53 - Financial instruments

Bilateral aid continued and the European Commission requested a 50 percent increase in funds from 2014. However, Europeans have not yet delivered on the promises they made in 2011.

After a series of eye-catching announcements on financial support to North Africa in 2011, 2012 was supposed to be a year in which the EU followed through and put the promised funds to good use on the southern side of the Mediterranean. In particular, last year’s increase in EIB lending ceilings, the extension of the EBRD mandate, and the launch of a new Support for Partnership, Reform and Inclusive Growth (SPRING) fund and civil society facility in the region created many delivery challenges. However, by the end of the year, the wider EBRD mandate was not yet operational – there are a number of technical changes needed, for example around the central banking systems in Egypt and Tunisia, in order to allow lending to begin – and the expenditure of money under the new funds still required extensive preparation. In fact, according to a Joint Communication published in May this year, only around €200 million of extra money had been spent on the southern neighbourhood in 2011; the figure for 2012 is likely to be at a similar level.

By contrast, overall foreign direct investment from the private sector in EU countries in the Mediterranean region recovered in 2012 after a drop in response to the Arab Awakening. €19 billion in new investments was announced in the first half of 2012, compared with €17 billion in the first half of 2011. The European Commission has requested an increase of 50 percent in funds for the southern Mediterranean under the next financial perspective for the period 2014–2020. The current environment of heated summit-level negotiations over the EU budget will test European unity around the priority of southern neighbourhood spending, but to date bilateral funds to the region have continued. In fact, many member states, notably Denmark, Finland, France, Germany, Italy, the Netherlands, Romania, Spain, and Sweden, increased their bilateral aid to the Middle East and North Africa in 2012.