EU launches controversial world aid reform

The world's biggest donor, the European Union decided on Thursday to slash aid for emerging powers like China, India and South Africa in order to focus on the world's poorest nations. The European Commission unveiled sweeping changes to the distribution of EU aid, drawing concern from international charity groups worried that the shift could come at the expense of the neediest people. The reform also calls for a shift to focus on key growth sectors such as agriculture and energy, but the non-governmental group ActionAid said this would benefit EU companies while it would have "questionable impact" for the poor. "We must keep pace with changing realities in the world and adapt the way we fight poverty as a result," said EU development commissioner Andris Piebalgs. "That's why I'm proposing today that we refocus our aid priorities to ensure that countries are on track to achieving sustainable and inclusive growth. I want to make sure that every euro reaches those that need it most," he said. The 27-state EU is the world's biggest donor, accounting for 50 percent of world aid with 53.8 billion euros ($73.9 billion) handed out last year. The European Commission, the EU's executive arm, manages 20 percent of that aid, or 11 billion euros. The commission said in a policy paper that it would increase the "volume and share of EU aid to the countries most in need and where the EU can have a real impact, including fragile states." This will mean drops in aid to the world's emerging powers. Between 2007-2013, some 980 million euros are earmarked for South Africa, 470 million euros for India, 170 million euros for China and 61 million euros for Brazil. Other middle-income countries such as Argentina will also see a fall in aid, Piebalgs said, adding that a full list would be released by the end of the year. In each country receiving aid now, the EU will focus on a maximum of three sectors to avoid dispersing money too widely. The commission wants to limit its activities to agriculture and energy, as well as good governance, social protection, health and education. "We applaud the EU's decision to focus on health, education and agriculture, as these sectors have the greatest impact on improving the lives of those most in need," said Natalia Alonso, head of the EU office of Oxfam charity group. But, she cautioned, "the proposal to cut aid to some middle-income countries will most certainly have an impact on the poor." With 75 percent of the world's poor live in middle-income countries, ActionAid called the changes an "alarming shift" that moves "EU aid away from supporting poor people to end poverty and towards promoting economic growth." Laura Sullivan, EU development policy expert at ActionAid, said the reform "assumes money from economic growth will trickle down to the world's poor but this has been tried before and it doesn't work." Piebalgs vowed that choices will be based on objective criteria and that Brussels will only cut programmes when it "believes that governments are capable of fighting against poverty on their own."