Thank you very much for providing me with this opportunity to present the Commission’s point of view on one of the main challenges for the future of development policies: how to achieve the MDGs and what is the role of the Commission in this respect.

As Europeans, we share core values such as the respect for human dignity, liberty, democracy, equality, the rule of law, human rights.

A Europe of 25 Members states should be inspired by these core values and play a coherent and real role as a global partner, in assuming regional responsibilities, promoting sustainable development and contributing to world peace and security.

With more than 450 millions inhabitants and a quarter of world output, an EU of 25 members should have a considerable influence over the long term political and economic choices determining prosperity and stability in the world, which in turn, influence the well-being and security of European.

We must realize that new interdependences are developing between the North and the South, which have a major importance for the management of international relations: globalization of commercial and financial systems, with its positive and negative consequences, population growth and poverty, with their repercussion on migratory pressure, ecological disorder and insecurity.

The obvious increase of this tensions call for additional efforts from the industrialized countries in order to avoid the appearance of irreversible gaps and antagonism, and development cooperation must play here an essential role.

This means two things:

1. That development cooperation is not only about moral values and solidarity. Long term development cooperation is also the best structural solution to address the root causes linked to poverty, of potentially violent conflicts, migratory pressure and insecurity.
2. But it means also that development cooperation must be a policy on its own rights and cannot be subordinated to short term security imperatives.

Actually, the two agendas are complementary. There cannot be no development without peace and no peace without development.

As you know, over the past ten years, reflection on development issues has undergone a remarkable evolution. A series of international conferences dedicated to specific issues have taken place (Cairo, Rio, Monterrey, Johannesburg) which sought to respond to the major challenges facing developing countries and which culminated in the adoption of the MDGs. This was an outstanding result. For the first time, the international community agreed on a set of universal development objectives which were linked to a specific timeframe and aimed at poverty reduction on a global scale. Remember that to day, half of the population of the world live with less than 2 $ a day, and nearly 1,5 billions with an income of 1 $ a day.

It was the first time in the history of development cooperation, that, despite a lot of difficulties, we all agreed on the objectives and we all took on commitments in this respect.

We have no other choice but to use the MDGs and their objective of poverty reduction as a framework for our strategies and action on development cooperation.

This is what we have decided clearly within the Commission, which, you will recall, disburses 6 billion Euros per year, represents 10 % of global aid and has become the third donor in terms of volume.

What does that mean in concrete terms?

First, that we have made poverty reduction the central objective of our development policy. This is reflected in the OPS of November 2000, with its 6 priorities and its 3 cross-cutting issues.

And when I say reduce poverty and contribute to the MDGs, this does not mean only focusing on health and education – as some parties sometimes believe.

It means improving the revenue of a country and its population and, by doing this, contributing to the MDGs. Macroeconomic reform, trade liberalisation, development of the private sector and policy coherence are all essential elements of the policies and strategies to be implemented in order to achieve the MDGs.

Second, that, since 2000, we have put in place specific policies, guidelines and initiatives to assist developing countries to achieve MDG 1 to 7.

We have anchored our strategies on PRSP of the countries concerned.

We have developed a food security strategy to overcome problems of food shortages and address structural food security problems.

We have been particular active in supporting primary education and health, at national and global level.

In particular, you know the priority we have attached to sexual and reproductive health since the decision taken by the Bush administration.

You know the focus we have put on confronting HIV/AIDs, Malaria and tuberculosis.

Our annual average resources have increased threefold compared to the 10 years period before 2002. Our contribution for the period 2003-2006 is close to 1,2 billions €.

You are certainly aware also of the initiatives we have taken on water and sanitation in Johannesburg followed by the ACP-EU water facility of 500 millions euros.

It means finally, that, on the basis of the MDGs, we drew up 10 results-oriented indicators which we take into account systematically, not only in our country cooperation strategies and the periodic reviews, but also, in the budgetary support which we provide to a certain number of countries.

In this context, we use these indicators to measure the performance of countries and to spend our aid depending on results achieved rather than on the condition of measures and actions to be implemented a priori.

The indicators which we have retained are indicators which measure impact and results (for example, the ratio of registration in primary education, the amount of births assisted by health staff, or the proportion of the population with access to drinking water).

This choice was made based on the relevance of these indicators in terms of the poverty situation, but also based on the availability of statistical data in this regard.

But, while useful as a measuring tool, indicators do not tell the full story.

MDGs are closely interrelated and development strategies rarely target just one objective. To give just a few examples: combating HIV/AIDS is impossible without addressing women’s empowerment as a central concern. Reducing the proportion of people leaving in absolute poverty or suffering from hunger requires sustainable water use in agriculture and combating land degradation. Lack of access to clean water and sanitation has a major impact on health, notably child mortality.

Moreover, it should be underlined that many Community interventions contribute to creating a conclusive climate for achieving the MDGs, although they are not reflected in any indicator.

This is typically the case for budget support, which allows the financing of recurrent costs, or transport which is the basis for trade, economic development and effective delivery of basic services.

If I have mentioned all these initiatives, it is not to be part of a kind of beauty contest.

It is to illustrate that we have been serious in implementing MDGs. It doesn’t mean that we have been perfect. And we have failed on some issues. In particular, we have not been very good in mainstreaming gender equality or environment in our strategies.

So there is still a lot to do.

It was against this background that, in a meeting at the end of April, the EU Council of Ministers on Foreign Affairs decided that the European Union should assume a leadership role in the UN Event on the MDGs, due to take place in September 2005. The Council invited the Commission to prepare a consolidated European Union report in order to highlight the role of Member States and the Commission in the contribution to achieving the MDGs. This consolidated report will be based on the individual reports prepared by the Member States and the Commission which has just finalised its own.

As the main ODA donor in the world and the principal trading partner for the majority of developing regions, it is clear that, at the UN Event, the Union must make an unambiguous demonstration of its weight, its commitment, its capacity to influence, its visibility and of the essential role it plays in the contributions to the MDGs.

This report will underline first of all how the European Union contributed to the different MDGs in terms of strategies, policies, action and financing, with a particular focus on MDG 8 which foresees specific commitments for developed countries. I am talking about contribution and not attribution, which would not make any sense. It is widely recognised that attempts to attribute the evolution of MDG 1-7 indicators to particular donor inputs would be artificial and contrary to the principle of ownership and partnership.

However, beyond this ‘reporting’ exercise, an important aspect of the report will be the suggestions for the ‘way forward’ in order to accelerate progress towards the MDGs.

Unfortunately, a clear message has been emerging from each report published over the past few months on the MDGs: No doubt the world as a whole will reach the objective of halving poverty by 2015. However, this progress is due almost exclusively to the progress made by India and China. By contrast, the situation in Africa is extremely worrying.

The EU is Africa’s largest trading partner and the most important donor on the continent. Over the next 10 years, it is, therefore, imperative that the Union takes the initiative to propose a series of measures to give Africa a reasonable chance of achieving the MDGs.

There is no doubt that the Africans themselves shoulder a large part of the responsibility in this situation: conflicts, corruption, weak institutions and human resources, inadequate infrastructure, vulnerability to exogenous shocks etc.

Yet, beyond the routine ‘bla bla’ on economic growth, institutional support, governance or the legal or fiscal framework favouring private sector and investment, at the level of the international community, there is a pressing need to seriously reconsider the way in which we support this continent.

In this context, I would like to share 4 thoughts with you.

First, a significant increase in public aid is an absolute necessity. It is a question of survival for this continent. It is a question of credibility for the donors who took on commitments at Monterrey – they must respect them.

The European Union will exceed the level of commitments it had set itself for 2006. But what about after 2006? A Monterrey II is crucial.

At the same time, when I see the figures put forward by certain parties - Jeffrey Sachs in particular - in order to achieve the MDGs, I feel somewhat light-headed (depending on the estimates, the figures vary from 40 – 100 billion dollars per year).

Putting forward such figures obviously creates absorption capacity problems for the country concerned as well as problems of realism and of raising the beneficiaries’ expectations…..this makes it difficult for us to manage.

Second, regardless of the level of resources which will ultimately be decided, we must ask ourselves if we possess the appropriate instruments for implementation.

For example, in order to address the question of Aids, the governments of the countries concerned must be committed to providing the necessary therapy over a period of a number of years. This implies that, in their budget, these governments should dispose of guaranteed resources which are neither volatile nor unpredictable.

We do not yet have mobilisation mechanisms at our disposal which would respond to this demand: budgetary support is volatile due to the conditionalities attached to it whereas project-aid entails infamous problems of transaction costs, investment budget limitations etc.

We must reflect on those instruments which can reconcile the predictability needed by governments, the incitement sought by donors and the checks and balances required by our Parliaments.

My third reflection is what we call ‘alignment and harmonisation’.

I have talked about all of these major international conferences which have taken place on global development questions as well as on more specific areas. Rio, Monterrey, Johannesburg, Marrakech…..

The list of high level events is impressive: nice places, nice words magnificent ideas. But what is really happening on the ground?

On the ground, we continue to absorb the time and energy of Ministers and high level officials for our own individual donor missions and multiple requests.

We arrive at different times, without any connection to the national agendas of the countries concerned, sometimes with teams of 80 people.

We continue to demand words and texts on development policy as well as conditions and indicators which go well beyond what was agreed in the PRSP.

Sometimes I have the feeling that we are much more demanding on Africa and impose more conditions here than with any other continent.

If we are serious about the concept of ownership and about the necessity of reducing transaction costs, we must align our processes with the PRSP process (including its reviews) and with the budgetary cycle of the countries concerned.

Moreover, I am also convinced that nobody is today in a position to manage neither the large quantity of donors, nor the large number of areas which make up development policy. Everything occurs as if we were facing a huge puzzle and no-one were in a position to put together the different parts and piece together, to reframe the picture or the usual setting.

Coordination has not proven to be an adequate instrument in dealing with this situation. We need to go further and to make a firm commitment to the division of tasks and harmonisation.

In my final reflection, I would like to stress that, over and beyond an increase in aid and a profound revision of its modalities for mobilisation, there will not be sufficient progress towards achieving the MDGs if the countries of the North do not open up their markets to exports from the South and if they do not abolish, progressively, their trade distorting subsidies which undermine and discourage local production in the South.

The European Union has set the example by implementing its ‘EBA’ initiative which allows all LDCs free access to the Community market for all their exports except arms, but also by starting to reform its common agricultural policy.

It is necessary for Japan and the United States to follow this example.

At the same time, the Union has to manage its own contradictions and it must ensure that its internal policies on agriculture (even if some progress has been made); trade and fish do not undermine the efforts of developing countries in the South.

In conclusion, I would like to highlight that the ideas I have just elaborated upon, form the basis of a basic reflection which has emerged over time and through experience. And I presented these thoughts to you with all the humility they require. Nobody can claim ‘the truth’ when it comes to development. We have been wrong in the past, and we will certainly be wrong again today from time to time.

So, let us be ambitious on the objective we want to achieve but modest in the best way to achieve them.

But let us, acknowledge too that modesty does not necessarily lead to weakness. Indeed it often brings lucidity and clarity.