA and those excluded from the EPA. The selection of excluded products will
probably reduce the potential welfare gains from an EPA. All members will want
to protect local producers (where consumption gains are possible), and the large
member will wish to protect its regional market (where trade creation gains are
possible). It is worth remarking that in almost any RIA amongst ACP countries
there will be a ‘Kenya type’ (large) economy that will lose import share in the re-
gion to EU competition, but may (more than) offset this with increased exports
to the EU if given preferences. This will also complicate negotiations, even if it
does increase the incentive for the large country to participate. These consider-
ations imply that ACP countries should be allowed to liberalise vis-à-vis the EU
only gradually over the ten-year permitted period. This appears to have been
recognised by the EU in its discussions with ACP countries. However, it implies
that potential welfare gains from an EPA will be reduced.

The rest of the world is unlikely to stay still; ROW exporters to the ACP are
likely to want to set up similar partnership arrangements, and this could change
the welfare implications of a partnership agreement with the EU. We have aimed
to provide a tractable method, if adequate trade data are available, to estimate the

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 216 15-6-2007 14:37:45

 welfare effects on ACP countries of forming an EPA with the EU. The core con-
clusion is that one cannot assume that the welfare effects on ACP countries will
be positive; it is more likely that the static effects will be negative. This should
be taken into account in negotiating an EPA. Of greater importance, least-devel-
oped ACP countries are unlikely to gain at all from an EPA, as they are entitled to
preferential access anyway. Such countries can legitimately question the motives
of the EU in requiring them to enter into an arrangement that requires them to
make greater concessions than they are required to make under the WTO.

References

Balassa, Bela (1974), ‘ Trade creation and trade diversion in the European Com-
mon Market: An appraisal of the evidence’, Manchester School, vol. 42, no. 1:
93-135
Collier, Paul and Jan Willem Gunning (1995), ‘ Trade Policy and Regional In-
tegration: Implications for the Relations between Europe and Africa’, World
Economy, vol. 18, no. 3: 387-410.
Karingi, Stephen, Remi Lang, Nassim Oulmane, Romain Perez, Mustapha Sadni
and Hakim Ben Hammouda (2005), Economic and Welfare Impacts of the EU-
Africa Economic Partnership Agreements, Addis Ababa: UNECA, available at
[Link]/trid.
Langhammer, Rolf (1992), ‘ The developing countries and regionalism’, Journal of
Common Market Studies, vol. 30, no. 2: 211-231.
Lyakurwa, William, Andrew McKay, Nehemiah Ng’eno and Walter Kennes
(1997), ‘Regional Integration in Sub-Saharan Africa: A Review of Experiences
and Issues’, in Ademola Oyejide, Ibrahim Elbadawi and Paul Collier (eds),
Regional Integration and Trade Liberalisation in Sub-Saharan Africa (vol. 1),
London: Macmillan, pp. 159-209.
McKay, Andrew, Chris Milner and Oliver Morrissey (2000), ‘ The Trade and
Welfare Effects of a Regional Economic Partnership Agreement’, CREDIT
Research Paper 00/8, available at [Link]/economics/credit/.
McKay, Andrew, Chris Milner and Oliver Morrissey (2005), ‘Some Simple Ana-
lytics of the Welfare Effects of EU-ACP Economic Partnership Agreements’,
Journal of African Economies, vol. 14, no. 3: 327-358.
Panagariya, Arvind (1998), ‘Rethinking the New Regionalism’, in John Nash and
Wendy Takacs (eds), Trade Policy Reform. Lessons and Implications, Washing-
ton, DC: World Bank, pp. 87-145.
Schiff, Maurice and L. Alan Winters (2003), Regional Integration and Develop-
ment, Washington DC: The World Bank.

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 217 15-6-2007 14:37:45

 Appendix – Modelling Framework

As noted in the text, three particular cases were estimated.

Consumption effects only

In those sectors where the EU is globally efficient and therefore the dominant
supplier to a particular EAC market, we assume that only consumption effects
would follow from the EPA. For those sectors where the EU is the dominant
supplier we estimate the consumption effect alone (ΔMC) relative to the existing
EU import levels as:

(1)

where t = current tariff against imports from EU

= price elasticity of demand for imports
= current volume of imports from EU
= current average unit value of imports from EU

The revenue (ΔRC) and welfare (ΔWC) effects associated with this are corre-
spondingly:

(2)

(3)

Trade diversion with consumption effects

For those trade sectors in EAC imports where the ROW is the dominant sup-
plier, we assume the EPA will divert all imports for the ROW to the EU. The
upper limit of the value of trade diversion (ΔMTD) is:

(4)

where = current quantity of imports from ROW

= current average unit value of imports from ROW

 Oliver Morrissey, Chris Milner and Andrew McKay

Mold - [Link] 218 15-6-2007 14:37:45

 The tariff revenue effect (ΔRTD) due to this trade diversion is given by:

(5)

Consumption effects, assuming on average PEU lies between PROW and PtROW are:

(6)

Given the assumption about PEU, we can approximate the overall welfare W TD
impact of the trade diversion with consumption effects as follows:

(7)

Trade creation with consumption effects

For those sectors where other EAC countries provide more than 25 percent of
imports we estimate the effects of trade creation (i.e., source substitution) with
consumption effects in analogous fashion to the trade diversion case. The maxi-
mum value of the trade created ΔMTC for the EU can be estimated by:

(8)

where = current quantity of imports from EAC

= current average unit value of imports from EAC

The pre-EPA tariff rate against EU imports provides an (upper) estimate of the
extent to which the import price can fall as a result of the EPA. Thus:

(9)

In turn the combined welfare (ΔW TC) effects of trade creation with consumption
effects can be identified by:

(10)

Proposed EU-ACP Economic Partnership Agreements 

Mold - [Link] 219 15-6-2007 14:37:46

Mold - [Link] 220 15-6-2007 14:37:46
 9 Creating a Development-Friendly
EU Trade Policy

Christopher Stevens

1. Europe’s Tangled Web

The EU has a bewildering array of trade polices towards other countries – the
OECD’s most complex system in terms of the number of agreements. This dif-
ferentiation is founded in discrimination, with some import sources treated more
favourably than others. Historically, it could be claimed (contentiously, but with
some justification) that the discrimination was based on some development cri-
teria. No longer – as layer has been added on top of discriminatory layer it has
become hard to provide for the EU’s regime any simple rationale other than that
it exists. This has made it a source of international dispute: over one-quarter of
the WTO disputes between 1998 and mid-2005 that involved the EU as respon-
dent were directly or indirectly related to the country differentiation in its trade
policy.1 It also hampers the task of assessing the economic implications of any
given change to trade policy since these depend on how the complex hierarchy is
shuffled.

At present the EU is busy creating even more agreements – but there is one
instance where it has increased coherence, at least on paper. This is the new
Generalised System of Preferences (GSP), approved by the EU Council in June
2005 (European Council, 2005). Could the GSP provide a basis for a future,
developmentally coherent trade policy? The answer has a technical and a politi-
cal dimension: is it feasible to construct such a policy and would the EU (and
its trade partners) accept the challenges that this would create? This chapter
focuses primarily on the former but identifies factors that are relevant to the
latter.



Mold - [Link] 221 15-6-2007 14:37:46

 2. The Patchwork

The current patchwork reflects a process that has been underway for the past
three decades. This has involved increasingly wide liberalisation but excluding
from this one group of states and delaying its application to two groups of prod-
ucts. In both cases, the groups may soon be reduced to a core that is irreducible
without a fundamental policy change. The new GSP may produce this effect for
countries; for products it is the combination of recent liberalisation for ‘sensitive’
manufactures and the failure of European agricultural reform to include substan-
tial tariff cuts for key items that may do the same.2

The sources of EU imports currently fall in broad terms into three categories
(figure 1):
– the most preferred countries: they benefit from a variety of trade agreements
that differ in their details but provide broadly comparable treatment; they in-
clude the EU’s older preferential trade accords (e.g., the Cotonou Agreement)
and its more recent trade agreements such as those with Mediterranean coun-
tries, South Africa, and Chile, together with beneficiaries of the more liberal
tranches of the GSP (see below);
– the middle group: countries that are party to the standard GSP but to no oth-
er regime (mainly South and East Asia, the Middle East, and parts of Latin
America);
– the least preferred (mainly industrialised countries): they trade on the now mis-
named ‘most favoured nation’ (MFN) terms. 3

Over time, the size of the most preferred group has increased, mainly by coun-
tries transferring from the middle group. The size of the three groups varies from
year to year, but they are of roughly comparable size. In 2003, the countries in the
first group accounted for a little under, and the others for a bit over, one-third of
the total.4 In the 1970s the Lomé Convention linking the EU to a group of mainly
ex-colonies in Africa, the Caribbean, and the Pacific (ACP) was at the apex of a
‘pyramid of privilege’. Since then, the ACP have been joined by a host of other
states.

The complexity of EU trade policy stems from three main sources. One is the
growth of special trade regimes with Europe’s neighbours, intended either as an
alternative or as a precursor to membership. The second is the historical legacy
of special trade regimes with former colonies. Both have been affected and built
upon by the third source: a pragmatic attempt to respond to pressures put on
the EU in a way that ‘manages’ market opening to maintain greater restrictions

 Christopher Stevens

Mold - [Link] 222 15-6-2007 14:37:46

 Figure 1 Share in Total EU Import Value, 2003

Most preferred
Least preferred 30%
35%

Only standard
GSP 35%

Source: derived from UNCTAD’s TRAINS database

on countries deemed to be most competitive than on others (see Stevens, 1999,

2000, 2005; Stevens and Kennan, 2001). The WTO is central to this third source
of pressure.

3. The WTO Link

Historically, to the extent that it attempted to justify its policies in the GATT,
the EU largely followed the pattern of other industrialised countries. In the case
of policies towards developing countries it either sought a waiver or argued that
they were covered by the enabling clause under which GATT signatories agreed
in 1979 to authorise, as a permanent feature of the agreement, the granting of
trade preferences by developed to developing countries. This approach changed
as it became increasingly difficult to obtain a consensus for waivers without con-
ceding ‘favours’ to other members. Agreement of a waiver for the Cotonou Agree-
ment until 2007, for example, was among the areas of brinkmanship that preceded
the final agreement on a Doha Declaration in 2001.

One aspect of the EU’s response strategy has been to establish new accords and
to re-negotiate old ones so that they can be portrayed as falling within the ambit
of article XXIV of the GATT (for goods) and article V of the GATT (for ser-
vices).5 These permit states to form free trade areas (FTAs) and customs unions

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 223 15-6-2007 14:37:46

 (CUs) that include industrialised countries to discriminate against non-members
subject to certain constraints. Another string has been to make those tariff-re-
duction regimes that cannot be portrayed as FTAs or CUs more compatible with
the enabling clause as its meaning has been clarified through dispute settlement.
It has proved to be very difficult to marry the requirements of the enabling clause
with the EU’s pragmatic desire to offer more liberal market access to some devel-
oping countries but not to others. The new GSP represents the most determined
attempt so far.

4. The GSP

The GSP reflects the EU’s differentiation in miniature since it has provided an
umbrella for no fewer than five different regimes. The broadest regime, dubbed
the standard GSP in this chapter, applies to almost all developing countries. No
developing country (other than the richest and most competitive or pariahs like
Korea PDR and Myanmar) is offered less favourable access to the European mar-
ket than that provided under the GSP. The four other tranches (which have been
superceded in the new 2006 regime) were more favourable but had restricted
eligibility. Because of its breadth the standard GSP is frequently not the most fa-
vourable of the EU’s import regimes. Although called a ‘preference’ scheme, coun-
tries that benefit from it and no other accord fit into the ‘the middle’ section of
figure 1 and are actually discriminated against when they are in competition with
the ‘most preferred’ countries.

The creation of restricted eligibility tranches within the GSP was one of the
mechanisms whereby the ‘most preferred’ group grew and the ‘middle’ group di-
minished. Two of the four more favourable GSP tranches were widely used; they
are the ones covering the least-developed countries (LDCs) under the Everything
But Arms (EBA) initiative and a select group of countries deemed to be fighting
illicit narcotics. The other provisions, which were virtually unused, offered small
extra preferences to countries with favourable social and environmental policies.
The anti-narcotics tranche was created in the early 1990s, when it applied only
to the Andean and Central American countries. It was the subject of WTO pro-
ceedings by Brazil in the late 1990s, but these never reached the panel stage. In
2001 Pakistan was added to the list – and this provoked India to take the EU to
WTO dispute settlement in 2002 (CEC 2001).

 Christopher Stevens

Mold - [Link] 224 15-6-2007 14:37:46

 5. The India Case

The essence of India’s case was that the anti-narcotics regime violated GATT
Article 1.1 (on non-discrimination).6 The EU’s primary defence was that the
discrimination was justified by the enabling clause. The WTO Appellate Body
found in India’s favour in 2004, but included in its decision was a potentially
important detail (WTO 2004a). India had argued that in order to claim justifica-
tion under the Enabling Clause the GSP must offer ‘identical’ tariff preferences to
all beneficiaries. The Appellate Body rejected this argument and asserted the le-
gitimacy of providing different preferences provided that the difference responds
“to a widely-recognized ‘development, financial [or] trade need’...” (para. 164). The
reason it upheld the main substance of the Indian complaint was that the EU’s
justification for its anti-narcotics regime failed to satisfy this criterion: the ben-
eficiaries did not share a widely-recognised trade need that bound them together
as different from all non-beneficiaries.

Arbitration subsequent to the Appellate Body ruling resulted in the EU being

asked to amend its trade policy by 1 July, 2005 (WTO 2004b). This timetable fit-
ted in well with a planned review of the GSP. Now over 30 years old, the GSP has
been reviewed and adapted several times, most recently in 2001, and was due to
expire in its current form by 31 December 2005.7 The WTO ruling both brought
forward this review and inserted into it a search for criteria that would balance
the EU’s two conflicting objectives: to offer higher-level preferences to a suffi-
ciently wide and coherent group to fulfil the Appellate Body’s requirement, but
to keep out countries considered too competitive.

6. The New GSP

The result is that the new GSP tweaks one longstanding feature and introduces
a novel one. Between them these two changes are believed by the EU to achieve
the balance. They are:
– a revised graduation mechanism under which preferences are withdrawn for a
particular group of products once a country accounts for a pre-set share of EU
imports from developing countries; and
– a special trade regime, known as GSP+, that will be available to many develop-
ing countries (but not all of the poorest) and provide improved access to the
EU (but not as good as the access available to LDCs under the EBA).8

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 225 15-6-2007 14:37:46

 In addition, around 250 items have been added to the list of products for which
standard GSP preferences are available. Just under two-thirds of these are fish and
fisheries products, with the remainder being mainly fresh or processed fruits and
vegetables. The new products account for about one percent of EU imports from the
countries for which the extension will represent a change to the status quo.9 The main
beneficiaries seem likely to be Argentina, China, Ecuador, Russia, and Thailand.

The graduation mechanism has been adjusted to limit the value of the GSP to
one small group of countries. The GSP does not apply at all to some develop-
ing countries (such as Singapore and Hong Kong) on the grounds that they are
too rich; others that are eligible for GSP treatment on some of their exports are
‘graduated out’ on certain goods for which they have to pay normal MFN tariffs.
Under the old GSP graduation was determined by applying a complex formula
linking market share, level of development, and specialisation. Under the new
GSP a country is graduated from any section of goods in which it accounts for
more than a certain share of EU imports.10 China is graduated from the largest
number of sections (15); Russia from three; Brazil, India, Indonesia, and Thai-
land from two each; and Algeria, Malaysia, and South Africa from one.

There is also a link between the adjusted graduation formula and the new GSP+
since the latter does not apply to countries for the goods on which they have
been graduated. The GSP+ replaces the tranche struck down in dispute settle-
ment and also the two little-used regimes linked to labour standards and the
environment.11 It covers a broader range of products and offers preferences that
are a substantial improvement over the standard GSP and comparable to those
available to other ‘most preferred’ states. In order to benefit from these additional
preferences a country must have ratified and be effectively implementing 16 core
human and labour rights UN/ILO conventions and at least seven (of 11) conven-
tions related to environment and governance principles. All 27 of the conventions
must be ratified by 31 December, 2008. There is to be regular monitoring by the
EU and review of the beneficiary’s implementation record.

But that is not all – there is another requirement; one on which the EU’s hope of
meeting the rules set out by the Appellate Body may founder. Countries must also
satisfy two additional criteria (European Council, 2005: Article 9.3). One con-
cerns diversification (or the lack of it): its five largest Harmonised System (HS)
sections must not account for over 75 percent of its ‘covered imports’.12 The other
requires the beneficiary to be relatively small (in economic, not geographic terms):
the country’s covered imports must represent less than 1 percent of the EU’s total
covered imports.13 These criteria mean that some states are excluded a priori from

 Christopher Stevens

Mold - [Link] 226 15-6-2007 14:37:46

 the GSP+ regardless of whether they ratify all of the conventions. The GSP regu-
lation does not list the ineligible states, but table 1 shows the countries that appear
to be excluded on the basis of these criteria. They are a motley bunch, ranging in
income per capita from US$ 420 to US$ 8,530. Most are not sufficiently substan-
tial exporters to the EU to have fallen foul of the graduation formula.14

7. Will GSP+ Survive in the WTO?

Of particular relevance in relation to the WTO is that table 1 includes both India,
the author of the last challenge, and Pakistan, which is the only country favoured
under the old regime to be excluded a priori from the new. Because of this the
possibility of a WTO challenge is a very real one – especially from states that

Table 1 Countries Excluded a priori from GSP+

a
Country GNI per capita 2003 (US$)b
Argentina 4,220
Brazil 2,860
China 960
Egypt, Arab Republic 1,470
India 470
Indonesia 710
Jordan 1,760
Lebanon 3,900
Malaysia 3,550
Mexico 5,940
Morocco 1,170
Pakistan 420
Philippines 1,030
Russian Federation 2,130
Saudi Arabia 8,530
South Africa 2,630
Thailand 2,000
Tunisia 1,990
Ukraine 780
United Arab Emirates n/a
Vietnam 430
Sources: Data provided by the Commission; World Bank.

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 227 15-6-2007 14:37:46

 do not wish to follow the alternative route to improved market access for their
exports, i.e., an FTA.

Whether or not the GSP+ will be subject to a WTO challenge is a question that
only time will answer. Its apparent security, were there to be such a challenge, by
contrast is a question on which a reasoned opinion can be given. In its ruling the
Appellate Body gives an example of the ‘objective standard’ that could justify dif-
ferential treatment for sub-groups within the GSP. The required ‘[b]road-based
recognition of a particular need...’ that would justify such differentiation is exem-
plified by recognition ‘set out in the WTO Agreement or in multilateral instru-
ments adopted by international organizations...’ (para. 163). This statement ap-
pears to confirm the legitimacy of the special tranche for LDCs under EBA since
the least developed is a recognised grouping. But does it extend to GSP+?

Whilst a plausible case can be made that the conventions that eligible countries
must accept have such recognition, the same does not appear to apply to the di-
versification and smallness criteria. There is no obvious developmental or trade
link that binds either the countries excluded from GSP+ or those included other
than the diversification and smallness criteria. These are sui generis: they are not
used by any other trading blocs or in any other context by the EU. Some wealthier
developing countries are eligible for GSP+ (if they implement the conventions)
whilst poorer ones are excluded. For example, five of the countries listed in table
1 are ‘low income’ according to the World Bank’s definition while many poten-
tial GSP+ beneficiaries are not. Indeed, five potential beneficiary countries are
wealthier than any of the states listed in the table.

A similar lack of coherence is evident in the transition regime. Whilst most

countries had to apply for GSP+ by 31 October, 2005 in order to receive, if
eligible, the benefits from January 2006, some received the preference immedi-
ately on a provisional basis even before they applied (European Council, 2005:
Articles 10.1(1) and 10.3). Fourteen states are listed in the regulation as ‘already
fulfil[ing] the criteria ... at the time of entry into force’ (Preamble: 8) and will
receive the preference provisionally on entry into force – subject to their subse-
quent application. Yet three of these states appear not yet to meet the criteria
in terms of convention adoption, whilst others that have done so are excluded
from the list.15

The real justification appears to be that this provisional arrangement applies only
to the beneficiaries of the superior tranches that GSP+ supersedes; the special
provision is to avoid a hiatus in their terms of access to the EU market. Other

 Christopher Stevens

Mold - [Link] 228 15-6-2007 14:37:47

 than Pakistan no state that was a beneficiary of the old tranches is excluded from
the list. All except two (Georgia and Mongolia) were beneficiaries of either the
anti-narcotics or the labour rights tranches of the old GSP. By contrast, states
that appear not only to have signed but to be implementing the conventions, such
as Seychelles, are absent.

8. The GSP as an Umbrella

If the new regime were to survive a challenge at the WTO (either through a
favourable verdict by the Appellate Body or by default in the absence of a com-
plaint) it could result in a considerable change to the EU’s de facto, if not its de
jure, policy coherence. Seven of the 21 states listed in table 1 already have bilateral
trade agreements with the EU ( justified under WTO Article XXIV). If GSP+
were widely adopted the effective result could be that the polarisation resulting
from the gradual increase in the most preferred and the reduction in the middle
group would be complete: all developing countries other than the remaining 14
states in table 1 would have very similar and favourable access terms.

The requirements
How realistic is it to think that the new GSP could become an umbrella under
which the EU’s multifarious schemes could be developmentally integrated? On
the one hand the case with India demonstrates the need and provides the pos-
sibility for the GSP umbrella. The ruling of the WTO Appellate Body has con-
firmed:
– not only that the EU’s existing preferences within the GSP (apart from those
for LDCs) are illegal,
– but also that differentiation within the GSP is acceptable
– provided it is related to objective and internationally accepted differences in
developing country circumstance.

To become acceptable the GSP+ would need to be altered in two (not neces-
sarily compatible) ways. It would need to be made more attractive to countries
currently treated better, as well as sufficiently attractive to dissuade others from
challenging it in the WTO. The ACP countries form the most substantial group
for which enhancement of the GSP+ would be necessary to make it attractive; for
them a suitably enhanced version would be an interesting option. This is because
the ACP’s current preferences under the Cotonou Agreement are vulnerable to
challenge in the WTO and the ACP are in the process of negotiating a new re-

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 229 15-6-2007 14:37:47

 gime based on Economic Partnership Agreements (EPAs) (see chapter 8 of the
present volume).

In 1975, when the first Lomé Convention was agreed, the ACP were at the apex
of Europe’s trade hierarchy and accounted for over 6 percent of the EU’s trade
with the rest of the world; the group was second only to the Mediterranean as a
regional partner from the developing world. Three decades later, the share is less
than half this level. The sharpest fall in the ACP’s share of EU trade was in the
late 1980s and 1990s; it has since stabilised (figure 2). This fall has coloured the
EPA debate. Unfortunately, it does not reflect a diversification of ACP trade to-
wards partners other than Europe (which would be a healthy trend): ACP trade
with other countries mirrors that with the EU. Africa’s share of global trade, for
example, has fallen from about five percent in the 1960s to less than two percent
now.

Figure 2 EU Trade with the ACP as a Percentage of Total Extra-EU Trade, 1988-2003

5.0%

4.5%

4.0%

Imports from ACP

3.5%
Exports to ACP

3.0%

2.5%

2.0%
1988 1993 1998 2003

Source: derived from Eurostat data

* See file EU EU-ACP [Link] for underlying data

As the ACP’s commercial importance to the EU has declined, so has its stand-
ing in the trade policy hierarchy. In many cases the EU treats imports from the
ACP the same as those from the many other highly preferred states and, in a few
cases, worse. Even so, the GSP+ does not provide equivalence on all products,
so it would need to be improved to make it an acceptable alternative to EPAs for
some of the ACP. A basic requirement for a GSP providing treatment equal to

 Christopher Stevens

Mold - [Link] 230 15-6-2007 14:37:47

 Cotonou is that it cover all of the products that the ACP currently export to the
EU with a preference. A second, practical requirement concerns the relative treat-
ment of the ACP and their competitors.

9. Improving the GSP for the ACP

The most obvious route for creating a regime under the GSP that is equivalent
to the Cotonou provisions is to extend GSP+. Two changes would be needed to
GSP+:
– to include in its ambit all products that the ACP export to the EU now or in
the foreseeable future;
– to improve access terms to the Cotonou level in any cases where GSP+ is cur-
rently deficient.

Table 2 summarises the scale of the task, which is modest. It classifies the most
significant ACP exports to the EU (accounting for 94 percent of the total) ac-
cording to the EU’s trade regime. Seventy five percent are unproblematic: they
are already given duty-free treatment either under the EU’s MFN tariff or under
the standard GSP. A further 16 percent are already covered by the new GSP+
and, except for four items, are given duty-free access.16

Table 2 Non-LDC ACP exports to EU, 2003

Value ($ bn) Share
Total 23.3
‘Significant’ items a 22.0 100.0%
Of which:
MFN zero 15.4 70.2%
Standard GSP zero 1.0 4.7%
b
Standard GSP not zero (GSP+ zero ) 3.4 15.7%
Not covered by GSP or GSP+ 2.1 9.5%
Note:
(a) Any item accounting for 5 percent or more of any individual non-LDC ACP country’s total
exports to the EU in 2003 (89 items) or not meeting this criterion, but which the 36 non-LDC ACP
countries in aggregate exported to the EU to a value of $10 million or more in 2003 (105 items).
(b) Other than 4 items – see footnote 16.
Source: UNCTAD, January 2005

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 231 15-6-2007 14:37:47

 It is these four items plus the remaining 10 percent that require further attention.
Giving these products duty-free status in GSP+ would also improve the access
to the EU of other scheme beneficiaries. This would spread the gains but might
also lead to preference erosion for the ACP. Clearly, the EU should not agree to
simply freeze current trade policy in order to maintain the ACP margin of prefer-
ence. But it is not sensible to use considerable political capital to extend GSP+ if,
in so doing, ACP preferences are entirely eroded.

In most cases the inclusion of these products in GSP+ would not significantly
erode ACP preferences (table 3). This is because some competitors will either

Table 3 Potential for Preference Erosion

Product description # ACP Liable to
(HS6/CN8 code) exporters to erosion? b
EU a
Beef (02013000, 020230) 9 No
Bananas (08030019) 14 Yes
Oranges (ex 080520) 11 No
Fresh table grapes (ex 08061010) 3 Yes
Brown rice (10062098) 3 No
Wheat/meslin flour (110100), malt (110710) 1 No
Sugar (17011110/90, 170199), molasses 17031000, 170390) 27 No
Rum (22084051) 7 No
Rum (22084099) 9 Yes
Residues of wheat (230230), preps used in animal feed (ex 1 No
230990),
Salts (250100) 7 No
Aluminium oxide (28182000) 2 No
Skins of sheep/lambs (41051010) 4 Yes
Skins of sheep/lambs (410530), skins/hides of goats/kids 11 No
(41062110/90, 41062290)
Unwrought aluminium (76011000), aluminium alloys 7 No
(760120), zinc (79011100)
(a) Exporter/product combinations.
(b) ‘No’ denotes either that no main competitors (i.e., non-LDC, non-ACP GSP beneficiaries
supplying 10 percent or more of the EU market in 2003) currently have access that is the
same as or better than the ACP, or that any that do are not eligible for GSP+. ‘Yes’ denotes
that some or all competitors whose access is currently worse than the ACP’s will be eligible
for GSP+.
Sources: UNCTAD, January 2005; UK Tariff 2005

 Christopher Stevens

Mold - [Link] 232 15-6-2007 14:37:47

 be excluded from GSP+ or already enjoy duty-free access (now or within a few
years) under one agreement or another. The main problems will be with sugar,
bananas, and rum – all of which face serious difficulties regardless of the future
EU-ACP trade regime. Until more is known about the way in which these dif-
ficulties are to be handled – and, crucially, which ACP countries decide not to
join EPAs – it is not possible to determine whether or not any ‘solution’ may be
accommodated under a GSP+ umbrella.

Extending the product coverage of GSP+ is not sufficient. Cotonou is a negoti-

ated agreement (as will be any EPA). The GSP is an autonomous EU action:
not only can it be reversed at any time, but the new regime has created great
uncertainty over what will happen in 2008. Any acceptable reform would need
to introduce certainty and dispute settlement into the GSP+. There are ways
to achieve this. Some involve parallel action in the WTO. The GSP tariffs, for
example, could be bound into the WTO given that the Hong Kong Declaration
of November 2005 on duty-free and quota-free access for LDCs has broached
the principle of tariff binding at levels other than MFN levels. Or a link could be
made with Cotonou, to provide the ACP with a contractual guarantee that the
EU’s tariffs would not exceed the GSP+ level.

10. Conclusions: The Economic Effects

If it were politically feasible to extend the GSP+ in this way it would not only
provide an alternative to EPAs for the ACP but also increase the chances of
GSP+ having a positive, trade-creating rather than a trade-diverting effect. This
is partly because the impact of the GSP+ will be determined by the number of
countries that apply for, and are accepted into, the new regime. The take-up rate
is vital because it will affect the balance between the new regime’s trade-creating
and diverting effects. The number of countries and products facing no tariff bar-
riers in the EU will increase, resulting in more trade. However countries elevated
from the ‘middle’ to the ‘most preferred’ group will find that trade is diverted to
them because they pay less import tax; they have a competitive advantage over
more efficient states that remain in the middle group.

Indeed, the economic effects could be superior to those likely to arise from EPAs.
The EU, a large economy, would liberalise substantially and quickly. Under EPAs
liberalisation by the small ACP states is likely to be partial and drawn out. This is
because the ACP will have to liberalise on only ‘substantially all’ of their imports
(which means they could entirely exclude 20 percent or so of their most sensitive

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 233 15-6-2007 14:37:47

 imports) and can defer some liberalisation for at least 12 years (and up to 20 years
if an Africa Commission recommendation is accepted).

To produce such effects, though, the EU would need to propose such a regime
and it would need to be supported within the WTO, meaning that it has at least
the tacit consent of other WTO members. And herein lies possibly the greatest
challenge. In the litigious environment that has developed in the WTO no trade
regime that offers some members better treatment than others is entirely safe.
This applies equally to EPAs (Stevens, 2000). To reduce the danger of a chal-
lenge, therefore, the EU’s strategy would need to be to move trade policy gradu-
ally along a route in which sufficient developing countries gain (or can see gains
around the corner) and therefore believe that it is in their interests not to derail
the process (Stevens, 2005). This will be a much greater political challenge: it
means providing something, at least over time, for India, Pakistan, the Mercosur,
and South East Asia. Were the EU to agree then, at last, its development policy
could become developmentally coherent.

Notes

 The absolute figures are nine out of  disputes, but three of these concerned sugar and
involved differentiation only indirectly; the complainants did not dispute the EU’s import
preferences to various developing countries, but these are linked to what was in dispute:
the volume of subsidised exports. Excluding these three reduces to  percent the propor-
tion of disputes related directly to differentiation. The cases are: DS , , , ,
, , ,  and .
 The end of the Multi-fibre Arrangement is the most notable example of the former but
there are other indicators of these trends. These include the EU’s relatively liberal posi-
tion in the Doha negotiations on non-agricultural goods and the evidence provided by
the  quota on Chinese footwear that protectionist member states are now in a mi-
nority.
 The MFN is the highest tariff that the EU may levy on imports from WTO members,
and in practice is used for non-WTO members, as well. It applies to all of the exports of
countries in the least-preferred group and to any items from other countries that do not
receive a concession under their trade accords with the EU.
 The relative shares are heavily influenced by the size of the Union and, hence, of ‘intra-
EU’ trade – which is not included in the pie. In the preceding years, when the ranks of ‘the
most preferred’ were swelled with the EU applicants from Eastern and Central Europe, it
was the largest of the three; once these states joined the EU (and therefore become even
more preferred) the share fell; the  figures on EU imports from TRAINS exclude the
new entrants.
 As with the replacement of the single regime with most of sub-Saharan Africa, the Carib-
bean, and the Pacific (the ACP) under the Cotonou Agreement with six separate Eco-
nomic Partnership Agreements.

 Christopher Stevens

Mold - [Link] 234 15-6-2007 14:37:47

  Initially India challenged all of the high-preference GSP regimes other than EBA, but
it then concentrated on the anti-narcotics regime and reserved its position on the other
two.
 The first European Community GSP was for an initial phase of ten years (-), sub-
sequently renewed for a second decade (-). The third ten-year offer was delayed
pending the outcome of the Uruguay Round, and the  scheme was extended with
various amendments until . The scheme for  –  was adopted on  January,
, the legislative acts being Council Regulation / in respect of industrial prod-
ucts and Council Regulation / in respect of agricultural products. The scheme was
revised for the period  July,  –  December,  on the basis of Council Regulation
/. The basic structure of the offer was not substantially modified until the end of
, with the adoption of Council Regulation (EC) No / of  December 
(OJ L ,  December, , p. ), which covered the period  –  and fully in-
corporated the EBA amendment. Council Regulation (EC) No / of  Decem-
ber,  (OJ L ,  December, ) subsequently extended this until  December,
.
 Under the proposed GSP+ simple ad valorem or specific duties will be suspended on all
products covered by the GSP. For items subject to an ad valorem and a specific duty, the
ad valorem element will be suspended. Duty suspensions will not apply to sections from
which any given country has been graduated.
 i.e., excluding imports from LDCs, countries that will be graduated, and those that may
already be receiving a preference because they benefit from bilateral/regional free trade
agreements with the EU.
 The Harmonised System (HS) of trade classification used by most trading blocs divides
the vast range of tradable goods into  broad sections (which are sub-divided into more
precise sub-groups). Under the new GSP countries are graduated out from any section in
which they account, on average over three consecutive years, for more than  percent (or
. percent for Section XI – which is sub-divided for the purposes of GSP graduation
into XIa (textiles) and XIb (clothing)) of the total value of ‘covered imports’ within that
section. Covered imports are all items included in the GSP that originate in a beneficiary
country, regardless of whether that country has been graduated out of the section con-
cerned.
 It is formally called the special incentive arrangements for sustainable development and
good governance. For those countries included in the special arrangements, simple ad
valorem or specific duties are suspended on all products covered by the GSP. For items
subject to an ad valorem and a specific duty, the ad valorem element is suspended.
 Additionally, the country must not have been classified by the World Bank for three con-
secutive years as high income. See note  for a definition of covered imports.
 To be calculated using the data available on  September,  for an average over three
consecutive years.
 By contrast, almost all of the graduated countries are to be found in the table: so they are
doubly disadvantaged compared to the rest.
 The three are El Salvador, Guatemala, and Venezuela.
 The four exceptions to duty-free access under GSP+ are chocolate (for which the ad va-
lorem duty is suspended but the agricultural component (AC) remains), and three shrimp
items (for which the GSP+ tariff is . percent).

Creating a Development-Friendly EU Trade Policy 

Mold - [Link] 235 15-6-2007 14:37:47

 References

Commission of the European Communities (2001). ‘Amended Proposal for a

Council Regulation Applying a Scheme of Generalised Tariff Preferences
for the Period 1 January 2002 to 31 December 2004’, COM(2001)688 final,
2001/0131(ACC), Brussels.
European Council (2005). ‘Council Regulation (EC) No 980/2005 of 27 June
2005 applying a scheme of generalised tariff preferences’, Official Journal L 169,
Vol. 48, 30 June.
Stevens, C. (1999). ‘ The EU and the Third World’, in David A. Dyker, ed., The
European Economy. Harlow: Longman.
Stevens, C. (2000). ‘ Trade with Developing Countries’, in H. Wallace and W.
Wallace, (eds), Policy-Making in the European Union. Oxford: Oxford Univer-
sity Press.
Stevens, C. (2005). ‘An Alternative Strategy for Free Trade Areas: The General-
ized System of Preferences’, in O. Babarinde and G. Faber, (eds), The European
Union and the Developing Countries: The Cotonou Agreement. Leiden and Bos-
ton: Martinus Nijhoff Publishers.
Stevens, C. and Kennan, J. (2001). ‘Post-Lomé WTO-Compatible Trading Ar-
rangements’, Economic Paper 45. London: Commonwealth Secretariat.
UK Tariff 2005. Integrated Tariff of the United Kingdom. 2005 Edition. London:
TSO.
UNCTAD. Trade Analysis and Information System (TRAINS), powered by World
Integrated Trade Solution ([Link]
World Bank. World Development Indicators Data Query ([Link]
org/data/ [Link], downloaded on 17.12.2004).
WTO (2004a). ‘European Communities – Conditions for the Granting of Tar-
iff Preferences to Developing Countries. AB-2004-1. Report of the Appellate
Body’, WT/DS246/AB/R, 7 April. Geneva: World Trade Organization.
WTO (2004b). ‘European Communities – Conditions for the Granting of Tar-
iff Preferences to Developing Countries. ARB-2004-1/17. Arbitration under
Article 21.3(c) of the Understanding on Rules and Procedures Governing the
Settlement of Disputes’, WT/DS246/14, 20 September. Geneva: World Trade
Organization.

 Christopher Stevens

Mold - [Link] 236 15-6-2007 14:37:48

 10 Between a Rock and a Hard Place –
Whither EU Development Policy?

Andrew Mold 1

1. Introduction: Raising Expectations Too High?

The chapters of this book have testified to the importance of the EU both as a
provider of foreign aid and in its broader influence upon the developing world.
The EU and its 25 members are the largest source of Western development as-
sistance, giving some 34.5 billion euros in 2004, accounting for approximately 55
percent of all aid flows in that year (EC, 2006: 1). Leaving aside the aid provided
by individual member states, the Commission is, in its own right, an important
donor, being responsible for approximately 20 percent of total aid proceeding
from the EU. All in all, as Degnbol-Martinussen and Engberg-Pedersen (2003:
125) note “the EU is a potentially omnipotent aid donor in terms of the compre-
hensiveness of its objectives, the multitude of its instruments and the distribu-
tion of its aid.” As an economic actor on the world stage, too, the EU is of crucial
importance to many developing countries as a source of trade and foreign direct
investment. This is particularly true of the poorest developing countries in Africa
and elsewhere, which continue to have (disproportionately) important economic
links with the EU. Notwithstanding the recent admission by the Commissioner
for Development and Humanitarian Aid, Luis Michel, that the EU currently acts
as “a financial giant and a political dwarf ” (cited in SID, 2005: 1), the EU is also
potentially a key actor in terms of its political sway. All this, the economic, politi-
cal, and historical dimensions – provides the EU with considerable influence. But
has it used that influence wisely? And could that influence be used more effec-
tively? Those are the fundamental questions that this book has tried to answer.

In recent years, the EU’s development agenda has evolved further. In chapter 1 we
noted that the new security-based agenda increasingly obliges the EU to embark
on a different kind of development policy. One clear manifestation of this is the
way in which the EU has become increasingly involved in peacekeeping activities



Mold - [Link] 237 15-6-2007 14:37:48

 in recent years. It is perhaps surprising to note that until 2003 the EU as such
had not mounted any foreign peacekeeping operations at all. Over the past three
years, however, it has put as many as 14 peacekeeping missions into the field,
turning Europe into one of the world’s main purveyors of peacekeeping. 2 As The
Economist (2006) recently noted,

missions such as these are a visible expression of Europe’s eagerness to play

a bigger role in the world ... if the ability to project force is now the hallmark
of an independent foreign policy, the EU could be said, at last, to be getting
a bit more bloody, bold and resolute.

At the same time, the meltdown of the bloody social reengineering project in Iraq
(the grounds of Fukuyama’s (2006) critique of US policy) has tempered views
on the ability of Western countries to intervene successfully, either politically or
militarily, in the affairs of developing countries. Certainly the chaos in Iraq pro-
vides a salutatory reminder of the limits of military force.

The EU has tended to see its relations with developing countries as more enlight-
ened than the foreign policy of the United States. In some important respects,
this is undoubtedly true: whereas the EU has put poverty reduction as the over-
riding objective of its development policy, the politics of naked self-interest are
much more evident in the US case, with far stronger links with foreign policy
goals. One particularly revealing fact is that while the EU spends the equivalent
of 20 percent of its combined defence budgets on development aid, the equiva-
lent figure for the US is only 3.5 percent (Gnesotto, 2006: 142). To borrow Nye’s
(2004) famous analogy, in its influence on the developing world, the EU clearly
prefers the approach of using ‘soft’ power (i.e. the power of persuasion by dint of
its cultural, social and political values) rather than the ‘hard’ power approach of
relying on military force, as the United States has tended to do.

But there is an important historical dimension to all this which should not be
forgotten. Understandably, the presumption that EU policy towards the develop-
ing world is more enlightened irritates many American observers. For instance,
speaking of the current situation in the Middle East Peter Suchman, a former US
foreign service officer, wrote recently in the Financial Times (2006: 8),

It is particularly inappropriate for European governments, whose colonial

intrigues in past generations and post-first World War mendaciousness in
large measure created the mosaic of failed states – Lebanon included – and
undemocratic systems that nurture Islamic extremism, to consider aban-

 Andrew Mold

Mold - [Link] 238 15-6-2007 14:37:48

 doning Israel ... Europe’s centuries of religious bigotry, anti-Semitism and
bloody persecution of its Jewish population led to the creation of Israel in
this dangerous neighbourhood.

Europeans who are studious of history and are honest with themselves will recog-
nise the large element of truth in such assertions. From Darfur to Eastern Timor,
European colonialism underlies many of the contemporary conflicts involving
failed states across the developing world. And despite revisionist attempts to prove
the contrary,3 Easterly (2006: 272) probably reflects the consensus view of histo-
rians and development professionals when he argues that “the old conventional
wisdom was correct – the previous imperial era did not facilitate economic devel-
opment. Instead, it created some of the conditions that bred occasions for today’s
unsuccessful interventions: failed states and bad government.” Nevertheless, there
is no objective reason why the EU as an institution should feel prisoner to the
history of its member states (indeed, as we shall go on to argue, this is perhaps
one of its prime comparative advantages vis-à-vis the bilateral engagements of its
member states).

Moreover, credit needs to be given where credit is due. In terms of broad strategy,
EU development policy has generally been well received. The European Commis-
sion’s ‘Development Policy Statement’ (DPS) (approved by the Council in 2000)
presented an overarching framework for EU development policy. According to
the assessment of Maxwell et al. (2004: 3),

the 2000 Development Policy correctly reflected many of the development

nostrums of the time, including the emphasis on ownership, country-led
development strategies, participation, and the strong linkage between aid
and trade issues....on many of these issues, the EU is at the forefront of
thinking, for example, on PRSPs, budget support and the mechanics of a
genuinely reciprocal partnership (at least in the case of the ACP).

Of course, one could challenge the idea that these ‘nostrums’ are in fact the right
ones (and indeed, in the final sections of this chapter, we will do just that). One
could also question the DPS in terms of thematic emphasis. In reaction to con-
cerns that the agenda had shifted since the publication of the DPS, on 20 Decem-
ber 2005 the Presidents of the Commission, Council and Parliament endorsed
a new EU development policy statement, ‘the European Consensus on Devel-
opment’. This captured much of the essence of the earlier document, but now
stressed a central role for the Millennium Development Goals (MDGs), as well
as reflecting the new prominence given to security concerns.

Whither EU Development Policy? 

Mold - [Link] 239 15-6-2007 14:37:48

 Thus overtime EU development policy has tended to become even more all-en-
compassing. It is worth recognising the difficulty of articulating a coherent de-
velopment policy when the EU has all kinds of political pressures pulling it in
different directions: meeting the aspirations of candidates for membership, giving
a priority to poverty reduction, maintaining financial support to EU farmers,
ensuring security, promoting economic links with other regions, etc. Moreover,
the agenda is not a static one – and the whole set of interests which the EU must
satisfy is in a constant state of flux. In the face of growing evidence of global
warming, for instance, one can perceive that environmental objectives are quickly
moving up the list of priorities. Mission creep is one of the major dangers for
any donor – attempting too much is a sure recipe for disaster. And, as the Di-
rector-General of the European Commission’s EuropeAid office Koos Richelle
(2005) has conceded, constant tensions exist as individual member states and the
EuropeAid compete to cover the whole range of development priorities. In such
a context, streamlining, rationalising and identifying comparative advantage for
European development cooperation would seem to be an obvious priority.

Criticism can also be made on a different level. Although in many important

areas of its activities the EU has established an honourable and principled set of
policy stances, arguably for the more crucial strategic questions, self-interest and
Bismarkean realpolitik still tend to dominate decision making. In this sense, as
Freres notes in chapter 6 it is legitimate to ask whether the European approach
is really so very different from that of the United States. In the words of Jawara
and Kwa (2004: xv), “the neo-colonial attitude ... persists – a sense that the de-
veloped world knows what is best for the developing countries, and has the right
to impose it.” And, in the context of the aggressive promotion of policies like the
EPAs, we would argue here that some current EU policies only reinforce such
impressions.

The slow pace of reform of EU development aid is similarly censurable. In 2002,

Clare Short, then the UK’s Secretary of State for International Development
memorably described the Commission as ‘the worst aid agency in the world’ (cit-
ed in Santiso, 2003: 4). Such judgments are perhaps overly harsh, and ignore the
extent to which in recent years efforts have been made to reform the EU’s aid
instruments. Moreover, the EU has a lot of potential advantages in its favour
vis-à-vis the programmes of member states – including economies of scale (in
both procurement and delivery), a stronger field presence, and a politically more
‘neutral’ stance (more on which will be said shortly). But there is no denying a
consistent underperformance in aid policy vis-à-vis the high aspirations set for it.
As Hoebink notes (2005: 156), whatever the value of such criticisms, they suggest

 Andrew Mold

Mold - [Link] 240 15-6-2007 14:37:48

 that the European Commission has at best a problem with its image on develop-
ment cooperation.

Of course, it could be argued that perhaps it is simply a case of the goals being too
ambitious. Could the EU foster a more focused, critical approach to development
aid? ‘Getting real’ is perhaps a rather crass way of putting it, but on a number of
scores, it would seem that this is exactly what the EU needs to do. It is useless,
for instance, to constantly exhort policy co-ordination and coherence in aid de-
livery if structural constraints and bureaucratic procedures do not allow this to
take place. Internally, for example, DG-Trade’s objectives (and the constituency
which it must keep happy) are very different from those of DG-Development.4
Similarly, Europe’s foreign policy has in the past been bedevilled by policy divi-
sions, the most glaring recent example being the war over Iraq in 2002-2003 (with
Britain, Spain, Italy, and several new EU members backing the war but France,
Germany, Belgium, and others coming out vociferously against it). Thus though
there is surely scope for finding more common ground on certain basic issues
of mutual interest, calls for Europe to operate with one foreign policy voice are
probably misplaced. As Holdar (2000: 74) notes, it may just be that the foreign
policy interests of the most influential members of the EU (France, Britain, and
Germany) are simply too different to be fused into any common European exter-
nal policy.

How then to live with this plethora of instruments and objectives and the appar-
ently contradictory outcomes? This final chapter makes some suggestions as to
what that more streamlined agenda might be – and where the EU can more fully
reap its comparative advantage vis-à-vis the more established perspectives of the
World Bank and IMF. We also venture to suggest that a dramatic improvement
in EU development policy may be impossible without addressing some of the
fundamental problems related to policy incoherence.

2. The Thorny Issue of Democracy Promotion

Since the inception in 1994 of the European Initiative for Democracy and Hu-
man Rights, the EU has become increasingly bold in its aspirations in the sphere
of democracy promotion. Yet there is no denying the continued existence of
quite deep fissures in the outlooks of member states towards the developing
world. One manifestation of this is the rarity of agreements between the only
two European members of the UN Security Council – France and the UK.
Another is the way in which the French polity often sees itself imbued in a con-

Whither EU Development Policy? 

Mold - [Link] 241 15-6-2007 14:37:48

 flict of interests with ‘anglophone’ countries in Africa, an attitude which some-
times seems to verge on paranoia.5 Clearly, though, such differences go beyond
a simple dichotomy between French and British interests in the African conti-
nent. Germany, Italy, the Netherlands, Spain – indeed, all European member
states – promote their own particular agenda of geographic allegiances. And
to some extent, these different spheres of interests have been intensified by the
process of enlargement to the East. A useful typology to help understand these
different sets of interests of EU member states is put forward by Emerson et
al., (2005), who identify a set of ‘syndromes and cleavages’ which permeate EU
foreign policy (table 1).

Table 1 Some Syndromes and Cleavages among the EU’s Member States
Preferences from geography Sensitivities from World War II:
 North prefers north  Germany towards Israel and Russia
 South prefers south
Sensitivities of former colonial powers: Alternative European visions:
 France and Spain towards the Maghreb  A united, democratic Europe
 Austria towards the Balkans  A powerful, controllable core Europe
Sensitivities of the formerly colonised or Alternative world views:
occupied:  New Europe Atlanticism
 Baltic and Central European states  Old Europe Gaullism
towards Russia
Source: Emerson et al., 2005: 178

These cleavages often undercut the EU’s declared democracy promotion objec-
tives, and cause more than a few problems with regards to the execution of devel-
opment policy too. An example is the way in which southern-tier countries in the
EU have often been less willing than their northern neighbours to rock the boat
and push for more ambitious reform in North Africa and the Middle East – their
proximity to the southern Mediterranean heightens their concerns over illegal
migration and instability and makes them adopt a more conservative approach. In
contrast, northern-tier countries such as Britain and Germany have pushed for a
more stringent interpretation of the human rights clause embedded in the asso-
ciation agreements with the North African and Eastern Mediterranean countries.
As a result, the EU has found it difficult to act in concert on the issue of reform.
Instead, “the European Union has often found itself captive to the lowest com-
mon denominator, and rather than launching bold initiatives to promote Middle
East reform, it has acted with excessive caution” (Yacoubian, 2004).

 Andrew Mold

Mold - [Link] 242 15-6-2007 14:37:48

 Nevertheless, there is a positive side to cleavages of this kind, in the sense that
it raises the possibility of a subtle blend of roles for both national and EU role
(Emerson et al., 2005). There have been repeated examples of member states
promoting deeper EU relations with their favourite neighbours, using their
comparative advantages in relations with these states to the EU’s advantage.
Whatever its shortcomings may be (see chapters 4 and 5), the Barcelona Process
(as its name suggests, very much fuelled by Spanish interests) is an example of
this. Another type of situation is where the member state may be politically
inhibited from championing a strong democracy promotion policy in a former
colony, but sees an advantage in the EU exploiting what Emerson et al. aptly
call its ‘historical innocence’ to pursue such policies more freely. This kind of
strategy can, for example, be seen with regard to what might be considered the
EU’s more ‘principled’ stand regarding the aftermath of the Ethiopian elections
in 2006, vis-à-vis the much more realpolitik reactions of European governments
such as those of the UK and Germany. According to Emerson et al., this type
of complementarity of EU and member states can be interpreted as a kind of
‘good cop, bad cop’ strategy, whereby the intimately friendly national leader may
persuade the partner state’s leader to understand better the case for the EU’s
harsher conditionality.6

What are the main underlying challenges for the EU in the sphere of democracy
promotion? Perhaps hitherto one of the main weaknesses of EU policy has been
the way in which it has tended to be linked excessively to the establishment of
a formal set of institutions or processes, such as support for the celebration of
elections themselves. The EU is increasingly seen as a key player in the field
of election observation. And most independent assessments consider that it is
a role that it is being carried out fairly effectively. In 2005, Election Observa-
tion Missions took place for presidential or parliamentary elections, or refer-
enda, in Afghanistan, Burundi, Guinea-Bissau, Lebanon, Liberia, Ethiopia, the
Democratic Republic of Congo, Venezuela and Sri Lanka. And, as the EU itself
declares, “in all these missions, the EU has gained visibility while becoming an
increasingly critical actor in the reinforcement of the democratic process” (EC,
2006: 8).

But a braver policy stance would be to stress the qualitative side of democracy
instead of focusing simply on how to carry out elections. Relevant here is the
important distinction made by Diamond (1996) between liberal democracy, where
there is extensive provision for political and civic pluralism as well as individual
and group freedoms, and mere electoral democracy. In the latter, civil freedoms
are less prized and minority rights are insecure. It is indeed worrying that among

Whither EU Development Policy? 

Mold - [Link] 243 15-6-2007 14:37:48

 many of the newer democracies, there are signs of democractic erosion or ‘hol-
lowing out’, settling on the form but less so on the substance of electoral democ-
racy (Burnell, 2005:188). In the extreme, there is the possibility that policies by the
EU and other Western governments to promote democracy in developing countries
might aggravate a situation whereby democratic institutions end up being noth-
ing more than an ineffective pretence, a sham – what might be termed a ‘Potemkin
democracy’, simply for deceiving Western visitors.7 One is instantly reminded of
Mobutu Sese Seko’s response to the volte face of the international community in
the early 1990s, who in a moment of post-Cold War fervour, suddenly insisted on
‘democratisation’ – he first asked how this process of democratisation should be car-
ried out, and when it was explained to him that this should entail the formation of
political parties, he hurriedly set about forming literally hundred of political parties
under the epithet ‘multi-Mobutism’! More recent examples are not difficult to find
either. As Santiso (2003: 13) notes, many new and restored democracies have ended
up in an uneasy stage of democractisation: while possessing the formal attributes
of democracy, the modes of governance tend to exhibit resilient autocratic features.
Moreover, in recent years, democratically elected autocrats have displayed greater
sophistication and bluntness at rigging elections, as the examples of Peru in 2000,
Zimbabwe in 2002, and Ethiopia in 2005 arguably show. As argued by Roderick
Pace in chapter 4, such practices are widespread in North Africa too.

A further, but fundamental, consideration is that democracy only takes on a realis-

tic character if it results in significant changes in the overall distribution of power
(Rueschemeyer, Stephens, and Stephens, 1992). As Pace notes in chapter 4 of the
present volume, “gestures of political liberalisation do not necessarily mean anything
unless real powers are transferred from current political elites to democratically ac-
countable institutions”. But in the modern world, such shifts in the power balance
may be becoming even more difficult: in a global economy, with many interactions
with international organisations (the international financial institutions, IFIs), the
donor community, multinational corporations, and other constraints on national
politics, it becomes increasingly pertinent to ask whether true democracy is ever
attainable, in the sense of empowering individuals to control decision-making pro-
cesses? Despite, for example, the remarkable vibrancy of autochthonous NGOs in
countries like Bangladesh,8 it has still been compatible with high levels of poverty. It
would seem that we are, in other words, still a long way from attaining a new ‘Great
Transformation’ in the developing world, in the sense of a political transformation
which empowers poor people (Stewart, 2006).

Perhaps key to all this is the realisation that democracy is not a set of institutions,
it is a mindset. And it took many centuries to cultivate in European countries and

 Andrew Mold

Mold - [Link] 244 15-6-2007 14:37:48

 suffered many setbacks.9 Reaching a political compromise (rather than adopting
a winner-takes-all mentality) is surely one of the most important lessons to be
learned for developing countries aspiring to establish a true democracy. If the EU
spent more time reflecting on ways of helping to promote this, rather than focus-
sing simply on the putting in place of the right institutional mechanisms, a much
more effective pro-democracy policy might be devised. An alternative approach
for the EU then would be to increase the support given to strengthening the more
qualitative side of democracy – civil society, the free press, union movements, etc.
– any counterbalance to the ‘constitutional power’ of the state. As Nancy Bird-
sall (2005: 23) has argued, donors need to end their apolitical approach. This is
particularly critical in the case of pro-poor reforms, since they usually undermine
powerful interests and have weak domestic constituencies. Ultimately, it may be
that only when developing country recipients have more voice (and votes) in the
major institutions will they assume real ‘ownership’ of pro-poor economic and
political reforms donors wish to support. Part of the strategy would also include
greater support for parliamentary reform, which is currently practically non-ex-
istent (Santiso, 2003: 9).

Yet evidently the EU has been reluctant to push such an agenda very hard. The
whole budget for supporting the European Initiative for Democracy and Human
Rights in 2007 was only 126.7 million. External observers have noted that the
Commission tends to take a technocratic approach (as have other donors), focus-
ing on limited issues such as the capacity of government administrations to han-
dle management of public finances, rather than a political approach, for example
by supporting the democratic oversight role of parliaments (Auclair, 2006). In
North Africa, for instance, so far only a small number of projects have been aimed
at institutional reform, and the EU has resisted directly funding parliaments,
political parties, or trade unions. Following tensions with Mediterranean govern-
ments over some MEDA programming, the MEDA II political funding became
more geared towards the less controversial areas of women’s and children’s rights.
In fact, only a small percentage of MEDA funding directly targets democracy
promotion; the vast majority of its funding is more closely oriented toward a tra-
ditional development mandate (Yacoubian, 2004). In chapter 7, Crawford makes
a similar point regarding EU democracy promotion in Ghana.

In all fairness to the European Commission, it needs conceding that such a path
is not unproblematic. In cases of particularly fragile societies, the danger that a
more overtly political policy of supporting pluralism could degenerate into chaos
is of course a real one, but in the final resort it is the only long-term way to build
a properly functioning democracy. In her polemical tract ‘World on Fire – How

Whither EU Development Policy? 

Mold - [Link] 245 15-6-2007 14:37:49

 Exporting Free-market Democracy Breeds Ethnic Hatred and Global Instabil-
ity’, Amy Chua (2003: 198) notes that there is always an inherent instability in
a combination of free markets and democracy. This is because every one of the
Western democracies has alleviated the potential conflict between the rich few
and the poor many through a host of devices, past and present, such as exten-
sive social safety nets and redistribution, gradual expansion of suffrage, upward
mobility, and even racism. To be sure, such systems have suffered periodic crisis
(what Habermas (1973) termed the ‘legitimation crisis’). But as Chua rightly
observes,

It is important to recognise that as we export free market democracy to the

non-Western world, that many of these stablising devices do not exist in
the developing world, that some of them are unsavoury, and that others are,
practically speaking, unreproducible.10

An additional consideration is that, because so much is at stake for opposition

parties, there is a great need for responsible behaviour on the part of donors –
giving out false hopes to the opposition can be extremely dangerous. For instance,
during the 2005 elections in Egypt the Muslim Brotherhood became emboldened
by statements of both EU and US officials, insinuating acceptance of the results
of a democratic process even if it brought Islamists to power (generally speak-
ing, the Brotherhood’s leaders and members have demonstrated a commitment
to a non-violent, reformist approach to Islamism) (El-Din Shadhin, 2005: 124).
But the electoral process was marred by many irregularities, including the arrest
of hundreds of Brotherhood members, and the crackdown on dissidents by the
Egyptian government was hardly commented upon by outside observers, giving
the impression that they had been subsequently abandoned to their fate.

Ethiopia provides another case study on these dangers. Encouraged by foreign-

ers’ support, and with an economic agenda much closer to what the EU or US
might like to see (a programme of economic liberalisation and privatisation of the
land), during the 2005 parliamentary elections the opposition coalition Kinijit
felt that it was bargaining from a position of strength. But when the crackdown
came, in the wake of allegations of massive election fraud committed by the ruling
party and subsequent street protests, Western governments were nothing if not
subdued in their criticism of the Ethiopian government. In fact, as noted earlier,
only the European Commission offered staunch criticism of the government’s
tactics. The recent experience of elections in Ethiopia and Uganda, two previous
‘darlings’ of the international aid community, leave another important lesson for
donors: aid for democracy also needs to take far more seriously how to help de-

 Andrew Mold

Mold - [Link] 246 15-6-2007 14:37:49

 velop ‘exit strategies’ for entrenched parties and leaders. Elections are useless un-
less the existing authorities feel comfortable about the possibility of subsequently
abandoning power.

To sum up, as pointed out by Gordon Crawford in chapter 7, unfortunately on

democracy promotion the large gap between rhetoric and practice is evident for
all to see. And donors’ professed new ‘pro-democracy’ focus has not been sup-
ported by actual aid flows (Brown, 2005).11 From this point of view, it could be
argued that the problem is not the policies themselves, but rather the exaggerated
claims made for EU policies. The rhetoric needs to be toned down and practical
political engagement stepped up if policies are to be made more coherent on this
sensitive issue.

3. The Controversial Issue of Aid Conditionality

What about wider questions related to policy conditionality? Despite exhaustive

studies in the past that have tended to show aid conditionality to be ineffective, 12
conditionality is still extremely popular among the donor community. Condi-
tionality has been used extensively in order to ensure that financial aid is used to
pursue the objectives that donors consider legitimate. Are constraints on actions
always a bad thing? Clearly not – if a country suffers from a brutal dictator, or
there is the suppression of basic liberties, a constraint on action is clearly to be
welcomed. The problem should be distinguished, however, from basic freedoms
to conduct economic and social policy in a way that is compatible with develop-
mental goals. The problem is that once it is accepted that donors/finance provid-
ers may act to constrain government actions in certain fields (e.g., in defence of
political rights), how can we guarantee that they won’t do so in other fields? Can
they be trusted to act with self-discipline in this sense? The degree to which ex-
cessive conditionality can be counterproductive has been much discussed in the
literature. As Chambers (2005: 39) has noted,

Now, to a degree that during the 1960s would have been vilified as gross
neo-colonialism, in many small and low-income countries – especially in
sub-Saharan Africa – lenders and donors not only fund much government
expenditure (over 50 percent in Uganda, for example), but also call many of
the policy shots.

Edwards (1999: 118-120) uses the ‘sticks and carrots’ metaphor and notes that
there is some evidence that conditions can influence economic policy more than

Whither EU Development Policy? 

Mold - [Link] 247 15-6-2007 14:37:49

 social and political change, and that ‘positive’ conditions can work (the carrots)
better than ‘negative’ ones (the sticks). Nevertheless, overall the links between
outside influence, internal compliance, and tangible results on the ground are
weak. Moreover, where the countries are large and their dependence on aid flows
relatively minor (as in the case of countries like China or Indonesia), conditional-
ity is a fairly futile exercise. In other cases, where the implications of abandoning
a country to its fate are simply too onerous for the international community to as-
sume (as was the case with Mexico with its bailout by the IMF after the financial
collapse of 1994, or perhaps as in the contemporary case of Ethiopia in the horn
of Africa, where the country is considered as a bulwark of stability in an oth-
erwise conflict-ridden, terrorist-infiltrated region), conditionality will not work
under any circumstances. This effectively means that conditionality is only really
applied to countries too weak to resist – hardly a fair application of development
principles. In this context, in recent years there has been some recognition of the
need to tone down the requirements placed on developing countries – hence a
greater emphasis on the importance of broader budget support by agencies like
DFID and IFIs like the World Bank, with some donors (like Canada) abandon-
ing conditionality altogether.

In Africa at least, the rising importance of Chinese influence is rapidly changing

perceptions over conditionality. Whereas Western analysts and governments tend
to see the entry of China as undermining their efforts to ‘discipline’ certain ‘errant’
governments, others see it as a promising new, more workmanlike, relationship
between African governments and donors. Indeed, this would explain why African
countries have been so accommodating to the overtures of the Chinese in the con-
tinent – there are no political conditionalities attached, and consequently African
countries know (or at least think they know) where they stand. While it is untrue
to say that the Chinese have not expressed concerns over how effectively their aid
is used,13 China has been accused of turning a blind eye to human rights abuses in
some African countries and of refusing to lay down governance conditionalities on
its African trading partners.

What is the correct path for the European Union to tread on these matters?
There is no easy answer to these questions, and to pretend otherwise would be
intellectually dishonest. In terms of democratic conditionalities, it is perhaps not
too bold to assert that people in many developing countries simply do not believe
US or European overtures about their wishes to strengthen democracy in devel-
oping countries (particularly in the Middle East) – when strategic interests come
into play (as they have arguably done in the case of Ethiopia, where concerns
over human rights abuses have generally been put aside in favour of being able

 Andrew Mold

Mold - [Link] 248 15-6-2007 14:37:49

 to count on the Ethiopian government as an important ally in the ‘war on ter-
ror’), the Western countries revert to form, and conveniently forget conditional-
ity. The current US administration has perhaps been more blatant on this score
than the EU, and it could be argued that the EU needs to distance itself from the
US stance and pave a more independent, principled position for itself. Detailed
conditionalities clearly do not work. But in cases where a government is clearly
abusing human rights and its commitment to poverty reduction is questionable,
the EU needs to act boldly, and make greater efforts to ensure that its member
states work in unison on these issues.

4. What is Motivating the Economic Partnership Agreements?

What can we sum up about the economic dimensions of EU relations with the
developing world? According to Holdar (2000: 73),

The historical development of EC aid programs and the geography of EC

member states’ aid shows that the EU lacks a consistent strategy to guide
its and the EU-15’s relations with aid-recipient countries. The EU still acts
primarily as a customs union in its relations with Third World countries
(trade and aid issues are closely linked), and it is a mix of the national inter-
ests of member states that guides the distribution of EU aid, a mix related
to changes in the relative power of member states within the Community.

Is this rather harsh judgement justified? Certainly, some of the evidence that we
have reviewed in this book would seem to lend support to this view. Mold notes
in chapter 5 that in its dealings with developing countries, the European Com-
mission has tended to increasingly treat trade agreements as the principal cata-
lyst of change in forcing countries to liberalise their economies. But it might not
necessarily have been the best way of inducing developing countries to accept the
need for reform. And, as Freres observes in chapter 6, there is certainly a whiff
of mercantilism in the form of some of these agreements (e.g., the EU-Mexican
agreement).

Perhaps one of the most puzzling policies of the Commission has been its persis-
tence in pursuing the Economic Partnership Agreements with the ACP countries
(see chapter 8). The formal explanations are given by Commission officials in
an emphatic manner, but arguably are not totally convincing. It is claimed that
with the ending of the WTO waiver, the EU had no alternative but to propose
a move towards a reciprocal agreement. Yet, as Van Reisan explains in chapter

Whither EU Development Policy? 

Mold - [Link] 249 15-6-2007 14:37:49

 2, the ACP-Lome-Cotonou agreements are long-standing ones, and have never
suffered a challenge through the WTO. True, the EU has had to defend other
elements of its trade policy from challenges via the WTO dispute mechanism.
One example is its banana scheme. As Stevens points out in chapter 9, the other
was the (politically-motivated) extension of the GSP+ to Pakistan.14

It is also argued by the EU that the previous policies of non-reciprocal access

failed. This argument could be interpreted as being self-serving, and implicitly
blames the developing countries themselves for their predicament. But it does
not reflect on the responsibility of the EU itself for this outcome. As shown in
Mold (2004a), there is a whole range of reasons as to why non-reciprocal mar-
ket access may have failed to elicit the desired supply response; many of them
are tied up with the actual design of the schemes, rather than on weak supply
side capacities of developing countries themselves (though this undoubtedly
played an important role). Stevens’ argument in chapter 9 that there is a need
for legally binding non-reciprocal preferential market access agreement is valid
here. 15

In any case, economic analysis generally shows a small but unambiguously nega-
tive impact from the EPAs, no matter what methodology is used. Chapter 8 in
this book, by McKay, Morrissey, and Milner, provides a straightforward and clear
analysis of the economic risks that the EPAs imply for the developing countries
that sign them. The EU has come under a barrage of complaints from NGOs
and other research centres regarding what is seen as the unequal playing field for
the EPAs.16 Cautious, if not openly critical, assessments have come from more
mainstream sources, too. World Bank economists Laurence Hinkle and Richard
Newfarmer claim, for example, that

To realize their potential development benefits, the European Union

must truly treat EPAs as instruments of development, subordinating
its commercial interests to Africa’s development needs and effectively
coordinating trade and development assistance. The African countries
need to use EPAs to accelerate the trade and investment climate reforms
necessary to raise growth rates and integrate their economies regionally
and globally. A number of important issues will need to be addressed to
limit the development risks associated with EPAs. If these issues cannot
be satisfactorily resolved, the EPA process could end up being replaced by im-
proved preferences or even abandoned. (Hinkle and Newfarmer, 2006: 163,
emphasis added)17

 Andrew Mold

Mold - [Link] 250 15-6-2007 14:37:49

 Clearly, it makes little sense for developing countries to enter into agreements
knowing that such agreements will have a prejudicial impact on their economies.
The offer of economic compensation, in the form of mise au niveau programmes
or in whatever other shape or form, hardly provides much reassurance to devel-
oping country governments – as pointed out in chapter 5, although the absolute
amount of funds made available could be described as moderately generous, the
record of the Euro-Mediterranean Agreements in terms of disbursements is not
exactly encouraging.

Perhaps one of the most revealing incidents on the EPA issue was the conflict
that recently arose between the European Commission and the UK government.
The UK government’s Commission for Africa (2005: 287-288) came up with a
number of sharp criticisms of the EPAs. It was argued that poor countries should
not be forced to liberalise and that the EU should adopt a ‘non-mercantilist ap-
proach’ in their negotiations with the ACP countries (implying of course that this
is what it is now doing). It was suggested that individual African countries should
be allowed to sequence their own trade reforms in line with their own poverty re-
duction and development plans, and that a gradualist timeframe should be intro-
duced for any reciprocal requirements (‘over 20 years if necessary’). Furthermore,
additional financial assistance should be provided to support developing coun-
tries in building the capacity they need to trade and adjust to more open markets.
The sting in the tale was left until the end: “ The EC should commit itself more
explicitly to this development-orientated approach, rather than a ‘trade negotia-
tor’ approach that seeks concessions from ACP countries.”

The response from the European Commission was no less vehement. According
to a leaked internal Commission document,18

The UK statement represents a major and unwelcome shift in the UK Posi-

tion as it focuses exclusively on the potential risks and how the Commis-
sion must limit these and makes no mention of the opportunities. Some
recommendations move well away from agreed EU positions set out in the
Cotonou agreement and negotiating directives. Others are not compatible
with WTO agreements. This makes the statement counterproductive as it
could well make progress with EPA negotiations more difficult by reinforc-
ing the views of the more sceptical ACP states, and raising the prospect of
alternatives that are, in reality, impractical. This happened in fact already
during technical meetings with Central Africa where the UK paper had
been distributed.

Whither EU Development Policy? 

Mold - [Link] 251 15-6-2007 14:37:49

 The advocates of the EPAs in the Commission obviously feel that they are on
strong technical grounds in making these charges. But the idea that the UK has
been guilty of propagating views that have been uncritically taken up by ACP
states might be seen as patronising – the Africa Commission report was simply
reflecting concerns raised not only by members of the Africa Commission itself,
but also the many countries and bodies that were consulted during the whole
process.19

The argument in favour of the EPAs would be more convincing if the EU had
previously expended more energy trying to renegotiate the Cotonou agreement,
instead of simply presupposing the impossibility of a further extension within the
WTO. Moreover, one gets the distinct feeling that the EU is itself of two minds
about the EPAs. DG-Development, from whose remit the EPAs were trans-
ferred, is distinctly cooler about the whole project than DG-Trade. The EC’s
own mid-term Report on Sustainability Impact Assessments20 warns that EPAs
‘might accelerate the collapse of the modern West African manufacturing sector’
and could also ‘further discourage the development of processing and manufac-
turing capacity in the ACP countries in export-oriented and other industries’.
Such institutional misalignments do little to restore confidence in what seems to
be a flawed process of negotiations.

Perhaps most controversially of all is the way in which the EPAs are seemingly
being used to pursue the ‘Singapore Issues’ – investment, competition policy,
transparency in government procurement, and trade facilitation. Despite the in-
sistence of the European Commission on these issues in multilateral fora, in face
of firm opposition from developing countries they were considered too divisive
during the Doha Round of WTO negotiations and were subsequently dropped.
The fact that they have reappeared in the EPA negotiations makes many suspect
that the EU is guilty of imposing its own agenda over poorer developing countries
simply by dint of its economic and political power. As Jawara and Kwa (2004:
xxii) have argued,

Since Cancun, many have bemoaned the possible demise of multilateral-

ism, represented by the WTO; its replacement with bilateral negotiations
has been held over the developing countries as a dire threat. This is a false
choice. For the USA and EC, bilateral agreements and the WTO are not
alternatives but two parts of the same strategy. What cannot be attained
in one arena is pursued in the other, and ‘progress’ in one strengthens the
other.

 Andrew Mold

Mold - [Link] 252 15-6-2007 14:37:49

 Of course, if such interpretations of intentionality are accurate, the more power-
ful developing nations – India, South Africa, Brazil, China, and perhaps Nigeria
– may feel that they can resist the pressures from the EU or the United States.
These large countries have been able to choose the pace and degree of liberalisa-
tion, whereas small African countries generally had to take the medicine in one
go, with Latin American countries in an intermediate position (Stewart, 2006:
8). In such a scenario, what we can look forward to is not the catastrophic implo-
sion of developing country aspirations as a whole, but rather what Churchill once
called ‘the agony of little nations’. This would surely constitute a step backwards
for development policy.

5. A Deeper Dilemma with Development Policy?

On a deeper level, the difficulties currently being experienced by EU develop-

ment policy can perhaps be seen as part of a wider problem with development
policy in general and development economics (the self-appointed crown prince
of the social sciences) in particular. In chapter 3 of this volume, Marjorie Lister
documents the long-standing frustration with development theory and policy.
The patent but uncomfortable truth for development professionals is that de-
velopment policy in general has been failing, no matter where it originates from.
Over the last 50 years, aid in aggregate has not had the positive impact that many
of its advocates had hoped. Too often, what has been dressed up as progressive
development policy is in fact motivated by self-interest. And frequently it seems
that there is a mismatch, with policymaking leading to progress in one field being
offset by prejudicial policies in another. We have certainly seen elements of this
in European policymaking. Why is this?

One explanation is simply the level of the debate. Within the international de-
velopment community there are some unspoken truths that are not supposed to
be challenged – for instance, that ‘trade liberalisation is the way to accelerated
growth’, ‘democracy is a prerequisite for any kind of development’, ‘good gov-
ernance is indispensable for poverty reduction’, etc. Much of the development
discourse has also become pervaded by clichés, with words like ‘empowerment’,
‘mainstreaming’, and ‘participation’ being bandied around so frequently that they
have become emptied of their meaning.21 Many critics associate this kind of dis-
course exclusively with the Bretton Woods institutions (in particular, the World
Bank and the International Monetary Fund), but it is of course also very much
true of the European Commission (as well as many NGOs and UN bodies). In
Kicking Away the Ladder, the Korean economist Ha-Joon Chang (2002) dares

Whither EU Development Policy? 

Mold - [Link] 253 15-6-2007 14:37:49

 to challenge many of these sacred cows. His book is a passionate assault on the
economic orthodoxy as espoused by the IFIs and supported by the majority of
our leading academic institutions. In an attempt to defy the Hegelian proposi-
tion that ‘the only thing we learn from history is that we learn nothing from
history’, Chang revindicates the importance of history as a tool for learning
about development strategies. The core of the book involves an in-depth analy-
sis of historical records of the now-industrialised countries during their own
period of economic, social, and political transformation, drawing a number of
important lessons from their experience for today’s developing countries. The
principle message that Chang conveys is that, on most of the major issues, the
policy advice given to developing countries over the last two decades has not
only been fundamentally wrong, it also ignores the historical experience of the
industrialised countries themselves in their own struggle towards development.
Consequently, the policy advice they receive is not only mistaken – it is essen-
tially hypocritical.

Take the issue of free trade. There is a great need to deconstruct the myth that
the now-developed countries adopted free-trade policies during their own indus-
trial revolutions. It is no small irony that the United States (the country which
now extols the virtues of free-trade regimes more aggressively than any other)
resorted to extensive tariff protection during crucial moments in the develop-
ment of its own emergent industries. But in fact, none of the now-industrialised
countries adopted a free-trade regime in the nineteenth century, not even Britain
(whose subsequent shift in the latter half of the nineteenth century towards free
trade coincided with the country’s demise as the world’s leading manufacturing
producer). Indeed, bearing in mind the lack of other policy instruments in exis-
tence then to promote infant industry, ‘tariff protection was a far more important
policy tool in the nineteenth century than it is in our time’ (Chang, 2003: 17). Yet
through bilateral pressure and the workings of the World Trade Organization
(WTO), it is a tool which the industrialised countries steadfastly deny to today’s
developing countries.

On governance, too, there is a clear gap between the contemporary discourse and
historical reality. The historical fallacy of the good governance approach is to
imagine that the advanced industrial economies developed by first introducing
stable property rights, establishing democracy, and eradicating corruption. As
Cramer (2006: 41) points out, this argument is wrong on every count: Democrat-
ic institutions arrived very late in the day in most Western countries, and their
implementation generally preceded the economic transformation in their societ-
ies towards industrialisation. In fact, most Western states only brought in male

 Andrew Mold

Mold - [Link] 254 15-6-2007 14:37:50

 political citizenship rights as late as the early twentieth century and, in many
cases, universal suffrage was brought in only as late as the mid-twentieth century
(Hobson, 2004: 290). Moreover, it could be argued that the idea of the impor-
tance of ‘good governance’ has always been intellectually flawed (who would want
‘bad’ governance?) ‘Good’ is a loaded word and tends to be defined in terms of
hegemonic conceptions of what is deemed ‘good’. This is certainly true with re-
gard to institutional design and for a whole range of institutions (e.g., social wel-
fare, patenting laws, central banking, bankruptcy laws, securities regulation, and,
pointedly, democratic political systems) standards in the industrialised countries
were found wanting during their own surge towards development: many of the
respective laws were either non-existent or inoperative and the quality of bureau-
cratic institutions often highly questionable. In contrast, nowadays the quality
of the institutions prevalent in developing countries is generally much higher
than when the industrialised countries were at a comparable level of develop-
ment. So why all the fuss about ‘good governance’ now, unless the intention is to
set standards so high that developing countries will inevitably fail? In addition,
the needless insistence on state-of-the-art institutions in poor countries implies
a waste of scarce bureaucratic time and resources that could be used for much
better ends.22

On one level, such arguments contain little that is new: the main message is all
there to read in classic works like Eric Hobsbawm’s (1975) The Age of Capital or
Paul Bairoch’s (1971) Le Tiers Monde dans l’Impasse. But although these authors
deal with some of the same themes, the merit of the aforementioned book by
Chang is the way that it brings the arguments together in a concerted fashion
for the first time and stresses the relevance of these historical experiences to con-
temporary debates on the problems of the developing world. Chang argues that,
intentionally or not, contemporary policy advice to developing countries is im-
peding economic progress in the poorest developing countries – ‘kicking away the
ladder’, so to speak – so that developing countries cannot follow in the footsteps
of the industrialised countries. On a whole range of issues, from trade and tech-
nology policies, the establishment of democratic institutions, to the use of child
labour, the industrialised countries are now compelling developing countries to
reach standards and adopt policies that they are either incapable of meeting or, if
they do, will impede their own development.23

In fact, arguments regarding inappropriate policy advice and the excessive de-
mands placed upon developing country institutions could be taken a step further;
it could be maintained that most economists and policymakers do not even apply
orthodox economic principles coherently – they focus excessively on particular

Whither EU Development Policy? 

Mold - [Link] 255 15-6-2007 14:37:50

 issues, like international trade and the importance of liberalising capital move-
ments, and almost completely ignore other issues that may be equally or more
important from the point of view of theoretical coherence, but are consciously
or subconsciously deemed politically off-limits. Take, for instance, the incoher-
ent application of restrictions on migration. Under free market principles, in the
same way that the IFIs and orthodox economists argue passionately in favour
of the free movement of capital, they should also be vigorously lobbying for the
removal of all restrictions on migration.24 Yet, with one or two notable exceptions,
orthodox economists are usually conspicuously silent on the issue of immigra-
tion, despite quite considerable evidence that ‘mode 4’ liberalisation (i.e., the free
movement of workers) would provide benefits several times those estimated to be
derived from trade liberalisation.25

What implications does all this have for the way in which policy advice is given
and received? Neoliberal ideology (even when dressed up in a more progressive
language) has become so pervasive that institutions and countries are increas-
ingly constrained in their actions and, more seriously, their policy options (‘policy
space’). There is, in other words, a straitjacket on development thinking, and ex-
cept within narrowly defined limits, experimentation with alternative policies is
not permitted. Lots of elements that were intrinsic to the development of the
industrialised countries, like the elaboration of an industrial policy or the protec-
tionism of domestic firms, have become effectively out of bounds.

Yet one thing that supporters of the new set of policies cannot hide is the poor
economic results that it has produced. Simply on an intuitive level, there is some-
thing fundamentally wrong when mass unemployment, like the kind that exists
in many parts of the developing world today, can coexist with so many unmet
basic needs. Something is clearly failing in the economic system if the right set of
incentives cannot be put in place to provide meaningful work for so many people.
Even in terms of economic growth (the overriding objective), neoliberal policies
have failed to produce the expected results. In the two decades since the policies
were first applied, growth rates have declined significantly compared to the peri-
od prior to the reforms. A few years ago, even the IMF felt obliged to concede that
“progress in raising real incomes and alleviating poverty has been disappointingly
slow in many developing countries, and the relative gap between the richest and
poorest countries has continued to widen.” (IMF, 2000: 113).26 This is more than
a little ironic, because the policies were originally sold precisely on the grounds
that they would improve economic performance.

 Andrew Mold

Mold - [Link] 256 15-6-2007 14:37:50

 Against this backdrop, the growing frustration in developing countries with the
orthodox set of policies is understandable. Moreover, the justification used to
explain this poor performance is beginning to wear thin – the policies would have
worked, it is often argued, if only they had been applied with more vigour and
developing country governments had been prepared to stay the course. This kind
of argument is common in Africa nowadays: In the post-independence period,
blame for the ills of the continent were squarely (and often fairly) laid on the
colonial powers by, for example, not having built up domestic capacities (lack of
education and institutional development), for having built infrastructures that
did not serve to develop the local economy, and for having created balkanised
and unviable political structures. In the era of the post-Washington Consensus,
however, the whole argument has shifted back to the other extreme: Once again,
everything, it is implied, is Africa’s fault – their poor governance, their poor imple-
mentation of policies, their corruption. No matter that the policies applied were
generally designed and shaped by foreign experts and donors and the feasibility of
their implementation never tested. In a generally overlooked, but deeply insight-
ful book, Atul Kohli (2004: 12) notes that

the nearly exclusive focus in the literature on appropriate policy choices

is incomplete, even misleading. Policy choices matter, of course, but these
choices must be explained. More important, the impact of the same policy
applied in two different settings may vary because of the contextual differ-
ences, some of the more obvious being varying global conditions and differ-
ent initial conditions of an economy.

From this point of view, there is no one ‘correct’ policy, nor one ‘incorrect’ one.
Implementation is the key. If this diagnosis is right, there is a need for develop-
ment policy to engage in a realistic evaluation of policy options – in other words,
a return to political economy. Peter Nolan (2004: 97) is quite right when he argues
that “far too often, economic advice has been little more than slogans. Too rarely
has it consisted of careful, pragmatic political economy”.

6. The Malaise of Development Economics

There may be an even simpler explanation for the poor policy-making advice
and institutional obligations thrust upon developing countries. And here a heavy
dose of self-criticism by the economics profession is sorely needed. The Mala-
wian economist Thandeka Mkwandawire (2004: 2) has argued that, in order to
explain the domination of one particular economic idea, we need to know more

Whither EU Development Policy? 

Mold - [Link] 257 15-6-2007 14:37:50

 about how ideas are formed and disseminated within the economics profession
and how these ideas are related to political power structures:

In this age of deconstruction of intellectual schemas, and from rhetorical

and sociological approaches to methodology, we have learned to accept that
ideas that become accepted at any given time are not necessarily the ‘best
ones’ but those that ‘win out’.

In large measure, the resurgence of neoclassical economics has been associated with
the immense resources at the disposal of the Bretton Woods institutions and the
governments of the industrialised countries to propagate orthodox economic ideas
and theories (Chang, 2003a). As Robert Wade (2004) has noted, ‘in the rhetoric
battle, the paradigm which provides certainties wins. But it is not necessarily right for
that.’ The vast consultancy budgets at their disposal has given the IFIs a particularly
powerful sway over economic thinking. Within the academic world, peer-group
and professional pressure mean that the reputation of an economist is largely deter-
mined by the number of publications they achieve in a few select journals – most of
these are published in the developed countries (particularly the US), and most have
a very narrow view of economics. Moreover, salaries for professional economists are
so low in most developing countries that a World Bank or IMF consultancy can be
irresistible. In sum, the pressures within the economics profession to conform to
what Albert Hirschman once eloquently termed ‘monoeconomics’ are enormous.27

The irony here is that, despite their often quite different philosophy and ap-
proach to development economics, continental European countries have done lit-
tle to promote an ‘alternative world view’. The EU’s aid apparatus sorely lacks the
research capacities of institutions such as the World Bank and thus encounters
difficulties in setting its own agenda and having its voice heard in multilateral fo-
rums (Santiso, 2003: Maxwell et al., 2004). This is somewhat paradoxical. Many
European research centres on development are excellent – and there is a strong
tradition in development studies that is generally conspicuous by its absence in
the United States. In comparison with the abstract theory that tends to emerge
from the economics departments of the best US universities, the more historical-
ly-based and multidisciplinary approaches to teaching development dominant in
Europe have potentially far more relevance to developing countries. But despite
the efforts of European-wide associations like EADI, the EU lacks the dense
network of policy think tanks that inform US foreign aid policy.

It is also worth noting that in practice European countries have been markedly
pragmatic in their approach to economic policy. It was observed a long time ago

 Andrew Mold

Mold - [Link] 258 15-6-2007 14:37:50

 that there is no obvious correlation between the success of an economy and the
intellectual distinction and prestige of its economic theorists – countries like
Germany or France,which thrived in the post-war period, produced few acknowl-
edged geniuses of economic science (Hobsbawm, 1980). This observation pro-
vokes the response that contemporary economic theory may not only often be
wrong – it might also be irrelevant. Certainly, as Lawson (1997: 3) notes,

Contemporary academic economics is not in a healthy state. Over many

years now problems have regularly come to light which throw considerable
doubt on the capacity of many of its strands to explain or even always ad-
dress, real world events or to facilitate policy evaluation.28

Why is the economics profession apparently failing developing countries so dis-

mally? One reason, which we hinted at earlier, may be the way in which so much
time and effort is dedicated by economists to subjects that are of marginal inter-
est to the real problems of development. Prichett and Woolcock (2004: 192) are
arguably right when they comment

Most agree the debate about the Washington consensus is blown far out
of proportion. At times 90 percent of the ink spilled addresses 10 percent
of the development battle; in the end, no matter who is right about trade
policy, fiscal deficits and the like, these policies do not add up to anything
like a complete development agenda ... Policies such as trade openness, fis-
cal probity, etc. need to be seen as part of, not a substitute for, a coherent
development strategy. Even the ‘augmented Washington consensus’ that
adds the provision of some key services (such as education) to the stan-
dard policy agenda leaves wide open the standard policy question of how
things will actually be accomplished. In general economists have focused
their tools on the question of what governments should do, with relatively
less attention given to the economics and politics of how to accomplish the
‘what’.

In this context, one of the most glaring weaknesses of modern economic theory is
the almost obsessive concentration on prices, exchange, and macroeconomic sta-
bility, and the lack of attention regarding how to enhance productive capacities.
The ironically named ‘supply-side revolution’ of the 1980s (‘ironic’ because it actu-
ally dedicates little or no attention to the actual conditions of supply), led by the
governments of Margaret Thatcher and Ronald Reagan, had a deeper influence
on economic thinking than is commonly thought – vanished were the ideas of
Keynes regarding the importance of avoiding coordination failures and maintain-

Whither EU Development Policy? 

Mold - [Link] 259 15-6-2007 14:37:50

 ing a high level of aggregate demand, despite abundant evidence that many devel-
oping countries are suffering the consequences of precisely this kind of problem.
And, although the idea has been creeping back in the watered-down form of
Poverty Reduction Strategy Paper (PRSPs) and Comprehensive Development
Frameworks (CDFs), gone too are most attempts to provide a planned, strategic
response to the challenges of development. Ideas on strengthening the supply side
tend to be limited to ‘getting prices right’ and liberalisation. If the private sector
fails to spontaneously respond to such incentives, so the argument goes, then it is
their fault for demonstrating a lack of business acumen and entrepreneurship.

Fortunately, orthodoxies have a nasty habit of turning on their promoters. There

are clear signs of chinks in the intellectual armoury of neoliberal thinking. The
fact that such a respected orthodox economist as Stiglitz defected several years
ago to the other side was clearly a sign that things were changing.29 The subtle but
marked shift in the position of institutions like the World Bank and the Interna-
tional Monetary Fund (which now, for example, accepts that there may be a case
in favour of capital account controls) is also illustrative as to how far the debate
has moved on in recent years. Heterodox development economists may have lost
many intellectual battles in the past, but might well end up winning the war. With
the possibly definitive abandonment of the Doha Round, the globalisation proj-
ect is perhaps at risk of unraveling itself.

7. Towards a Conclusion: How Can the EU Genuinely Help

Restore ‘Policy Space’?

This intellectual detour has had, as its purpose, to put the apparent failings of
EU development policy in a broader perspective. The problems identified in this
volume are not simply a function of the failure of European policy towards the
developing world, but a much wider malaise with development policy. If the argu-
ments put forward here are correct, there is an urgent need to restore a balance
to contemporary debates on development – to re-establish a sense of proportion
regarding what is important in achieving development.

So, where do we go from here? Clearly, the policy advice stemming from analysis
like that contained in Chang (2002) and Kohli (2004) is that there is a need for
developing countries to retain more independence in the elaboration and execu-
tion of their own policies (‘policy space’). How could the EU contribute to this
objective? Such a viewpoint might be construed as naïve, but the EU is sufficient-
ly powerful, as an institution and as individual member states, to help developing

 Andrew Mold

Mold - [Link] 260 15-6-2007 14:37:50

 countries win greater autonomy within the international fora like the WTO.
Rather than simply err on the side of caution and reinforce traditional alliances
(especially the transatlantic partnership), more concerted efforts could be made
to establish deeper partnerships with developing countries, along the lines dis-
cussed by Lister in chapter 3 and Freres in chapter 7. The EU could also be in-
strumental in providing greater freedom from the overbearing external pressure
placed upon developing countries by donors and the IFIs. For these aspirations
to become a credible reality, those institutions would have to undergo a process
of democratisation themselves – something again in which the EU could be in-
strumental and play a constructive role, if it so wished.

Nor is the EU immune from criticism on this score: With its complex and deli-
cate balance between the Council of Ministers, the Commission and Parliament,
the decision-making process within the EU is not wholly legitimate. Although
the system is generally considered to have worked well in the initial stages of
European integration, successive enlargements of the EU have led to questions
regarding their respective roles. As spelt out in chapter 2 of this volume, many of
the problems with EU development policy identified in this volume ultimately
stem from archaic and inefficient institutional arrangements. Reform of EU in-
stitutions themselves may therefore be a prerequisite for articulating a more co-
herent development policy. It is difficult to justify lecturing developing countries
on the merits of democratic institutions when the EU’s own system of decision
making is so far from perfect.

All this should put European aspirations to promote democracy and good gover-
nance in the developing world into perspective. In his controversial but thought-
provoking recent book, William Easterly (2006: 156) argues that “the official aid
agencies simply don’t know how to change bad governments into good govern-
ments with the apparatus of foreign aid. Bad government has far deeper roots
than anything the West can affect.” Analyses contained in chapters 4 and 7 of this
book and elsewhere would certainly seem to back up this assessment. In the final
resort, as Adrian Leftwich (2000) notes in his comprehensive review of the em-
pirical evidence on the relationship between democratisation and development,
the best way to guarantee democratic consolidation in the developing world is
through enhancing economic performance. Getting development policy ‘right’ is
thus key and, as the world’s major donor, the EU has a responsibility to contrib-
ute to this outcome.

Several of the chapters in this book identify a need for the EU to lay out its own
strategy more explicitly. As Santiso (2003: 23) has argued,

Whither EU Development Policy? 

Mold - [Link] 261 15-6-2007 14:37:50

 The need for more coherent aid policies and strategies should not lead the
EU to adopt the IFIs agenda, but rather to influence and challenge it. In
particular, and unlike the IFIs, the identity of EU aid is founded on its
distinctively political character and approach. Challenging the intellectual
monopoly of the IFIs on aid policies and the predominance of economic
approaches to development will require the EU to enhance its credibility as
an innovator and leader in development thinking.

In this context, recent plans for the EU to introduce its own annual ‘Develop-
ment Report’ (Maxwell et al., 2006) are to be welcomed, as a first step on the way
of articulating a more coherent ‘European view’ of development policy. Despite
the existence of many excellent research centres in Europe, such as the Institute
of Social Studies (ISS) in The Hague, or the Institute of Development Studies
(IDS) in Brighton, research efforts are at present too fragmented and there are
insufficient cross-border collaborations. Strengthening existing European-wide
networks on development research, particularly Bonn-based EADI, would also
be a prime way of providing the catalyst for a new ‘European approach’ to devel-
opment.

Finally, it is quite evident from the chapters in this book that not much progress
can be expected unless the EU tackles major policy incongruencies like the Com-
mon Agricultural Policy. Beyond the problems invoked earlier in aid strategy and
delivery, the damage done through policy incoherence in other areas (such as
requesting excessively onerous concessions in trade deals or condoning abusive
fishing policies of member states) can potentially far outweigh the benefits accru-
ing from development aid. The first development rule should be ‘do no harm’ and,
regrettably, on a number of scores, the EU does not currently pass this test.

We would not however like to end this final chapter on a negative note. As the
title of this chapter (‘Between a Rock and a Hard Place’) alludes, it needs ac-
knowledging that the choices for European development policy makers are not
easy ones. In this context, Hoebink’s (2005:163) evaluation of European develop-
ment aid is probably one of the most adroit:

The answer to the question ‘Is the EU a “good” aid donor?’ has to be mixed:
the EU is a slow, bureaucratic donor, demanding a lot of paperwork, ef-
fective in some sectors and clearly inefficient in others. But the EU is also
generous, imposes low levels of conditionality, with fewer strings attached
to aid than most other donors.

 Andrew Mold

Mold - [Link] 262 15-6-2007 14:37:50

 As suggested in the introduction to this book, the EU enjoys considerable influ-
ence in its relations with the developing world. It can use this influence either
to pursue its own agenda, or genuinely allow developing countries more ‘policy
space’. That would require a major rethink of policies such as the EPAs, the Euro-
Mediterranean agreement, or indeed on areas related to democracy promotion.
Articulating more fully a ‘European view’ on development policy (without subse-
quently imposing that view) would go some way to helping achieve this objective.
Hopefully, this current volume will help provide some useful reflections in this
process.

Notes

 The views expressed herein are those of the author and do not necessarily reflect the views
of the United Nations, nor should they be attributed collectively to the authors of this
book. The author would like to thank Gordon Crawford for some very insightful com-
ments on an earlier draft of this chapter. Any errors of course remain the responsibility of
the author.
 One recent example is the involvement of the EU in trying to establish a UN mission to
keep peace between Lebanon and Israel. Another is the border between Ukraine and the
breakaway Moldovan region of Trandsniestria which is patrolled by EU forces. The EU’s
influence goes further afield too. For instance, in Indonesia EU troops are monitoring the
peace in Aceh. EU soldiers have also been sent to supervise Congo’s recent election.
 For instance, on his first ever visit to Africa the UK’s Chancellor of the Exchequer Gor-
don Brown declared boldly that “I’ve talked to many people on my visit to Africa and
the days of Britain having to apologise for its colonial history are over. We should move
forward. We should celebrate much of our past rather than apologise for it.” See “It’s Time
to Celebrate Empire, says Brown”, by Benedict Brogan, The Daily Mail online,  Janu-
ary , [Link]
id=&in_page_id=. It might be added that similar declarations by politicians
from other European countries with long and not always noble colonial histories, such as
Belgium, France and Spain, are not difficult to find.
 Several such institutional inconsistencies, which are difficult to resolve without undertak-
ing a thorough internal reorganisation, are discussed by van Riesen in chapter  of this
volume.
 The perceived ‘loss’ of Rwanda to the Anglophone government of the Rwandan Patriotic
Front (RPF), in the aftermath of the genocide of , is one such instance. Dijbouti, too,
is increasingly ‘passing to the other side’.
 Ana Gomes, the EU official in charge of the Election Observation Mission, was far more
outspoken in her criticisms of government repression during the post-election crisis than
her counterparts in the British and German Embassies, and was subsequently barred by
the Ethiopian authorities from entering Ethiopia. Whether such an outcome can really
be called a ‘strategy’ (the different positions taken do not appear to have been planned or
intentional, but rather the fruit of genuinely different perspectives on the crisis) might be
debateable of course.

Whither EU Development Policy? 

Mold - [Link] 263 15-6-2007 14:37:51

  The term ‘Potemkin village’ derives from the apocryphal tale of Catherine the Great’s
Field Marshall Grigory Potemkin’s attempt to hide the failure of a gigantic scheme for
the colonisation of the Ukrainian steppe by erecting artificial villages to be seen by the
empress as she inspected progress.
 Stewart (: ) notes, for instance, that total micro-credit provision in Bangladesh
is estimated to extend to over  million people, and that the health and nutrition pro-
grammes of the NGO BRAC are estimated to cover over  million people ([Link]
[Link]/[Link]).
 None of this is to subscribe to the Eurocentric idea that development of democracy is in-
imitable to European civilisation. As Amartrya Sen () eloquently argues, democracy
as a concept has universal roots. Moreover, although it may be argued that our contem-
porary understanding of democracy has Greek origins, this may well have been forgotten
had it not been for the Arab-Islamic heritage that conserved the idea of democracy during
the European Dark Ages (Tibi, ).
 Although Chua does not acknowledge this, her ideas on this subject constitute a revisiting
() of Polanyi’s ideas, as embodied in his classic text ‘ The Great Transformation’. For
an excellent discussion of the relevance of ‘ The Great Transformation’ to the contempo-
rary situation in developing countries, see the aforementioned paper by Stewart ().
 Particularly scathing criticism of this has recently been made by William Easterly (:
-), who notes that “foreign aid is used as political reward to allied governments, no
matter how unsavoury they are ... so we had the world’s twenty-five most undemocratic
government rulers (out of  countries the World Bank rated on democracy) get a sum
of  billion in foreign aid in .”
 For example, Mosley, Harrigan, and Toye (), or Crawford ().
 For instance, see Anver Versi, (), ‘A Meeting of Minds and Needs’, African Business, who
discusses Chinese intervention in Angola to stop its aid money diverted to other uses.
 This occurred at the time of the war in Afghanistan when the US administration was
negotiating to enlist the support of the Pakistani government for its ‘war on terrorism’.
The EU was pressured to do something in support of this objective and so extended its
GSP-drugs (GSP+) scheme to Pakistan, despite the fact that this scheme had really only
been intended for Latin American countries suffering from serious problems related to
drug-trafficking and production.
 The question of making such preferential access legally binding has also been raised in
other fora (e.g., Mold, ). Perez (forthcoming) makes the interesting, but controver-
sial, proposal that rather than switching to EPAs, a simple expansion of the GSP might
make an attractive alternative.
 See, for instance, the websites of ActionAid [Link]
html or Christian Aid [Link]
 In private, this author has in fact heard an evidently well-meaning EU official acknowl-
edge that the African ACP countries are in no condition to compete with the EU, and that
the result of the EPAs would probably be the decimation of many domestic industries
and a concomitant huge increase in imports (the capital account permitting, of course).
But the same official suggested that this would be a good thing – it would break down
‘rent-seeking’ activities and oblige the state to renounce its control on economic activity.
This turns the conventional wisdom on the merits of export-orientation and liberalisa-
tion on its head and suggests that through ‘export failure’ and a massive surge in imports
an economy can be turned around. It does also reflect what is arguably a rather naïve and
one-dimensional view of the political economy of African countries.

 Andrew Mold

Mold - [Link] 264 15-6-2007 14:37:51

  See EPA Watch, [Link]/documents/doc_.doc
 Even the UN General Secretary Kofi Annan argued in his address to the ACP heads of
state that the EPA’s ‘threaten to further hinder [their] ability to achieve the Millennium
Development Goals’ (Oxfam, : ).
 Available at [Link]
 It is perhaps revealing that many of these words were not even used in development circles
a few decades ago – they might, in some sense, be considered completely artificial arte-
facts. As Chambers (: ) notes, “Language has changed. In the s we did not use
many of the words that are current today. ‘Equity’ and ‘poverty’ were there. But of the six
power-and-relationship words now in common use, the only one I have found in what I
wrote is ‘participation’: there was no trace of ‘empowerment’, ‘ownership’, ‘partnership’, ‘ac-
countability’ or ‘transparency’. These concepts and priorities had no yet been articulated.”
 Moreover, for critics, institutions like the World Bank and the IMF can hardly be re-
garded as the most qualified institutions to lecture developing countries on governance,
given their own tainted record on transparency and democratic decision making. See, for
instance, Raghavan ().
 This viewpoint might be labelled excessively pessimistic. But on another level, it could be
argued that the current situation, although regrettable, is entirely understandable. His-
tory shows us that hegemonic powers have always attempted to bend the rules in their
favour. In this sense, rule-bending by the US is no more blatant than that carried out by,
say, the British in India, with the suppression of the Indian textile industry, or in China,
with the opium wars (Bairoch, ).
 Appealing to factor-price equalisation through the workings of the Stolpher-Samuelson
theorem (i.e., claiming that trade substitutes for the free movement of labour) does not
totally let them off the proverbial hook. On two grounds, the argument is particularly
shaky: first, convergence between countries would be very much accelerated through the
free movement of labour; secondly, the Stolpher–Samuelson theorem significantly weak-
ens the case for the free movement of capital, which is considered by orthodox economists
as the cornerstone of the international system, because it inevitably leads to the question
‘why have one but not the other?’
 The degree of selectivity in the orthodox discourse is often startling. For example, where-
as there are continual exaltations for developing countries to harmonise labour and en-
vironmental legislation to industrialised country standards, there has never to date been
any serious attempt to propose global standards with respect to taxation. Why are inter-
national standards in one area considered beneficial and another not? Tax competition
clearly distorts the decisions of market agents, affecting the allocation of resources, and
has potentially serious effects on a state’s ability to finance its expenditures on social and
infrastructural development (Mold, c). Yet the granting of selective tax holidays or
other exemptions to encourage investment abroad has been positively encouraged by the
IMF and World Bank (Shutt, : ).
 Chambers (: -) recalls that “the conditions, approaches and outlook in Eastern
Africa in the late s and early s were strikingly different from those in the early
st century. In the earlier period, in sub-Saharan Africa, many conditions were better.
The outlook was optimistic. Neither I, nor any but the most dire pessimists, could have
dreamt of the downturns that were to come. In Eastern Africa,  years later, it is appall-
ing to see how much has changed for the worse.”
 It is also highly significant that the liberal pro-market philosophy almost all comes from
outside the developing world, being led by names such as Milton Friedman (US), Tibor

Whither EU Development Policy? 

Mold - [Link] 265 15-6-2007 14:37:51

 Scitovsky (US), Ian Little, (UK), Bela Balssa (US), Anne Kruger (US), with Deepak Lal
and Jagdish Bhagwati (from India, but educated in the UK) almost the sole developing
country representatives (Stewart, : ).
 Elsewhere, Chang (b) has questioned the usefulness of economists for tackling the
problems of underdevelopment and suggested that developing countries intent on estab-
lishing a good economic bureaucracy and management should put more emphasis on re-
cruiting people of generally high calibre, rather than looking for specialists in economics.
The experience of countries like Taiwan and South Korea, where the representation of
career bureaucrats with technical backgrounds in field such as engineering is far more
predominant than in Western governments, would seem to bear out this evaluation.
 Other economists from within the World Bank are also showing increasing signs of rebel-
lion against the official line. Milanovic (: ), for instance, argues that “It is only by a
serious misreading of the recent evidence that the partisans of globalisation are able to
argue for its unmitigated munificence”.

References

Auclair, Denise (2006), ‘ The EU’s Good Governance Agenda in Development :

Europe Should Prioritise National Accountability’, World Economy and Devel-
opment in Brief, 25 September, available at [Link]).
Bairoch, Paul (1971), Le tiers-Monde dans l’Impasse, Paris: Gallimard.
Bairoch, Paul (1993), Economics and World History – Myths and Paradoxes, Chi-
cago: University of Chicago Press.
Brown, Stephen (2005), ‘Foreign Aid and Democracy Promotion: Lessons from Af-
rica’, European Journal of Development Research, vol. 17, no. 2, June.
Burnell, Peter (2005), ‘Democratization’ in Peter Burnell and Vicky Randall
(eds.), Politics in the Developing World, Oxford: Oxford University Press,
Chapter 12, pp. 185-202.
Chambers, Robert (2005), Ideas for Development, London: Earthscan.
Chang, Ha-Joon (ed.) (2003a), Rethinking Development Economics, Anthem Press:
London.
Chang, Ha-Joon (2003b), Globalisation, Economic Development and the Role of the
State, London: Zed Books.
Chang, Ha-Joon and IIene Grabel (2004), Reclaiming Development – An Alterna-
tive Economic Policy Manual, London: Zed Books.
Chua, Amy (2003), World on Fire – How Exporting Free-Market Democracy Breeds
Ethnic Hatred and Global Instability, London: William Heineman.
Commission for Africa (2005), ‘Our Common Interest – Report of the Commis-
sion for Africa’, London: DFID.
Cramer, Chris (2006), Civil War is Not a Stupid Thing – Accounting for Violence
in Developing Countries, London: Hurst and Company.

 Andrew Mold

Mold - [Link] 266 15-6-2007 14:37:51

 Crawford, Gordon (2000), Foreign Aid and Political Reform: a comparative analy-
sis of democracy assistance and political conditionality. Basingstoke, Palgrave.
Degnbol-Martinussen, John and Poul Engbert-Pedersen (2003), Aid – Under-
standing International Development Cooperation, London: Zed Books.
Diamond, Larry (1996), Developing Democracy: Towards Consolidation, Baltimore:
The John Hopkins University Press.
Easterly, William (2002), ‘Growth in Ethiopia: Retrospect and Prospect’, Center
for Global Development Institute for International Economics, April.
Easterly, William (2006), The White Man’s Burden – Why the West’s Efforts to Aid
the Rest Have Done So Much Ill and So Little Good’, London: Penguin Press.
The Economist (2006), ‘Abroad Be dangers – Doubts over Sending Troops to
Lebanon Say Much about the European Union’s Aspirations to Play a Bigger
Role in the World’, August 24.
Edwards, Michael (1999), Future Positive – International Co-operation in the 21st
Century, London: Earthscan Publications.
El-Din Shahin, Emad (2005), ‘Egypt’s Moment of Reform: A Reality or an Illu-
sion?’, in Michael Emerson (ed),. Democratisation in the European Neighbour-
hood, Brussels, Centre for European Policy Studies,
Emerson, Michael (ed.) (2005), Democratisation in the European Neighbourhood,
Brussels: Centre for European Policy Studies.
Emerson, Michael, Senem Aydin, Gergana Noutcheva, Nathalie Tocci, Marius
Vahl and Richard Youngs (2005), ‘The Reluctant Debutante: The EU as Pro-
moter of Democracy in its Neighbourhood’, in Michael Emerson (ed.), Democra-
tisation in the European Neighbourhood, Brussels, Centre for European Policy
Studies.
Fukuyama, Francis (2006), America at the Crossroads: Democracy, Power, and the
Neoconservative Legacy, New Haven: Yale University Press.
Gnesotto, Nicole (2005), ‘Europe and America’s different visions of how to help
the Third World’, Europe’s World, Autumn, available at [Link]
[Link]/europesworld/[Link]
Habermas, Jurgen (1973), The Legitimation Crisis, London: Beacon Press.
Hinkle, Laurence and Richard Newfarmer (2006), ‘Risks and Rewards of Re-
gional Trading Arrangements in Africa: Economic Partnership Agreements
between the European Union and Sub-Saharan Africa’, in Richard Newfarmer
(ed.), Trade and Development, Washington: World Bank.
Hobsbawm, Eric (1975), The Age of Capital, London: Weidenfeld and Nicolson.
Hobsbawm, Eric (1980), Historians and Economists, Lecture given at Faculty of
Economics, Cambridge, reprinted in ‘On History’(1997), London, Abacus.
Hobson, John M. (2004), The Eastern Origins of Western Civilisation, Cambridge:
Cambridge University Press.

Whither EU Development Policy? 

Mold - [Link] 267 15-6-2007 14:37:51

 Hoebink, Paul (2005), ‘Assessing Europe’s aid effort’, Europe’s World, Autumn,
pp.156-163, available at [Link]
htm
Holdar, Sven (2000), ‘European Foreign Aid – South, East, Both, or Neither?’, in
Richard Grant and Jan Nijman (eds), The Global Crisis in Foreign Aid, Syra-
cuse: Syracuse University Press.
International Monetary Fund (2000), ‘World Economic Outlook – Asset Prices
and the Business Cycle’, May, available at [Link]
ft/weo/2000/01/[Link]
Jawara, Fatoumata and Aileen Kwa (2004), (updated edition), Behind the Scenes
at the WTO – The Real World of International Trade Negotiations: The Lessons
of Cancun’, London: Zed Books.
Kohli, Atul (2004), State-Directed Development – Political Power and Industriali-
sation in the Global Periphery’, Cambridge: Cambridge University Press.
Lawson, Tony (1997), Economics and Reality, London: Routledge..
Leftwich, Adrian (2000), States of Development – On the Primacy of Politics in
Development, Cambridge: Polity Press.
Maxwell, Simon, Dirk Messner, Francoise Moreau, and Laurence Tubiana (2006),
‘European Development Report – A Prospectus’, mimeo produced for DG-
Development.
Milanovic, Branko (2002), ‘ The Two Faces of Globalization: Against Globaliza-
tion as We Know It’, Washington, World Bank Research Department, May
(draft).
Mkandawire, Thandeka (2004), ‘ The Spread of Economic Doctrines in Post-co-
lonial Africa’, UNRISD, Geneva, mimeo.
Mold, Andrew (2004a), ‘ Trade Preferences and Africa: The State of Play and the
Issues at Stake’, Work in Progress Policy Paper no. 12, African Trade Policy
Centre (ATPC), UNECA, Addis Ababa.
Mold, Andrew (2004b), introduction to Retirar la Escalera – La Estrategia del
Desarrollo en Perspectiva Histórica by Ha-Joon Chang, Madrid: La Catarata.
Mold, Andrew (2004c), ‘Paying a Fair Share? A Proposal for Unitary Taxes on
the Profits of Multinational Enterprises’, The CEPAL Review, no. 43, April.
Mold, Andrew (2005), ‘ Taking Politics Out of Preferences: The Need for a New
Deal for Africa’, Bridges, Year 9, No. 1, January, ICTSD.
Mosley, Paul, John Harrigan and John Toye (1995) Aid and Power: The World
Bank and Policy-based Lending, 2 vols., second edition, Abingdon: Routledge.
Nolan, Peter (2004), Transforming China – Globalisation, Transition and Develop-
ment, London: Anthem Press.
Nye, Joseph S. Jr. (2004), ‘ The Decline of America’s Soft Power’, Foreign Affairs,
May/June

 Andrew Mold

Mold - [Link] 268 15-6-2007 14:37:51

 Oxfam (2006), ‘Unequal Partners: How EU – ACP Economic Partnership
Agreements (EPAs) Could Harm the Development Prospects of Many of the
World’s Poorest Countries’, Oxfam Briefing Note, available at [Link]
[Link]/what_we_do/issues/trade/bn_epa.htm.
Perez, Romain (forthcoming), ‘Are the Economic Partnership Agreements a
First-Best Optimum for the ACP Countries?’, Journal of World Trade, vol. 40,
no. 6.
Pritchett, Lant and Michael Woocock (2004), ‘Solutions when the Solution is the
Problem: Arraying the Disarray in Development’, World Development, vol 32,
no. 2, pp. 191-212.
Raghavan, Charavarthi (2004), ‘Choose IMF Head Through Transparent and
Participatory Process, says G24’, Third World Economics – Trends and Analy-
sis, Issue 324, 1-15 March.
Richelle, Koos (2005), ‘How Brussels has overhauled its “dire” aid apparatus’,
Europe’s World, Autumn, pp. 146-151, available at [Link]
be/europesworld/[Link]
Rueschemeyer, Dietrich, Evelyne Huber Stephens and John D. Stephens (1992),
Capitalist Development and Democracy, Cambridge: Polity Press.
Santiso, Carlos (2003), ‘Sisyphus in the Castle: Improving European Union
Strategies for Democracy Promotion and Governance Conditionality’, Euro-
pean Journal of Development Research, vol. 15, no. 1, June, pp. 1-28.
Sen, Amartya (2003), La Démocratie des autres – Pourquoi la liberté n’est pas une
invention de l’Occident, Paris: Editions Payot & Rivages.
Society for International Development (SID) (2005), ‘Will Europe make a differ-
ence? Future of the European Development Policy’, Briefing Session Report,
Brussels, 1 September, available at [Link]
Stewart, Frances (2006), ‘Do we need a new ‘Great Transformation’? Is one like-
ly?’, Queen Elizabeth Working Paper Series QEHWPS136, February.
Tibi, Bassam (2005), ‘Islam, Freedom and Democracy in the Arab World’, in Mi-
chael Emerson (ed.) (2005), Democratisation in the European Neighbourhood,
Brussels: Centre for European Policy Studies
Wade, Robert (2004), ‘Democracy, Development and the Case for the Develop-
mental State’ presentation at Symposium, held at the Sheraton Hotel, Addis
Ababa, 30th August.

Whither EU Development Policy? 

Mold - [Link] 269 15-6-2007 14:37:51

 About the Authors

Dr. Gordon Crawford is Senior Lecturer in development studies in the School of

Politics and International Studies at the University of Leeds, UK. He specialises
in the politics of development, including issues of human rights, democracy, and
development. He has published widely in the area of aid policy and democracy
promotion, including Foreign Aid and Political Reform: A Comparative Analysis of
Democracy Assistance and Political Conditionality (Palgrave Macmillan 2001).

Dr. Christian Freres, Research Associate at the Instituto Complutense de Estu-

dios Internacionales (ICEI) and advisor at the Spanish Agency for International
Coperation (AEIC), is a specialist on European-Latin American relations. He
has published widely, lectured at various universities and carried out numerous
consultancies on this topic. Among recent publications, he co-edited the book
América Latina y la Unión Europea. Estrategia para una asociación necesaria (Icar-
ia, 2006).

Dr. Marjorie Lister is Senior Lecturer in European Studies, University of Brad-

ford, UK. She has written extensively on European development policy and,
among other publications, is the editor of the book European Union Development
Policy (1998).

Professor Andrew McKay is Professor of Economics and International Devel-

opment at the University of Bath, UK. He is also a part time research fellow at
the Overseas Development Institute (ODI), London. In addition to academic
research Professor McKay has many years experience of undertaking advisory
work for Department for International Development (DFID) and different Afri-
can governments, among others.



Mold - [Link] 270 15-6-2007 14:37:51

 Professor Chris Milner is Professor of International Economics and Head of School
at the University of Nottingham, UK. He is a Research Fellow of both the Lever-
hulme Centre for Research on Globalisation and Economic Policy (GEP) and the
Centre for Research on Economic Development and International Trade (CRED-
IT). His research interests lie in the area of applied trade and trade policy analysis
in both a developed and developing country context. He has published widely in
academic journals and authored or edited a number of books in these areas.

Dr. Andrew Mold works as an economist at the United Nations Economic Com-
mission for Latin America (ECLAC), Santiago, Chile. He previously worked at
the United Nations Economic Commission for Africa (UNECA), based in Ad-
dis Ababa, Ethiopia, and the Instituto Complutense de Estudios Internationales
(ICEI), Madrid. Since 2003 he has been the Editor of the European Journal of
Development Research.

Professor Oliver Morrissey is Professor of Development Economics and Di-

rector of the Centre for Research in Economic Development and International
Trade (CREDIT) at the University of Nottingham, UK. His primary areas of
research interests include macroeconomic effects of aid and in trade policy reform
in Africa. He has published many articles in international journals, mostly on aid
policy and effectiveness, trade policy reform, conditionality and adjustment.

Dr. Roderick Pace is currently Director of the European Documentation and

Research Centre at the University of Malta and lecturer in international relations
and European Studies. His research interests are in the theories of European in-
tegration, small states in world affairs and Euro-Mediterranean relations.

Sheila Page is a Senior Research Associate of the Overseas Development In-

stitute, London. From 1982 to 2005 she was a Research Fellow there. Previously
she was at Queen Elizabeth House, Oxford, 1972, and the National Institute of
Economic and Social Research, 1972-82. She was President of the European As-
sociation of Development Research and Training Institutes (EADI), 1999-2002.
Recent publications include Trade and Aid: Partners or Rivals in Development
Policy (Cameron May, 2006) and Special and Differential Treatment for Developing
Countries in the WTO, with Peter Kleen (2005).

Mirjam van Reisen is Director of Europe External Policy Advisors – EEPA (www.
[Link]) based in Brussels, Belgium. She is the author of the book EU Global Play-
er, The NorthSouth Policy of the European Union (International Books, 2000).

About the Authors 

Mold - [Link] 271 15-6-2007 14:37:51

 Dr. Christopher Stevens is Director of Programmes (International Economic
Development) at the Overseas Development Institute, London. He was previ-
ously at the Institute of Development Studies (IDS), Brighton. He has written
extensively on EU trade with developing countries, most recently on Economic
Partnership Agreements, rules of origin, and the effects of reform to the Com-
mon Agricultural Policy.

 About the Authors

Mold - [Link] 272 15-6-2007 14:37:52