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EU's aid budget facing cuts despite evidence it will pay for itself by 2020

EU's aid budget facing cuts despite evidence it will pay for itself by 2020:Campaigners warn reducing European development fund by 11% would leave world's poorest 'paying the highest price'
The EU's aid programmes for some of the world's poorest countries face steep cuts ahead of a crunch EU budget summit starting on Thursday.
With Britain among those calling for cuts, not just a freeze, in the EU's 2014-20 €1 trillion budget, campaigners fear the organisation's aid budget will take a disproportionate hit.
The president of the European council, Herman Van Rompuy, last week proposed cutting the European development fund (EDF), which mainly targets sub-Saharan Africa, by 11% compared with figures put forward by the European commission.
In July, the commission called for €30.3bn for the EDF whereas, last week, Van Rompuy suggested €26.9bn. Van Rompuy has also proposed less than the commission wanted for the EU's overall aid budget. Whereas the commission put on the table €70bn, Van Rompuy put forward a figure of €63.7bn.
"The cut is indeed quite substantial and is notably worrying for EDF. The countries which need it most would be the most affected by the cuts," said a European development official.
Under the 2008-13 EU budget, EDF came to €22.6bn. Technically, Van Rompuy's proposal is an increase on the current budget. But, taking into account inflation, it constitutes a cut in real terms.
"The total amount available for the 11th EDF is proposed at €26.984bn, which represents an 11% cut – proportionally the highest cut in the EU budget, and almost four percentage points higher than average. This must be reversed without delay," said ONE, the advocacy group.
The group, along with the UK'S Overseas Development Institute and the National Institute of Economic and Social Research, last week released a report showing that EU aid would more than pay for itself by 2020 (pdf). ONE's analysis said the €51bn in EU aid that targets the poorest countries would give a 20% return on investment for the EU economy by 2020, equivalent to an €11.5bn net gain for the EU and its citizens.
The report – the first study to quantify the impact of EU aid on donor and recipient countries – said by 2020 the aid spent would give a 0.1% boost to EU gross domestic product (GDP), a 0.2% boost to global GDP, and a significant 2.5% boost to sub-Saharan African GDP.
Several countries have pledged to support EU development aid spending in recent weeks, including France, Denmark and the UK. Denmark, Ireland and the UK have also protected development aid from national budget cuts. The European parliament, in a vote last month, said proposed EU funds for so-called external spending should be considered the "bare minimum".
According to a Eurobarometer survey (pdf), released last month, 85% of EU citizens believe Europe should continue helping developing countries despite the economic crisis, and 61% are in favour of increasing aid. At the same time, 55% think rapidly growing emerging countries should no longer receive aid. Most people (61%) believe aid should focus on countries that have suffered conflict or natural crises.
"Van Rompuy's plans will make no substantial financial savings by cutting aid to poor countries," said Olivier Consolo, director of Concord, an umbrella group of European NGOs. "Instead, some of the poorest people in the world will pay the highest price and could lose vital aid support. EU aid works out at only €1.87 per citizen a month, and saves millions of lives around the world. We urgently need development champions to stand up for the EU aid budget."
Should the aid budget be cut, EU development commissioner Andris Piebalgs and campaigners have set their hopes on a financial transactions tax being pushed by France and other EU countries. They are banking on hopes that some of money raised from such a tax could be put into development.

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The Swiss National Bank (SNB) urged Credit Suisse, the country's second largest bank, to boost its reserves ahead of a potentially disastrous escalation in the eurozone banking crisis.
The SNB said Credit Suisse should "take all action necessary to expand its loss-absorbing capital base significantly during the current year", by curtailing risky investments, suspending dividend payments or raising capital by issuing shares.

The SNB also said rival UBS, which had to be bailed out by the Swiss government in 2008, should boost its capital buffers by limiting dividend payments.
"The SNB considers that the big banks' loss-absorbing capital is still below the level needed to ensure sufficient resilience," vice chairman Jean-Pierre Danthine said.

Switzerland has come under seige during the euro crisis from foreign investors seeking a safe haven. An influx of funds has put intense pressure on the currency, leading the central bank to say last year that it would peg the Swiss franc against the euro to cap further rises.

Funds, however, have continued to pour in, especially to Geneva, various ski resorts and the hedge fund managers' favourite destination, the canton of Zug.
The SNB said it was determined to defend the cap of 1.20 francs to €1 and was ready to buy foreign currency in unlimited quantities.

"Even at the current rate, the Swiss franc is still high. Another appreciation would have a serious impact on both prices and the economy in Switzerland," said chairman Thomas Jordan.
"The SNB will not tolerate this. If necessary it stands ready to take further measures at any time."

Jordan declined to confirm speculation that he is close to imposing capital controls to prevent funds entering the country. "Concerning capital controls, there are various experiences and various ways to implement them and there are also countries that have had positive experiences with these measures in the recent past," he said.

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Illegally smuggled into Brazil 14 years ago, transgenic soy has proved a boon to domestic farmers and now accounts for 85 percent of total production.

But five million Brazilian farmers are now locked in a legal feud with US biotech giant Monsanto, the GM soy seed manufacturer, and are refusing to pay crop royalties.

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