SDG Knowledge Weekly: Update on the EU Budget and Multi-Annual Financial Framework
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The Institute for Sustainable Development and International Relations released a brief proposing that the SDGs be used as a template for the EU's next Multi-Annual Financial Framework.

The European Think Tanks Group published briefs on integrating the SDGs into the MFF, and recommendations for external action.

An EC staff working document looks at EU responses to the Addis Ababa Action Agenda, using the framework’s seven action areas.

The international community has been paying close attention to the ‘EU budget for the future,’ which was proposed by the European Commission on 2 May 2018. This SDG Knowledge Weekly brief reviews developments on the EU budget and the next Multi-Annual Financial Framework (MFF) since first covering the topic in April.

The SDGs present a means for setting not just national policy frameworks, but regional ones as well. The EU Budget for the Future, released on 2 May, is a proposal that translates EU political priorities into financial terms, and follows on months of discussion and recommendations issued by stakeholders. The draft budget makes reference to the SDGs in the introductory section, in Header 2 on “Cohesion and Values,” and in Header 6 on “Neighbourhood and the World.” Moving forward, the budget will be presented to the EU Council of Ministers on 14 May 2018, and negotiated with EU Member States and the European Parliament. If the budget’s structure or priorities do not reflect those of the SDGs, then there remains a risk that funding streams flowing both within the EU and abroad will not facilitate sustainable development.

The Institute for Sustainable Development and International Relations (IDDRI) released a policy brief supporting the appointment of a high-level panel to recommend SDG-relevant policy priorities for the EU to uphold by 2030, including through the EU budget process. Titled, ‘SDGs: A Legitimate Basis for Current European Debates,’ the brief proposes that the SDGs be used as a template for the next MFF – the EU’s seven-year budget for 2021-2027. The brief looks at EU efforts on SDG implementation to date, flagging a draft EU-level policy gap analysis that explains that existing EU policies already contribute to the SDGs. According to the IDDRI authors, the gap analysis “suggests that nothing new or additional is needed.” However, the brief identifies areas of action, including to use the SDGs to set post-2020 priorities, create the next EU budget, and frame Common Agricultural Policy (CAP) reform. There are five priorities in the current decade’s Europe 2020 strategy: employment, innovation, education, energy and poverty. The strategy sets quantified targets for the EU to meet by 2020, but is currently separate from the MFF.

The European Think Tanks Group (ETTG) published a brief calling for the integration of the SDGs into all budget headings of the next MFF. Titled ‘Steering the EU towards a sustainability transformation,’ the brief aims to clarify opportunities that the SDGs offer the EU. It states that SDG implementation in the EU has been slow – “more on stock-taking than transformative reform” – perhaps in part due to the Goals often being misunderstood, despite EU values already being embedded in the framework. The authors debunk fallacies associated with the SDGs (for example, that the Goals and targets are a “lowest common denominator,” or that as the MDGs’ successor, they are primarily relevant for developing countries) and review EU actions to date.

The brief identifies five ways for moving forward, starting with the preparation of a Europe 2030 strategy similar to what the above IDDRI brief calls for. Second is a “distance-to-target analysis” on where the EU and member states face the most significant gaps and challenges. The third recommendation, on making the next EU budget truly sustainable, outlines five ways in which the SDGs can be used in the MFF discussions. The fourth and fifth recommendations focus on peer learning and exchange among EU institutions and member states, and empowering local actors throughout Europe.

A second ETTG brief delves deeper into the MFF. It highlights the importance of the Framework, noting that the MFF will shape the EU’s external engagement and international development cooperation. The brief addresses three key questions: how much funding should go towards EU external action; what should the funding be spent on; and how should the money be managed? Titled, ‘The European Union’s next Multiannual Financial Framework: Prospects and Challenges for EU Development Cooperation,’ the brief claims that the current MFF is not fit to respond to the current EU and development context (internal and external).

The brief calls for Heading 4 of the current budget (on Global Europe and external action) to be redesigned around three pillars: national level development problems faced by all developing countries; problems that require cross-border action such as taxation; and the European Fund for Sustainable Development (EFSD) as the third pillar, offering opportunities for blended finance. Across these pillars, the authors call for prioritized support to least developed countries (LDCs) and steps to reinforce accountability, particularly around blending. A corresponding blog is available on ETTG’s website. The SDG Knowledge Hub has previously reported on guidance for mainstreaming the SDGs into EU policies and financing instruments. The ETTG, formed in 2010, consists of five independent research organizations: the German Development Institute (DIE), European Centre for Development Policy Management (ECDPM), Institute of International Affairs (IAI), Institute for Sustainable Development and International Relations (IDDRI), and Overseas Development Institute (ODI).

The EC released a staff working document that reviews EU Member States’ policy and financial responses to the 2030 Agenda and Addis Ababa Action Agenda (AAAA), primarily through the lens of the new European Consensus on Development. The report titled, ‘Investing in Sustainable Development: The EU at the forefront in implementing the Addis Ababa Action Agenda,’ reviews the seven “action areas” of the AAAA, outlining how the EU provides support: domestic public resources, domestic and international private business and finance, international development cooperation, international trade, debt and debt sustainability, systemic issues, and science, technology, innovation and capacity-building. For each area, the paper estimates the strength of efforts made, and progress on those efforts. A reaction by CONCORD, the European NGO confederation for relief and development, welcomes the report as an opportunity to increase transparency on the EU’s efforts to implement and support the SDGs, but also highlights areas for improvement.

A EurActiv article authored by staff from Eurodad and ActionAid International pushes back on specific aspects of the EU External Investment Plan (EIP), which is recognized under Header 6 of the EU budget communication as a means of “crowding in” additional financial resources. The authors argue that while the European Fund for Sustainable Development is an essential pillar of the EIP, the EU budget should not be diverting resources away from Official Development Assistance (ODA) to subsidize blended finance and private sector investments.

The European Centre for Development Policy Management (ECDPM) summarizes the details of the next EU budget on the organization’s blog. Andrew Sherriff and Mariella Di Ciommo review elements of the budget proposal. Their post examines quantities proposed under each heading, the drivers behind the numbers and blind spots associated with the chosen narratives, as well as lingering questions that have yet to be answered. A second post by ECDPM’s Jean Bossuyt looks at the EU’s embrace of multi-actor partnerships vis-à-vis the EU budget. It cautions that in such partnerships, local authorities do not have a voice in decision-making, despite the importance of participatory governance in achieving the SDGs.

Additional coverage on the EU budget’s size, priorities and instrumentation is available on the Center for Global Development’s blog, Politico and Devex, respectively.

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