Review of the Multiannual Financial Framework: The case for increased funding for external action

Review of the Multiannual Financial Framework: The case for increased funding for external action

This paper has been drafted by civil society organisations (CSOs) and networks from various sectors of development cooperation, climate and environmental protection and humanitarian aid. We are calling on the European Commission, the European Parliament and the Council to increase resources for external action (under Heading 6) as part of the multiannual financial framework (MFF) review process.

1. An increase to Heading 6 is urgently needed

In the midst of a global energy and economic crisis with heavy effects also in Europe, finding new funds for Heading 6 will not be easy. Yet in an interconnected world, investing in safer, greener, and more equitable conditions abroad is unquestionably one of the best investments in Europe’s future itself. The devastating war in Ukraine, the COVID-19 pandemic, and worsening climate catastrophes underline how closely tied European citizens are to their neighbours, as well as the expectations that
partners have for the European Union (EU) to live up to its commitments. With the EU’s purchasing power reduced due to inflation, funding for key thematic programmes emptied due to COVID-19, and overall funds reduced due to the frontloading of resources in 2021 and 2022, the long-term budget must be adapted to protect the EU’s positive impact, influence and
credibility on the global stage.

2. Heading 6 cannot currently deliver the EU’s ambitions

While the EU has the ambition to create a more environmentally sustainable and a more equitable world, there is a growing gap between its bold ambitions on the global stage and the resources available to achieve them. It is now clear that the pace of global needs has outpaced the level of funds in the MFF, as many of the EU’s financing tools and flexibility instruments are almost fully committed. 80% of the funding available in the NDICI’s cushion for emerging challenges for 2021-2027 has been earmarked; 100% of the funding available in the margin of Heading 6 for 2021-2023 has been used for the EU Facility for Refugees in Turkey (and the future margin will likely be used to continue funding the Facility); the Flexibility Instrument, used for Heading 6 in the past years, will no longer be available for external action. Similarly, the humanitarian budget is so scarce – and annual top-ups are becoming increasingly difficult to obtain – that it now needs to be reinforced by the emergency reserve from the beginning of the year. There is no doubt that funds are urgently needed for humanitarian response, crisis response, and Ukraine reconstruction. The EU should also deliver on the commitment of climate finance that is new and additional (a net contribution in addition to its ODA commitment) to be able to more adequately respond to the climate crisis. However, it is essential that the long term NDICI thematic and geographic programmes dedicated to sustainable development are not cut down or reallocated to cover these urgent needs. The lack of funds creates a dangerous gap between the EU’s ambition, and what is actually available to be spent. At a time when the geopolitical context calls for strong alliances, the EU’s ability to deliver on its promises, respond to emerging crises and continue investing in its longstanding global partnerships,
will seriously be jeopardized if its ambitions are not matched with adequate funding. Insufficient funding will also create damaging competition between short-term needs and long-term investments, and between core development sectors, ultimately hampering the effectiveness of EU aid and its contribution to the achievement of the 2030 Agenda.

3. Heading 6 has a bold value proposition, particularly in times of crisis

The exhaustion of key sections of Heading 6 remains a challenge, but it serves as a compelling testament to the essential leading role the EU plays in sustainable development and crisis response. From upholding the multilateral system and its role in the world, to advancing gender equality, human rights and democracy, Heading 6 is one of the most strategic tools and soft power assets of the EU on the global stageiv. It also shows the value proposition of coordinated EU action. From the
COVID-19 pandemic to worsening humanitarian crises, the EU has proved time and again that it can step up when individual Member States cannot. Unfortunately, while Member States turn to the EU in times of crisis, the underfunding of Heading 6
makes it hard for the EU to shoulder this responsibility, raising serious concerns for larger global challenges looming ahead. It is essential that in the forthcoming package of new EU Own Resources, the EU and Member States deliver new and additional finance from innovative sources at sufficient scale to meet their international commitments. EU external action has proven its value time and time again, but for the EU to continue to deliver in the face of worsening and emerging crises, then it must be equipped to do so.

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