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1. Maximising EU Concessional Finance for Greater Leverage and Impact: An Options Spread

Author:
Mikaela Gavas, Samuel Pleeck, Andrew Rogerson, San Bilal, and Karim Karaki
Publication Date:
03-2024
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
Already constrained by the economic aftershocks of COVID-19, the impact of the war in Ukraine, and the food and climate crisis, low-income countries and lower-middle-income countries now face a combination of soaring debt and high interest rates. Confronted with insufficient liquidity to respond to these challenges and unable to access capital markets, they need additional concessional finance, in the form of grants and soft loans. The European Union (EU) already provides concessional finance, but it is not nearly enough to respond to their growing needs. With European budgets under more strain than ever, this paper puts forward the case for finding ways to maximise the overall efficiency and impact of European concessional finance and in doing so, better articulating and combining grants and concessional loans in its support and investment toolbox. To remain relevant and maintain relationships and influence with partner countries–even more in a world characterised by the polycrisis and geopolitical fragmentation–the EU will have to step up its game when it comes to providing more strategic concessional finance. The paper sets out six complementary and non-mutually exclusive options for maximising EU concessional finance with a view to a strategic set of decisions to be made for the next EU Multiannual Financial Framework.
Topic:
Development, European Union, Financial Institutions, and Sustainable Development
Political Geography:
Europe

2. The EU’s Global Role: A Third Node of Power

Author:
Mikaela Gavas and W. Gyude Moore
Publication Date:
07-2024
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
In recent years, a quest for economic security and strategic autonomy have come to define the European Union (EU)’s politics. The need to compete globally for the finite resources required for the green and digital transitions, and rivalries between the US and China for global dominance, are all driving this agenda. And while the COVID-19 pandemic and the war in Ukraine highlighted countries’ global dependencies, deepening geopolitical tensions have brought national security considerations to the fore. At the same time, the rise of populist parties across Europe is fuelling calls for countries’ national interests to play the defining role in development cooperation. This presents a challenging environment for EU development cooperation. Caught up in this new paradigm, development cooperation is increasingly viewed as a lever of hard power and an instrument of influence which can be used to reinforce Europe’s strategic autonomy and economic security. With European interests central to EU development cooperation strategy, the climate of distrust between Europe and its partners is being heightened, given the not-so-distant memory of European vaccine “nationalism” during the COVID-19 pandemic, the different standards some Europeans apply with regards to fossil fuel exploration and the negative repercussions the Green Deal will have on African countries’ growth and development. However, shaping EU development policy in this fashion, with geostrategic interests at its forefront will be more detrimental than helpful for the EU in the medium to long-term, and carries the risk of fuelling conflicts of interest with partners. Geo-economic fragmentation and a trust deficit when it comes to governments and societal institutions are threatening our ability to address pressing global challenges. In Africa, this fracturing is evident in the plethora of Africa plus-one summits, for example, the first ever Korea-Africa summit. Instead of using multilateral vehicles to address development cooperation, this new environment has spawned a diversion of resources toward more bilateral initiatives, where the geopolitical returns are direct and attributable. In this piece, we propose a reset of the EU’s international relations narrative and “third way” for the EU to position itself as a global development player.
Topic:
International Relations, Development, European Union, and Green Transition
Political Geography:
Europe

3. A Global Development Paradigm for a World in Crisis

Author:
Rachael Calleja, Beata Cichocka, Mikaela Gavas, and Samuel Pleeck
Publication Date:
11-2022
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
This paper explores how and whether responses to COVID-19, particularly from non-DAC actors, have deepened the transition from an “international” to a “global” development paradigm, and it considers implications for the future of development cooperation. To do so, we map international responses to COVID-19—financial and beyond—to understand the changing nature of development challenges and cooperation as well as the growing role of non-DAC actors as part of this shift. Our analysis shows that while a diversity of actors contributed to international COVID-19 responses, the transition towards a global development paradigm has yet to materialize. Instead, responses to COVID-19 demonstrated clear tensions between the imperative for collaboration and the national interest, with the latter trumping the former.
Topic:
Development, International Cooperation, Pandemic, and COVID-19
Political Geography:
Global Focus

4. The Future of the European Financial Architecture for Development

Author:
Mikaela Gavas
Publication Date:
05-2022
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
In “The European Financial Architecture for Development: evolution or revolution,” Mikaela Gavas sets out the current European Development finance landscape, explaining the key players involved and highlights the challenges with the current systems, and underlines the importance of the EU and its various instruments.
Topic:
Regional Cooperation, Governance, European Union, and European Parliament
Political Geography:
Europe

5. Incentivising Investment in Human Capital through the European Fund for Sustainable Development

Author:
Mikaela Gavas and Samuel Pleeck
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
As the EU prepares to significantly scale up its deployment of blended finance, guarantees, and other risk-sharing tools aimed at stimulating investment in developing countries, and, in the face of spiralling needs as a result of COVID-19, this paper analyses how the EU could use its development budget to incentivise private investment in human capital. The paper provides three contributions. First, it gives an overview of the allocation of the EU’s external investment to date. Second, based on interviews with stakeholders, it documents cases of private investment in health and education while exploring some of the barriers to a higher share of investment in these sectors by the EU and its development finance partners. Finally, it puts forward a set of proposals for how to steer greater European external investment through the European Fund for Sustainable Development Plus (EFSD+) toward human capital.
Topic:
Development, Regional Cooperation, European Union, Investment, Human Capital, and Sustainability
Political Geography:
Europe

6. The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options

Author:
Hannah Timmis and Mikaela Gavas
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
In 2017, the EU launched an ambitious programme of investment mobilisation in Africa and the Neighbourhood: the External Investment Plan (EIP). The EIP aims to increase the scale, impact, and coherence of EU-supported external investment by introducing various innovations to the European financial architecture, including a new guarantee mechanism and a unique “three-pillar” approach to investment support. The European Commission is proposing a significant expansion of the EIP under the EU’s new long-term budget, the Multiannual Financial Framework 2021–27, replacing the current plethora of investment tools and modalities with a single framework. This paper provides a comprehensive overview of the evolution of the EU’s complex external investment architecture. Based on interviews with stakeholders, it documents lessons learned during the EIP’s first year of implementation and proposes a series of options for the design and operationalisation of the new investment framework. To increase the additionality, development effectiveness, and efficiency of EU-supported external investment, it recommends that the European Commission improve the current architecture by providing greater policy steer to investors; increasing competition among institutions for investment support; clarifying linkages between the three pillars; setting clear guidance, fee structures, and standardised contractual terms; and strengthening management of investment tools.
Topic:
Regional Cooperation, European Union, Finance, and Investment
Political Geography:
Europe

7. The EU’s Financial Architecture for External Investment: Progress, Challenges, and Options

Author:
Hannah Timmis and Mikaela Gavas
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
In 2017, the EU launched an ambitious programme of investment mobilisation in Africa and the Neighbourhood: the External Investment Plan (EIP). The EIP aims to increase the scale, impact, and coherence of EU-supported external investment by introducing various innovations to the European financial architecture, including a new guarantee mechanism and a unique “three-pillar” approach to investment support. The European Commission is proposing a significant expansion of the EIP under the EU’s new long-term budget, the Multiannual Financial Framework 2021–27, replacing the current plethora of investment tools and modalities with a single framework. This paper provides a comprehensive overview of the evolution of the EU’s complex external investment architecture. Based on interviews with stakeholders, it documents lessons learned during the EIP’s first year of implementation and proposes a series of options for the design and operationalisation of the new investment framework. To increase the additionality, development effectiveness, and efficiency of EU-supported external investment, it recommends that the European Commission improve the current architecture by providing greater policy steer to investors; increasing competition among institutions for investment support; clarifying linkages between the three pillars; setting clear guidance, fee structures, and standardised contractual terms; and strengthening management of investment tools.
Topic:
Regional Cooperation, European Union, Finance, and Investment
Political Geography:
Europe

8. International Development Cooperation After Brexit

Author:
Mikaela Gavas
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Center for Global Development (CGD)
Abstract:
Mikaela Gavas submitted written evidence to the United Kingdom's House of Lords EU External Affairs Sub-Committee on January 31, 2019. In her evidence Gavas answered questions about the future of UK-EU development cooperation after Brexit.
Topic:
Development, Regional Cooperation, European Union, and Brexit
Political Geography:
United Kingdom and Europe

9. Redesigning the External Investment Plan to be a Game-Changer for Africa

Author:
Mikaela Gavas
Publication Date:
10-2019
Content Type:
Policy Brief
Institution:
Center for Global Development (CGD)
Abstract:
Despite their potential to achieve high development impact, projects in the poorest and most fragile countries, most in sub-Saharan Africa, are chronically underfinanced by Euro- pean development finance institutions and private investors owing to real or perceived low risk-adjusted returns. The External Investment Plan and its risk-mitigation tools, if struc- tured right, have the potential to mobilise investment where the need is greatest. To make this happen, the new European Commission should n clarify the strategic objectives of external investment and steer it towards leveraging high-risk capital for underserved markets; n explicitly focus assistance on the poorest countries through clear project selection criteria; n provide demand-driven technical assistance and oper- ationalise policy dialogue to improve the business envi- ronment; and n federate the development finance institutions focusing on steering policy, encouraging best practice, and har- monising procedures and results amongst the develop- ment finance institutions and multilateral development banks.
Topic:
Diplomacy, International Cooperation, European Union, and Investment
Political Geography:
Africa, Europe, and Sub-Saharan Africa