Patten threatens cuts to EU's foreign aid budget

Chris Patten, the European commissioner for external relations, has delivered an uncompromising ultimatum to the European Union member states, telling them the bloc's £7bn overseas aid budget will be slashed by two-thirds unless they give him enough staff to spend the cash properly.

The move is part of proposals to end the reputation of Brussels as a slow and inefficient distributor of aid.

Chronic understaffing has caused the European Commission to sub-contract out much of the work, often to companies that are either expensive, inefficient or even corrupt. A financial scandal in one Belgian firm working for the Commission contributed to the crisis that brought about the fall of Jacques Santer's Commission last year.

Mr Patten is determined to avoid taking the blame for weaknesses in projects that his department has insufficient resources to run - even if that means a drastic scaling down of the EU's involvement in distributing foreign aid.

Yesterday, he told the European Parliament: "We cannot go on as before. My only aim is to put the Commission into a position to run EU external aid properly and competently. If the European Parliament and the Council of Ministers agree to our ideas we can implement them from 2001. If not the Commission will be obliged to propose very big cuts of up to two-thirds to scale existing projects back [to] what we can manage properly."

Despite the vast sums spent on development and those channelled through the European Community Humanitarian Office (ECHO), Brussels has attracted more adverse than positive publicity for some of its most important work. The present backlog of commitments has reached more than 20bn euros (£12bn) and, in the past five years, the average delay in distributing committed funds has increased from three to four and a half years.

"For certain programmes," says the Patten document, "the backlog of outstanding commitments is equivalent to more than 8.5 years' payments."

Proposals outlined in a paper approved by the Commission yesterday would unify overseas assistance, create a single body called Euraid responsible for project implementation (not including humanitarian aid), devolve more work to staff on the ground and eliminate old and dormant commitments. Member states would have less power to meddle.

The problem at the heart of Mr Patten's plan is an explosion in the number of the projects EU governments have asked Brussels to administer, particularly since the fall of the Berlin Wall. The share of European aid managed by the Commission and the European Investment Bank has increased from 7 per cent 30 years ago to 17 per cent today.

The Commission was committed to no fewer than 14,500 projects and contracted to a further 30,000 last year. Extra staffing needs have not been identified, but projections suggest a shortfall of 1,300 posts.

"Where member states or the World Bank have between four and nine officials to manage 10m euros," says Mr Patten's document, "the Commission has 2.9 officials."

The estimated annual cost of sub-contracting the work to about 80 private firms, which each employs around 80 people, is 170m euros - equivalent to about 80 per cent of what the Commission spends on all its foreign representations worldwide in a year. As well, procedures are notoriously slow.