The European Commission has launched a new development policy, An Agenda for Change. Read a commentary by Simon, Mikaela Gavas and Sian Herbert below , and watch Simon speaking at the launch in Brussels:

The European aid machine is like an oil tanker that takes miles of empty sea to alter course. Standing high up on the bridge at the back of the ship is Development Commissioner, Andris Piebalgs. Observing turbulence ahead, he began to plot a change of course soon after taking office at the beginning of 2010. More than a year and a half of discussion and consultation later, the proposed new course has been announced - in a document just published, called an Agenda for Change. Hang on for another seven months of negotiation, and the EU’s development ministers will approve the new course in May next year. At that point, half way through his five year term, the Commissioner can send a signal to the engine room, and the long manoeuvre can begin. Andris Piebalgs’ leadership should be celebrated, but the shackles placed on leadership in the EUEuropean Union are heavy indeed. Let’s hope that there are not too many icebergs in this particular stretch of ocean, requiring a rapid change of direction!

The new policy claims direct descent from the European Consensus on Development, first published in 2005 and agreed by the Commission, the Council and the Parliament. As in 2005, the Agenda for Change puts the reduction of poverty in pride of place – as, indeed, it is required to do by the Lisbon Treaty. In that sense, there is continuity in EUEuropean Union development policy. At the same time, the new strategy signals four important shifts in priority:

1. i.            a higher profile for good governance and human rights, linked to greater conditionality;
2. ii.            a higher profile for growth, with a strong focus on leveraging in private sector money;
3. iii.            the introduction of the concept of differentiated development partnerships, with new allocation criteria for aid; and
4. iv.            an attempt to boost EUEuropean Union joint work.

The focus on good governance and on growth are signalled in the table of contents, which identify these as the two pillars of EUEuropean Union development policy. All other topics are grouped under these headings.

Good governance encompasses, democracy, human rights, the rule of law and the empowerment of women, operationalised via better public sector management, tax policy, natural resource management and anti-corruption measures. All these will feature more prominently in political dialogue with recipient countries, and will be associated with stricter conditionality. In the best cases, countries will receive budget support, now re-labelled as ‘good governance and development contracts’. Where budget support cannot be justified, money will be channelled away from Governments and in favour of local actors and NGOs.

Growth is carefully defined as needing to be both inclusive and sustainable, wording which permits health, education and social protection to be name-checked. The main emphasis, however, is on finding new ways to engage with the private sector, blending grant finance with loans and guarantees in order to leverage private sector finance. There is also strong emphasis on energy, with a link to climate change.

The idea of differentiated development partnerships provides the justification for introducing new allocation criteria for aid: not just poverty, but also capacity, country commitment and potential EUEuropean Union impact. Priority will be given to sub-Saharan Africa and the EUEuropean Union Neighbourhood, with the explicit implication that countries which fall outside the regions, or that fail to meet the new criteria, will receive less aid.

Finally, a familiar theme, the new policy calls for greater coordination among EUEuropean Union Member States, pointing to the costs of fragmentation and proliferation, and suggesting joint programming, single EUEuropean Union contracts for budget support, and common EUEuropean Union frameworks for measuring and communicating results.

Tacked on at the end of the document, in four short paragraphs, are some aspirations for greater policy coherence, especially a joined up approach to security and poverty, and a plea for a better approach to migration.

The differences between the European Consensus and the Agenda for Change are highlighted in the table below. There is necessary and welcome evolution, but in the context of clear strategic consistency.

In making judgements about the new approach, the starting point has to be that this is work in progress. The Agenda for Change is not, yet, a new policy. It is a proposal from the Commission to, among others, the Council and the Parliament. There will be a negotiation between now and next May, which will certainly result in some things being taken out, and, perhaps, others being put in. Joint Programming is likely to be eliminated early on, for example, despite the merits of the idea, and notwithstanding that the Commission holds dearly to the idea.

There is other unfinished business. For example, it is hard to grasp what the operational implications of the policy might be, in the absence of numbers. We are told that ‘an increased share’ of the EUEuropean Union country and regional programmes will be dedicated to the new policy priorities. What is the current share? What will it grow to? Over what period? Similarly, ‘some countries’ may receive less or no grant aid. Which countries? How much do they receive now? And how much less will they receive in future?

The financial questions are probably difficult to answer while the whole EUEuropean Union budget is up in the air, and this is another piece of unfinished business. The European Commission disbursed some €11 billion in ODAOverseas Development Assistance last year, making it the second largest source of ODAOverseas Development Assistance in the world. Will this continue after 2014, when the new Multi-Annual Financial Framework comes into force and when the replenishment of the European Development Fund is agreed? How does the financial settlement shape decision-making – for example on allocation of aid to ACPAfrica, Caribbean and Pacific countries? And where will climate funding fit?

Climate change is an example of issues that lie beyond the sole remit of the Development Commissioner, and a final piece of unfinished business is to link the Agenda for Change to the rest of the development agenda – whether global imbalances in the world economy, or the management of shocks – or, come to that security and migration. There is filling out to do if the new policy is not simply to stand as the policy of an aid administration, but rather that of an outward facing European Union.

The captain of the oil tanker has scanned the horizon and seen the turmoil caused by financial instability, global food crises, climate change and insecurity. Those are the icebergs which require and legitimate change. Now that Andris Piebalgs has listened to official and non-official voices on which way to steer, it would be good to speed up the unfinished business and formalise a new course.

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This commentary has also been published by ODIOverseas Development Institute (London) (see here) and the European Development Cooperation Strengthening Programme (see here)