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The MDGs and the Three Cs

Professor Helen O’Neill

Professor Helen O’Neill is a member of Commissioner Louis Michel’s Expert Group on the future of European Community development policy.

Some Quantitative and Qualitative Aspects of UN and EU Development Goals

Two of the most important development goals that have been articulated by the United Nations are, first, the goal for official development assistance (ODA) amounting to 0.7% of gross national product or income (GNP/GNI) and, second, the set of eight Millennium Development Goals (MDGs). The ODA goal dates back to 1970 when it was adopted at the 25th General Assembly and accepted in principle by nearly all its member states. The MDGs originated in a set of goals first articulated in the OECD in the early 1990s and published by it in its seminal document Shaping the 21st Century in 1996. [1] At the UN Millennium Summit held in New York in 2000, the goals were accepted by all the member states and then became known as the Millennium Development Goals (Box 1). The first seven Goals are aimed at developing countries. In the words of Malloch Brown, Administrator of the United Nations Development Programme, ‘To maximize the impact of rich country assistance and complete their side of the deal, poor countries must undertake nationally-owned, good faith, political, economic and social reforms such as combating corruption, encouraging entrepreneurship, and improving basic services, especially in health and education.’ He adds: ‘Meaningful achievement of the first seven Goals will require …redoubling global commitment to the “partnership for development” called for in the eighth Goal: the promise by rich countries to support the efforts of developing countries through trade, aid and debt relief.’ [2]

By 2002, only five countries (Denmark, Luxembourg, Netherlands, Norway and Sweden) had met or exceeded the UN target for ODA. In an effort to re-energize donors, the Finance for Development (FfD) conference was held in Monterrey, Mexico in March 2002. Its objective was to mobilise resources for development from all possible sources including domestic savings, ODA, debt relief, foreign direct investment and international trade. The fact that it was jointly organised by the UN, the World Bank, the International Monetary Fund (IMF), and the WTO attested to a new determination to develop a global partnership for development by strengthening the coherence of the international monetary, financial and trading systems (Goal 8). The ‘Monterrey Consensus’ included commitments on the part of the industrialised countries (ICs) to increase their ODA, to improve market access for exports from developing countries (DCs) and, in cooperation with the World Bank and IMF, to help speed up the exit of heavily indebted poor countries (HIPCs) from unsustainable debt.

The most up-to-date ODA data available from the OECD’s Development Assistance Committee (DAC) during the preparatory stage of the Monterrey conference related to 2000 when the average ODA/GNI ratio for all DAC donors was 0.22%. The EU average at that date was 0.33% (total EU ODA divided by total EU GNI). The official EU proposal at the FfD conference was that this ratio should be attained by each individual member state by 2006. This would have lifted the EU average to 0.39% at that date. At the FfD conference, the EU committed itself to the 0.39% target by 2006 ‘as a significant step toward reaching the UN target of 0.7%’. This would have resulted in additional aid of around €8 billion a year or €22 billion by 2006 and an extra €9 billion a year from 2006 onwards. As noted below, such levels of growth in ODA would fall far short of what is needed to meet the MDGs.

Box 1. Millennium Development Goals

  1. Eradicate extreme poverty and hunger
  2. Achieve universal primary education
  3. Promote gender equality and empower women
  4. Reduce child mortality
  5. Improve maternal health
  6. Combat HIV/AIDS, malaria, and other diseases
  7. Ensure environmental sustainability
  8. Develop a global partnership for development

Current Situation and Prospects regarding ODA targets and MDGs

The most recently published estimates of ODA in 2004 show that total flows amounted to US$78.6 billion in 2004. [3] As regards the ODA/GNI target of 0.7%, the average figure for all donors in 2004 was 0.25%. The EU ODA/GNI average was significantly higher in 2004 at 0.36% suggesting good prospects for reaching the Monterrey target of 0.39% by 2006.

On 24 May 2005, a major step was taken by the foreign and development ministers of the EU when the 15 ‘older’ member states agreed to meet the UN target by 2015 and to meet an interim target of 0.51% by 2010. The ten new members states from Central and Eastern Europe that joined the EU in 2004, promised to try to meet targets of 0.17% of GNI by 2010 and 0.33% by 2015. If the latter target is met, it would mean that ODA from the EU would more than double within a decade, with about half of it going to sub-Saharan Africa. Total EU aid would rise by €20 billion a year from 2010. Unfortunately, not all of the ‘older’ 15 member states have committed themselves to the 2015 target. Germany, Italy and Portugal expressed reservations because of national budgetary difficulties. Herein lies one of the concerns regarding the new EU targets: some member states may use the excuse of budgetary constraints imposed by the EU’s Stability and Growth Pact to avoid meeting the softer targets in their national budgets. Nevertheless, the May 2005 promises are the most substantial and time-bound that have been made to date.

If the United States and Japan – the biggest donors – were to follow the EU example of setting new suit, would total ODA flows be sufficient to fund the MDGs? As Sachs points out, it is difficult to determine the amount that the rich donors should provide in order to meet the MDGs. [4] He cites a number of studies that attempted to estimate total ODA requirements. All of them, including Sachs’ own estimates, suggest that aid needs to double between 2004 and 2010 (from US$78.6 billion to US$152 billion) and to increase to around US$195 billion by 2015 if the MDGs are to be achieved.

By the end of 2004, it was already past the halfway mark for the goals set in the early 1990s. Progress toward reaching the MDGs is to be evaluated in 2005. The outlook is not good. Assessments by a range of international organisations paint a rather gloomy picture.

The International Fund for Agricultural Development (IFAD) was even more pessimistic in its 2001 report: ‘The goal to halve extreme poverty is ‘doomed to fail’ because of decline in aid to agriculture and rural areas where most poor people live’. [5]
In its 2003 Human Development Report, the UNDP bluntly stated that unless progress accelerates, the MDGs will simply not be reached by 2015. In its opinion, some goals may be reached but overall prospects are bleak because ‘in many countries poverty grew in the 1990s, life expectancy fell due to HIV/AIDS and access to basic health and school enrolments fell due to conflicts.’ [6]

The World Bank/IMF Global Monitoring Report 2004, describes the prospects for reaching the MDGs as ‘bleak’. [7] According to that report: ‘If present trends continue, only one (halving the number living below $1 a day) will be met. Even that one will be due to successes in China and India. Sub-Saharan Africa will fall well short’. It adds: Among the priorities for donors, is a big increase in ODA. At least an extra $30 billion p.a. could be absorbed by DCs. If their policies and governance were improved, they could absorb an extra $50 billion p.a.’ The Global Monitoring Report 2005 reiterates the warning that ‘sub-Saharan Africa is in danger of not meeting any of the MDGs’. [8]

Finally, the views of the OECD/DAC are pertinent since, in its words, the MDGs mark ‘a major endorsement of the earlier work in the DAC to select seven international development goals’. In a report published in 2003, the OECD/DAC suggested that, at global level, the only targets that are on course for achievement are halving the proportions of people living in poverty and hunger and without access to safe water and sanitation. It concluded that: ‘In sub-Saharan Africa, none of the targets are on track. It would be 2050 before the targets for primary schooling and access to safe water were met. None of the other targets will be achieved in the 21st century if past trends continue.’ [9]

Motivations for providing ODA

In addition to the ‘quantitative’ side of ODA, that is, achieving a significant increase in the volume of total flows, equally important is the ‘qualitative’ issue of improving the effectiveness of ODA. For example, how is the EU to deliver the new resources in a way that gives the right incentives and the right accountability? On being appointed the new Commissioner for Development at the end of 2004, Louis Michel immediately began preliminary work on drafting a new Development Policy Statement to replace the current Statement published in 2000. A major problem underlying the difficulty of improving aid effectiveness is the complexity inherent in the motivations of ODA donors. Although all donors claim that their main objective is improving the lives of poor people in poor countries, in fact their motivations are mixed and include many objectives aimed at attaining their own national interests.

Briefly, the motivations of donors can be categorised under three main headings:

  • Humanitarian/moral
  • Economic
  • Political/security

The humanitarian/moral motivation is unambiguously aimed at alleviating poverty in poor countries. It is based on the belief that rich countries have a moral imperative to help people less well off than themselves. The economic motivation is more complex. On the one hand, donors claim that ODA is aimed at promoting economic development in DCs. On the other hand, if ODA is ‘tied’, it may be provided in order to promote flows of investment and exports to DCs from the donor countries – and thus to promote their economic interests. Political motivations have always been important for the more powerful donors, especially those with past colonial links with DCs. In more recent years, the issue of ‘security’ – both global and national - has risen to the fore and further complicated the motivations behind aid provision.

Different motivational mixes underlie the ODA objectives of different donors. Many of the problems that prevent or constrain aid from being more effective as a cure for poverty and an instrument for achieving the MDGs are to be found in the confused mix of motivations that imbue the aid policies of donor countries. When the motivations of individual donors are mixed with those of multilateral donors and financial institutions to which they make financial and policy contributions, the potential for contradiction and competition is as least as great as the potential for coherence, complementarity and coordination.

The last-named ‘three Cs’ have been identified by the European Commission (EC) as key qualitative aspects of EU aid programmes. They are aimed at improving aid effectiveness. Before analysing them, however, it is appropriate to present a brief overview of the links between the ODA programmes of individual EU member states and that of the European Commission (Box 2).

Box 2. Links between aid programmes of EU member states and that of the EC
Links between aid programmes of EU member states and that of the EC

The three Cs as qualitative aspects of EU development policy

According to the EC, the three Cs (coordination, complementarity and coherence) are necessary preconditions for effective EU aid.

Legal Basis of the 3 Cs within the EC

The legal basis of the 3 Cs is to be found in the treaties of Maastricht and Amsterdam and the new Treaty establishing a Constitution for Europe. The key Articles in the Maastricht Treaty 1992 (Articles 130u-130y) and the Amsterdam Treaty 1999 (Articles 177-181) set out the following obligations:

  • The EC and Member States shall co-ordinate their policies
  • EC development cooperation policy, which shall be complementary to Member States’ policies, shall foster; sustainable development, integration of DCs into the global economy, and the campaign against poverty
  • The EC shall take account of the above objectives in policies likely to affect DCs (coherence)
  • The key Articles of the Treaty establishing a Constitution for Europe (Title V: The Union’s External Action: Chapter IV: Cooperation with third countries and humanitarian aid) read as follows: Article 111-292
  • The Union shall ensure consistency between the different areas of its external action and between these and its other policies. The Council and the Commission, assisted by the Union Minister for Foreign Affairs, shall ensure that consistency and shall cooperate to that effect (coherence). Article 111-316
  • The Union’s development cooperation policy and that of the Member States shall complement and reinforce each other (complementarity). Article 111-318
  • In order to promote the complementarity and efficiency of their action, the Union and the Member States shall coordinate their policies on development cooperation and shall consult each other on their aid programmes, including in international organisations and during international conferences. They may undertake joint action. Member States shall contribute if necessary to the implementation of Union aid programmes (coordination). Article 111-319
  • Without prejudice to the other provisions of the Constitution, and in particular Articles 111-316 to 111-318, the Union shall carry out economic, financial and technical cooperation measures, including assistance, in particular financial assistance, with third countries other than developing countries. Such measures shall be consistent with the development policy of the Union and shall be carried out within the framework of the principles and objectives of its external action (coherence). Article 111-321
  • The Union shall ensure that its humanitarian operations are coordinated and consistent with those of international organisations and bodies, in particular those forming part of the United Nations system (coordination and coherence).

Types of Coordination

To promote aid effectiveness, coordination is necessary at a number of different levels. These include:

Donor-partner coordination: this involves coordination between the EC and the partner DC as well as coordination between Member States and the partner DC.

Donor-donor coordination: this involves coordination between the aid programmes of the EC and that of each Member State; between the programmes of Member States; and coordination between the programmes of the EC and the Member States and those of other donors

Donor-international organization coordination: this involves coordination between the aid programmes of the EC and those of the Member States with the programmes of the UN and the World Bank

Among international organizations: this involves coordination between the World Bank and the IMF; between the World Bank, the IMF and the World Trade Organisation; and among UN agencies.

Why is coordination necessary?

Lack of coordination among donors and between them and international financial institutions (IFIs) such as the World Bank and IMF imposes unnecessary burdens on aid recipients. According to the OECD/DAC, these burdens include:

  • Donor-driven priorities and systems
  • Difficulties with donor procedures
  • Uncoordinated donor practices
  • Excessive demands on time
  • Delays in disbursements
  • Lack of information

Demands beyond national capacity [10]

Despite improved coordination among donors and between them and the IFIs, further improvements are still necessary under the following headings:

  • Simplification of procedures
  • Harmonisation of procedures
  • Alignment of procedures on partners’ systems
  • Sharing of information
  • Untying of aid
  • Respect for national priorities and strategies
  • Strengthening of local capacities
  • Movement toward budget support and sector-wide approaches

Has coordination improved?

A number of improvements have taken place at UN level as a result of reforms already introduced within the UN system. However, co-ordination among the UN agencies still leaves much room for improvement. Moreover, the UN Development Assistance Framework (UNDAF), which is supposed to bring all UN funds together inside DCs, remains to be fully implemented. However, coordination between bilateral donors and UN agencies should improve in the medium term as individual donors increasingly coordinate the consultations they conduct with the various UN agencies to which they make multilateral contributions and with whom they work inside the DCs.

At OECD level, the 2003 ‘Rome Declaration’ on aid coordination provides a blueprint for improved coordination at all levels and between all actors.

Cooperation between the World Bank, the IMF and the World Trade Organisation has improved since the end of the Uruguay Round of multilateral trade negotiations and the establishment of the WTO in 1995. An Agreement on Coordination was signed between the IMF and the WTO in 1996 and one was signed between the World Bank and the WTO in 1997. Since 2003, the World Bank and the IMF have been attending the WTO General Council on Coherence.

Specific examples of cooperation among these three organisations include the IMF’s Trade Integration Mechanism, the Sectoral Cotton Initiative and cooperation in relation to Trade Facilitation.

As regards coordination between the World Bank, the IMF and the EU, studies by the World Bank and by the European Centre for Development Policy Management (ECDPM) report some positive results in relation to the design and implementation of Poverty Reduction Strategy Papers. [11]

At EU level, some improvements in terms of coordination have followed the 1999 EC reforms; the signing of the Cotonou Agreement; the 2000 Joint Statement on Development Policy; and the simplification of the Financial Regulation. Although the EU provides around 55% of global ODA, it is not considered an aid ‘leader’ since it does not speak with one voice in all international meetings. However, some improvement has occurred in recent years: the EU spoke with one voice at two international conferences held in 2002: the Financing for Development Conference in Monterrey, Mexico and the World Summit on Sustainable Development in Johannesburg, South Africa.

Another positive sign of improved efforts at coordination and harmonisation at a wider European level is the creation of the Nordic plus (Nordic+) group. This group includes the four Nordic countries, plus Ireland and the UK. The initiative, which is called Harmonisation in Practice (HIP), is being implemented in two phases. The first phase is aimed at aligning the donors’ country strategy papers (CSPs) with the poverty reduction strategy papers (PRSPs) of the partner countries. The second phase is aimed at reducing unnecessary overlap between their individual aid strategies within partner countries and at reducing the burden on the latter’s line ministries. Inefficiencies can arise if a number of donors are providing assistance to the same sector within a partner country. A memorandum aimed at promoting greater coordination and harmonisation of aid practices within Zambia was signed recently by eleven bilateral donors (the Nordic+ group and five others). While the process is mainly aspirational at this stage, it was agreed that each of the donors should align their CSPs with the PRSPs of the partner countries; carry out combined evaluations and audits; endeavour to reduce the number of sectors in which each donor is engaged; and reduce the number of missions sent to partner countries.

What is Complementarity at EU level?

Complementarity refers to the relationship between the aid programme of the EC and those of the Member States. It entails sharing of competences. It is neither the ‘Europeanisation’ of EU aid, nor the ‘re-nationalisation’ of EU aid. Rather, it is related to the notions of comparative advantage, value added, leadership, and concentration. It is also related to the role of the DC partner country which should be ‘in the driver’s seat’.

Why is complementarity necessary?

The 2000 Statement on Community Development Policy [12], jointly produced by the Council and the Commission, stated that the main objective of Community development policy ‘must be to reduce and, eventually, to eradicate poverty’. This objective, it stated, entails support for sustainable economic and social and environmental development, promotion of the gradual integration of the developing countries into the world economy and a determination to combat inequality. It emphasized the principle of the primacy of the role of the DCs in terms of the ownership of development strategies. While Member States are free to design their individual development programmes, the Statement identified six areas on which the EC’s own development activities should concentrate. These were: the link between trade and development; regional integration and cooperation; support for macroeconomic policies; transport; food security and sustainable rural development; institutional capacity-building and cross-cutting issues including human rights, gender equality, and environmental dimensions. Strengthening complementarity is, in the words of the Statement, ‘a response to the need for a better division of labour between the Community and the Member States.’ One of the issues that is being considered in the preparation of the new Statement, due in 2005, is the continued appropriateness of the six areas in the above list. Moreover, given the complexity of today’s global reality as well as the new complexity of EU external relations policy, other issues include the continued relevance of poverty reduction as the overarching objective of EU development policy as well as ways to improve the effectiveness and impact of EU aid flows so as to improve the likelihood of achieving the MDGs.

Is Complementarity improving within the EU?

As noted already, the EU provides over 50% of global aid but is not perceived as an ‘aid leader’ because it tends to speak with many voices on aid. There is much overlap and duplication of activities. Moreover, the perception by individual Member States of their ‘place in the world’ often conflicts with the overall perception in Brussels of the EU’s ‘place in the world’.

Country Strategy Papers (CSPs) are seen as a mechanism for promoting complementarity. However, it is generally acknowledged that information exchange between the Member States and the Commission is still weak

What is Coherence?

The aim of policy coherence is to ensure that all policies of bilateral donors and of international organisations that are likely to affect DCs do not run contrary to what they are trying to achieve with their direct development cooperation policies and development assistance. It applies at all levels, UN, IFIs, OECD, EU, and individual donor levels.

Coherence and Consistency

As already noted, Article 130u of the Maastricht Treaty states that EC development cooperation policy shall foster sustainable socio-economic development of DCs; smooth and gradual integration of DCs into the global economy; and the campaign against poverty in DCs. Article 130v states that the EC shall take account of those objectives in the policies it implements that are likely to affect DCs. Article 130v (177 of Amsterdam) is the ‘coherence Article. However, Article 3, as amended by the Nice Treaty, states that: ‘The Union shall in particular ensure the consistency of its external activities as a whole in the context of its external relations, security, economic and development policies’. It does not say which policy takes precedence over the others. The 2000 Statement on the EC’s Development Policy puts it this way: ‘There must be greater coherence between the various Community policies focused on sustainable development. Efforts must be made to ensure that Community development policy objectives are taken into account in the formulations and implementation of other policies affecting the DCs.’

What types of policy incoherence currently exists within the EU?

One type is ‘internal’ to development policy. An example is food aid which can create problems for farmers within DCs if delivered in inappropriate ways and at inappropriate times.

Other types are also ‘internal’ but at wider EU policy levels. Examples are the EU’s common agricultural policy (CAP), its common fisheries policy (CFP), and its policies on environment, consumer protection and immigration.

Other examples of policy incoherence can arise at an ‘external’ level. These result from incoherence and lack of coordination between EC and Member States’ policies; between policies of the EC and the Member States with those of the DCs; and lack of coherence between the policies of the EC and the Member States with those of the World Bank and IMF and the WTO. Finally, policy incoherence can arise at the level of EU trade policy, its general external relations policy and its Common Foreign and Security policy.

Is policy coherence improving within the EU?

A number of attempts are underway to improve policy coherence within the EU. Since the early 2000s, impact assessment systems are increasingly being used to identify potential economic, social and environmental impacts of all major policy proposals.

Since 2001, the Inter-Service Quality Support Group (IQSG) examines all CSPs with respect to, inter alia, the three Cs. However, while the iQSG includes representatives of all services involved in external relations with DCs, it does not include representatives from those dealing with the CAP, the CFP or consumer protection.

On a more positive note, in a March 2004 EC Working Paper, all Member States and most of the acceding countries agreed to a shared C3 analysis. Moreover, a number of Member States, including Ireland, have established Coherence Units within their national development cooperation departments/agencies.

OECD views on EU coherence

An examination of recent DAC Peer Reviews of development cooperation programmes of the EC and of EU Member States reveals continued concerns in relation to policy incoherence.

In the peer reviews of the Member States’ programmes, all are urged to improve. Indeed, some are described as ‘regressing’ as a result of promoting national interests.

In its 2002 peer review of the EC programme, the OECD/DAC commented on ‘weak coherence’ between the CAP, the CFP and development policies. It also described procedures as ‘complex’ and analytical capacity as ‘weak’. [13] In its 1998 peer review of the EC programme, the OECD/DAC declared that, while it is impossible to be consistent in all matters at all times, ‘it is necessary to avoid contradictory policies and to anticipate consequences’. [14] This last should be the very least that a major donor such as the EC can achieve in order to ensure the effectiveness of its aid programme.

A concluding comment

A public consultation on the future of EC development policy took place between 18 January and 19 March 2005. The ‘Issues’ paper, published by the Commission in January, set out three main reasons why it was opportune for the Council and the Commission to produce a new Statement on development policy. [15]

  • An accelerated globalisation process which includes not only trade and economic matters, but also all the major issues of concern to citizens (environment, health, migration, security,….) and renders it necessary to step up cooperation and extend the scope of partnership agreements with developing countries, in conjunction with aid for development as such. Development policy is becoming the privileged instrument for managing globalisation
  • New political priorities in an enlarged EU, in particular the EU’s neighbourhood policy and the security strategy, and the draft Constitution Treaty
  • The emergence of a more robust international consensus reflected in: the UN’s Millennium Declaration and Development Objectives; the commitments made at Monterrey regarding funding for development, at Doha regarding trade, and at Johannesburg regarding sustainable development; and the debate on the effectiveness of aid, covering issues such as harmonization between donors and the tailoring of aid to policies and procedures in the partner countries.

In addition to the need for coordination/harmonization among donors, the paper also underlined the need for a review of the way the EU policies are articulated with the policies pursued by Member States and partner countries and with civil society initiatives, ‘in a spirit of coherence and complementarity’. The Commission clearly recognizes that the three Cs are still on the agenda and their implementation leaves much to be desired. The ‘Issues’ paper also stated that the EU’s development policy is on the same level as the CFSP and trade policy and must be articulated consistently with them. It added: ‘By the same token, the other policies must be coherent with development policy.’ [16] Clearly, one of the issues to be worked out, not only in the new Statement on development policy but also in its future implementation, is the precise meaning of the term ‘consistency’ and how the various policy conflicts associated with it are resolved in the future.

[1] OECD/DAC (1996), Shaping the 21st Century: the contribution of development cooperation, OECD, Paris.

[2] Mark Malloch Brown (2003), ‘Domestic Needs, Foreign Support’, Choices, New York, United Nations, September.

[3] OECD/DAC (2005), News Release, 11 April, available at, accessed 12 April 2005.

[4] Jeffrey Sachs (2005), The End of Poverty: How we can make it happen in our lifetime, Penguin Press, pp296-304.

[5] IFAD (2001), Rural Poverty Report

[6] UNDP (2003), Human Development Report 2003, New York, Oxford University Press

[7] World Bank/IMF (2004), Global Monitoring Report, Washington, DC

[8] World Bank/IMF (2005), Global Monitoring Report, Washington, DC.

[9] OECD/DAC (2003), Millennium Development Goals: Progress during the 1990s, derived from a working paper prepared by the United Nations statistics Division based on the Report of the Inter-agency Expert Group on Millennium Development Goals Data and Trends 2002 (

[10] OECD (2003), Guidelines on Harmonising Donor Practices, Paris, OECD/DAC

[11] World Bank (2004), ‘PRSP, coordination and donor harmonisation in Southern Africa: the case of Zambia’, preliminary draft, Zambia donor workshop version, September 2004; ‘PRSP-related coordination challenges in Europe: the case of Albania’, preliminary draft, Tirana donor workshop version, May 2004; ECDPM (2003), ‘The Coordination of European Development Cooperation in the Field: Myth or Reality?’, Discussion Paper 43, March.

[12] European Commission (2000), The European Community’s Development Policy – Statement by the Council and the Commission, Brussels, EC

[13] OECD/DAC (2002), European Community: DAC Peer Review, Paris, OECD/DAC

[14] OECD/DAC (1998), European Community: DAC Peer Review, Paris, OECD/DAC

[15] European Commission (2005), ‘European Union Development Policy: Issues Paper’, Brussels, DG Development, 7 January.

[16] Ibid, 3.

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