REPORT on the future European Financial Architecture for Development

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

on the future European Financial Architecture for Development

(2021/2252(INI))

The European Parliament,

– having regard to the Joint Statement by the Council and the Representatives of the Governments of the Member States meeting within the Council, the European Parliament and the European Commission of 30 January 2008 entitled ‘The European Consensus on Humanitarian Aid’[1],

– having regard to the Commission staff working document of 30 April 2014 entitled ‘Tool‐box – A rights‐based approach, encompassing all human rights for EU development cooperation’ (SWD(2014)0152),

– having regard to the UN resolution of 21 October 2015 entitled ‘Transforming our World: the 2030 Agenda for Sustainable Development’ adopted at the UN Sustainable Development Summit on 25 September 2015 in New York, and to the 17 Sustainable Development Goals (SDGs),

– having regard to the Third International Conference on Financing for Development held in Addis Ababa from 13 to 16 July 2015, and to the Addis Ababa Action Agenda,

– having regard to the agreement adopted at the 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21) in Paris on 12 December 2015 (the Paris Agreement),

– having regard to the joint statement by the Council and the representatives of the governments of the Member States meeting within the Council, the European Parliament and the Commission of 30 June 2017 entitled ‘The New European Consensus on Development – Our world, our dignity, our future’[2],

– having regard to the report by the High-Level Group of Wise Persons on the European financial architecture for development of October 2019 entitled ‘Europe in the World – The future of the European Architecture for Development’,

– having regard to the Council Feasibility Study of 14 April 2021 on Options for Strengthening the Future European Financial Architecture for Development,

– having regard to the Council conclusions of 10 June 2021 on enhancing the European financial architecture for development,

– having regard to the Commission’s roadmap of 24 March 2022 for an improved European financial architecture for development and 2021 progress report (COM(2022)0139),

– having regard to the EIB-EBRD Joint Report of 25 November 2021 on actions undertaken in the context of the EFAD Council Conclusions,

– having regard to the opinion of the European Court of Auditors No 7/2020 of 11 September 2020 accompanying the Commission’s report on the implementation of the European Fund for Sustainable Development (EFSD),

– having regard to its resolution of 25 March 2021 entitled ‘A new EU‐Africa Strategy – a partnership for sustainable and inclusive development’[3],

– having regard to its resolution of 7 October 2021 on the implementation report on the EU Trust Funds and the Facility for Refugees in Turkey[4],

– having regard to the joint communication from the Commission and High Representative of the Union for Foreign Affairs and Security Policy of 1 December 2021 entitled ‘The Global Gateway’ (JOIN(2021)0030),

– having regard to Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood, Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council Regulation (EC, Euratom) No 480/2009[5],

– having regard to the 6th European Union – African Union Summit of 17-18 February 2022 and related final statement entitled ‘A Joint Vision for 2030’,

– having regard to Article 209 of the Treaty on the Functioning of the European Union and to the statute of the European Investment Bank (EIB), which is annexed to the Treaties and stipulates that the EIB is the financing institution of the European Union, is exclusively owned by all 27 Member States of the EU and has the task of contributing to the implementation of EU development policy,

– having regard to Rule 54 of its Rules of Procedure,

– having regard to the opinions of the Committee on Budgets and the Committee on Foreign Affairs,

– having regard to the report of the Committee on Development (A9-0270/2022),

A. whereas the COVID-19 pandemic has deepened the already significant SDG financing gap and caused an overall decline in resources of USD 700 billion, and, at the same time, an increase in needs of USD 1 trillion, causing a scissor effect, so that the pre-pandemic SDG annual funding gap in developing countries of USD 2.5 trillion is expected to increase by 70 % post-COVID-19, to USD 4.2 trillion (EUR 3.7 trillion)[6];

B. whereas there is an annual financing gap of USD 148 billion in low- and lower-middle-income countries in relation to achieving SDG 4 between now and 2030; whereas additional costs resulting from COVID-19-related school closures risk increasing this financing gap by up to one third;

C. whereas Russia’s military aggression in Ukraine has drastically exacerbated the situation of SDGs in Ukraine and its neighbouring countries; whereas the current Russian military aggression in Ukraine will impact the worldwide implementation of the SDGs, particularly in relation to the fight against poverty and hunger, which heighten the risks of growing civil unrest, conflicts and irregular migration; whereas the destructive consequences caused by the criminal act of Putin’s war have significantly diverted the already scarce resources of development aid; whereas the long-term consequences of this war are as yet unknown; whereas the major shortfall in SDG financing and the consequences of the COVID-19 pandemic, which has been devastating across the developing world, demands an extraordinary sustained response from all EU actors and a system-wide review of the European financial architecture for development (EFAD);

D. whereas the current political and financial leadership of and efforts by the EU are not sufficient for achieving the SDGs and the goals of the Paris Agreement and addressing other acute global challenges, in particular worsening climate change, the dramatically increased debt burden of partner countries, the consequences of COVID-19 and violent conflicts, and therefore joint engagement at international level is required to ensure that EFAD is able to respond to these emerging challenges;

E. whereas in order to actually achieve the SDGs and to overcome the COVID-19 pandemic, policy coherence and close cooperation between all official development finance institutions, their government shareholders, EU institutions and all existing partners is urgently needed to ensure that scarce public money is used in the most effective and efficient way; whereas the successful mobilisation of further capital, both private and public, in addition to official development assistance (ODA) and other existing forms of development finance, is critical and needs to be aligned with development policy objectives, particularly with a view to reducing inequalities and poverty as the first goal of Agenda 2030;

F. whereas, also with a view to the sustainable development of the Global South, it is of prime importance that world energy flows are reorganised in the future and that the African continent plays an important role; whereas strengthening its role with regard to sustainable energy production, use and exports will provide the chance for future-oriented and sustainable economic development and could improve the living conditions of the broad majority of the population;

G. whereas food insecurity is a significant barrier to achieving the SDGs, particularly in Africa, where 2 in 10 people are undernourished; whereas this challenge will only become more acute as a result of population growth; whereas EU cooperation with partner countries needs to tackle this challenge effectively, in a sustainable manner;

H. whereas the EU institutions and the 27 EU Member States together constitute the largest donor for developing countries, responsible for approximately 46 % of the total ODA provided by all OECD ODA members to developing countries;

I. whereas the creation of the Team Europe approach as the global EU response to COVID-19 could help to establish a single strategic coordination framework for the EU’s external response to the pandemic and other major challenges, such as the consequences of Russia’s military aggression in Ukraine, in support of partner countries; whereas this approach is a promising process in enabling further cooperation between the EU institutions, the Member States and European bilateral and multilateral development finance institutions, the EIB and the European Bank for Reconstruction and Development (EBRD), continuously increasing the EU’s collective effectiveness and visibility;

J. whereas the entry into force of the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI – Global Europe), with an overall budget of EUR 79.5 billion, constitutes an historic change in the EU’s external and development policies, leading to the rationalisation and consolidation of EU development spending, and giving new impetus to greater cooperation between European development actors; whereas NDICI – Global Europe significantly modifies the external investment framework, bringing together blended finance and guarantees under the European Fund for Sustainable Development Plus (EFSD+) – External Action Guarantee (EAG); whereas the EFSD+ considerably expands the geographical scope and financial envelope of its predecessor, the EFSD, and will be able to guarantee operations up to EUR 53.4 billion through the EAG; whereas the ‘policy first’ principle at the core of NDICI – Global Europe represents a shift towards cooperation driven by policy objectives and ensures that the use of EU budgetary guarantees is covered by the programming process;

K. whereas the EFSD+, established under the NDICI – Global Europe instrument, provides funding for blending and budgetary guarantee operations, which are to be implemented by eligible partners in an open and collaborative approach;

L. whereas Article 36 of the NDICI – Global Europe Regulation sets out the specific role of the EIB under that instrument;

M. whereas EU companies and financing institutions operating in developing countries during the last decade have increasingly faced unfair competition from global players that operate outside the multilateral development finance system, which provides for an international set of rules and regulations, such as specific requirements for ODA, officially supported credits, sustainable lending and debt sustainability, prohibited export subsidies and international standards to combat bribery and corruption;

N. whereas properly functioning Policy Coherence for Development (PCD) and support for Domestic Resource Mobilisation (DRM) is an integral part of sound financial management and is aimed at increasing aid effectiveness through concrete initiatives, such as supporting the fight against corruption, the development of progressive tax systems and tackling tax avoidance and evasion;

O. whereas the report of the High-Level Group of Wise Persons released in October 2019 included among its recommendations the setting up of a European Climate and Sustainable Development Bank (ECSDB), an option immediately dismissed by the Member States as being too costly and taking too long to implement within the new budgetary period; whereas, instead, the Council opted for an alternative option to those suggested by the High-Level Group of Wise Persons, called Status Quo +, which does not fundamentally change the existing structures but calls for their improvement; whereas the Status Quo+ option envisages the following improvements at no additional cost for the Member States: improving the presence of the EIB on the ground and changing its business model towards a more development bank-oriented one, gradually expanding the EBRD’s scope of action into sub-Saharan Africa and increasing the capacity of the Commission, the European External Action Service (EEAS) and EU delegations;

P. whereas Member States have called on European development banks and financial institutions to increase their collaboration and coordination, both among themselves and with other multilateral and international financial institutions, building on the strengths and expertise of each institution, thereby enhancing the efficiency, visibility and impact of EFAD, and encouraging further mobilisation of the private sector while continuing to complement and support public sector engagement;

Principles and objectives of the European financial architecture for development

1. Takes note of the Council’s conclusions on enhancing EFAD and of the Commission’s roadmap for an improved European financial architecture and the 2021 progress report of 24 March 2022 (COM(2022)0139); underlines the key role of NDICI Global Europe, the EFSD+ and the EAG in providing a strategic framework for blended finance, de-risking investments and guarantees, and mobilising resources from the private sector with the support of the EU budget, especially in the light of increasing geopolitical and economic competition;

2. Emphasises that EFAD should provide for an efficient, effective, coherent and inclusive architecture, underpinned by the ‘policy first’ principle as the backbone of EFAD’s structure, and in line with the strategic interests and values of the EU; insists that all implementing partners who are part of EFAD and access EU budget funds under the EFSD+ apply the full range of EU social, human rights, procurement, transparency and environment and rule of law standards, policies and procedures; calls on the Commission to assess, monitor and report back on the adherence to these EU rules; stresses that the policy-first-driven EFAD should be guided by the principles and objectives set out in the UN 2030 Agenda for Sustainable Development, the Paris Agreement and the Addis Ababa Action Agenda, and should contribute to the achievement of the SDGs; reiterates that projects involving EFAD actors must be subject to climate, environmental and social sustainability-proofing with a view to minimising any possible detrimental impact and maximising the benefits in the climate, environment and social dimensions, in line with the commitments of the EU and its Member States under Article 2.1(c) of the Paris Agreement; strongly insists that operations under the new EFAD contribute to mitigation and adaptation to climate change; further insists, in this context, that operations involving EFAD actors do not finance sectors that bolster the climate crisis but contribute instead to the transition to sustainable energy production; recalls that the EU’s political engagement should be embodied in its multiannual financial framework and fully reflected in its European financial architecture for development;

3. Strongly insists that EFAD must strengthen the strategic partnerships between the European Union and its global development partners; reiterates that such partnerships should always be based on mutual respect and dignity, shared interests and values, in particular human rights, gender equality, environmental, social and climate responsibility, health and security, aimed at reducing inequalities and poverty; repeats that these partnerships should always be established in line with, and in an effort to, achieve the SDGs; points, in this regard, to the multidimensional influence of and support to Putin’s regime by the African continent and calls for the EU and its Member States to reach out to these African partner countries and to establish reliable partnerships; calls on the Commission to involve civil society organisations and NGOs, including local organisations, in the establishment and implementation of such partnerships; underlines that a prerequisite for the partnership projects financed through EFAD is to ensure development and financial additionality, as well as country ownership and development effectiveness; advocates EU policies and initiatives supporting coordination and cooperation between Member States in the field of development policy, and the EU’s actions complementing and supporting the initiatives of Member States; stresses that the eradication of poverty (SDG 1), fostering good health and well-being (SDG 3), ensuring access to quality education for all (SDG 4, reducing inequalities (SDG 10) and promoting climate action (SDG 13), with a particular focus on the most marginalised groups and leaving no one behind, are especially acute challenges in today’s world; further insists that more action should be taken to meet investment needs for sustainable ocean industries, since SDG 14 on ‘life below water’ remains one of the most underfunded of all the SDGs;

4. Underlines the interconnection between humanitarian aid, development cooperation and peace; highlights the role that development plays in preventing conflicts, ensuring durable exits from conflicts and bolstering crisis management; insists on the importance of further developing a well-tailored triple nexus focused on a people-centred, structural, and sustainable long-term recovery, in order to address the complexities of protracted and predictable crises and violent situations; recalls that, without peace and security, development and poverty eradication are not possible, while without development and poverty eradication, sustainable peace, human or state security cannot be established; further notes that a lack of security exacerbates the already existing vulnerabilities in developing countries and increases the funding gap for achieving the SDGs; takes note of the fact that security, the rule of law and resilient institutions are essential for investments and for sustainable development; notes the activities of local stakeholders, including local government bodies, civil society organisations, social partners and faith-based organisations in conflict resolution and management, contributing to peace and security; recalls that ODA should always be used in line with internationally agreed development objectives and NDICI – Global Europe;

5. Emphasises the role of a collective, coherent EU approach, supported and endorsed by all EU Member States, which is politically savvy and tailored to the specificities of the partner country, and which could be effective in fostering the expansion of social protection systems that are in line with the relevant ILO conventions, and of essential public services in developing countries; points out that such an EU approach would help make social protection one of the foundations of the social contract, paving the way to enhanced resilience; considers blended finance to be an option from the development finance toolbox that could complement public investment in a constrained budgetary context; calls for blending operations to be limited to areas where they can add value to the local economy and calls, in this context, for a careful assessment, in particular when targeting least-developed countries, with a view to limiting debt burdens, safeguarding essential public services such as health, education and social protection, and not widening existing inequalities;

6. Underlines that consistency across all EU policies, strategies, initiatives and financing instruments, notably the new NDICI – Global Europe instrument, the Team Europe initiative and the new Global Gateway strategy, as well as close alignment with the EU’s strategy for PCD and Policy Coherence for Sustainable Development (PCSD) is crucial in order to maximise the EU’s global response for sustainable growth, development and peace; believes that EFAD should improve the EU’s visibility and the impact of its development finance in the world, in order to ensure that the EU’s perceived role in the world matches the magnitude of its support;

7. Is alarmed at how the COVID-19 pandemic has exposed the long-standing structural drivers of health inequalities; believes that EFAD should contribute to investments in resilient public health systems, healthcare and healthcare services, and in research and development of new health technologies, as well as of vaccines, treatments and focusing on diseases that are recurrent in developing countries; calls for the possibility of creating a platform for sharing innovation, education and training, knowledge and expertise to be explored, which would support multi-stakeholder partnerships, foster public-private dialogue and explore innovative business solutions to accelerate sustainable development; underlines the role of public and private investments and public-private partnerships, as well as the importance of domestic resource mobilisation in partner countries and more efficient utilisation of EU funding in closing the USD 2.5 trillion funding gap identified for meeting the SDGs by 2030, while strengthening good governance and combating corruption;

Challenges to be addressed

8. Underlines that developing and developed countries have a shared responsibility to achieve the SDGs; emphasises that the EU’s financial contribution to sustainable development in partner countries should enable partner countries to contribute to their own economic and social development and to achieve the SDGs; underlines the paramount importance of domestic ownership in this context; stresses that EFAD and the long-awaited EU SDG strategy must reflect and facilitate a coordinated and coherent set of internal and external EU policies and commitments, including through the set of existing development policy tools; underlines that public and private financing must be aligned with the goals of the SDGs and the Paris Agreement; regrets, in that context, that the Commission has not yet developed an integrated and holistic SDG implementation strategy, which presents a significant challenge in terms of the ambition to achieve policy coherence, owing to the lack of clear, measurable and time-bound EU-wide targets for all SDGs as a reporting benchmark;

9. Believes that EFAD should be based on the expertise and existing networks of all its different actors (i.e. the EIB, the EBRD, the European Development Finance Institutions (DFIs) and others); recognises the progress and improvements made in relation to the future EFAD since the Council’s conclusions, but notes that the current status quo is still characterised by a lack of policy steer and coordination, as well as by fragmentation, duplication and unhelpful competition between the aforementioned actors; calls for further efforts for better coordination and cooperation to make the current system more effective, collaborative and focused on ensuring an optimal use of resources that leverages key partners’ relevant geographical, sectoral and financial expertise to achieve a better return on EU taxpayers’ money and a stronger development impact;

10. Recognises the need to enhance and improve the EU institutional set-up, and address its ‘development effectiveness deficit’, to reduce heavy bureaucratic coordination and strengthen institutional flexibility with a view to maximising EFAD’s potential and increasing its development impact;

11. Calls on the Commission to work on effective governance of the Global Gateway strategy, which has to be promoted under the overall steer of the President of the Commission, and to coordinate closely in this regard with the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the EEAS, the Council and Parliament; underlines that the strategy should be consistent with EFAD and that a recourse to the NDICI – Global Europe’s emerging challenges and priorities cushion for financing is not appropriate; urges the Commission to provide additional information on its calculation of the leverage ratio for investment operations of the recently announced EU Global Gateway;

12. Is concerned that the key features of the PCSD principle are systematically missing from regulatory initiatives of the EU; stresses that more efforts are needed to fully comply with PCSD principles, in order to achieve aid effectiveness objectives; insists that mechanisms for ensuring PCSD must be enshrined in EFAD; calls for more ex ante impact assessments and the establishment of an early warning system for policy incoherencies at EU delegations; recommends that PCSD should be used more systematically and efficiently by all relevant EU institutions and Member States, including at the highest political level, and should be mainstreamed in the design and implementation of every variety of EU policy in order to ensure that they do not negatively affect the attainment of the SDGs; recalls that PCSD mechanisms should be also implemented by the EIB, EBRD, DFIs and their intermediaries; emphasises that PCSD needs to be mainstreamed in particular in EU external policies and addressed in order to achieve the SDGs;

13. Acknowledges the Commission’s efforts in better regulation with the aim of creating long-term sustainable investments which promote health and the well-being of both people and the planet, and which protect human rights; demands that EFAD be consistent with the future EU due diligence and corporate responsibility legislation, ensuring corporate compliance with human rights standards and regulatory developments, mandatory due diligence and adherence to the international commitments on business and human rights; underlines that EFAD must meet the highest standards of transparency and accountability; calls on EFAD members to strengthen the due diligence of their operations, ensure meaningful consultation of the local population throughout the implementation of the projects, further develop their development expertise and dedicated capacity and human resources on the ground, implement gender mainstreaming and protect human rights in all operations, be equipped with solid accountability mechanisms for impacted communities and closely monitor, and report on, the shortcomings of their involvement and the role of their intermediaries in projects which have negatively impacted local populations in developing countries;

14. Reaffirms that all implementing partners and financial intermediaries involved in projects linked to EU guarantees or financed from the EU budget must fully comply with EU social, environmental, tax, transparency, anti-fraud and anti-corruption standards, policies, rules and procedures; calls on the European Court of Auditors to fully scrutinise and regularly report on operations backed by guarantees from the EU budget, addressing any shortcomings in its working methods that are currently preventing it from doing so; underlines the importance of carrying out an independent evaluation of the EFSD+ and the Team Europe approach in due course in order to assess their effectiveness, performance and development impact;

15. Notes that the Team Europe approach emerged as a response to the COVID-19 pandemic; believes that the Team Europe approach should play a key role in further improving strategic cooperation and global coordination and the coherence and effectiveness of development efforts, especially at partner-country level, as well as at EU and Member State level, including at regional government level; expects stronger policy direction and focus, and stronger mechanisms for communication and visibility when it comes to the EFSD+/NDICI – Global Europe instrument ; further insists on the appropriate implementation of the European Parliament scrutiny mechanism in order to allow for the democratic legitimacy of Team Europe activities;

16. Calls on the Commission to put forward a powerful EU policy direction for development policies and to coordinate EFAD in a way that would allow further alignment of the EU development financial institutions’ activities within the new open, collaborative, transparent and inclusive architecture in order to achieve EU development policy objectives, strengthen close partnerships with regions and contribute to their development;

17. Emphasises that the NDICI – Global Europe programming process provides the opportunity to enhance the use of EU budgetary guarantees, notably the EFSD +; underlines that the future financial architecture should enable all interested development finance actors to participate, including small and medium-sized actors and non-EU development banks and stakeholders; calls, in this context, for a solid level playing field in terms of the governance of the EFSD+ and access to EU resources; stresses the importance of an adequate risk management framework and of the effective management and oversight of the implementation of development finance instruments; calls on the Commission to use its existing banking expertise resources and its financial and technical capacities more effectively;

18. Welcomes the publication of the Commission’s first roadmap for an improved European financial architecture for development and 2021 progress report; recalls that NDICI – Global Europe requires that the Commission disclose to the Council and Parliament the composition, terms of reference and rules of procedure of the technical assessment group and that it ensure the impartiality and absence of conflicts of interest of its members; urges the Commission to put in place similar measures to ensure the transparency and impartiality of the High-Level expert group which will provide the Commission with recommendations on further accelerating the flow of private capital to low- and middle-income countries;

19. Calls on the Commission to ensure that EFAD pursues the goal of restoring the multilateral development finance system in order to help put an end to the unsustainable lending practices of some countries operating outside that system, which not only threaten the level playing field for the EU and other compliant countries, but also dramatically increase the already high external debt of many developing countries which were made even more vulnerable as a consequence of the COVID-19 pandemic; highlights against this backdrop that Russia’s military aggression in Ukraine is further worsening the debt burden in many developing countries; highlights that least developed countries are unable to implement the SDGs without financial support and therefore strongly calls for debt relief measures in line with sustainability commitments;

20. Considers that the EU taxonomy should contribute to the reorientation of capital flows towards sustainable investments and introduce sustainability among the criteria to be taken into account for risk management; calls on the Commission to further develop the EU taxonomy and encourage development finance institutions both at EU and Member State level, as well as private actors active in development, to align their activities, in particular those in developing countries, with SDG objectives and the objectives of the Paris agreement;  

European and national financial institutions  

21. Reaffirms the EIB’s specific role within the EU and globally – as set out in Article 209 of the Treaty on the Functioning of the European Union and in Article 36 of the Neighbourhood, Development and International Cooperation Instrument – Global Europe; highlights the important role of the EIB in delivering EU investments and partnering with the Commission in implementing the Global Gateway strategy;

22. Recognises the EIB’s flagship role in the European Green Deal and sustainable blue economy, and its substantial contribution to the EU’s economic response to the COVID-19 pandemic; calls for the EU to further maximise the potential of the EIB as a tool to leverage the EU’s strategic autonomy and promote its external policy interests and priorities in its relations with non-EU countries; calls on the EIB to improve its policies and practices and its transparency, in particular by implementing the recommendations formulated by the European Ombudsman to ‘take several transparency steps to enable the public to more easily see the potential environmental impact of the projects it finances’, as set out in cases 1065/2020/PB, 1251/2020/PB and 1252/2020/PB;

23. Welcomes the setting up of EIB Global, defined by the EIB as a dedicated development branch within the EIB Group, which has been operational since 1 January 2022; calls on the EIB to strengthen its presence in the field, while exploiting possible synergies with the EEAS, EU delegations, the EBRD and other European DIFs; points out that the lack of information on how EIB Global is funded jeopardises its mandate from the outset, also in view of the commitments of this new entity in terms of development objectives; calls, therefore, for a concrete and strong development mandate for the new EIB Global; expects this new structure and its advisory board, its goals and budgetary provisions, organisational functioning and specific goals of the branch, as well as its coordination mechanisms with other financial development institutions, to be fully transparent, including by proactively publishing documents, by ensuring meaningful representation of recipient countries and by regular exchanges with the European Parliament and open dialogue with stakeholders, in particular civil society organisations and local actors;

24. Encourages the EIB to continue to actively engage in developing planning, monitoring and evaluation at country level, hand in hand with the EU delegations and through co‐financing with development finance institutions; calls for stronger coordination between the Commission and the EEAS and EU delegations to facilitate discussions and cooperation with relevant actors on the ground in order to identify projects which best meet development effectiveness objectives;

25. Encourages the EIB and the EBRD to further reinforce their complementarity and their business models through greater mutual reliance initiatives, as the needs are greater than their joint resources; calls on the EIB and the EBRD to coordinate their work along different trajectories and clarify their division of labour in order to help each bank to focus on its respective core competencies, thereby avoiding duplication and undercutting; notes that there is a need to adapt the working methods and tools of the EIB and the EBRD to the investment needs in Africa, particularly in order to facilitate large-scale investments, while maintaining EU support for smaller scale local projects; points out that it is crucial for European investments to be accompanied by a visible presence of the EU and continuous political dialogue; notes that EFAD needs to maximise the advantages of the different structural backgrounds and working methods of the existing European development banks and financial institutions in order to increase the efficiency of the EU’s contribution to sustainable development; expects the EIB, EBRD and other European DFIs to ensure and provide evidence in the form of ex ante impact assessments that every project, and in particular blended finance projects, contribute to the EU’s development goals, including those concerning least developed countries, and meet international human rights standards; calls on the Commission, the EIB, the EBRD and European DFIs to ensure that their advisory and technical assistance teams are equipped to further gender equality and inclusive development;

26. Calls on the Commission, the Member States, the EIB, the European Bank for Reconstruction and Development and the other European development banks and financial institutions, including smaller DFIs, to strengthen their cooperation, notably in the framework of NDICI – Global Europe and its objectives, as well as in globally achieving the goals of Agenda 2030, and to encourage them to pool resources and financing, and to enhance coordination and communication in common projects, by drawing on their respective financial expertise; calls on the Commission to play a stronger role in providing technical assistance for projects and assisting DFIs and other development actors in coordinating; calls for an inclusive approach towards the smaller DFIs of Member States in accessing funding under the European development finance architecture;

27. Underlines the importance of more efficiently utilising synergies and better harmonising the financing initiatives of the EBRD, the EIB and other DFIs that are targeting European neighbourhood countries, with particular importance given to EU candidate countries; recalls, against the backdrop of the ongoing war in Ukraine, that European financing in neighbourhood and candidate countries is an indispensable component of the reforms required to fulfil the accession criteria, in line with the EU’s foreign policy interests;

28. Calls on the EIB to work more closely with the African Development Bank and to assess the advantages of establishing a joint subsidiary following the implementation of the ongoing EIB-African Development Bank partnership action plan; invites the EIB to report to Parliament about the next steps taken; underlines the need to finance long-term investments that foster sustainable development and to build on cooperation to date, in order to develop further sustainable development opportunities for the African continent; encourages the creation of project and advisory hubs, jointly operated by the EIB and the African Development Bank, to create effective contact points for advice and project initiation for local actors and to better match the development needs on the ground, as well as improve local ownership for common development projects; calls, in this regard, for support to local private sector development in Africa, in particular thanks to the provision of more funds to African micro, small and medium-sized enterprises;

29. Stresses, in this context, that in general, local ownership and a collaborative and inclusive approach are needed and should be underpinned by a strong framework for systematic local consultations of stakeholders and beneficiaries in order to achieve a lasting development impact; asks the Commission to assess how the framework for systematic local consultations of stakeholders and beneficiaries could be further improved;

30. Calls on Member States’ development finance institutions to further expand financial inclusion to support access to sustainable finance to those most in need, including women, as it contributes to their economic empowerment; calls, in this context, for EFAD to contribute to the full implementation of the EU’s third gender action plan; recalls the target for at least 85 % of actions to have gender equality as a principal or significant objective, of which at least 5 % should have gender equality and women’s and girls’ rights and empowerment as a principal objective; calls for an obligation for all EFAD operations to collect gender-disaggregated data and include ex ante as well as ex post gender impact evaluations;

31. Encourages all development banks and institutions to make sustainable commitments and bold investments in line with development policy objectives, in particular the reduction of inequalities and the eradication of poverty, rather than in terms of return on investment; recognises, therefore, the importance of encouraging riskier investments in more challenging development settings, such as fragile or conflict-affected countries, and underserved sectors such as the climate, biodiversity and the education and health sectors; underlines, at the same time, the need to minimise any associated risks to the EU budget, such as increased demands on the EU budgetary guarantees, and to preserve the high credit rating of the EIB; encourages DFIs to take more risk in their investment programmes through the EFSD+, so as to also reach the most fragile economies; calls on the Commission, in this respect, to play a greater role in ensuring measurable and additional development impacts without distorting the local market or unfairly competing with local economic actors, and in helping to develop the supply side of projects by providing support for project preparation and helping DFIs to coordinate, while ensuring the integration of smaller DFIs;

32. Recognises the importance and potential of Member State development banks within the EFAD structure; is concerned, however, about the role of intermediaries partnering with DFIs, in particular regarding reported violations of human rights; stresses the important role that local private sector development in sub-Saharan Africa can play in empowering partner countries to set themselves on a path to sustainable development;

33. Calls on the Commission to report annually on Team Europe initiatives (TEIs) based on quantitative and qualitative indicators within the framework of NDICI – Global Europe, while evaluating the resources mobilised, development planning and impact, harmonisation and application of EU standards, the EU integration perspective and Member States’ involvement; insists that such reporting be shared with Parliament and made public; stresses that Parliament has a key role to play in scrutinising the political objectives and expected results of TEIs, both at general and project levels, ensuring that TEIs work alongside existing mechanisms and complement rather than supplement the multiannual indicative programmes;

34. Reiterates that institutional control and scrutiny of EU funding fosters democratic debate and helps to boost the credibility and transparency of the EU; highlights Parliament’s important role and its scrutiny role under NDICI – Global Europe in that regard; calls for obligations ensuring appropriate visibility of the implementation of EFAD; calls on the Commission to take action in an appropriate and timely manner where those obligations are not met; calls on the European Court of Auditors to draw up regular reports on the implementation of EFAD, which will be made public and lead to policy recommendations, including on actions to be taken for improvements; regrets the lack of information provided to the general public on the EU’s role in offering support to local communities and encourages better communication with the public;

35. Calls on the Commission and EFAD institutions to promote transparency in their procurement procedures; recalls that EU businesses should be able to compete on equal terms with businesses based in non-EU countries;

36. Underlines that obtaining relevant, consistent and comparable information in a timely manner is essential for measuring progress and actual results, and for identifying whether EU development finance has been effective and additional to other finance; regrets the absence of a unified reporting and results measurement framework with comparable indicators for the EFSD+; encourages the Commission to develop such a framework to make it possible to harmonise results management; invites the Commission to update Parliament on the content and implementation of this framework;

37. Looks forward to the European Court of Auditors special report on programming development aid, which will assess whether EU development aid for 2021-2027 has been allocated according to a well-defined strategy; stresses the importance of assessing the additionality of blended finance in order to determine the effectiveness of these instruments in achieving development results and policy objectives based on EU values; invites the European Court of Auditors to consider performing such an assessment;

Financing for development

38. Insists that the Member States honour their commitment to spend 0.7 % of their gross national income (GNI) on ODA; is alarmed that in 2020, ODA from advanced economies was on average just 0.32 % of their GNI – less than half of the 0.7 % commitment, one which has only been attained by four Member States; highlights that the impact of Russia’s military aggression in Ukraine on government spending around the globe will put further pressure on aid budgets which are already low; notes that the Member States which joined the EU after 2002 committed to striving to increase their ODA/GNI to 0.33 %; welcomes the efforts which these and other Member States have made so far to gradually scale up their ODA spending; encourages them to continue on this track; underlines the important role of ODA as a catalyst for change and a lever for the mobilisation of other resources; considers that the EU should strive to maintain its position as a world leader in ODA; recalls that at least 93 % of the expenditure under NDICI – Global Europe must fulfil the criteria for ODA;

39. Stresses the importance of the EU’s commitment to mobilise resources for climate action and the EIB’s and other EFAD members’ role in making progress in this area; notes the Council’s commitments to steer EFAD towards achieving the 2030 Agenda for Sustainable Development, the SDGs and the Paris Agreement in order to limit global warming to 1.5 °C; recalls the NDICI – Global Europe 30 % global climate spending target and the target to spend 7.5 % of GDP on biodiversity by 2024 outlined in the multiannual financial framework; regrets the fact that the Commission has not made more specific commitments to climate policy goals in its roadmap and expects this to be remedied in an upcoming programming document; calls for all operations financing sectors that contribute to the climate crisis, mainly the fossil fuel industry, to be banned; recognises that EFAD should be inclusive for all regions and partner countries, while acknowledging that a considerable share of investment is being channelled to the Western Balkans and the Eastern and Southern Neighbourhood;

40. Recognises the role of local micro, small and medium-sized enterprises, cooperatives, inclusive business models and research institutes as engines of growth, employment and local innovation, which will in turn contribute to the achievement of the SDGs; underlines the need to simplify access to financing, strengthen inclusiveness and support smaller actors, including by improving accessibility to relevant publicly available data; underlines that local SMEs therefore need to have easy access to financial services in the EFAD framework; notes that EU policies need to encourage the cooperation of companies and enterprises, particularly SMEs, to play an active role in initiatives contributing to sustainable development in developing countries;

41. Calls on the Commission to establish a link between possible de-risking activities and financial support for access to education and vocational training, particularly for the purpose of establishing proper infrastructure and training for teachers, under the NDICI) – Global Europe, in order to facilitate achieving SDG 4;

42. Notes the particular importance of EU investments in the field of sustainable agriculture, including agro-ecological practices, where private and public investments are lacking; emphasises that local farmers, smallholders and family farms need to have access to financial services, and, in particular, to micro-financing;

43. Notes that the lack of market access owing to connectivity issues is one of the main barriers to food security in many regions in Africa; considers that EU investments in this field could have a strong impact;

44. Takes note of the two-pillar solution for addressing the tax challenges arising from the digitalisation and globalisation of the economy, as agreed by the members of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting; calls for the EU and its Member States to ensure that the agreed global minimum corporate tax rate of 15 % for multinational enterprises is effectively applied; underlines that according to estimates, this minimum tax is expected to generate around USD 150 billion in additional global tax revenues annually;

45. Calls on the Commission to promote international cooperation in tax matters to fight against tax evasion, illicit financial flows and corruption in order to foster purposeful and sustainable development financing that contributes to reducing inequalities and poverty;

°

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46. Instructs its President to forward this resolution to the Council, the Commission, the Organisation for Economic Co‐operation and Development and the United Nations.

EXPLANATORY STATEMENT

Over the last 15 years, the world has successively been hit by the 2008 financial crisis, the COVID-19 pandemic and now Russia’s war of aggression against Ukraine.  Whether these crises could have been foreseen is a matter for debate, but what is clear is that they were not foreseen. They each threw the international political agenda into disarray and raised doubts over the commitments made in 2015 at the UN Conference on Financing for Development in Addis Ababa, the UN Sustainable Development Summit in New York and the Conference on Climate Change in Paris.

The crises only amplified the scale of the task, given the huge amounts of funding required to meet the development objectives. With priorities having shifted, the Sustainable Development Goals are unlikely to be achieved by 2030, if at all.

Zero hunger, no poverty, good health, quality education, clean water and sanitation, not to mention access to affordable energy – all of these can be met, but with UNCTAD estimating that it will cost EUR 4 200 billion (some 4.2% of global GDP) it will require an exceptional level of determination.

The EU is certainly not in a position to raise these funds alone. However, its experience, expertise and position as the world’s largest donor of development aid make it the natural leader in this area. Its highly appreciated development cooperation now has a simpler, more flexible and therefore more effective funding instrument (NDICI Global Europe). Its Member States are also co-owners of the European Investment Bank (EIB), the world’s largest provider of climate finance, far ahead of other financial institutions such as the World Bank, and a reliable, effective body that is fully anchored in the values of the European model. As such, it is the institutional partner of choice in the implementation of EU development cooperation policy. The fact that the EIB has recently set up a specific development branch demonstrates its willingness to get fully involved in helping countries in the global South.

The European Bank for Reconstruction and Development will also have an important role to play. However, notwithstanding its genuine willingness to become more engaged in development, it will probably be required to devote a significant proportion of its resources to the rebuilding of Ukraine following the action taken against it by two of its shareholders. There are also the Member States’ own development banks.

Some, such as the French AFD and German KFW in particular, are among the major providers of development finance, but there are many other similar institutions.

What they all have in common is the ability to channel large, mostly private funds into investment projects and programmes for developing countries. Their expertise and know-how will be key to keeping the promises made in 2015 at the major UN conferences on development financing and achieving the SDGs and the goals of the Paris Agreement.

The success of an architecture such as this, which seeks to mobilise funding for development, will require a vision and a willingness to achieve ambitious goals from the outset. Europe’s approach to delivering on its development commitments therefore needs to be clarified. Its vision is firmly rooted in our fundamental values, which guarantee free, fairer societies, and embodies the social market economy model. The European Parliament expects all financial institutions that want to participate in this architecture to be fully aligned with this vision of the European model.

 

OPINION OF THE COMMITTEE ON BUDGETS (17.5.2022)

for the Committee on Development

on the future European financial architecture for development

(2021/2252(INI))

Rapporteur for opinion (*): Angelika Winzig

(*) Associated committee – Rule 57 of the Rules of Procedure

 

 

SUGGESTIONS

The Committee on Budgets calls on the Committee on Development, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

1. Takes note of the Council’s conclusions on enhancing the European financial architecture for development (EFAD) and of the Commission’s roadmap for an improved European financial architecture and the 2021 progress report of 24 March 2022 (COM(2022)0139); underlines the key role of the ‘Neighbourhood, Development and International Cooperation Instrument – Global Europe’ (NDICI Global Europe), the European Fund for Sustainable Development Plus (EFSD+) and the External Action Guarantee in providing a strategic framework for blended finance, de-risking investments and guarantees and mobilising resources from the private sector with the support of the EU budget, especially in the light of increasing geopolitical and economic competition;

2. Highlights that EFAD should support EU strategic interests and promote EU values, as laid down in Article 2 of the Treaty on European Union; underlines that operations outside the EU, including blended finance projects, must be aligned with EU external policy objectives and contribute to achieving the EU development goals;

3. Notes that the EU is the largest donor in the world; highlights the need to promote better visibility and awareness of EU development actions and projects; regrets the lack of information provided to the general public on the EU’s role in offering support to local communities; encourages all those involved to step up their joint efforts to communicate with the public;

4. Recognises the progress and improvements made in relation to the future EFAD since the Council’s conclusions, but notes that the current status quo is still characterised by a lack of policy steer, coordination, fragmentation, duplication and unhelpful competition between the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and European development and finance institutions; calls for further efforts to make the current system more effective, collaborative and focused on ensuring an optimal use of resources that leverages key partners’ relevant geographic, sectoral and financial expertise to achieve a better return on EU taxpayers’ money and a stronger development impact;

5. Welcomes the Council’s commitments to steer EFAD towards achieving the 2030 Agenda for Sustainable Development, the SDGs and the Paris Agreement in order to limit global warming to 1.5 °C; recalls the NDICI Global Europe 30 % global climate spending target and the target to spend 7.5 % of GDP on biodiversity by 2024 outlined in the multiannual financial framework, and calls for projects that create co-benefits and meet multiple objectives to be prioritised; calls for the stringent application of the do no significant harm principle; regrets that the Commission does not make more specific commitments to climate policy goals in its roadmap, and expects this to be remedied in an upcoming programming document; calls for all operations financing sectors that contribute to the climate crisis, mainly the fossil fuel industry, to be banned;

6. Recognises that EFAD should be mainly focused on least-developed and fragile or conflict-afflicted countries, where the needs are greatest, particularly in sub-Saharan Africa; recalls, however, that a considerable share of investment is channelled to the Western Balkans and the Eastern and Southern Neighbourhood, and underlines the need to provide funding to deal with new challenges and support new priorities in these regions;

7. Points to the considerable impact of the Russian Federation’s illegal, unprovoked and unjustified military aggression against Ukraine on the development landscape and economic and security situation in the EU and its neighbourhood; calls on the Commission, the EIB, the EBRD and European development and finance institutions to work on action plans for the reconstruction of Ukraine and to build back better, greener and in a more inclusive way; recognises, furthermore, that Russia’s war against Ukraine has increased energy and food prices, exacerbating humanitarian needs, especially in sub-Saharan Africa; underlines the urgent need for further funding, including through the NDICI Global Europe cushion, to address these unforeseen circumstances;

8. Calls on the Commission, the Member States, the EIB, the EBRD and European development and finance institutions to strengthen their cooperation within the EFSD+ open architecture by taking a Team Europe approach; stresses the need for greater specialisation and a better division of labour to ensure synergies and complementarities;

9. Underlines that the future financial architecture should be open and collaborative and enable all interested development finance actors to participate, including small and medium-sized actors and non-EU development banks and stakeholders; calls, in this context, for a solid level playing field in terms of governance of the EFSD+ and access to EU resources, including through capacity-building and support for smaller development banks and financial institutions, as this is key for fruitful cooperation among European development and finance institutions; underlines the need to move away from the current project-based approach towards sector-based programming involving all relevant stakeholders from the start, including the private sector and civil society, to increase transparency, leverage and impact;

10. Stresses that local ownership and a collaborative and inclusive approach is needed and should be underpinned by a strong framework for systematic local consultations of stakeholders and beneficiaries, to achieve a lasting development impact; asks the Commission to assess how the framework for systematic local consultations of stakeholders and beneficiaries could be further improved;

11. Reaffirms the privileged role of the EIB as the EU’s investment arm and notes the recent creation of its development branch, EIB Global; underlines that local presence is key for successful financing operations and calls on the EIB to draw on the example of the EBRD and strengthen its presence in the field by recruiting local workers and staff dedicated to environmental, human rights and social due diligence, while exploiting possible synergies with EU delegations, the EBRD and other European development and finance institutions; expects this new structure and its advisory board to be fully transparent, including by proactively publishing documents, and to ensure regular open dialogue with stakeholders, and in particular with civil society organisations;

12. Highlights the need for a stronger and clearer policy steer and political guidance from the Commission in implementing EFAD, with the Western Balkans Investment Framework serving as a possible model in this regard; stresses the importance of an adequate risk management framework, effective management and oversight of the implementation of development finance instruments; calls on the Commission to use its existing banking expertise resources and its financial and technical capacities more effectively; recognises the management challenges faced by the Commission and the European External Action Service and invites the Commission to assess whether adequate resources and expertise are available for effective engagement with development and finance institutions and the oversight of guarantees and complex blended finance instruments;

13. Takes note of the Global Gateway initiative put forward by the Commission and the European External Action Service and underlines that it should be consistent with EFAD; requests immediate and comprehensive information on the financing of the Global Gateway, noting that the initiative relies heavily on the idea of leveraging resources from outside the EU budget and that the value of the budgetary guarantees involved and the origins and purpose of the additional EUR 750 million announced for the initiative are unclear; reiterates that a recourse to the NDICI Global Europe emerging challenges and priorities cushion is not appropriate for the Global Gateway;

14. Recognises the importance of encouraging riskier investments in more challenging development settings, such as fragile or conflict-affected countries, and underserved sectors such as the climate, biodiversity, education and health sectors; underlines, at the same time, the need to minimise any associated risks to the EU budget, such as increased demand on the EU budgetary guarantees, and to preserve the high credit rating of the EIB;

15. Underlines the importance of private sector mobilisation in tackling development challenges; considers blended finance to be an option from the development finance toolbox that could complement public investment in a constrained budgetary context; recalls that it should respect the principle of additionality; calls for blending operations to be limited to areas where they can add value to the local economy, and calls for a careful assessment, in particular when targeting least-developed countries, with a view to limiting debt burdens, safeguarding essential public services such as health, education and social protection, and not widening existing inequalities; acknowledges the continued relevance of grant-focused aid in these contexts; considers that blended finance rules should be set according to the different development contexts, allowing flexibility in the balance of the blended elements; expects the EIB, EBRD and other European development and finance institutions to ensure that all projects, and in particular blended finance projects, contribute to the EU development goals, including those concerning least-developed countries;

16. Reaffirms that all implementing partners and financial intermediaries involved in projects linked to EU guarantees or financed from the EU budget must fully follow EU social, environmental, tax, transparency, anti-fraud and anti-corruption standards, policies, rules and procedures; calls on the Commission to assess, monitor and report back on these aspects as well as on the adequacy of budgetary guarantees, including through country-specific risk assessments; underlines the need for increased transparency as regards final beneficiaries;

17. Highlights the need to increase the transparency of the current framework, including programming and reporting processes, and for Parliament to be more heavily involved, in order to enhance democratic accountability and scrutiny; recalls that the Tripartite Agreement between the European Commission, the European Court of Auditors and the European lnvestment Bank of 15 November 2021 gives the Court of Auditors (ECA) access to all information related to guarantees from the EU budget; calls on the ECA to fully scrutinise and regularly report on operations backed by guarantees from the EU budget, addressing any shortcomings in its working methods that are currently preventing it from doing so; underlines the importance of carrying out an independent evaluation of the EFSD+ and the Team Europe approach in due time to assess their effectiveness, performance and development impact; underlines the need to ensure the EFSD+ facilitates learning about best practices for sector- and region-specific projects;

18. Calls on the Commission and EFAD institutions to promote transparency in their procurement procedures; recalls that EU businesses should be able to compete in equal circumstances with businesses based in non-EU countries;

19. Underlines that obtaining relevant, consistent and comparable information in a timely manner is essential for measuring progress and actual results, and for identifying whether EU development finance has been effective and additional to other finance; regrets the absence of a unified reporting and results measurement framework with comparable indicators for the EFSD+; encourages the Commission to develop such a framework to make it possible to harmonise results management; invites the Commission to update Parliament on the content and implementation of this framework;

20. Looks forward to the ECA special report on programming development aid, which will assess whether EU development aid for 2021-2027 has been allocated according to a well-defined strategy; stresses the importance of assessing the additionality of blended finance to determine the effectiveness of these instruments in achieving development results and policy objectives based on EU values; invites the ECA to consider performing such an assessment;

21. Recalls the EU’s global commitment to defend and promote human rights, which are indivisible, universal and interdependent; expects all involved parties to fully respect the protection of human rights or procedures to prevent human rights violations, following repeated calls, inter alia from Parliament;

22. Stresses that gender-responsive investment involving women enhances the effectiveness and sustainability of development policies; calls on the Commission, the EIB, the EBRD and European development finance institutions to ensure their advisory and technical assistance teams are equipped to advance gender equality and inclusive development, notably by employing gender specialists;

23. Calls for EFAD to contribute to the full implementation of the EU’s third gender action plan; recalls the target for at least 85 % of actions to have gender equality as a principal or significant objective, of which at least 5 % should have gender equality and women’s and girls’ rights and empowerment as a principal objective; calls for an obligation for all EFAD operations to collect gender-disaggregated data and include ex ante as well as ex post gender impact evaluations.

 

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OPINION OF THE COMMITTEE ON FOREIGN AFFAIRS (12.5.2022)

for the Committee on Development

on the future European financial architecture for development

(2021/2252(INI))

Rapporteur for opinion: Isabel Santos

 

SUGGESTIONS

The Committee on Foreign Affairs calls on the Committee on Development, as the committee responsible, to incorporate the following suggestions into its motion for a resolution:

1. Welcomes the Council’s recognition that a new European financial architecture for development (EFAD) should follow the ‘policy first’ principle and stresses that the EU’s crucial efforts in development cooperation must respect the interests of partner countries and be consistent with other EU external activities and in line with its strategic interests, its transformation needs, and especially with the EU’s values, including rule of law, democracy, human rights, gender equality and climate;

2. Notes the central role of the Neighbourhood, Development and International Cooperation Instrument (NDICI-Global Europe), including its European Fund for Sustainable Development Plus (EFSD+), and the need to respect the instrument’s objectives, guidelines and spending targets, such as those on climate, biodiversity and gender mainstreaming for the EFAD; is mindful of the need for Parliament’s close involvement to set the strategic orientation for and enable general scrutiny of the programming and implementation;

3. Welcomes, in this context, the EU’s readiness to tackle most pressing global challenges by investing in the sustainable development of global infrastructure, in particular in green technologies and digital connectivity through the EU Global Gateway, while fully respecting the Sustainable Development Goals, the Paris Agreement, strong biodiversity protections and the rights of indigenous peoples and local communities; calls on the Commission to work on effective governance of the Global Gateway strategy, which has to be advanced under the overall steer of the President of the Commission, and to coordinate closely in this regard with the Vice-President of the Commission / High Representative of the Union for Foreign Affairs and Security Policy, the European External Action Service, the Council and Parliament, making sure that active ownership is given to EU institutions and to Member States under the Team Europe approach; calls on the Commission to duly involve Parliament in decisions on the Global Gateway investment programmes, and keep it regularly informed about related developments, including budgetary implications, as they unfold, notably through scrutiny of NDICI-Global Europe;

4. Underlines that new players have emerged in global financing, including countries that have economic and geopolitical interests that often contradict those of the EU and that oppose the EU’s concept of democracy, rule of law, peace and sustainability; calls, in this respect, for the European Investment Bank (EIB), the European Bank for Reconstruction and Development (EBRD) and other development finance institutions (DFIs) to create a framework for enhanced cooperation on joint financing projects and platforms and to improve the effectiveness of their delivery in countries outside the EU thanks to strengthened social, environmental and human rights due diligence on their operations, as well as solid accountability mechanisms for impacted communities;

5. Underlines the importance of more efficiently utilising synergies and better harmonising the financing initiatives of the EBRD, the EIB and other DFIs that are targeting European neighbourhood countries, with particular importance given to EU candidate countries; recalls, against the backdrop of the ongoing war in Ukraine, that European financing in neighbourhood and candidate countries is an indispensable element of the reforms required to fulfil accession criteria, in line with the EU’s foreign policy interests;

6. Regrets the reduction in the budget allocation for some regions in the EU’s 2021-2027 multiannual financial framework; is, at the same time, aware that the geopolitical impact of funds allocated to regions, such as Latin America, does not necessarily depend on the overall amount of the budget; stresses, in this regard, that there must be adequate policy steering from the Commission to ensure that the available instruments offered by the EFSD+ are used to strengthen close partnerships with regions and contribute to their development;

7. Notes the Council conclusions of 4 June 2021, where Member States endorsed the ‘Status Quo Plus’ option to improve the current situation for more effective cooperation between the EIB and the EBRD, alongside DFIs in a Team Europe approach; reiterates that the Team Europe approach could strongly contribute to the EU’s ability to fulfil its development objectives in a competitive global financial landscape; welcomes the recently adopted roadmap for improving the EFAD and calls on the Commission to encourage the Member States to pool resources and financing and work together on coordination and communication in common projects (Team Europe initiatives); emphasises that the EFAD must avoid gaps and overlaps in order not to undermine the EU’s development impact and leadership;

8. Calls on the Commission to move forward from the current status quo and provide a strong and clear policy steer, under the appropriate guidance at the highest political level, to ensure consistency of EU action as Team Europe by proposing concrete actions and a roadmap for applying the enhanced EFAD in the successful implementation of European initiatives, such as the Global Gateway strategy, the Green Deal or the Strategic Compass after its adoption, in order to strengthen the EU’s strategic autonomy and strategic solidarity with like-minded countries, and its ability to contribute to international stability, security and peace, in particular as regards the promotion of and respect for international law, in close cooperation with the UN, NATO, the Organization for Security and Co-operation in Europe, the African Union and partner countries, or if needed, alone; calls on the Commission to promote the EU’s values through its partnerships;

9. Welcomes the multi-pillar structure of the EFAD, which leverages the expertise and role of all of its members, i.e. the EIB, EBRD, European bilateral financing institutions and European DFIs; calls for further coordination and cooperation among these EFAD members in line with the Council’s conclusions on the EFAD; recalls that the EFAD must be based on an inclusive architecture, work with all European development banks and financial institutions, build on their respective expertise and added value and contribute to stronger development impact and additionality; calls on the Commission to propose concrete and timely actions to strengthen cooperation among these actors and to promote inclusive partnerships with smaller European DFIs in the spirit of Team Europe, including through a tailored approach to support the latter in accessing financing and in their pillar assessment applications;

10. Stresses that DFIs are encouraged to take more risk in their investment programmes through the EFSD+, so as to also reach the most fragile economies; calls on the Commission, in this respect, to play a greater role in ensuring measurable and additional development impacts without distorting the local market or unfairly competing with local economic actors, and in helping to develop the supply side of projects by providing support for project preparation and helping DFIs to coordinate, while ensuring the integration of smaller DFIs;

11. Reaffirms the specific role and responsibility of the EIB as the EU’s financial arm with a global reach; calls for the EIB to be further capitalised on as an exclusively EU-owned tool for reinforcing its operations in support of the EU’s external policy priorities and ensuring inclusive cooperation with European development banks and financial institutions; welcomes, in this regard, the establishment of EIB Global; calls for the EIB’s capacities on the ground to be strengthened to support the Commission in policy dialogue and project identification;

12. Welcomes the significantly enhanced open architecture under the EFSD+ and calls on the Commission and Member States to provide the EIB, the EBRD, European bilateral financing institutions and European DFIs with a reliable and enhanced operational environment based on a solid, level playing field in terms of governance and access to EU resources, where they can effectively undertake their strengthened roles in external lending operations and mobilise resources from the private sector, while ensuring transparency and guaranteeing accountability and proper scrutiny, as required by NDICI-Global Europe and through the further improvement of the independent complaints mechanisms and the due diligence framework; is cognizant of the fact that resources of the magnitude required for the relevant initiatives, such as the Global Gateway, will not be attained in the absence of public and private actors joining forces;

13. Calls for a better geographical balance in the use of EFSD+ blending and guarantees in line with NDICI-Global Europe and for support for the least developed and most fragile countries; stresses, in this context, that the EIB needs to strengthen its capacity to support private sector development in Africa and, in this regard, calls on the EIB to dedicate more funds to African micro-, small and medium-sized enterprises through the EFSD+ blended budget;

14. Notes that the Team Europe approach provides a unique opportunity to leverage EU impact and visibility in the world far more than is currently the case and to further promote our values and interests, while leaving no one behind; expresses the need for an inclusive Team Europe spirit to also be put into action in the EFAD; notes that the key to the success of the Team Europe approach is EU policy-guided cooperation and coordination in a transparent and inclusive environment, including making information contained in Team Europe initiatives publicly available, such as intervention costs, financial instruments deployed and which investments are jointly owned by partner countries; emphasises that Parliament’s early and close involvement in the strategic orientation, programming process and scrutiny of Team Europe initiatives is key to preserving their democratic legitimacy; highlights, in this sense, that Parliament should further reinforce the EFAD’s functioning under the Team Europe approach; reiterates that in order to address today’s global challenges, it is essential to make the EFAD more relevant, consistent and responsive, but this cannot be at the expense of Parliament’s rights of scrutiny over the way external action funds are used and on the setting of political priorities, which should be adequately catered to;

15. Underlines, in this context, that the EFAD requires a decentralised approach to be successfully implemented, and thus recalls the need to strengthen the role of the EU delegations as focal points to facilitate upstream discussions with Member States, the EIB, the European DFIs, private sector actors and other partners on the ground in a Team Europe approach; underlines the importance of this stronger coordination between the Commission, the European External Action Service and the EU delegations, especially in developing countries with the most fragile economies, to facilitate discussions and cooperation with relevant actors on the ground in order to identify the most effective projects;

16. Calls on the Commission to ensure that financing institutions implement the conditionality principle, with regard to the EU’s Instrument for Pre-accession Assistance, the NDICI-Global Europe and all other relevant financial instruments, by linking it to the respect for rule of law, human rights and democracy and deeply anchoring it in the EFAD; underlines that gender equality, in particular, women’s economic empowerment, and gender mainstreaming, in line with the requirements of NDICI-Global Europe, need to be key focuses of the EFAD;

17. Recognises that the EFAD is focused on the most vulnerable regions and where the needs are greatest, notably least developed and fragile countries, especially in Sub-Saharan Africa, but urges that it be borne in mind that around two thirds of the EIB and EBRD’s combined external operations are concentrated in accession and neighbourhood countries where the EU needs to deliver on the recently launched Economic and Investment Plans for the Western Balkans, as well as in the Eastern and Southern Neighbourhoods, in line with the Paris Agreement, strong biodiversity protections and respect for the local communities concerned; calls, in this regard, on the EIB and the EBRD to strengthen their role by enhancing cooperation through concrete actions.

 

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