The Africa-EU partnership: effective or not?

In response to yesterday’s annual college-to-college meeting of the African Union Commission (AUC) and the European Commission, hold in Ethiopia, I thought it would be nice for once to reflect on their connection, as we nowadays are more focused on the Middle-East part of the world.

Establishments

Europe and Africa have close historical, cultural and geographical ties. Their relationship is based on the 2000 Cotonou Agreement with African, Caribbean and Pacific (ACP) countries. It was established in 1975 at the Lomé Convention. The main financial instrument for development cooperation in ACP countries is the European Development Fund (EDF) which was created by the Treaty of Rome (European Union External Action, 2016). Last year, there was a public consultation held by the European Commission and the High Representative of the Union for Foreign Affairs and Security Policy, to discuss key questions pertaining to the partnership and relations with the ACP group after 2020, as the current one lasts until 2020.

The Euro-Mediterranean Partnership, was established in 1995 and its main objective is to create a deep Euro-Mediterranean Free Trade Area which aims at removing barriers to trade and investment between both the EU and Southern Mediterranean countries (with the exception of Syria and Libya). Together the region represents 8,6% of total EU external trade.

The Joint Africa-EU Strategy, is another essential fundament of their partnership. This strategy was adopted, as the first and only intercontinental partnership strategy of the EU, at the EU-Africa Summit of Lisbon in 2007 and reaffirmed at the Summit of 2014. They want to strive together towards 2 unions and 1 vision, as a partnership between equals, and align common issues in order to solve them as soon as possible.

Financing the Partnership

The EU and its Member States together remain the biggest aid donor of Official Development Assistance (ODA) to Africa worldwide. It also remains Africa’s top trading partner even if Africa is expanding its economic relations with other continents. Around 20 percent of all foreign direct investment in Africa comes from EU firms. Funds are to be provided not only through the EU budget, but also by EU Member States and where possible, through AU Member States and African instruments and institutions like the African Development Bank. The Africa-EU partnership is currently governed by Roadmap 2014-2017. The bond between the two continents has been very effective thus far, it has delivered results in various areas of cooperation, including peace and security, democratic governance, infrastructure, and Millennium Development Goals (MDG’s). For example, in infrastructure many projects have received financial support of the EU, for a total value of €6.5 billion and it was estimated that the return on investment was 12 times what had initially been invested. The European Union contributes and supports more than 80% of the African Union Commission programme budget. Since 2013, the European Commission alone spend approximately €1.7 billion to the African Union. The Pan-African Programme (Panaf) is an initiative of the EU and operates as a funding instrument in order to help integrate African countries and regions better. The Panaf amounts to €845 million for the period of 2014-2020. ‘’The Programme allows to better addressing the needs of the Africa-EU partnership, focussing on trans-regional and continental challenges in Africa as well as supporting activities of common interest at the global level (The Africa-EU Partnership, 2016).’’ The EU has concluded several successful negotiations for Economic Partnership Agreements (EPAs), in particular with West and Southern Africa in 2014 and with the East African Community in 2015.

All this promises to be very well for the economic prosperity of Africa, but how about the current migration crisis of refugees from Africa who flow daily into Europe. Is there still enough money to give to the least developed countries (LDCs), such as the African continent? More and more European ‘’donor’’ countries are cutting aid from their national foreign aid budget which was reserved for the LDCs, this is especially dangerous as the global goals for sustainable development are set to meet less poverty in those areas by 2030. As Adrian Lovett, Europe executive director for the ONE campaign, said: ‘’As more aid is diverted to offer vital help to the increasing numbers of refugees arriving in richer countries, people in desperately poor nations are paying the price.’’   

In the graph above, you can see the percentage of aid spent on in-country refugees. It dates from 2013, but Sweden is still the country which spends most of its aid budget on refugees. I think it is understandable that Italy and Greece spend almost the entire aid budget on refugees, as they have had austerity measures forced upon them due to amongst other things; the Eurozone crisis. However, I believe that other European countries need to deal at first with refugee’s cause of having a lack of opportunity to have a decent life in their own countries, and not treat solely the symptoms. In other words, invest more in LDCs instead of in refugee camps as Europe no longer can bear the burden. In previous years, money supply disappeared due to political corruption that’s one of the reasons why EU member states rather choose for using the oversees aid budget on the refugee crisis in their own country. Many of the migrants are not worst-off in their home countries, which became clear in a Frontex report. Besides, the vice-president of the European Commission, Frans Timmermans, said earlier that around 60% of the so-called refugees are actually Africans, including Moroccans and Tunisians, who are leaving their own countries for ‘’economic reasons’’ and not for emergency reasons such as war or poverty. Many people are convinced that it is just a question of logical reasoning when it comes to relocating aid money, as people flee from North-Africa it is natural that the aid money is following them to the EU migration crisis.

To conclude,

The entire development assistance system is fragile at a time when demands for aid are increasing. Of course, all these cutbacks in financial foreign aid put a certain pressure on the Africa-EU partnership and these matters were addressed once more at yesterday’s meeting.

 Please leave your comment in the section below.

-Maxime Helgers

1345192

 

 

Turn your attention to Russian funded right-wing parties

The stability of Europe is threatened not only by regional disputes such as a civil war in Syria: The looming potential Brexit, a rapid increase of refugees, an unsolved financial problem, but also Russian expansionism as well as a rise of nationalism which is taking the center stage of politics. People tend to focus on European areas when they think about the current financial situation in Europe, however, they should turn their eyes more to Russia.

The nationalism currently overwhelming Europe has its roots in funding from Russia towards the extreme right-wing parties in each country. In the United Kingdom, the government refuses to make a definite promise of receiving refugees because of popularity of United Kingdom Independence Party who supports Putin (the President of Russia). Although Syrian government troops are invading to retake the city Aleppo which anti-government forces controls, Russia supports government troops through bombardments. It makes the peace process more difficult.

Such Russian action did make a slight contribution to the stock market. Many stock markets in the world plunged in the beginning of 2016, but almost improved later on. Russian and Turkish stock markets raised their stock prices to double figures since the beginning of 2016, and currency and bonds are rallying. However, European stock is falling behind the stocks of other countries. Consider the Stoxx 600 index (which consists of 600 main enterprises in Europe), the rise and fall rate since the beginning of 2016 is still down 6.7%. Especially European bank stocks were heavily damaged. Its drop rate reached 19.5%. The European economy is not in very bad condition. ECB (European Central Bank) announced a quantitative easing policy that ended up working better than expected by financial market in March 2016. On the other hand, even though the headwind still blows from overseas, it is getting weak.

However, I think that there are risks remaining inside Europe. Its refugee crisis response made investors realise the awkwardness of policy making. The pending British referendum could be a further risk. There are still fears that the Greek problem comes to the surface again. When it comes to the euro zone, the acceleration of economic growth is still a desire, not reality. S&P (Standard & Poor’s, a rating firm headquartered in the United States) revised its expectation of the growth of the eurozone by 1.8% to 1.5%. This means that Europe is still waiting for continuous growth. Europe should not wait for so long because it can make investors decrease their eagerness about investment. Furthermore Europe also should make Russia stop funding to extreme right-wing parties.

Anzu Imamura

How sustainable energy evolved from being a moral issue to an economic one

I remember the day An Inconvenient Truth came out on DVD. I was home, still oblivious to many things, and me and my parents decided to go for a documentary. I always had a soft spot for documentaries, but I heard about this particular one often on the news and reviews. An hour and a half later we were not quite the same, the way the movie was put together and the way it communicated the message was masterful, and that message weighed heavily on my personal morals. As it turns out, I was not alone as showed by this study by Nielsen:

“Sixty-six percent of viewers who claimed to have seen An Inconvenient Truth said the film had “changed their mind” about global warming and eighty-nine percent said watching the movie made them more aware of the problem. More importantly, three out of four (74%) viewers said they changed some of their habits as a result of seeing the film.”

To me, although global warming had been an existing issue for a long time, this documentary brought it to the main podium. Our lives could not continue on the current path, and we needed to change habits drastically.

But it felt hard to do. Furthermore what does it change if I become more environmentally friendly? If others don’t do it, why should I? Businesses would just continue doing what they do best, which is business as usual.”. Deep down we would know it, feel it weighing on our sense of morality, but the scale of the challenges was such that it felt like being just a speck of dust on a beach. The USA didn‘t even ratify Kyoto, twice.

But something did change over the years. Awareness and attitudes changed, leading to a change in behavior. I like to think that change took place in Germany. In fact as early as in 1991, Germany passed the Erneuerbare Energien Gesetz, or the Renewable Energy Act, the goals of which are pretty self-explanatory. Over the years the act got constantly revised and more complex to keep the technicalities and legislation up to date, but it helped Germany set the course to become a solar-energy powerhouse on an international scale, despite the fact that Germany is not known for being a sunny country. In June 2014, solar energy managed for the first time to provide 50% of German energy demand, which is massive, not to mention way ahead of other countries. How massive exactly? Roughly 23 Gigawatts, or roughly 19 times the amount needed for Marty McFly and Doc to travel back in time.

Great Scott!

 
But what is really interesting is that although initiatives can be traced early in Europe, the reduction in costs and the explosion of solar panels ending up on the rooftops of Germans and other areas may never have been viable if it weren’t for China. China! The world’s biggest polluter! They are helping the world fuel the energy of tomorrow by driving down the global manufacturing costs with its army of factories and heavy subsidies. And the result of that is that today, solar energy now costs cheaper than fossil fuels, although the Chinese were doing so well one might say they overdid it, outcompeting western companies to bankruptcy, sadly.

Moreover although investors were timid in renewables, like children learning to swim in the water, this also changed with big names like Warren Buffet and Elon Musk warring over control of the market. When these guys are investing in a particular market, you know they’re onto something.

Solar farms in Dubai can offer less than 6 US cents per KiloWatts/Hour, and are currently expanding to bring it even lower. Assuming the price for solar is 5.84 cents per KW/h, it would cost 706,64 US dollars to keep the energy needed for the time traveling DeLorean over the course of an hour, or roughly 2 US dollars per second. Who here fancies a trip?

Time-travel dreams aside, it is clear that renewable energy is no longer a moral incentive, but an economic one, Being eco-friendly has now become part of economic policy for businesses and governments alike. For the European Union, there is definitely a huge stake in energy efficiency. According to the Commission the EU imports more than half of its energy, and because there is no common structure on energy policy between countries, the bill ends up being higher too. The EU outlined its goals as early as 2008 in its integrated energy and climate change strategy, aiming for a 20% increase in energy coming from renewables, as well as for a 20% reduction of consumption and greenhouse emissions for 2020. While it provided a framework for promoting the shift to renewables, it was also the starting point of its vision for an “integrated energy”, and later an energy union. In order to boost energy efficiency and revitalize its energy market, the EU introduced many strategies and goals such as its 2030 energy strategy.

If you take a look at this map:

What you see here is one neat, beautiful map underlining the potential solar energy can have over Europe. See how most of the countries who happen to have the biggest potential are those who were in the deepest of economic troubles during the Crisis: Portugal, Spain, Italy, Greece… Even France gets a chocolate chunk of the cookie. These are areas suffering from high unemployment, so investing in these areas where there is such a high potential can help revive their economies and close the gap between north and south. Seeing Germany’s performance, imagine how well southern countries could do, not to mention eastern countries like Bulgaria and Romania. The money-saving potential is just immense! Not to mention that another advantage is that the price for renewables is more stable than shifting oil prices, or gas, because there is no finite resource. Solar will last as long as the Sun exists, wind or geothermal will continue to supply energy as long as planet Earth exists. Although some days there may be less wind or less sun than others, with data analysis, statistics and forecasts we can easily predict average output, it’s easier to figure out than consumer behavior through CRM.

Lastly, making the EU more energy independent has also a political incentive: Russia. Despite recent events from previous years the EU still currently imports most of its energy from Russia, giving them political leverage. Switching to renewables as fast as possible might perhaps be more effective than applying more sanctions.
For anyone who might be interested to know more, I wholeheartedly reccomend this abridged documentary made by Tegenlicht. Despite the fact that some parts may be in Dutch, English speakers shouldn’t be worried.

-Max.