The ABCs of the Cotonou Agreement  ( part IV)

Development Co-operation between the Government of Ethiopia and the European  Union 

(based on a paper prepared by Friedrich Ebert Stiftung for the awareness  workshop for journalists)

By our staff reporter

Unlike the previous one (the Lome agreement) the Cotonou Agreement, as we have seen in previous sections, makes  distinct connection between the politics, trade and development. It is founded on five pillars:

1. Political Dialogue

Regular political dialogue is expected to take place in order to promote the consistency and relevance of ACP-EU cooperation strategies on issues of peace building and conflict preservation policies, migration, respect for human rights, democratic principles and the rule of law, and good governance.

Serious violations of such profound principles may lead to suspension of aid after consultation between the parties involved.

2. Participatory approach

Promoting the participation and the contribution of civil society is very much emphasized in the Cotonou Agreement. So is the involvement of non-state actors in the implementation and monitoring of programs and projects.

3. Poverty reduction

The philosophy of the Cotonou Agreement is the reduction and, in the long term, eradication of poverty with a view to integrating the ACP countries into the world economy. With this regard due attention is givien to gender equality, sustainable management of the environment and natural resources and institutional development and capacity building .

4. New trade arrangement

In the place of the preferential tariffs of the Lome Trade Regime, the approach in Cotonou is the establishment of new trade agreements leading to liberalization of trade between the parties to boost the efforts to integrate the ACP countries into the world economy. This could be accomplished by enhancing production and the capacity to attract investment, and insuring conformity with World Trade Organization (WTO).

5. Simplified Cooperation

EDF (European Development Fund) resources will be channeled thru two instruments: One envelope (A) for long-term development programs and a second (B) envelope to provide risk capital and loans with a view to supporting the development of the private sector.

This, it is hoped, will enable APC countries to shoulder the primary responsibility of developing their own economies.

The Ethiopian Country Support Strategy (CSS)

The Ethiopian Government prepared a Country Support Strategy (CSS) in close consultation with the European Commission and undertook consultative meetings with non-state actors and the donor community in order to inform the public. The CSS was signed on February 27, 2002.

Under the framework of the CSS, the European Commission has made a long-term assistance available to Ethiopia.

This assistance has two components: A-envelop covers “all programmable aid” and B-envelop is reserved to cover unforeseen needs that may arise due to circumstances beyond the control of the government such as a fall in export earnings, debt relief and emergency situations. However, the two envelopes are indicative amounts and are not entitlements.

For the period 2002-7 the allocation for the A and B envelops are 348.4 million  and 153.7 million Euros respectively. The A-envelop has been readily accessible after the April 2003 ratification of the Cotonou Agreement. 

The focal sectors under A-envelop allocation are infrastructure, macro-economic support and food security, taking 211 million, 96 million, and 54 million Euros respectively. The remaining 23 million Euros is set aside to finance the non-focal areas of the cooperation including capacity building for governance and support to non-state actors.

Specific objectives are set in the Country Strategy Paper, for example, with regard to the transport sector to improve road network, flow of traffic, road connectivity as well as improved transport policy.

Apart from the grant in the two envelopes, there are additional resources reserved for special groups and specified sectors. One such resource is the European Investment Bank loans available to boost private sector initiatives.

Performance being the major criteria for additional funding, the Ethiopian government has to demonstrate its efforts to strengthen the participation of the private sector through the provision of information and inviting the participation of the non-state input in policy formulation.