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EU Development Policy

2nd of June 2009, Group 9 - Team A

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


 EU Development Policy
 Milestones / Main Tenets
 EU and HIPC Initiative
 Economics Behind
▪ The Vicious Circle of Poverty
 EU Reality Check: Ghana
 Ghana and HIPC Initiative
 Ghana and the Vicious Circle of Poverty
 Conclusion

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


 1950: Schuman Declaration
“Development of the African continent”
 1957: Treaty of Rome
Development assistance officially
introduced in EC
 1975-1995: Lomé Conventions
Geographical widening (ACP countries) &
trade arrangements
 2000 (revised 2005): Cotonou
Agreement
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 Built on 3 Complementary Pillars:
1. Development cooperation
2. Economic and trade cooperation
3. Political dimension
 Objective 1:
 Eradication of poverty in the context of
sustainable development (to achieve MDGs)
 Objective 2:
 Economic cooperation to integrate economies
gradually and smoothly into world economy
  African, Caribbean, Pacific (ACP)
countries
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 Rationale
 The HIPC Initiative funds debt relief for all ‘Highly
Indebted Poor Countries’ (HIPCs)
 Initiators
 Established 1996 by World Bank & IMF / EU
support since
 $51 bn funded in total / EU: $1.6 bn
 Objectives
 Lower external debt burdens of HIPC
governments
 Finance add. government spending on poor
people
 Conditions
 Eligibility is based on external debts and income
per capitaGroup 9 Team A - EU Development Policy – An Ambiguous Case
June 2, 2009
Debt
Relief
as
Soluti
on ?

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


 2002: Ghana’s initiative to revive economic
growth
 Application for HIPC programme (set an end to
debts)

 Pre-2004: Successful efforts to restructure:


Efficienc
 Administration (combating corruption)
 Procedures y
 Practices

 2004: HICP completion point reached after:


 Poverty reduction
 Improved macroeconomic performance (e.g.
inflation) Group 9 Team A - EU Development Policy – An Ambiguous Case
June 2, 2009
 IMF Resident Representative in
Ghana stated:

“Ghana has achieved relatively strong


economic growth with significant
reduction in the rate of inflation and
other efficiency related
improvements. The progress is
overall satisfactory.” (IMF, 2005)
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 Magic Formula:
 1. Reform system
 2. Remove corruption
 3. Insert aid
 4. Flourish
 Set of conditions and assessments made
sure Ghana will be able to act under the
right measures when receiving debt relief
through HIPC

  consider economic AND political


infrastructure to prevent wasted aid
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 After all this, sneaky trade barriers remain:
 Major obstacle to the eradication of poverty
 Example 1: EU’s export restriction on Ghanaian
cocoa using the chocolate directive (main
export product to the EU)
 Example 2: Strict EU regulations on banana
exports, regarding
▪ Size
▪ Weight
▪ Colour
▪ Shape
▪ Texture
▪ Quality

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


June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 Adjei Henaku, the Executive
Secretary of the Ghana Farmers’
Association, put it like this:

“It is extremely difficult to figure


out how the dumping of cheap
poultry parts-like legs, wings, necks
- that have no markets in the EU
anyway, could be permitted in the
name of free trade that is supposed
to promote competitiveness.”
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 In order to escape the poverty cycle
an income high enough to allow
savings must be achieved 
investment!
 Sneaky export restrictions and dumping
prevent exactly that
 So the EU is making efforts to eradicate
poverty while partially being the source
of it
▪ Going 2 steps forward, and 1 back each time?
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 No, 2 steps forward and 1.5 back:
▪ It can be good though:
 With the support of international donors
Ghana has been able to curb economic
growth between 1991 and 2002 by 4.2
percent per annum (European Commission,
2006).
▪ However, Ghana has a much higher potential, still
largely depends on primary products 
deteriorating terms of trade...
 EU’s economic interests still main
priority, interest groups still dominant
 Aid could have a much bigger positive
impact!
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
 http://www.youtube.com/watch?v=Bl
Dhd_0f-r4
 Aim: Eradicate poverty and integrate
economies into world economy
 Ghana:
 HIPC partly helps to break vicious circle of poverty
 EU trade barriers and Directives hinder sound economic
growth
 Works on poverty reduction but hinders economic
integration
Statement confirmed:
EU Development Policy reveals
ambiguousness
 What should be done?
 Remove barriers to trade
 Stop dumping
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
The World Bank (2009). Poverty. Retrieved May 5,
2009, from:
http://www.worldbank.org/depweb/beyond/beyondbw

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

Damned by Debt Relief (movie)


(2007). Retrieved May 28, 2009, from:
http://www.youtube.com/watch?v=BlDhd_0f-r4
June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case
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June 2, 2009 Group 9 Team A - EU Development Policy – An Ambiguous Case