Mediterranean Policy ProgramSeries on the Region and the Economic Crisis Prepared in Partnership with Paralleli Euromediterranean Institute

(Turin)

Policy Brief
August 2012
Instead, qualitative change in the way that funds are spent would strengthen the European impact. This policy brief uncovers what has been achieved through the EUs democracy-related aid since revolution hit Tunisia and explains why European funds still fall short of maximizing their potential boost to Arab democratization. Democracy Assistance Revived One layer of aid is the one allocated from common EU budgets. The EU insists that 600 million of aid have already been diverted to reform objectives.1 Per capita aid receipts for Mediterranean states have moved further ahead of those earmarked for eastern neighborhood countries. Under proposed allocations, the European Commission has requested a 50 percent increase in funds for the Southern Mediterranean under the new financial perspectives, considerably more than for other regions.

Summary: Since the beginning of the Arab revolts, Europes use of development funding specifically to advance democratic reform has been closely scrutinized. The EU and member state governments have committed increased amounts of democracy support. This policy brief uncovers what has been achieved through the EUs democracy-related aid since revolution hit Tunisia and explains why European funds still fall short of maximizing their potential boost to Arab democratization.

Funding Arab Reform?

by Richard Youngs*

Introduction The European Unions policy mix in the Southern Mediterranean is comprised of many different elements: trade, diplomatic engagement, sanctions, financing, migration policies, and conflict interventions. One aspect that has been closely scrutinized since the beginning of the Arab revolts is that of Europes use of development funding specifically to advance democratic reform. The EU and member state governments have committed increased amounts of democracy support. They have promised to spend these resources in a more nuanced and effective fashion. And indeed progress is being made. Away from the limelight, development aid is taking on a more reformist tint in the southern Mediterranean. But, the improvements could be greater. While European political aid will not be a major factor in Arab reform processes, it could make a more valuable contribution than it does at present. The need is not only, or even primarily, for more money.

1 European Commission, Delivering on a new neighbourhood policy, May 2012

1744 R Street NW Washington, DC 20009 T 1 202 683 2650 F 1 202 265 1662 E info@gmfus.org

* Richard Youngs is director general of FRIDE and an assistant professor at the University of Warwick. Prior to joining FRIDE, he was EU Marie Curie research fellow at the Norwegian Institute for International Relations, Oslo (2001-2004), and a senior research fellow at the U.K. Foreign and Commonwealth Office (1995-1998). He has a Ph.D. and a masters in international studies from the University of Warwick and a bachelors in social and political science from the University of Cambridge. His research focuses mainly on democracy promotion and democratization, European foreign policy, energy security, and the Middle East and North Africa region.

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Policy Brief
The EU has increased its aid allocation for the neighborhood states by 1.2 billion over three years, on top of the existing 5.7 billion for 2011-2013. Two-thirds of this supplement will go to the Southern Mediterranean. The extra 1.2 billion was found by taking money from other areas, after initial resistance from some member states was overcome. The EU declared Egypt, Tunisia, and Libya as being in crisis in order to free up a number of quick release budget lines. Officials stress that these additional resources will come with firmer conditions attached.2 Commission officials insist there will be a more critical assessment of progress made under action plans each year, rather than an uncritical waiving through of new funding as has most commonly occurred up to now. Civil society is to be involved in these assessments so the exercise will not simply be one of governments assessing themselves. A dual logic has been elaborated to get positive and critical measures working in tandem: wherever sanctions are used, support to civil society will be increased at the same time. Commissioner Stefan Fle regularly highlights how civil society is now much more systematically associated with EU policy dialogue and involved in the preparation of our programs and interventions.3 External Action Service staff members also insist that local, Arab civil society organizations are now brought into EU deliberations at an early stage. Those running the European Instrument for Democracy and Human Rights (EIDHR) point out that rules have been changed to release money more quickly; to get money to Syrian opposition activists on the ground through intermediary bodies; to allow funding of non-registered (and thus more independent) civic movements; and to lessen co-funding requirements (that oblige even small organizations to put up significant amounts of money themselves to match any EU support). The EIDHR has doubled allocations for Tunisia, Egypt, and Libya, and even plans projects in Iran for 2012. A new EU Communication in December 2011 entitled Human rights and democracy at the heart of EU external action has a strong Middle East focus and promises better
2 Communication from the Commission and High Representative, A partnership for democracy and shared prosperity in the Southern Mediterranean, March 2011 3 Stefan Fule speech to the European Parliament, One year after the Arab Spring, January 24, 2012

Commission officials insist there will be a more critical assessment of progress made under action plans each year, rather than an uncritical waiving through of new funding as has most commonly occurred up to now.
unity, implementation, and coherence on human rights policies, and also creates the post of human rights special representative. The high representatives July 2012 Human Rights Strategy wraps these promises into an action plan. The EU now promises a Single support framework to coalesce the myriad sources of its funding behind a reformist agenda. Resources directed at democracy cover a broad array. A common theme is coalition-building: the EUs stress is on consensus in constitutional processes in preference to quickly-held competitive polls. High Representative of the European Union for Foreign Affairs and Security Policy Catherine Ashton makes a particular push for more womens rights funding. The Commission has used much of its 17 million quick impact package to shore up civil society organizations like the Ligue Tunisienne des Driots de lHomme.4 Tunisian, Egyptian, and Libyan activists have been taken to observe various member states elections. A 4 million Commission program has been launched on judicial reform, corruption, and human rights, first in Morocco and Tunisia, in addition to the spring initiative. The European Parliament has beefed up its exchanges with the Moroccan parliament to focus more specifically on concrete implementation of reform promises under the advanced status agreement. A new EU judicial reform program has commenced in Lebanon. A no disconnect strategy funds civil society organizations to defend
4 Statement by Stefan Fle on the occasion of his trip to Tunisia, March 31, 2011, MEMO/11/213,

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themselves against electronic restrictions imposed by state authorities. The Commission has funded a 5 million Council of Europe project in the Southern Mediterranean, working in particular on constitutional reform. And the Council of Europe Parliamentary Assembly has offered a Partner for Democracy status to the parliaments of Morocco and the Palestinian Authority. A second layer of funding pertains to the national level. Several member states have launched their own national initiatives. For 2011, Germany allocated 30 million to support democratic change in the region. Another 100 million has been set aside for 2012, as part of a Transformation Partnership. Spain has offered a package of technical assistance in transitions, recognizing that this constitutes a new approach for the countrys traditional caution over democracy support. In late 2011, the out-going socialist government released a new aid package ostensibly to support democratic transitions. The U.K. has set up a new Arab Partnership Fund amounting to 110 million; of this, 40 million is for political participation and 70 million is managed by the Department for International Development for economic reform. New media projects have been launched, especially through the BBC World Trust. Public financial management is another priority area for U.K. funding, along with work on extending the Extractives Industry Transparency Initiative to Arab states. The new fund also supports the Westminster Foundation for Democracy for party training. British diplomats in Morocco point to a series of edgy or politically sensitive projects that seek to help civic organizations use the new constitution in a tangible manner to raise human rights and corruption issues in parliament. U.K. Arab Partnership Fund projects are selected by local embassies that are supposed to push through support for civil society projects not necessarily of regimes likening. Denmarks Arab Partnership Initiative has increased from around 20 million in 2010 to 40 million in 2011 and 60 million projected for 2012. The initiative has expanded from its focus on Yemen, Jordan, and Morocco to include Tunisia, Egypt, and Libya. Sweden has become the biggest funder to Arab Reporters for Investigative Journalism. In Egypt, France has supported projects on transitional justice. German organizations set up the first protected space for reformers to meet, the Tahrir Lounge. The U.K. has used its Arab Partnership Fund to support rule of law and coalition-building initiatives. Several European donors have increased support to civil companies set up by democrats to circumvent the restrictive NGO law. The Dutch have funded multi-party training organized by the Egyptian Democratic Academy. The EU delegation brought forward the 2012 EIDHR allocation for Egypt and decided that this is the right time to attempt more audacious democracy projects, going beyond purely bureaucratic approaches. Germanys Transformation Partnership in Egypt makes 5.25 million available for the promotion of the democratization process and independent media, 8 million to boost youth employment, and 20 million for micro-financing measures to promote small and medium-sized enterprises. In Tunisia, German projects provide advisory services for NGOs and the constituent assembly from political foundations and the Max Planck Institute. The Foundation for International Legal Cooperation and the Hanns Seidl Foundation collaborate with Tunisian authorities in strengthening the rule of law. Further training is provided for Tunisian officials at an academy for good governance in Berlin and at the Federal Foreign Office. Member states played a role in enticing the interim Tunisian regime to sign the Rome statue of the International Criminal Court. Deceptions While these advances are welcome and well-conceived, many aspects of European funding elicit disappointment. Notwithstanding the increased aid allocations, the magnitude of funding has reached nothing like the scale of funds transferred to either Southern or Eastern Europe in the wake of their transitions, where in each case, several percentage points was added to GDP through EU payments. The ENPs additional 1 billion amounts to 250 million

The magnitude of funding has reached nothing like the scale of funds transferred to either Southern or Eastern Europe in the wake of their transitions.

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a year split across 16 countries a drop in the ocean alongside the billions that the revolutions have cost in lost production. In nearly all Arab states, Taiex twinning projects (which place European officials in counterpart ministries in the partner state to boost technical capacity) have actually decreased in number Jordan, Morocco, and the Palestinian Territories are the only exceptions to see small increases in the number of such initiatives. Education exchanges continue at an extremely modest level. In 2011, 260 Israeli researchers were funded for mobility schemes into Europe, while no Arab state received more than 20 such awards a negligible level compared to other regions.5 Spain may have lobbied hard for greater EU attention to the Mediterranean, but its own resources are in freefall: the countrys foreign affairs budget plummeted 12 percent over 2010-2011, with 800 million sliced off its development aid budget.6 For 2012, Spains new conservative government has cut the 85 million annual allocation to Morocco down to virtually nothing. The local embassy has had to refuse Moroccan requests for some governance assistance because Spanish officials and experts have no money even to pay for flights to Rabat. The governments focus on winning commercial contracts in Latin America entails a diversion of resources away from the Mediterranean. Italy has made funds available for Libya but has not increased allocations elsewhere in the region. Indeed, Rome has planned to draw down troops in Lebanon, as UNIFILII is seen as too expensive in a time of austerity.7 The U.K.s Arab Partnership Fund actually spent only 6 million on political reform in 2011. British chancellor George Osborne admitted at an EBRD meeting in May 2012 that we have not yet mobilized our resources. Nearly a year and a half on from the first protests, only 27 countries have ratified the decision to extend the banks operations to North Africa; at least 44 need to do so. The aim is currently to start operating the 1 billion fund for the region from
5 European Commission, Joint Staff Working Document, Implementation of the European Neighbourhood Policy in 2011: Statistical Annex, SWD(2012) 122 final, p. 72 and p. 76 6 I. Molina y J. Tovar, El ao en que estall la otra burbuja: la poltica exterior y de seguridad espaola en 2010 7 G. Bonvicini, A. Carati, A. Colombo, R. Matarazzo and S. Silvestri, Italian foreign policy in 2010: continuity, reform and challenges 150 years after national unity, IAI 11/06, May 2011, p. 9

October,8 by which time nearly two years will have passed since the first rumbles of revolt in Tunisia and Egypt. The proposal for a European Endowment for Democracy is still grinding its way through the EU decision-making process. Poland is the only member state to have promised resources to the EED. The EIDHR budget is divided between 64 states rather than prioritizing the Middle East. The Instrument for Stability was the quickest source of funds, able to release money within six weeks, and was used to support advisors on election preparations in Tunisia. However, IfS officials are themselves extremely cautious, not wanting the mechanism to gain high visibility; by spring 2011 only 2 million had been committed for pilot projects in each of Tunisia and Egypt, but other requests were rejected. With democracy funds managed by DevCo, the Commissions development directorate, diplomats in the External Action Service complain of a familiar lack of coherence between political aims and funding procedures. A frequently heard complaint from the region is that the EU has failed to change the qualitative, not merely quantitative, nature of its reform support. Officials admit that the Spring program is more a top-up of existing funding than a qualitatively new departure in how money is spent. Arab civil society representatives complain that they have not been consulted on any of the EUs new policy documents. Indeed they banded together to write to Ashton to protest at this situation in late 2011. The shift to more political governance aid exhibits severe limitations. The new concern with best-fit rather than ideal political models in some places has led to a downscaling of reform ambition. The reduction of development

Officials admit that the Spring program is more a top-up of existing funding than a qualitatively new departure in how money is spent.
8 Financial Times, May 19, 2012

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budgets has gone hand-in-hand with a search for quantifiable impacts of the reduced amount of money spent, so as to justify aid in a time of austerity; this sits uneasily with the less quantifiable benefits of governance support.9 Arab activists also express disappointment that member states will not allow a completely independent civil society mechanism. Much support is still channeled through NGOs that are not fully independent of regimes. Arab activists argue that the EU still needs to change its partners not just throw more money at the region. Officials agree that the EMP has been far too oriented to the governmentto-government level, but caution that opening up to civil society should only be done very gradually. Some civil society actors in the region insist that the international community still has not understood how far the revolts constitute a post-political civic project. The EU ambassador to Tunisia argues that the Unions role should be confined mainly to technical governance issues like customs, tax reform, and administrative law along the lines of EU rules.10 In Jordan, EU funding remained in limbo during the whole of 2011. Jordans national indicative program for 2011-2013 allocates 20 percent of its funds for democratic reform.11 However, development projects progress on a basis of business as usual, according to local European officials. Budget support remains paramount, while development projects are decided on the basis of requests from the government. Diplomats recognize that they struggle to reach out beyond the traditional range of RONGOs (Royal NGOs). The organizers of Jordans social protests are disinclined to organize themselves into formally registered NGOs, which makes EU support difficult. These new groups often reject European funding precisely because this is so associated with royal-backed NGOs. Moroccos national indicative program for 2011-2013 allocates the majority of its funds for governance and institutional support, but democracy is not mentioned.12 The EU struggles to engage with the constellation of cell-like groups linked to the February 20 movement. One of their leaders
9 T. Carothers and D. Gramont, Aiding governance in developing countries: progress amid uncertainties, Carnegie Endowment for International Peace, November 2011 10 A. Koetsenruijter, Tunisia and the EU: what now?, New Europe, Issue 930, April 10, 2011 11 European Commission, Joint Staff Working Document, Implementation of the European Neighbourhood Policy in 2011: Statistical Annex, SWD(2012) 122 final, p. 51 12 Ibid, p. 60

Much support is still channeled through NGOs that are not fully independent of regimes.
in Rabat criticizes European donors for being reluctant to fund flexibly organized local groups rather than the same old elitist NGOs that, in the eyes of a new generation of protestors, lack legitimacy. As one European diplomat in Rabat admits, little funding goes to NGOs that are not seen in a favorable light by the palace. Post-revolution funding in Egypt continues in relatively unaltered manner, even with the same interlocutors across the Egyptian ministries. The focus of most officials remains on running good projects, even with a stronger concern to inure individual aid programs from the surrounding political uncertainties of quasi-transition. Several European diplomats even admit to urging their NGO contacts to rein back their pressure on the military council. Much-needed security sector reform has gained little traction. The focus now in Egypt is not on the facebookers but a series of caravans travelling out to villages to engage those not connected to the reform process; those on the ground say the international community is again behind the curve here, still focusing on new technologies. Conclusion European development agencies are beginning to give a more political focus to their governance aid in the wake of the Arab Spring. This involves moving governance projects from a technical focus on the efficiency of policymaking supply to addressing underlying political reform. In mainstream development projects, the issues of accountability and popular oversight of state spending have become a notable priority. Funding specifically for democracy and human rights projects is increasing. Efforts are apparent to correct some of the long-standing shortcomings of European democracy and governance assistance. There is heightened awareness among policymakers of the need for demand-driven democracy support, quicker and more flexible funding, and engagement with more genuinely independent civil society voices.

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Progress is undoubtedly being made. At the same time, however, it cannot be concluded for the moment that the EU is making a major contribution to democratic reform in Arab states through the way it deploys its development funds. Increases in democracy assistance have been relatively limited. Civil society representatives in the Southern Mediterranean decry their limited involvement in the design of funding priorities. In terms of qualitative strategy, there has been more continuity than change in the way that European funding is spent. The EU and member state governments have taken important steps in the right direction, but their approaches to development funding exhibit as mixed a record as the domestic reforms of the Arab Spring itself. It is important not to expect too much from European aid, and some Arab criticisms of European projects are unfair. Yet, with a tight squeeze on resources, it is even more essential that the funding that the EU does channel to the Southern Mediterranean more tightly and effectively target reformers, new political actors, and underlying social change. Many EU officials are aware of the need for such improvements and most of the new strategies outlined in this paper promise changes going into 2013. Yet, two determinant challenges loom on the horizon: first, the inevitable pressure on funding that will dominate negotiations over the post-2014 financial perspectives; and second, the potentially stony ground upon which the Arab Spring may well find itself stumbling. It may become both more difficult and more necessary for the EU and member states to maintain a reformist leaning to its Middle Eastern funding.
About the Partners

The German Marshall Fund of the United States (GMF) is a non-partisan American public policy and grantmaking institution dedicated to promoting better understanding and cooperation between North America and Europe on transatlantic and global issues. GMF does this by supporting individuals and institutions working in the transatlantic sphere, by convening leaders and members of the policy and business communities, by contributing research and analysis on transatlantic topics, and by providing exchange opportunities to foster renewed commitment to the transatlantic relationship. In addition, GMF supports a number of initiatives to strengthen democracies. Founded in 1972 through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has seven offices in Europe: Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm. www.gmfus.org

Paralleli Euromediterranean Institutes mandate is to contribute to the creation of a Euro-Mediterranean area of freedom and of economic and social development. The institute acts at the local, national, and international level with the aim of meeting the needs of the North-West region of Italy concerning its relations with the other sides of the Mediterranean Sea. The activities of the Institute fall within the process of Euro-Mediterranean partnership initiated by the European Union with the 1995 Barcelona Process and currently undergoing a major relaunch through the Union for the Mediterranean, since July 2008. Paralleli intends to contribute to the reinforcement of political relations, economic cooperation, cultural exchange, and human flows between the European and the South-East Mediterranean countries. Its main objective is to promote dialogue at cultural, social, and political level between the societies of the Mediterranean countries, with the aim of encouraging and improving economic relations between them, with a particular focus on the dimension of sustainability and co-development. For this reason, the institute has decided: to involve civil society in the development of Euro-Mediterranean relations; to create and to support networking in the Mediterranean area; and to increase the value of research in order to suggest truly effective policies to local, national, and international actors. www.paralleli.org