Committee on Development Ordinary meeting
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DEVE European Parliament
Follow its sittingsHildegard Bentele
I can follow here? We start with a compromise amendment 5. The vote is open in.
You can do it by hand as.
Hildegard Bentele
Long as they're clear. Okay. So the vote is open in favor, against, abstention adopted. Compromise amendment six in favor, against, abstentions adopted. Compromise Amendment seven in favor, against, abstention adopted.
Compromise amendment two in favor, against, abstention adopted. Compromise amendment three in favor, against, abstention adopted. Compromise amendment four in favor, against, abstention, adopted. Compromise amendment one in favor, against, abstention, adopted. The final vote we do by roll call vote.
Vote is open.
Hildegard Bentele
Vote is open. Okay. I close the vote. It is adopted to bid 16 votes. Congratulations.
Then we proceed to the next vote, which exactly.
This one.
Hildegard Bentele
Yeah. Which is, thank you. Thank you. It is the report on promoting transnational governance of water in the interests of conflict prevention and peace. Then we start with the vote.
Does he want to? Okay. Sorry. Can I will pass I'll pass to the floor to the
Yeah. Yeah. Yeah. Okay. Okay.
Hildegard Bentele
We start with compromise amendment one. In favor, against, abstention. Rejected. Compromise amendment A in favor. Against. Abstentions adopted. Then we vote on amendment 101 in favor.
Against. Abstention rejected. We wait for the next 20. 109. No?
109? Yes. So we vote on amendment 109: in favor, against, abstentions, rejected. Amendment 112 in favor, against, abstention rejected. Then we vote on compromise two: in favor, against, abstention. Rejected.
Compromise b in favor, against, abstention, adopted. Then we vote on compromise three. We compromise three in favor, against abstentions rejected. Compromise c in favor, against, abstention, adopted. Amendment 133 in favor, against?
Abstentions? I have to check this, please.
Bote is open.
Hildegard Bentele
It's adopted. Amendment 134 in favor? Against? Abstentions are adopted. Amendment 138 in favor?
Against. Abstention adopted. Amendment 145 in favor? Against. Abstention rejected.
Okay. You open.
Hildegard Bentele
We check. Okay. Open the vote. Close the vote. Yes, it's adopted.
So we go to Compromise four, in favor, against, abstention, rejected. Compromise d in favor, against, abstention, adopted. Compromise 10 in favor. Against. Abstention.
Rejected. Compromise in favor. Against. Abstention adopted. Compromise, sorry.
Hildegard Bentele
5. In favor, against? 5. 5. Abstentions?
Rejected. Wait. Wait. Sorry? Did we skip 34 and 35 then?
Sorry. Yeah.
Stanis, 34 and 5. Yeah.
So we need.
Skipped 34.
So, yeah, it does fall. Yeah.
It falls. Okay.
Speaker 12
But 35 does not fall. Okay. Because that's the only fault if CA 10 is adopted. So 35.
Yeah.
Hildegard Bentele
In favor, against, abstentions, rejected. So then we vote on compromise five. Yeah. Compromise five? Compromise five.
Yeah. Okay. In favor? Against? Abstentions rejected.
Compromise in favor? Against abstentions, adopted. Amendment 49?
49. Yes. Yeah. Yes. 49.
Yes.
Hildegard Bentele
Amendment 49 in favor, against, abstention adopted. Yeah. Yeah. The next compromise six in favor, against, abstention rejected. Compromise in favor against, abstention adopted.
Yeah. Just after that, it's 60.
Hildegard Bentele
Then we check it. Okay. Amendment 60. Open the vote. Close the vote.
Yeah. It's adopted. It's adopted. So we go to compromise seven in favor, against, abstention rejected. Compromise in favor against, abstention adopted.
71. Amendment 71 in favor, against, abstention. Check. Yeah. Okay.
Okay. Open the vote. 71. Close the vote. It's adopted.
Yeah. It's adopted. Amendment 72 in favor, against, abstention adopted. Compromise eight in favor, against abstention, rejected. Compromise in favor against abstention adopted.
Compromise nine in favor, against, abstention, rejected. Compromise, in fact, I. Sorry. In favor, against, abstention, adopted. Then we go to 96.
96. Yep. Amendment 96 in favor, against. Abstention rejected. Amendment 97 in favor, against, abstention adopted.
Then we have Amendment 99 in favor, against, abstention adopted. And we go to the final vote by Rokul Woj. The vote is open. The vote is closed and adopted. Thank you very much, colleagues.
The floor to mister Yeah.
György Hölvényi
So, dear colleagues, this vote, as you know very well, has taken place already months earlier. You know, it was postponed several times. And, we have shared the compromises as a reporter. Amendments are ready on March 10. It's taken more than amounts for you to come up with your alternative tax, but barely contains the difference in the content as you see.
Yeah? This is really very small things. And we have presented the balance tax incorporating 20 amendments on the S and D and 11 from the Greens, not mentioning, sorry for that, for the other groups. A lot of times, we have expressed our full openness for negotiations. But you have considered your own party political interest more important than the coherent position of the committee.
And.
this
György Hölvényi
Is really it's, no I wouldn't like personally nobody attacked, but I think this is not a good practice. It was well described when your groups have responded, stating that you will not be part of the compromises for the political reasons. It was not me who came up with the, how would you say, the anti-democratic practice of the court of sanitaire. You have come with that. You have made the op operational.
And it is even more disgraced, the mutual respect and the professional work. Therefore, I am not, therefore, not the one to be ashamed. And, I will, of course, carry on my work and our work, as I have done in the last ten years in this committee. And I cannot let development cooperation become the party so really closely that the political game? This time, it was unsexual, but this is not due to fault on my side, on our side.
If the case is, tell me. And as you think about, we are between us. And what you have achieved with all of this, not me, not us, or you, are the ones who have something, but the people, they are really in need. This is the problem. Thank you.
Hildegard Bentele
Thank you, Mr. Heaveney. Mister Bohlman has asked for the floor, and I give it to you.
Udo Bullmann
Thank you. Thank you so much, Chair. I do not want to enter into a debate on the remarks of our colleague, Hovany. I have a different issue. I would like to, but on this occasion, I would.
Cannot give you the floor. Sorry.
Udo Bullmann
Could I have asked to the next coordinator's meeting? And that relates to his remark, but I do not discuss the content of the remark. I would like to ask you, chair, and the secretary to put on the coordinator's agenda for our next meeting. Not today. Not this one, but the next one, because we need to prepare, not today, but the next coming coordinators meeting to discuss the procedures of the negotiations of our reports and amendments.
Hildegard Bentele
Thank you very much. We take note of this. And with this, I close this topic of the agenda. Thanks, colleagues, for coming to the vote, and I hope you continue to stay for the next item, which is we're going to establish a budget expenditure tracking procedure, performance framework, and other horizontal rules for the union programs and activities.
Yeah. The budget reports are not here yet. Maybe we can give it, I can give minutes. I
Saw the others from the other groups.
Yeah. Yeah.
So just yeah. People are ready.
Speaker 24
So colleagues, just for your information, we are waiting for one colleague, the shadow of S and D. So we take a small break of 2 minutes. So dear colleagues, Mr. Sherman is here. So we start with the next item on the agenda.
Can hammer something.
Yeah. Would like to hammer something. Yeah.
Yeah. It's fine.
Hildegard Bentele
Mister Schermer, would you take your seat, please? We were waiting for you. Thanks. We will now proceed with the presentation of the draft opinion on the so-called performance framework regulation that our committee will submit to the Budget and Cont Committee. This budget expenditure tracking and performance framework complements the Global Europe instrument and is one of the regulations proposed by the European Commission in July 2023 as part of the new multi-annual financial framework for 2028 to 2034.
The proposal replaces today's fragmented performance landscape, which has thousands of program-specific indicators and multiple portals. With a single horizontal framework to track EU budget expenditure and report on performance. Core new features include a streamlined single gateway, a single list of intervention fields common to all EU policies, and a reduced set of standardized indicators intended to make EU spending more comparable and easier to oversee. Overall, the framework for the targets is aligned with horizontal priorities related to climate and environment, social spending, gender equality, and the principle of do no significant harm. One annual performance report is foreseen to replace the current 34 sector specific annual reports.
However, as the report of the Court of Auditors pointed out, the proposed framework does not always provide a clear link between funding and results, nor does it show explicitly the correlation between intervention fields and policy objectives. This, in particular, is the case for Global Europe, adding to the fact that the core objectives of our sectoral instruments still need to be defined by a joint report in AFET and DWER, and then in co-decision with the Council. The content of the single performance report is not proposed in detail by the Commission. So one of the critical questions for us will be which features of the current annual report on external financing instruments need to be retained and continued. Last but not least, the Court of Auditors pointed out that the mapping and correlation between Global Europe's policy objectives and the intervention fields are not clear.
I believe these are critical questions that our rapporteur addresses in his draft opinion, and I look forward to hearing his proposals, as well as those of the shadows. I'll give the floor to the rapporteur, Niels Goyking, for 5 minutes.
Yeah. Thanks, Chair. I speak.
In German, so please use your headphones.
Niels Geuking
Thank you, madam. Well, first of all, I want to say quite clearly that we welcome the commission's aims in making the budgets more transparent and tracking the expenditure. But there are some shortcomings. A list of indicators we feel is insufficient and lacks reality for us in Devy. It talks about activities rather than effects, and that is the core problem in corporation.
The risk is that, at the end of the day, we measure how many projects we're financing, but not the improvements that we've made to people's lives. The court of auditors has said that this current system focuses too much on outputs and doesn't talk enough about the actual effects. If we focus on performance, then we have to measure true performance. A central point in our report, hence, is that external action should not follow the same logic as the internal EU programs because development cooperation is long term and has a complex nature and depends on context, we can't just pile up papers and draw numerous columns. We need to know what the effects are.
So we would like a separate annex for external action. We're proposing that so that we can base ourselves on what we've already got, the established principles, the global Europe performance framework. And, we believe that that's the only way to ensure that we measure what we really need. So at the end of the day, we can show how we've reduced poverty, how we've granted access to services, how resilience has become more visible. Second point, the single gateway, the proposal makes sense, but at the moment, there's too much focus on financial implementation.
That's not enough. The people want to know what the EU money is doing in the field. So that's why we're proposing the external action, the focus on long-term results, and the contribution to poverty reduction. Transparency is not just about how much we spend. It's about showing what we've really changed.
Thirdly, bureaucracy. Another central point is cutting red tape. The compromise proposal has too many reporting obligations for parallel data systems. We are proposing that we make better use of existing data, improving access and reporting structures be updated, particularly for international organizations and companies, any additional report required of our implementing partners costs time and money, and that money doesn't go to the people who need it. And then, next point, gender equality.
Our report is calling for an exemption from external action for horizontal gender tracking. It only measures how many measures we have at the moment. It doesn't say what we're actually implementing in the field. It only talks about measuring the input of the money, but not the output in terms of equality. It looks good on paper, but at the end of the day, nothing really changes in reality.
It could even be damaging in a conservative context. Local partners can be placed in danger, and access to communities becomes more difficult. This is an argument that we have found with our UN experience. A horizontal target is a top-down approach. It doesn't really fit in with our efforts to have partnerships at eye level.
It also undermines the self-determination of our partners. We track gender equality, but still via project reporting. That will remain the case. Equality is too important to be left by the wayside. So let's have a good score, in reality, not just on paper. Cooperation with my colleagues is something I'm looking forward to.
We've already had talks. My office is open at any time. So let us support greater transparency together, and the results and effectiveness. We need a system which reflects reality and involves our partners. If we want performance to be taken seriously, then we have to measure what really has an impact.
Hildegard Bentele
I'm grateful that rapporteurs from the lead committees, the batch committee and the quant committee are also with us today. And I would like to give the floor to Mister Schormack Germain for 2.5 minutes. Please, you have the floor.
Jean-Marc Germain
Thank you very much, Chair, and thank you for inviting us together with my fellow reporter from the CALM Committee. And, of course, I been hearing carefully what you just say, and I may say that all the hearings that for now we we've been pursuing, it's more or less the same thing. While performance is an interesting framework, but not for us, more or less, that's what we hear. And also, have some ask for exception for the fees. We are very puzzled with what the commission wants to do with the regulation that doesn't fit for any or little of the figures that we have to take into account.
Maybe just to make a couple of comments. First, together with Nicolas, we decided to have a bottom up approach. So we will, of course, take into account carefully your tariff report and, of course, the work of the shadow, the final report with the amendment, because as you say in your report, what we want is this regulation to be relevant, to be useful for action. And if the indicators are not, then it will not be the case. So more or less, I don't know if we, in the end, decide to have a dedicated annex or framework for Global Europe, but at least we will take your correct indicators on what you think is useful and what you would have put in your dedicated regulation for Global Europe.
Second, it has not been touched here, or maybe I missed it in your report, but we have a very huge concern about the link between performance and NRPP. Because in NRPP, the regulation says that the new system of payments to the final beneficiary should be not anymore on cost base, but based on output indicators. And those output indicators should be chosen in Annex 1 of the performance framework. And for that, we hear from all the stakeholders that we heard that it's the biggest problem because if performance is a statistical gateway, then what? We can fly with a reduced number of indicators.
But if it's used for payments, then we have a big issue. And also, if it's used for the real evaluation of performance. So that's what I would like to say in the short term that we have. But if I sum up the bottom approach, we still have to settle the relationship between NALPP and performance. And then with Nicolas, we will have to deal with the horizontal principle.
And we noticed also that you have concern about the application also for Global Europe of those performances. Thank you very much.
Hildegard Bentele
Thank you, Mr. Schallmann. I give the floor to Nicolas Herbsd from the Cruch Committee.
Niclas Herbst
Thank you, Madam Chair. Of course, this is a very complex file. It has overarching implications. So I also had already the opportunity to take part in a stakeholder meeting that was organized by the Robert Turen. And so I'm not that surprised about the outcome of your draft report.
I think it will be extremely important that the performance framework respects the specificities, especially of the external action. Also, we need to use the existing reporting and data. That is also a big issue for us. Reporting and transparency requirements need to remain proportionate and context sensitive, as pointed out, especially in fragile and humanitarian settings, which can be very challenging, including also in regard when it comes to the protection of personal data, which is in your area extremely important and sensitive. We have also taken note of the role foreseen for delegated acts.
I think it's obvious that we need to ensure that the parliament's adequately involved and that relevant stakeholders are consulted in the development of indicators and methodologies. So we support improving transparency through tools such as the Single Gateway, while ensuring that information on external action reflects impact, as you pointed out, and remains adapted to sensitive context. So in the end, need to strike a balance to ensure that such a business will be in line with the overarching idea of this regulation. And as Jean Marc pointed out, that will be difficult to achieve. It's also important to remember that this is a horizontal regulation, the provision should apply to a similar extent to all financing programs.
So, how do we deal with that? I think Jean-Marc was clear on that. We are concerned that very important issues, such as the guidance on do no significant principle, for example, will be defined solely by the commission. We are concerned that the specific climate targets will be defined by delegated act. And I'm concerned about the incoherence of legislative drafting in this MFF.
So, for example, the climate targets will be included in the sectoral regulations. Well, now the sectoral funds will have to abide by some targets which are defined somewhere else. So that is technically difficult to, but again, as Jean Marc pointed out, it is very important that these specialized committees are very clear in their opinions, and we look forward to your input and would encourage you to have a strong focus on elements that ensure the framework is fit for purpose for EU external action while remaining consistent with the overall objectives of the regulation.
Hildegard Bentele
Thank you, Mr. Herbs. Then we invite the shadow rapporteurs present to take the floor, and I would start with Mrs. Mail.
Marit Maij
Yes. Thank you, Chair, and thank you very much to the rapporteur and also to the speakers of the committees. For the rapporteur for the draft, but also for organizing the stakeholder meeting, I think that was very helpful and very useful. What we all see is that it's okay that we have an opportunity with the performance regulation to streamline monitoring, but we see that this is gonna be difficult for external action. And this is what was also said by our partners in the stakeholder meeting, that when we have the way that we are it's being presented right now, it's going maybe to simplify, but does it really show what we need to know in the external action?
We see that there is a mismatch on the ground from what our partners are doing and how it's going to be, in the performance regulation, how we see what we want to see, but we want to know that we actually have external action that performs in the way that we think it is important in our main priorities. So we need to align that much more in this performance regulation. So I think it's a good idea that Rapporteur has a proposal for a separate annex for external action to make sure that external action is monitored and is evaluated in the way.
that
Marit Maij
is external and different from national action or, inter sorry, in European action. Also, I think it's important that we see that the application of the OECD monitoring guidelines are only guidelines for financing EU external action, and that raises a concern when it comes to public private financing. How do we actually monitor public private financing in this way, because there's also a lot of blended financing and public private financing in the EU external action. And we think, as was said by many, you know, the main aim of the EU development funding, and the EU is one of the few that is still there when it comes to international cooperation, is the reduction of poverty, but also based on the principles that we have from the EU, which is gender equality, but also fighting climate change, protecting the environment, do no significant harm. All these elements are really important.
So I think they should maintain it and it's well. We're looking forward to collaboration with the rapporteur on the next step, but I think there's still when we really want to have this in the focus of the external action, there are still quite some steps that have to be taken. Thank you very much.
Hildegard Bentele
Thank you, Mrs. Maier. Then I will turn to the other shadow reporters present. I see Mrs. Levin, but Mr.
Gorens maybe wants to take the floor for Mr. Andrews or not? No? Yes. Yes?
Okay. Thank you. Then we turn to Mr. Gorenz.
Charles Goerens
Didn't know that Mister Andrews was not going to be present today, but I can speak in my own name. We are from the same group, and we share many views. So just a few remarks on the report that has been presented by our colleague, Mister Gokking. Yes. For the most part, I endorse the majority of his remarks.
The focal point is really, is the text is the context specific enough such that we can have an exemption to the commission's line as proposed? And I would say yes. By way of example, I financed myself a project to promote craftsmanship in Niger about 20 years back, and the assessment was surprising. It was relatively negative. And I had an additional report and assessment, and I said to the assessor, you have a negative assessment because there are not enough results in terms of training when it comes to training of craftspeople as the project had set forth to achieve.
And I would say that the reason for this is extremely easy. We didn't take the best possible element to have a good result at the end. We took people who were living in absolute poverty, so essentially had nothing, no basic training, and nothing at the outset. And we took these people, and we turned them into craftspeople. If we had taken the best people to put into the program, well, then the results would have been different.
Therefore, we have to do things smartly. The report is along the lines of the OECD that assessed four criteria: assessment, relevance. First, I think that we can say that, yes, the criteria are relevant when the commission is involved. The second involved is effectiveness when it comes to the implementation of the means to achieve the objective. And if they are enough, third, efficacy, correctly.
And the rapporteur underscored the fact that the fourth is the most important, and that is sustainability. And I would, and I recognize what Mister Epp said, and he said this extremely clearly. These criteria are here, and they should respond to the principle of proportionality, and I hope that the rapporteur could rebound on this. I think that this would mean that we can have a differentiated approach in practice. That is common sense, in my opinion.
If we do not factor in the context, and I believe that the example that I gave you shows clearly that the issue of context is extremely important. If you know if you have a country like Senegal that has a good starting point, and then you, or that is just be another context where things are just beginning to get up and running. Thank you. That's essentially my comment.
Isabella Lövin
Thank you, madam chair. Yeah. Dear colleagues, unfortunately, Eric Marcat, who is the Green's shadow rapporteur, couldn't be here today. So he sends his apologies and asked me to share the remarks on his behalf. So first, he would like to thank the rapporteur for the draft opinion, which provides a very solid basis for discussions.
As Greens, we share many of the concerns raised regarding the performance framework. On the one hand, transparency and accountability in the use of EU funding, particularly development funding, are essential, also through the systematic use of disaggregated data. On the other hand, we must ensure that reporting requirements do not become an excessive burden for implementing partners. It's therefore important to avoid duplicative reporting standards, and instead build on existing frameworks. At the same time, reporting should be meaningful, capturing not only short-term outputs but also long-term results, as the rapporteur mentioned, and development priorities.
The single gateway should be used as a genuine opportunity to provide EU citizens with relevant and comprehensible information on what is being achieved, rather than merely presenting figures. There are also remaining uncertainties regarding the intervention fields, in particular, which can be applied to external action and how the related coefficients have been determined. Furthermore, we'd like to be sure to align the performance regulation with the outcomes of the negotiations of the Global Europe regulation. We would like to see clear spending targets on key priority areas, combined with a robust performance framework to help ensure more evidence-based decision making. And through our amendments, we aim to bring greater clarity to these aspects.
Mr. Markowitz looks forward to constructive cooperation with the rapporteur and all the other political groups. And I'm quite sure we will also agree with what the shadow from socialists was saying about gender equality and climate, and the do no significant harm principles, that these are also very central to our policies. Thank you.
Hildegard Bentele
Thank you, Mrs. Levine. I don't see any other shadow rapporteur in the room. So I would then give the floor to the European Commission. Yes.
As DG Badge has the horizontal responsibility over the performance regulation, they take the lead in responding, and colleagues from DG INPA and DG ECHO can complement. So I pass the floor to Mrs. Lod at Theodore Montoya. Thank.
Lourdes Montoya
Thank you very much for the opportunity to engage with you on the performance regulation. A few words of the general objective of the performance regulation, which have been mentioned by some of you. First, simplification for beneficiaries, so those that do implement on the ground. Second, transparency. Transparency of what we do with the EU budget, also for opportunities, so that we have potential beneficiaries knowing how they can participate in the EU budget, but also transparency for everyone on what are the results and the outcomes of what we do with the union funding in a general way, but also very concrete in concrete terms.
Let me say a few words about the indicators. So the performance regulation provides for an annex which has indicators that are relevant for internal policies as well as for external action. We estimate that about 95% of the intervention fields that are in the annex, and about 70% of the indicators proposed, will be relevant for external action. And those are building also on existing practice that you have, like household food security programs, basic sanitation, reproductive health, poverty, which have been mentioned several times by some of you, are there as intervention fields. We have several indicators that are used today, which are reported in the annex, like the number of people directly benefiting from EU supported interventions aimed at civilian post conflict peacebuilding and others.
However, also thinking about simplification and administrative burden, there are a number of indicators today which are either not used or only very marginally used. Those have not been retained. The OECD framework is fully retained and specific to the indicators which are specific to external action, they build on OECD DAC codes. There is a clear possibility to link the objectives in Global Europe to the intervention fields and the indicators. We think that there is an added value in providing an aggregate picture of what the EU budget does, and that the indicators respect the specificities of the policy.
On the climate target, there is an overarching climate target for the whole MFF and a specific one for Global Europe, which also builds on the efforts and the achievements in the current MFF. Gender equality, it's quite important for global Europe. We do think that there is a merit, a strong merit, in monitoring how Global Europe contributes to gender equality. A final word as well on the do no significant harm, where, of course, proportionality is key, and the guidance will take into account the specific features of external action, including, for instance, how to assess do no significant harm in crisis situations. Some of you refer to the single gateway, and I do think that this is a massive improvement in terms of transparency.
The single gateway would allow to report not only on the indicators in the annex, but also on the results of the evaluations. And there is quite a substantial improvement of how to perform evaluations and how to bring in indicators that measure the actual impact on the ground. So we do think that the indicators provided for intervention fields output results, output end results, provide for a very good framework to measure the impact of global Europe, while at the same time providing for disaggregation and simplification, which is key for beneficiaries.
Hildegard Bentele
Thank you, Mrs. Montoya. We are lagging behind time, and we have two more colleagues from the Commission who would like to take the floor. So I would first give them the floor, and then shortly to Mr. Gurens again.
So we move on to Mr. Stutzel from DG InPap, please.
Stutzel
Thank you. Actually, nothing to add from my side. Luedes said it all. Thank you.
Hildegard Bentele
That is very smart. Then we move to DG ECHO. I know ECHO. They will always take the floor. Please.
Dominique Albert.
Speaker 36
Yes. Yes. Dominique Albert, DG ECHO. I think, indeed, that everything was said. So, thanks a lot.
Hildegard Bentele
Okay. Thank you very much. Then I would like to give the floor to mister Gorens again shortly.
Thank.
Charles Goerens
you. Yes. This question is very important. If you build a school in a partner com country, you determine the location, the terms of reference, and then the most critical point is when you give the keys of that school to the recipient. So my question is, thinking about what they said about sustainability being the most important criterion, at what point does the evaluation end?
If the project ends in 2030, it's only in 2040 that you're going to be able to say whether the sustainability criterion is fulfilled. Is there still, you know, a roof on the school? Are there teachers? Are there pupils? It's only at that point that you're going to be able to have a more or less credible opinion.
Lourdes Montoya
Yes. So two aspects in terms of the monitoring of the specific projects. One is indeed when do we launch. When we launch the project, I do think that the performance regulation also provides in this annex to be able to monitor what is the output and the result of this intervention, which will be monitored as we implement. The second one, which you referred to, is evaluation.
And this takes time because there are a number of impacts, which take more time to materialize. And there, in the performance regulation, you have dedicated articles in relation to the evaluation, which provide for the longer-term horizon to be able to monitor and perform those evaluations. Those will be carried according to the better regulation guidelines for evaluations. And also, the articles that are provided in the performance regulation give a stronger hook, if I may say, for stronger requirements of how to measure those. So this evaluation will have to take place at least 3 years after the end of the programming period for each activity.
Hildegard Bentele
Thank you very much. So, thank you. I think we are about to close this point. I hope that our rapporteur's shadows and the lead committee find a sound approach that reflects the specificities of the EU Development Corporation and humanitarian aid, because fitting external action under one horizontal framework with all other EU policies risks diluting reporting and monitoring that we, as MAPS, need for our meaningful scrutiny. The deadline for amendments is Monday, May 18, at EOB.
The vote will take place on July 15, so that we can deliver our opinion before September 10. Thank you very much, colleagues, for attending this item. We move on?
Yep. We can move on.
Do we have?
Do we have?
Hildegard Bentele
So, dear colleagues, we resume our session. Please take your seats. Our speakers are with us. Because we have a very topical issue on the agenda, the impact of the crisis in the Middle East on global food security. As you all know, the ongoing disruption to trade through the Strait of Hormuz corridor is already triggering one of the most severe shocks to global commodity flows in recent years.
Higher fuel and fertilizer costs are already translating into higher production costs for farmers worldwide, which may lead to dramatic declines in crop yields, changing production patterns, and ultimately, rising food insecurity around the globe. We are very eager to learn about the various ways in which these disruptions are affecting food security in our partner countries, what the medium and longer term projections are, and most of all, what we in Europe can do to alleviate this situation. Without further ado, I welcome our guests both in the room and online. First, Mr. Alvaro Lario, President of the International Fund for Agricultural Development, IFAD.
Thank you for being here with us today. A warm welcome as well to Mr. Maximo Torrero Cullen, the Chief Economist at the Food and Agricultural Organization, FAO, joining us remotely from Rome. And finally, we welcome Mr. Kon De Kayser, Policy Analyst in ECBPM's Sustainable Food Systems team.
You're all extremely well placed to comment on this issue. Let us dive straight in. Mr. Larue, you have the floor for a maximum of five minutes.
Álvaro Lario
Thank you very much, Honorable Chair, distinguished members of the European Parliament. We are pleased to be here to discuss some of the consequences of the current energy and fertilizer shocks, specifically also for food security. One week ago, we actually presented the global report on the food crisis in London with a couple of our partner institutions, and the situation is already very dire. I would say we have 266 million people with high levels of acute food insecurity. And after this crisis, that could rise by another 45 million.
Two countries under famine or IPC Phase 5, Sudan and Gaza. So the situation is already quite complicated. At the same time, what we are seeing currently is a global production shock in the making. As it was presented, we are currently seeing an impact in terms of, first of all, the supply of food to many of the food dependent countries, including on The Gulf. For example, they have 70% of their food imports go through the Strait of Hormuz.
So already in the food supply, there's an impact. Also on the transportation cost and the freight cost, which are naturally going up, energy fuel, which has a direct impact on mechanization, fertilizer prices. And I'm sure that Massimo will come back with all of the specific, I would say, figures, data, and analytical tools. But I also wanted to discuss what we are currently seeing on the ground. So first of all, this is not an abstract macroeconomic shock.
We know that the plantation season is currently undergoing, especially in West Africa and South Asia. So for many of them, which have one or at most two harvests, that might mean completely losing, in many cases, their entire income for the year. So this is not an abstract macroeconomic shock. Also another important point, I would say, is that the worst of the impact is not behind us. Even if it were to close right now, I mean, if we were to have a full, I would say, escalation and the war would be over, we would already see the impact over six to twelve months.
We know from the IMF estimates that it will at least increase in fertilizer prices, half of it will go into food price inflation in six to twelve months. So it's very clear that food prices will be going up. They have already gone up a little bit, but most of the impact will be over time. This is very different from the previous shocks we had during COVID or during the Ukraine invasion. So it's just a matter of really starting to see what we can do in the short term and the medium term.
And that's a little bit of what I will also delve into. For Europe, this is, we know, for many farmers, yesterday, we were in the Agriculture Committee. This is not a distant concern. It's going to translate for sure into pressure on supply chains, into mostly growing instability in regions very close to the European Union, and also increased volatility in many of the food prices. So the question before this committee is mostly a political question, which is how Europe can act right now.
And for us, clearly, one of the issues and some of the lessons learned is that we talk about food crisis and food shocks every time that one happens, but a lot of the preparation does not happen. So for us, this is an opportunity to build actually a lot of the, I would say, resilience mechanisms before they happen. In the short term, there's very limited action that can actually happen, I would say, mostly stabilizing markets, trying to partially subsidize the fertilizers. But over time, I think the key impact that we have to look into is diversifying the supply. So that means diversifying the supply of the inputs we receive, whether it's biofertilizers, whether it's seeds, whether it's also the food self-sufficiency on different value chains that the countries have.
And this is exactly building that resilience over time. That's the medium and long-term action that we can take, and this is exactly what IFAT can work with the European Union. So I'll use my last minute to actually talk a little bit about how we believe that the European Union and IFAT can work together. I think the tangible results, a lot of the global gateway focuses on big infrastructure and actually on investment corridors. I think what IFAT can bring to the table is also, given that we are a financial institution and we also work through guarantees and blended finance, I think it's protecting also livelihoods and building the resilience, especially the income of many of the small-scale farmers.
And I think this also brings economic security and stability. It also very much speaks to issues related to forced migration, to really creating economic opportunities. So I think this is a tangible impact that we can work on together, and it aligns very well with the current financial model that the European Union is putting forward. So I do believe that if Europe can position itself as a strategic actor in the global food systems, and this will only be as resilient as the most vulnerable producers. And many times, this is at the first mile, and this relates to really livelihoods and trying to make sure that farming is a business.
It's not just a subsistence economic activity, but actually a commercial activity. So my main message for today is let's now put in place the measures that we can do in the short term, but let's start preparing for the next shock, because the next shock is going to happen. And we know whether it's an oil shock, whether it's an energy shock, whether it's a fertilizer shock. And sooner or later, it's going to come. So just to finalize, IFAT was actually born in the '70s out of an oil price shock and a food price inflation shock.
So let's work together. Thank you.
Hildegard Bentele
Thank you very much, Mr. Lario, for this presentation. Then we move on to Mr. Torero Callon. Are you with us?
Maximo Torrero Cullen
Yes, please, see your slides. Very good. Very good. Okay. You have the floor, please.
Thank you. Thank you very much. I will do a brief presentation, which will be based on the situation we are facing today. Next slide, please. Okay.
So, the first thing is that we need to understand what is the problem today, and what happens through the Strait of Hormuz. So, as 35% of the oil is going through the Strait Of Hormuz, 20% of natural gas, which is used for nitrogen production, 20% to 30% of finalized fertilizers, depending on the type, 50% of sulfur, which is sulfuric acid to be used for phosphate, and of course, there is the choke of demand, which is the reduction in the demand of these countries of The Gulf, which were key importers of food. Next slide, please. Now what we are observing today is that the mobility of food across vessels across the Strait of Hormuz has shrunk substantially. Yesterday, there were some problems of conflicts in the vessels that were trying to move.
This has worsened the situation. But also, we are seeing a side effect on the Suez Canal, which is also starting to have an indirect impact on the conflict, and reducing the number of vessels. At the same time, we are also observing in the Panama Channel that there have been increasing fees, which makes it more difficult. On the right-hand side, you can see the shipping cost, how it has been increasing, and how this also will produce a significant problem. Next slide, please.
This is to show the impacts of what we are observing, and it's important to understand the mechanics of what the impacts are. So first, the cost of energy and the fertilizer mobility will impact several things. Indirectly, it will impact seed production because they are intense in use of fertilizers. It will, of course, impact the prices of fertilizers, and this will have an effect on the decision of farmers because the input costs will increase under our situation of lower prices. And third, the energy market will also have an impact on the operational costs for farmers.
As a result, there will be a potential decrease in yields and increase in agri-food prices, and this will end in a potential reduction of global production for the second half of the year because farmers will have to make choices of planting less inputs and therefore, less yields, and this is already happening, or planting less or switching to crops that can fix nitrogen better, like moving from wheat and corn to soybeans and selling to biofuels, which is now profitable because we are around $115 per Brent barrel. So it becomes biofuels become very profitable. The consequence of this is for the second half of the year next year, commodity prices will increase, and that increase in commodity prices will lead to food inflation, which incorporates in addition to the commodity, like the bread, the wheat is 15%. The other part is energy cost and labor cost. So this energy cost will also increase food inflation, will create food inflation.
As a consequence, overall inflation will happen. So those are the mechanics. If you go to the next slide, you will see that today, we're already in between 40% to 55% of increase of natural gas and 50% to 75% of increase of urea prices, which keep increasing, and that's the major concern. Next slide, please. No, before that, you jumped too many.
One more before. You skip all this. Before. There. No.
Next. Okay. There, please. So what we see here is the variance we observe across different regions. Let's just focus on the right-hand side corner.
The median diesel price change between Latin America, plus 19%, Europe, 28%, Asia, 25%, Africa, 13%. Now this is a result of two things. It's a result of the policies being put in place by countries already. Europe is implementing several policies to control the transmission of energy prices to diesel, but also it is a result of the intensity in agri-food systems of energy use. And as you can see, Europe has a significant intensity in the left-hand side of energy use, and that's where we need to look at carefully and to assess carefully the consequences of that.
The next, please. This is just to show that, right now, we have enough supplies of food and enough stock. That's why the FAO Food Price Index, Commodity Price Index of the month of March was not so high and was stabilized, and that is because of the level of commodity prices. But we now are starting to see increases in commodity prices for corn, 6% for soybeans, 19%, and then, of course, for rice, between negative and positive because we have enough commodities to consume. Next, please.
This is just to show that we already have a significant dependency on some countries which are importing from this region, and the intensity of use of fertilizers. Turkey is one of those which depend heavily on the gold supply. But beyond fertilizers, again, there is the energy issue, which is increasing the cost to farmers, which right now is creating a negative margin for them. Next, please. Now, we have simulated the impacts of this, and we are very aligned with what the IMF produced.
We did it a little earlier. But essentially, what we are going to observe is a minus 1.6% effect on household consumption, welfare. And this will also imply a potential impact of around minus 1.7% in economic growth. Why? Because the high food prices and the food inflation and the overall inflation will force countries to increase interest rates, and this will be impacting economic growth.
And that's what we want to minimize, and that's the impact we want to minimize. If you move to the next slide, this is what shows the policies being already implemented. The only important thing here to raise, which is important, is that most of the policies implementing are affecting the fiscal sector. And that's something that we need to carefully assess. Next slide, please.
And I will stop there. Next slide. Okay. Here are our recommendations. But first, to have this in the context of what we are talking about.
We are talking about a situation in which we are reducing to the world just in fertilizers, just doing a quick and well of 5,700,000 tonnes per year. That means 110,000 tonnes per week. And that means between 1,000,000,000 to 2,000,000,000, depending on the conversion rates, of a number of mills that will be affected as a result of that per week, 1,000,000,000 to 2,000,000,000 meals per week that will be affected. That means if we take three meals per day, 95,000,000 people per week will be affected because of the level. And this is a fast calculation, but it's more or less to give you a magnitude.
So we have split the recommendations in three periods between zero to 90 days, 90 to 360 days and 360 days. And this is linked to the crop calendar because as the days move, we start to move from east to west, south to north in terms of the crop calendar, and we are now already affecting large key exporting countries. So in the short term, the major measures are to develop alternative trade routes, to enhance market monitoring through the Agriculture and Market Information System, to avoid export restrictions on fertilizer and energy products, to support food consumption of the most vulnerable people through targeted social protection programs, and to help humanitarian logistics because the logistical costs have increased substantially. Just to move commodities to Afghanistan, for example, has tripled or quadrupled the distance that they have to cover, and that means a significant increase in cost, which has an impact on nonhumanitarian agencies. Between ninety to sixty days, our major priority is to secure the viability of farmers, especially small and medium farmers, and that requires some financial support, temporal financial support, like what happened in COVID-19 with SMEs.
But we also need to help the food-importing countries that require fertilizers now, because if the strait opens, they will have to pay more right now, and that requires some liquidity. And these are countries like Bangladesh, Sri Lanka, Kenya, Sudan and Thailand, and also including Brazil, which used to import 45% of urea from this region. And also, we need to diversify import sources. On the long term, as it was mentioned, I think it's really important to prepare for the future. The future is already here.
On May 15, we start with El Ninos. So that will evaluate the situation that we have right now, plus El Nino, which the probability of having a super intense Nino is very high right now. It's increasing by the day. It's one in four right now for the highest intensity El Nino. So we need to start to set up infrastructure around so that we can build up more diversification, access to these types of inputs, to avoid this situation in the future.
And we need to accelerate in the energy mix, which has improved substantially and which has shown to make us resilient. If not, oil prices will be already over $140, and they are not yet because of this change in the net income mix. And of course, we need to prepare for a more complex structural change because what we are looking forward, if The Strait doesn't open in the next we are already 64 days. In the next 30 days, we are going to end in a situation of scarcity of commodities, food price commodities increasing, food inflation, overall inflation, and that means that we will impact economic growth. We will be living in a world of high inflation and low economic growth.
So let me stop there, and thank you so much.
Koen Dekeyser
Honorable Chair, distinguished members of parliament, I'm grateful that this topic is being discussed amidst the turmoil that we're in here. So the main message that I want to bring is that it's not Europe's war, but it's our mess. And so if we want to be serious about building resilience, we can no longer afford the strategic exposure that we have to the volatile global fertilizer markets. We must integrate our food, energy, and security sectors to create a resilient system that serves our farmers, and this requires new partnerships both within Europe and outside the EU. So, what are we facing?
Speaker 42
We're facing an immediate crisis, like Mr. Alvaro and Mr. Maximo has said before, with the severity depending clearly on the duration and the policy responses. So in 2002, there was a food crisis. At the moment, we're sort of in a fertilizer crisis.
Well, the food markets, like Maximo said, are currently in a better short-term position than in 2022. That stability is thin. And both EU farmers and farmers across the global South are united by a shared fragility to this fertilizer shock, and with a potential El Nino on the horizon, and an internal international development system facing an existential crisis on its own. Our capacity to respond to the next shock is being hollowed out. So why are we facing this crisis?
Koen Dekeyser
The immediate catalyst is obviously the war, but the war only exposes the preexisting conditions that we are suffering from a strategic exposure to a fertilizer system that is structurally linked to fossil fuels and geopolitically volatile regions. There's a bitter irony in that in the current geopolitical landscape that the actor who has the most influence over the course of this conflict, specifically the US, is largely shielded from its influences because of their own energy independence. And meanwhile, Europe remains an energy-poor continent. We import a lot of our fertilizers, or we import a lot of our gas to produce those fertilizers. So this is not just an agricultural headache.
It's a security issue. We still import a lot of nitrogen fertilizers from Russia. We are seeing a world where countries will not sacrifice their harvest seasons. They will get fertilizers from whoever is selling, including obviously Russia. And finally, it's a climate issue.
Nitrogen fertilizer production is a massive greenhouse gas heavyweight. Because of this vulnerability, it's not the first time this decade that our farmers are facing this turmoil. It was also so with the Russian invasion of Ukraine. And it won't be the last unless we change the math on this. We cannot simply tell our farmers to use less, because there's obviously huge costs associated with that as well.
So, on how can we move forward, from our point of view, we need to sort of develop partnership across food, energy, and security systems so that we can build resilience instead of providing relief. Resilience cannot be built within the silo of agriculture. We need partners both within and inside the EU. Fertilizer is really a physical intersection of these three sectors and needs to be more recognized as a strategic asset. We have a technical solution.
We can cut 90% of the production of the greenhouse gas emission on the production of nitrogen fertilizers by producing first green hydrogen from renewables, and converting it then to green ammonia. This is how we can lower our dependence on Russian fertilizer and Middle Eastern and U. S. Gas. But there is a catch.
Europe is not very cost-competitive on renewable capacity. The sun simply doesn't shine as hard here as whoever has been in Brussels the last 2 days can attest to. And this is where new partnerships should come in to create these stable, diverse supply chains. We don't want to swap one dependency, conventional fossil fuel dependency, with other green dependency. And therefore, we need deep industrial partnerships in North Africa, the Middle East, and South America.
These regions are well positioned for green energy production and their derivatives. By combining their resources with the EU industrial strategy, we can diversify our supply chains and stabilize our future. From a development perspective, we can combine the investment needs of partners with the EU decarbonization, food security, and hard security goals. The global gateway can lead the way. It hasn't really worked on supporting food security, but I believe it can work better on the fertilizer sector because of the industrial nature of the sector.
Thank you very much.
Hildegard Bentele
Thank you very much for respecting the time very duly, and also for the strategic recommendations that all three of you provided to us. Then I would like to give the floor to our colleagues in the room, starting with the EPP. Mr. Quirking?
Niels Geuking
So perfect. Thanks. Yeah. Thank you very much.
Thank you for the presentation of the issues from your point of view. Well, crises always show us how important sustainable investment is in order to increase resilience. So we need independent structures as far as possible. The issue is the energy arm of the EU, but it's also about our particular role of importing in a way that we can protect our environment. So we import a lot of raw materials that then go into our ground.
On food security, I would like to talk about the different contexts, country context, which EU instruments should we give priority to for our implementation in order to bring our partners into independent structures, at least offer the opportunity not to be so badly affected by these shocks so that in the future, they are in a better position on the world market and not then jeopardize other investments just because of food security problems. So that's a particular problem in unstable countries. We've seen, we'll be seeing this in Africa. We'll be seeing the waves of these shocks. So how can we enhance independence?
Which instruments do you see as the priority instruments to achieve that? Thank you.
Thank.
Speaker 47
you. Thank you, madam. As we've seen in Gaza, Lebanon, Iran, the crisis in the whole of the Middle East, this is a crisis because of historic economic complex reasons, but also political reasons, which, decisions taken, policy decisions taken, those who've decided to violate international law. And we see the devastating consequences of that, for humans and beings, for victims, but also for supplies, for millions of citizens throughout the world. We've seen different consequences already.
Speaker 45
Direct consequences, hunger being used as a weapon of war in Gaza with impartial neutral humanitarian aid being essential to combat that. But we've also seen the consequences of violations of human international law on our own security, in terms of food, energy, and instability for the future for us. So we need to put Europe in the equation, the fight for peace, the fight for clean energy, and, of course, supporting international humanitarian law. Apart from all of that, we need to be very much aware of the fight against climate changes. There are people in this house denying climate change, and we've seen that it's already having devastating consequences in different areas, in particular, food security.
Speaker 46
So once again, I'd like to make use of this opportunity to clarify our position. We believe that Europe has been lukewarm in its response, and we need to be much firmer on the implementation of international law in the region. We should be fighting for peace and stability in the region. We need to adopt short, medium, long term measures to guarantee sufficient food supply for the present and the future. So what concrete measures do you think we should be requiring?
Charles Goerens
Thank you to the experts who have explained the problems from their different perspectives. I think we're taking quite a short term approach in our economic general stance, particularly when it comes to the plan for agriculture, we don't have any reserves. They see them for fertilizers is over. And so I don't really see how the changing prices for fertilizer in May will have an impact on food this year, because fertilizers were bought last November and December. Anyone with any foresight in agriculture makes their purchases at that time.
And so if we're seeing long-term problems, it's that there aren't enough reserves and stocks. So we've basically got rid of all fertilizer production in the European Union. And even with CBAM, we aren't able to recreate the industrial fabric in this field, and we haven't had enough foresight. What makes prices rise is speculation. We haven't anticipated enough.
We know that the Strait Of Hormuz was a trap. It made us more vulnerable. This has been since time immemorial, basically, that we've known this. And the most absurd example was for pulses with a 19% rise. Can someone explain to me how the increase in prices of nitrogen fertilizer can have an impact on the price of pulses?
Because we know that the pulses in themselves biologically don't really need artificial fertilizers. They stock nitrogen from the air themselves. This is a plant that is independent, does not require nitrogen fertilizer, be it soya, broad beans, peas, or any other pulses. Anyone who knows anything about agriculture is aware of this. They don't need to purchase nitrogen fertilizers for these crops.
And so I think the problems we need to face up to now are, of course, exacerbated by the crisis of this closure of the Strait of Hormuz, but could be very much improved in our own policies.
Hildegard Bentele
Are there more colleagues who want to join the debate? Mister Karim, please.
Damien Carême
Thank you for the interesting presentations, which nevertheless prove something is that we have remembered nothing of previous crises, be it COVID-19 or the war in Ukraine. Back then, we wondered about Europe's food independence and its food strategy. And yet there are strategic solutions. We know about them. They take time to implement, but they would not only contribute to food sovereignty, but also to fighting climate change.
These were only mentioned in a single presentation, the very last slide of the specialist who joined us remotely, which was agroecology. This could help us break away from fertilizers and synthetic entrants. As we saw with Ukrainian wheat, for example, not to mention fertilizers, I think European agriculture needs to get out of this hole and really challenge our agriculture models now, and not just in a few years as suggested in the slide. Thank you. Thank you, Mr.
Karen.
Hildegard Bentele
Colleagues, if not, I would also like to ask a question. I'm the Global Gateway rapporteur, and I was very interested in your references to Global Gateway potential projects, which are strategically based but which are also based on European companies. And in the past, we were putting a lot of emphasis on small farming. So now we would go for industrial farming, which I embrace, but it would be a new shift in our policies. So do you see any European agricultural companies who would go abroad and also work with new partners?
Could you elaborate on that a little bit? Further replies, every speaker has two minutes. And I would start with you again, Mr. Larrio, please.
Álvaro Lario
Thank you very much, and thank you for the interest. Perhaps in terms of the election, or the choices that many of the leaders have to make, especially in Africa, I would say after the last two shocks, what I saw is that many of them were actually starting to focus also on food self-sufficiency, on food security as national security. So for the first time, they were really, I would say, starting to place much more attention and also part of their budgets, which are much more limited because of the cost of the debt, into also, I would say, rural areas and small scale farming and that ability. So it's for those leaders to actually decide what they want to become self-sufficient, what crops, what value chains, and also how much they want to diversify, because the main message is that the shocks will continue happening. And the most important, if you are a country or you are very dependent on certain imports, whether it's from supply or from food, it will be much more affected.
The same goes, perhaps, in terms of the farming practices. As it was mentioned, obviously, agroecology, BO input production, mixing organic and chemical, soil health are other ways also of diversifying. They cannot be there only, but it's another way. Same goes to perhaps what you just mentioned vis-à-vis global gateway or the industrial or vis-à-vis small scale farmers. I think what from our side, IFAT can really do and can really connect is this global value chains and European companies also with the local value chains.
It's a matter of how we can make sure that local markets and global markets are connected, both companies and local SMEs, because my main plea probably would be for a global gateway also to continue strengthening institutions, human capital, and capacity building. Why? Because to me, in Africa, when we talk about food security, currently, Africa is importing $90,000,000,000 of U. S. Dollar every year.
Imagine what can also happen vis-à-vis forced migration, vis-à-vis security. If some of those, I would say, jobs were created in value chains to transform and to diversify their own ability to really produce food. And I think that's an opportunity. The African Continental Free Trade Area is also an opportunity. How can Europe make sure that it's more successful, so that they can also trade among themselves?
That's still a very, I would say, low hanging fruit. And that's also partially what I think, apart from obviously connecting global value chains to local value chains, the global gateway can become, and Europe can become a leader in fostering this type of security. We are happy from IFA to continue working with yourself, but I think that's also important not to forget. I mean, food security is also part of national security or defense of architecture, and that's a very important point. Thank you.
Hildegard Bentele
Thank you very much, Mr. Larrio. Then we would bring in Mr. Torrero Callan from Rome.
Maximo Torrero Cullen
Thank you. Thank you very much. And let me briefly answer the comments first. I think on the first comment of structural changes needed, I agree. We think there are three levels of this structural change.
One is, of course, to improve the infrastructure required so that we can have storage capacity in different geographical locations to avoid this problem in the future. That does not mean more reserves, but means more logistical capacity around the world, so that we can minimize this risk. Second, on the humanitarian part, we need right now to find a way to create a buffer for logistical costs to avoid delivery of food in emergency situations being affected because of the logistical costs. And that is a very concrete measure. And the other very concrete measure in the short term, of course, is to create facilities to be able to help countries that need resources to cope with the potential lack of access to these resources when they become unavailable if the Strait of Hormuz open.
Now there was a comment saying that the fertilizers were bought in November. Therefore, there is no impact. That's not necessarily correct because, yes, they could be bought. Like in the U. So, they have fertilizers, but the farmers have to replace these inputs in the future.
And the expectations of the prices increasing will affect them. Of course, they will take this into account when they make their crop decisions. Second, it is important to understand, it's not just fertilizer, this is also energy. And all the logistical production of the value chain will affect the cost of farmers, and the margins are very small. This is also linked to the issue that was referred to as speculation.
I don't think we are facing speculation right now. What we are facing is uncertainty. The difference in transmission of 1% increase in energy to the food import bill, with no uncertainty, is 0.27 of that 1%. When we have uncertainty, that 0.27 goes up to 60-something percent. So it's more than tripled because of the uncertainties.
Regarding pulses, yes, they don't need nitrogen because they fixate nitrogen better, but they need phosphates and they need others. So it's NPK, it's not just N. And the P, the phosphate, is being affected because of the sulfuric acid. And also, of course, energy. These products, these pulses have to be transported from one location to another.
You need energy to be able to do irrigation, and that cost is also impacting the products. Finally, on the agroecology issue, I think we need to get into a balance here, because if we go to extremes like Sri Lanka did, for example, we saw the consequence. We have a clear natural experiment on what happened in Sri Lanka. We want to avoid that. So we need to keep the balance.
All of the technology is possible, but we also need to be realistic that BO fertilizers still are not cost-effective. They are far from it. It will take 4 to 5 years to do that. But we need to invest in that to be able to achieve that goal. And the global gateway, of course, could be instrumental for this, but at the regional level.
That's why the corridors could be an option where we can get the scale and the efficiency of investment of the private sector so that we can get the returns necessary that is profitable, but also helps to improve accessibility of food in the world and diversity, and also to create the scale that is needed. Thank you very much.
Speaker 49
Thank you very much, Mr. Thierry Rocallen. And then we have Mr. Dick Heiser.
Koen Dekeyser
Thank you. On the question regarding the EU instruments towards unstable regions, I think it would be interesting to differentiate with our approach towards the global south, like for Los Campos Morocco has Morocco's OTP has an investment program of USD 13,000,000,000 in green ammonia production, and could be targeting the EU market. Egypt, Algeria has similar ambitions. Namibia, we already have partnerships, you know, hydrogen energy partnerships with them. So it's so I would differentiate between countries within the global south in which we can make partnerships with.
Europe is one of the most food-secure continents in the world, so we have perhaps been a little bit spoiled regarding our food security. And our societal readiness on, for example, strategic food reserves has really been at the individual country level. Right? The Nordic countries have some strategic food reserves, but this is not at the EU level. Although I noted in the readiness plan, there is at least mention of building up that capacity for so.
On the question of agroecology, I mean, it's I'm really yeah. It's about the balance. I mean, there are a lot of things that can change within the food system, right, like food demand, diet change, food environment change, so on. But I think at a very basic biophysical level, you will need synthetic fertilizers and some capacity. It just would not work at a system level to get nitrogen fertilizers to zero without really, really massive, massive societal change.
And, yeah, I think it would really be difficult for a policy level to steer this. On the global gateway, very interesting questions. We are working with Aude Nepat, the development agency of the AU on this, and it's just a general problem to include private sector into the global gateway. Right? This is not only with food.
Food and, of course, as the issue or agriculture issue that's high risk, very volatile. And to be honest, I have not really seen it work very much, but we are working on approaches on how to sort of lower risk through blended finance and whatnot. But also, to be honest, we face quite a bit of competition from Chinese investments, for example, in East Africa on that. And then the large, really large scale fertilizers companies don't really need a global gateway to do their investments to go make their markets. Thank you.
Hildegard Bentele
Very much to all of our three speakers. And then I would like to give the floor to the Commission. Present is from EAS, Mr. Goriszek. He is the Deputy Head of Financing Instruments and International Cooperation Division.
Speaker 50
Thank you very much, and thank you for inviting us to be part of this new discussion, which is very interesting and not coincidentally. Our internal analysis, of course, is very much aligned with what we've been hearing today, also because we're in close contact with the colleagues that we're presenting. So I'm with the danger of not, or let's say, trying not to repeat what has already been said. Even though we see that the food prices have not been increasing as much as one might have expected. There is, of course, the expectation that there will be a pass through inflation from all the inputs and all the fertilizer costs that will be increasing.
But not only that, also what was already mentioned, the potential El Nino impact, the reduced harvest that might be resulting from change to change decisions for the plant during the planting decisions. But not only all this, so there's another element that has not been mentioned, which is also that some actors are implementing export restrictions in view of all this, which, of course, additionally, distorts the market and increases the price and as to the unpredictability. So the final result, of course, is that, again, the most vulnerable will be impacted on. And what we must do, I mean, we've heard many of the recommendations, which are all very much valid, and we are working on many along many of these lines. For instance, we know that the HR VP is very much involved with the local actors in the Strait Of Hermos to try to, let's say, find some durable solutions. But, the Strait Of Hormuz is not faced with any long term consequence in terms of fees or quotas, which would be clearly against the international rules.
But we're also close in contact with the UN task force, which is trying to find some solutions, which could be, you know, minor, but immediate and, also part of the trust building measures. Of course, it goes beyond that. There are also we know there was a team meeting of the EU leaders in Nicosia recently where they were also discussing what happens the day after because, of course, this will not finish when the bullet starts stop running around. And we also need to use the multilateral fora because multilateral fora is also something that we can do a lot bilaterally, but also through the multilateral fora. We need to highlight the importance of respecting international law, that we maintain the trade routes open.
Of course, we have also huge financial commitments on which we're delivering, but maybe I'll leave that to the commission colleagues to present. Thank you very much.
Hildegard Bentele
Thank you very much, mister. Then we will, you know, switch to the next colleague from the Commission. This is Mr. Leonard Mizzi. He's adviser for food systems in DG in Perth.
Leonard Mizzi
Thank you, and thanks to the three keynote speakers, to Alvaro, to Maximo and to Kune. And as Thomas mentioned, also with ECO colleagues, we are almost in daily contact on the analysis. The analysis is spot on. The question is, what can we do short, medium, and long term? I think this is the key issue.
We came through this, although, as Alvaro mentioned, the typology of shocks is different from the COVID and from the aggression of Russia on Ukraine. But as you know, also this house knows, we mobilized in 2022 a portfolio of EUR 600,000,000 from the EDF funds, including on fiscal space, including funding also to EFAD, which is investing in livelihood resilience and soil health programs. We know what needs to be done. But let's be clear, there is no silver quick-fix here. The geopolitics of 2026 are more complicated than five, ten years ago.
We are in a totally different ballgame, transitioning of food systems in a bundled approach, biodiversity, climate, energy, food systems, human rights based approach is more complicated today because of the international landscape. Also, on ODA is totally different in the last 12, 18 months. Global Gateway is a pathway. So we know that. Does it work in every sector, in every typology, including green ammonia?
We're doing work also on green ammonia. Ku mentioned on OCP operations, Dangote operations. There are a number of operations from Namibia to Kenya, but the question of speed and transition is not quick enough. And also, typology of production, where do you go on the typology of production as Goran has mentioned. Do you go in the wheat?
Do you go in rice? Do you go in a diversified portfolio? This is not an easy decision, and it's up to the partner countries to decide. Some want to go to wheat production fully. Some want to go into rice production with exposure.
So I think some concrete recommendations, clearly, as Thomas mentioned. We have a four-pronged approach. I don't need to mention funding. We have 18,000,000,000 under Team Europe. We remain among the most reliable partners in the donor community.
This is necessary, but not sufficient. And the question is, we are guided by the council conclusions of 2024. So humanitarian operations, which Pepe will mention, production where we give a signal of self-sufficiency on a demand-driven basis, a cocoa value chain and the coffee value chain is different from a blue economy and the livestock typology. And then let's not reinvent the wheel. There is the African Fertilizer and Soil Health Action Plan.
We are accompanying these countries, but at the end, the domesticization of the action plan and what I haven't heard much, trade was mentioned clearly. If you have export restrictions, export bans, and the pressure point on the multilateral system, you have clearly shocks in the system not to have that full coordination that is required. But it's clear that we need more coordination at the highest level, and we need the typology. An African case compared to a Brazilian case, to an Asian case is totally different, and that requires targeted approaches in close collaboration with the partners. Global gateway is a pathway, but clearly, the big challenge is what type of production for what and how to do the transitioning in a smart way, where you have distortion of subsidies, big subsidies in the mineral fertilizers point of view.
So how do you transit and wean off gradually by doing an agroecology approach and agroforestry as we are doing also with EFAD? How do you create the fiscal space, and also how to save lives and livelihoods? Also, we haven't heard much. There are remittances shocks from the Gulf countries, which are having an impact also on remittances in the coming months.
Hildegard Bentele
Thank you, Mister Metze, for raising all these issues. And then I give the floor to mister Jose Ruiz Espie from DG ECHO from the Thematic Food Security team. Please.
Jose Ruiz Espie
Thank you, chair. So in DG echo, we are very concerned about the homeless crisis. We are particularly concerned about the announcement that an additional 45,000,000 people could go hungry in the next months, because this would put additional pressure on a humanitarian system that is already at the breaking point. Well, the numbers are very clear. Funding is collapsing.
Last year, for example, food security needs were met at less than 30%. And this year, as we speak, they're covered at less than 17%. Now the EU remains, as it had been mentioned, a stable donor, a reliable donor. We are not decreasing our humanitarian aid, but it has to be clear. We cannot fill the gap alone, not when needs are skyrocketing and key donors are stepping back.
So what this crisis proves once again is that humanitarian aid alone cannot solve the problem of hunger. We have to invest more in long-term resilience, so that fragile countries can cope with the crisis by themselves. And for years, this has been overlooked, and now the consequences are difficult to ignore. Now it has also been mentioned the global report on the food crisis was released in London some days ago. And at that event, commissioner Sickela and DG Eco's deputy director general, Hans Das, joined all the global leaders in insisting on the need to address the root causes of hunger and to work on food resilience.
This was probably the most repeated message across the board. So this need to promote resilience was also specifically mentioned in the commission letters for commissioner Labib and commissioner Sikele, and I'm happy to recall that the commission will soon adopt in the next few weeks a staff working document on an integrated approach to fragility. This staff working document will accompany a broader commission communication on humanitarian aid. And as I said, it should be adopted in the next few weeks. The staff working document on this approach to fragility will propose a framework so that we align better our humanitarian, development, and peace efforts to ensure fragile countries receive a more coherent and efficient support.
It should also allow the EU to work better with member states and with partners in fragile context. So we'll be sharing more details once the documents are adopted, but I wanted to flag this important step forward in the response to hunger. Thank you.
Hildegard Bentele
Thank you very much, Mister Ruiz Espey, and thank you to all our speakers here in the room and also online. I think that was very informative and also very strategic and very helpful for our future work. With this, I would close this item, and thank you again. And then we will move immediately directly to the next item. Thank you very much, colleagues.
So dear colleagues, we continue with our agenda. And on top eight, we have the amending decision EU 2020 1764 on the association of the overseas countries and territories with the European Union, including relations between the European Union on the one hand and Greenland and The Kingdom of Denmark on the other. So we are considering a draft report of our Chair, Barry Endros, on the proposed revision of the Council decision on the U. S. Association of the Overseas Countries and Territories, including Greenland.
In line with Annex VI of Parliament's rules of procedure, our committee is responsible for matters relating to the OCTs. The Association of Overseas Countries and Territories is based on a council decision, which has a particular basis in the treaty. Article 203 imposed the council to adopt the provisions of the OCT Association through the special legislative procedure, where the council can adopt acts after having consulted the parliament but without negotiating a common text. The proposed revision comes as part of the preparation of the next multiannual financial framework. Cooperation with OCTs remains separate from the Global Europe Instrument, due to its distinctive legal nature and treaty base.
But the revision of Dwag is required for the financial program under the next MFF. This revision provides an opportunity to adapt the association framework to other developments and changes, such as the launch of the Global Gateway Initiative in 2021, new needs and priorities, and a drastically changing and increasingly tense geopolitical context, most visibly as regards Greenland. Against this backdrop, the commission proposes to allocate an indicative financial envelope of $999,000,000 to the OCT Association's funding program for 2021 to 2034. Compared to the current MFF, where the OCT allocations amount to €510,000,000 in current prices, this would amount to a doubling of the support for OCTs, or a 74% increase if calculated in 2025 constant prices. In addition, the Commission proposes amendments primarily relating to, first, the global gateway and its toolbox, allowing budget support, policy-based loans, budgetary guarantees, financial instruments, and blending as modalities to be used for cooperation with OCTs.
Second, the merging of the bilateral with the regional envelopes for OCTs other than Greenland, and third, cross-referencing and highlighting the complementarity of other EU funding programs for which OCTs are eligible. Lastly, the Commission proposes to adjust the policy dialogue framework. Now, I will read out a statement by the rapporteur which Barry asked me to read. Firstly, we would like to welcome the Commission's proposal to increase funding for OCTs, but we believe that more ambition is needed to face the unprecedented challenges the EU and OCTs, in particular Greenland, are facing. My draft report aligns fully with the position parliament adopted on April 28 in the interim report on the MFF, and which calls for an allocation of €2,080,000,000 for OCTs.
Overall, my amendments seek to reinforce democratic accountability and consultation, take into account the increased geopolitical relevance of the partnership, and to broaden social, economic and strategic opportunities for the people living in the OCTs by reflecting local voices, needs and sustainable development priorities. In this respect, it is important to strengthen the resilience of the partnership, its democratic legitimacy, and citizens' participation by reinforcing the active involvement of youth and civil society. I hope that a broad majority of our committee will support these overall priorities. Through the amendments tabled in my report, I underline that the cooperation with OCTs in the context of Global Gateway should generate demonstrable mutual benefit, enhance safety and prosperity, and support stronger regional integration and diversification of OCTs' economies. My conversations with representatives of the OCTs have made clear that it is important to take into account the OCT's limited human resources and administrative capacities.
I suggest a few amendments aiming to ensure that OCTs will have simplified access to EU programs and to capacity building and training in order to make the best use of EU support, especially in view of more complex modalities connected with global gateway, and to have access to capital markets, blended finance, or public private partnership. The OCTs can build bridges towards countries of the so-called global south if the EU leverages the position fully. The Pacific and Caribbean OCTs could foster networks and trusted connectivity, both in terms of hard infrastructure and on a human level. At the same time, the EU must be clear that it is willing to shield OCTs from external pressure and threats, while itself fully recognizing the right to self-determination. My draft report says Berry recognizes the importance of critical raw materials for the EU strategic autonomy and for decarbonizing economic growth, yet stresses that the OCT's right to decide on extraction and investment choices must be respected and that the EU and the OCTs should ensure that local communities benefit through jobs, infrastructure, and fiscal revenues.
Mining should respect high environmental and human rights standards. That was the statement by our chair and rapporteur. I will now give the floor to the Shadow Rapporteurs for two minutes each, and I will start with Lukas Mandel from the EPP.
Lukas Mandl
Thank you very much. Allow me to thank operator Pierre Andrews for his constructive draft. From the EPP side, we strongly support the modernized and more strategic partnership with the overseas countries and territories as part of building a stronger Europe in the world. The overseas countries and territories, OCTs, are important partners. They help strengthen our presence in key regions and contribute to security, stability, and connectivity.
Our cooperation with GreeneNT is especially important given the growing strategic relevance of the Arctic. We welcome the increased budget, but we need more clarity on how the money will be spent. Transparency and clear priorities are essential to ensure real results. We also support better links with other EU instruments. At the same time, development funding should remain focused on development goals, while other priorities should be financed through the right tools.
A key issue is simplification. Many OCTs have limited administrative capacity. Access to EU funding must be easier, with less bureaucracy and more support for capacity building. We support focusing on areas such as ocean governance, connectivity, and sustainable resource management as long as these bring real benefits to local communities. Finally, in today's global context, these partnerships are also about strengthening Europe's presence and credibility in the world.
I look forward to working with colleagues on this. For any additional questions, my team and I remain available. Thank you again.
Hildegard Bentele
Thank you, Mr. Mendel. Then I give the floor to Marit Maier from S&D.
Marit Maij
Yes. Thank you very much, Chair, and thanks also to the rapporteur for his report, which we welcome. I had the privilege to participate in the OCT Forum a couple of weeks ago, and I think some of my comments will also be based on what I've learned there from our colleagues from the OCTs. The OCTs are important for the European Union in their strategic positioning, but also they are important for the citizens of the OCTs themselves. And we see that the citizens of the OCTs themselves, they are citizens of the European Union.
Sometimes we tend to forget, and we should make the we should facilitate participation from them more in the way that it's being done right now. For example, in the way that they vote for us as members of the European Parliament because we also represent them. So it's important that we have input from the OCTs also on this programming, but also on the programming during the seven years. Their priorities are on SDGs, on social and economic priorities and activities for young people in their countries. As was mentioned, capacity building and technical assistance is important.
Simplification cannot just be simplification. They need the possibility to be able to work with the funds that are being made available, but also with the horizontal funds that are being made available. And Global Gateway brings in connectivity, energy transition, digital transition, climate change, but these are all larger regional programs. And how do these larger regional programs also support local entrepreneurs and local companies, because they will not be able to participate in these larger programs from the mere perspective that they have. So we have to look at the regional programs versus national envelopes.
How do national envelopes and regional envelopes communicate, and what is the preference of these two? And last but not least, I think what I've learned there is that the OCTs think it's really important that they have this forum to communicate. I know their proposal is to have fewer forums to communicate amongst each other, and I think we should support them in having this forum annually, but also in having a parliamentary participation there annually to make sure that this also reflects on how we look at it. So thank you very much.
Hildegard Bentele
Thank you. No. Thank you, Mrs. Maier. Are there more shadow rapporteurs who would like to take part?
Isabella Lövin
Thank you, Madam Chair. I would like to start by thanking the rapporteur, although he is not here. But we think that it's a really good draft report, which we largely support. And we also see the need to have an update on our relationship with the OCTs in this time where we have a geopolitical situation where there's been, in fact, even threats towards Greenland. And, we need to also reinforce our solidarity and partnership and respect for the self-determination of these people.
This, I think, needs to be at the very heart of our position here. So the need for the EU on critical raw materials and the kind of extractive attitude that we sometimes can be perceived as having is very important that we really underline the free, prior and informed consent principle, ensuring that the indigenous people are voluntarily accepting and that they can reject projects affecting their lands, resources or rights. So this is perhaps something we will reinforce in amendments, the UN free, prior and informed consent principle. Regarding oceans, I mean, the majority, vast majority of the OCTs are small island states. So it's extremely important to include wording on their participation in biodiversity beyond national jurisdiction agreement, BBNJ, on ocean governance, on the Ocean Pact, on blue economy, and also really underlining that our cooperation, when it comes to blue economy, should be sustainable.
It's in the very large interest of the OCTs themselves that we manage the ocean in a sustainable way, but also that they have the possibility to participate in the setting up of the governance structure for the biodiversity beyond national jurisdiction, which is the international waters. That is kind of half of the globe, but they are very involved in that. So that should really be a priority. Lastly, I'd like to put a question to the commission, if I may. So our chair has put us amendments to lower the threshold on action plans and individual measures for which the union funding does not exceed a certain number.
So the original tax was €2,000,000 and our rapporteur has suggested €1,000,000. And in another paragraph, he lowered the threshold from 5,000,000 to 2,000,000. And my question to the commission is your view on that. I can guess you stand by your proposal, but what would that have as an effect? Thank you.
Hildegard Bentele
Thank you, Mr. Slovene. Mr. Karim, have to watch a little bit of time because we'll have a joint meeting with Alfred at 11:30, and they are on time. So we have to close the other building, in addition.
So we have to close our business here at 25, but we also would like to bring in the commission. Mr. Karim, please.
Damien Carême
Just a few remarks. I'd like to thank very much the reporter for this draft report, which is an excellent basis for our work. Amending the 2021 council decision is timely because indeed the international situation has undergone huge upheaval. The economic and social situation of the majority of OCTs unfortunately remains alarming. The current geopolitical instability has placed these territories back front and center in our discussions, and this must mean a profound paradigm shift in our partnership relations, which must be more to their benefit and no longer solely for ours.
We cannot pretend that we stand by their side in the face of the greed of other international actors, and then take advantage of them. New Caledonia, for example, is going through a profound economic and social crisis and experiencing a near collapse of its economy. GDP fell by 22.5%. Some 11,050 jobs were lost, and there was a significant demographic exodus. The territory knows a poverty rate that is 2.5 times that of Mainland France.
Unemployment is structurally high. A difficult economic situation that exists is also coupled with the fact that deep community inequalities exist. The median standard of living of connects is twice as low as that of non-connects. And in French Polynesia, we see the cost of living is 16 percent higher than Mainland France, with high cost for health, transport, education, and poverty is much higher than Mainland France. And in addition to all of this, what we have seen is that these territories have been at best ignored or at worst looted.
For example, in Greenland, it has used its cryolite deposit, mining it, bringing 54,000,000,000 to Denmark for more than a century, or using it as open air laboratories for French nuclear experiments that has a huge consequence on the health of Polynesian inhabitants and their environment. So we must stop seeing these territories as a geostrategic asset or as a new critical raw material supermarket for us. Our contribution in amending this council decision really needs to focus on what the EU can do for these territories that face multiple challenges. We have a responsibility in terms of development for these territories, and that is precisely what I will do by way of my amendments on behalf of the left group. Thank you.
Hildegard Bentele
And as the last speaker, we have the Commission. This will be missus Wattelier, the team leader in INTPA B3. Okay, please.
Emilie Wattellier
Commission thanks the Parliament on this draft report on the amendment of the Council decision on the COTs, specifically, Greenland. Of course, it's important when it comes to the EU relations with the COTs, specifically in the current geopolitical context that we experienced, doubling the amount shows precisely how important they are. The commission made a proposal, just an amendment. There were consultations and recommendations concluded that the instrument is still made for purpose and has positive results. Therefore, there are very few articles that have been amended just to fill in some gaps based on the assessment.
Four points that I think respond to your concerns. One is the integrating CO2 into the global gateway for projects of common interest. We want COTs to be better integrated into the global gateway with more flexibility and a toolbox that is complete, that has blending, including guarantees, for example. This would mean that European funds that are limited would be able to attract more funds, specifically when it comes to the private sector, in terms of projects of common interest and for the benefit of the populations and for development. Where global gateway approach is to, when there's mining involved, is to expect environmental standards.
The second point is that we want to be more effective to meet the needs of COTs. We would like to merge the regional and interregional to make sure that it is easier for co twos to be integrated and also with the outermost regions or neighboring third countries. We suggest reducing the COT forum and have it every two years rather than every year, to make sure that there is enough debate and political mobilization at the highest level. We also want to make sure that the COTs have access to Erasmus or Horizon Europe and all cross-cutting funds. We also took note of COTs to be able to continue to have technical assistance, so that they can have capacity building and make sure that they have better access to these funds.
The fourth point, we would like to conserve, broad cooperation and digital connectivity, is very much in line with the Global Gateway's objectives. We also hope to continue to work with a broad spectrum of players, including young people. We have the EOTC network. Just speaking about the thresholds, what our experience shows us in terms of action, anything below €2,000,000 is enough support where we pay for fora, communication networks, OCT networks, where we are working with all of these constraints, of course. But, politically, these are not decisions that are made on a QCT basis.
So having a higher threshold means that we can focus on the most crucial subjects without detriment to these decisions. The commission is fully available to you, and we thank you for your report. It's an important subject, indeed.
Hildegard Bentele
For your contribution, I would recall to colleagues that the deadline for amendments is Monday, May 18, at noon. Thank you to everyone. And with this, I close this item and move to any other business. Does anyone have to raise other biz just May 18, not Monday eleventh. May.
This is written in my papers. It's May 18.
Thank you. That makes me happy.
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