Review of the Development Co-operation Policies and Programmes of Greece

Overall framework and new orientations

Greece became a bilateral donor ten years ago and joined the DAC in December 1999. It has made  progress in organising its development co-operation system over the last five years and aid volume has increased, but has substantial ground to cover in meeting the objectives it set for itself when joining the DAC and vis-à-vis the European Union (EU). As compared to other DAC members, Greece is a relatively small donor facing some large challenges in terms of further developing its strategic approach to development aid, strengthening its aid delivery system and adapting to new aid instruments. This must now be a key priority since Greece’s commitment to reach the 2010 European Union (EU) target of 0.51% of Gross National Income (GNI) allocated to Official Development Assistance (ODA) means that it needs to build towards a programme of over USD 1 billion, three times the 2004 level in real terms. In doing so, Greece can draw on a strong political will as well as committed staff. As the most recent DAC member, Greece’s response to the challenges and opportunities which it faces in adapting to an evolving aid environment while scaling up its aid will be of considerable interest not just to the DAC but to emerging donors more generally.

Greece’s geographic location within the Balkan region drives the strong regional focus of its aid programme. As a stable and developed country surrounded by a number of countries in post conflict situations and/or economic transition, it faces specific challenges, highlighted by significant migration flows and growing concerns over illegal trafficking issues. Encouraging democracy and sustainable economic development in the region is, therefore, a key orientation for Greece’s development co operation policy.

Since 2002, Greece has taken a stronger role in the international community, as illustrated by its special effort to promote the Olympic spirit worldwide in the context of the 2004 Olympic Games, its current membership of the United Nations Security Council and its distinctly more active role in the OECD over the last two years (including chairing the Ministerial Council meeting in 2006).  With respect to its aid programme, it has taken positive steps to strengthen its policy framework with a second medium-term development co operation programme (2002-06) aligned to the Millennium Development Goals. As noted above, Greece has also reaffirmed its political commitment to reach the EU ODA/GNI target of 0.51% in 2010. Its very significant effort in providing humanitarian assistance in emergency situations (e.g. 2004 Tsunami, 2005 Pakistan earthquake, 2006 Lebanon crisis) is widely recognised. Given active leadership at the political level in shaping and promoting the aid programme, and with the potential for increased public support for aid following the tsunami mobilisation, the constituency for development aid should strengthen, suggesting an optimistic outlook at a time when Greece must address key challenges in the context of development aid.
 
To generate the significant increase in the amount of aid expected, Greece needs to develop a strategic approach, taking into account two dimensions. Firstly, in relation to the quantity of aid, there is the challenge of making the case domestically for the very large rise in its aid implied by the EU commitment it has endorsed. Secondly, in relation to aid quality, a larger, more diverse and more recipient-driven aid programme will require Greece to substantially overhaul its aid system with implications in terms of strategic approach, aid management and delivery modalities.

Addressing the domestic issue is difficult as the Government is dealing with a significant fiscal challenge in conforming to the Maastricht norm of a deficit of less than 3% of Gross Domestic Product (GDP), which puts public expenditure under pressure. A further complication is raised by the potential 25% upward revision of Greece’s GDP proposed by Eurostat in September 2006. If confirmed, this would reduce the public deficit to below the 2.6% of GDP currently envisaged but it would further raise the additional spending necessary for Greece to meet the 2006 and 2010 EU targets for ODA. Public opinion is very sympathetic to humanitarian concerns but communicating the priority of development assistance is  challenging, especially since Greece will need to consider gradually shifting the aid programme out of its neighboring region as countries will in time no longer be eligible to receive ODA. Improving public awareness and ensuring continued political and public support will be crucial. Current efforts should be reinforced through a stronger communication strategy. In this respect, a major challenge for Greece will be to strike a balance between the need for visibility and results in its aid programme and the longer-term  development perspective which implies promoting ownership and building capacity.

Greece is thus encouraged to take the opportunity of the preparation of its third medium-term development co operation programme to develop a strategic framework based on a long-term vision of its aid programme. While reaffirming poverty reduction as the central motivation for aid, it should clarify its objectives and principles and translate them into prioritisation and programming, with a geographic and sector strategy and related resources. This should be done in the light of the aid effectiveness agenda. Greece should take the opportunity of the launch of its next medium-term programme to announce a clear strategy for its aid.  Such a statement could help mobilise and reinforce the constituency for development aid which will be crucial to accompany the large increase in funding between now and 2010. A continued and more active dialogue with Parliament on the Greek aid programme would strengthen the visibility, transparency and political support for Greek development co operation. 

Recommendations

• Greece should take the opportunity of the launch of its next medium-term programme to announce a clear strategy for its aid, reflecting Greece’s comparative advantages, as the framework for the medium term programme in terms of country and sector priorities and allocation among aid channels.
• As the aid programme changes in size, geographic focus and ways in which it is delivered, public accountability will become crucial. The DAC encourages further developing the dialogue with the Parliament in order to strengthen political support for Greek development co operation. Greece also needs to further raise public awareness on development co operation issues and to continue its efforts to build public support.
  

Aid volume and distribution

Although Greek aid has increased in real terms between 2001 and 2004, total net ODA disbursements in 2004 were USD 321 million, or 0.16% of Greek GNI.  This is behind the DAC average of 0.26%.

It should be noted that Greece also incurs very substantial outlays, equal to 0.07% of its GNI in 2004, in hosting a large number of secondary school students from Albania and other developing countries – though these costs are not ODA eligible under the DAC reporting directives.

The large-scale support for Albania secondary school students is part of an overall Greek policy towards Albania, which includes the construction of European level schools in Albania and the return of Albanian students to Albania at the age of 21 or on completion of a University course. Greece considers this comprehensive approach as a test case for how donors can engage with poor neighbouring countries. Greece believes that its expenditure on Albanian students in secondary schools should qualify as ODA and plans to make a proposal to the DAC Working Party on Statistics for an amendment to the relevant Directives in this sense.

It will be a challenge for Greece to meet the EU commitment to attain a ratio of 0.51% by 2010. Allowing for economic growth, this would require Greece’s net ODA volume to more than triple between 2004 and 2010, reaching USD 1.2 billion. For this to become a reality, a clear plan for achieving this goal with annual targets should be developed and included in the next medium-term programme.

Geographical and sector focus

Greece’s bilateral aid programme is focused on 21 priority countries, with a high concentration in the Balkan and the Black Sea region. In the medium term, some of Greece’s main priority countries will eventually become ineligible to receive ODA, should they accede to the EU or DAC. Indeed, Greece is already considering possibilities for increasing its development aid activity in the Middle East and Sub-Saharan Africa (to some extent through the OECD MENA Initiative/Programme and NEPAD). Hellenic Aid will need to develop a strategic approach to its geographic focus, with a clear link to its basic motivation for providing aid. This will imply defining appropriate criteria for selecting new partner countries, taking account of Greece’s comparative advantage, and an appropriate communication strategy to explain this progressive shift to the public. In doing so, Greece should be rigorous in applying the concept of priority countries in order to have effective aid programmes. As Greece’s aid budget rises, the increased resources should be applied to a core group of partners receiving a high share of the total ODA.

Greece’s bilateral programme is focused on a limited number of sector priorities which are in line with its overall objective of poverty reduction. While considering engagement in new countries, Greece should take into account its priority sectors to maximise consistency in its programme.

Multilateral aid

The share of multilateral aid has decreased over the last four years and amounts to 50% in 2004. Apart from the EC, which accounts for 90% of its multilateral ODA, Greece’s aid is fragmented among a large number of multilateral organisations which does not allow it to have a significant voice in the agencies it supports. In order for the scaling up effort to be manageable, Greece should allocate an increased share of aid resources to multilateral channels and develop a more strategic approach to multilateral aid. While expanding its multilateral programme, Greece should be more selective. It should also focus on allocating more funds to the core budgets of multilateral organisations or to already established multi-donor trust funds, rather than setting up new ad hoc trust funds tied to Greek-sourced inputs.

Recommendations

• Greece needs to address urgently the challenge of implementing its political commitment to reach the 0.51% ODA/GNI target by 2010. Therefore Greece should include an ODA growth implementation plan focussing both on the resourcing and spending dimensions of the equation, in its new medium-term programme.
• Greece is encouraged to build a medium-term geographical strategy to its development co operation. In shaping this geographical strategy, Greece should be cautious to strike a balance between the need for continuity with its key partners in the region and the imperative of gradually adjusting its portfolio to take into account that some of its current partner countries will not be eligible to receive ODA in future, while ensuring continued public support.
• Greece should maintain a strong focus based on its comparative advantage, in order to maximise its aid effectiveness and concentrate the allocation of its resources on a core group of partner countries.
• With a view to maximising its aid effectiveness while increasing its aid volume, Greece should increase the share of aid to multilateral organisations beyond the EC. While expanding its multilateral programme, Greece is encouraged to be more selective and to develop a strategic approach to multilateral assistance.

Promoting policy coherence

Greece is increasingly aware of the need for policy coherence for development and has a good record in developing an efficient whole-of-government approach in areas with important domestic ramifications, such as migration, human trafficking and money laundering, but also in the environment sector following Greece’s adoption of the United Nations Convention to Combat Desertification. In these areas, Greece already has inter-ministerial structures in place and improvements in co ordination are noticeable.

In line with the recommendation made in the last review, the DAC recommends that Greece should strengthen policy coherence for development as a government objective in the context of the new medium-term strategy under preparation.

Building on the experience gained from existing policy coherence mechanisms, the Greek authorities should consider setting up a systematic, formal framework for co ordination on policy coherence issues within the government. The Inter-ministerial Committee may be the appropriate body to embrace this issue in its co-ordinating role and its mandate could be expanded to this end. Greece should also consider how to reinforce Hellenic Aid capacity to enable it to address complex issues and provide adequate analytical support to the Committee whether through additional skilled staff resources or strengthened links with research institutes or universities. Such a framework would also enhance the role of Parliament’s Committee on Defence and Foreign Affairs in vetting legislation for its coherence with the goal of reducing poverty.

Recommendations

• Greece is encouraged to strengthen policy coherence for development as a government objective. A strong focus in the medium-term strategy would provide a solid foundation for developing a systematic, formal framework for inter-ministerial co ordination.
• Greece should adjust existing structures to foster more systematic and selective attention to policy coherence for development. Greece could consider expanding the mandate of the Inter-ministerial Committee to cover policy coherence issues. To provide adequate analytical support, Hellenic Aid should have enough capacity to access information from other line ministries, the EU and other sources.

Aid management and implementation

Implications of a major increase in aid for organisation and management

Over the last five years, Greece has continued its efforts to build its institutional and technical capacity, moving towards a more efficient and coherent system with an Inter-ministerial Committee (EOSDOS), chaired by the Minister of Foreign Affairs, providing strategic guidance to the aid programme and Hellenic Aid in the Ministry of Foreign Affairs coordinating its implementation. The strengthened role and increased professionalism of Hellenic Aid, more efficient mechanisms - as highlighted by a revised call-for-proposals process and a new statistical reporting system - and increased presence in the field are key areas of progress which help improve aid delivery.

The projected increase in aid will require further reinforcement of the Greek development co-operation system to enable it to manage a one billion dollar programme by 2010. Despite the 2002 institutional re-organisation, the programme is somewhat fragmented with seventeen entities in twelve ministries involved in delivering bilateral aid. Moreover, different ministries manage bilateral and multilateral channels with insufficient dialogue between them. Greece needs to further consolidate its structure and bring the key development actors of Greek co operation closer together in order to generate enhanced synergies and limit overlap. The authorities should examine, in the light of other DAC members’ experience, the different possibilities to do so, either relying on different ministries’ capabilities, or creating an implementing agency. The DAC recommends that Hellenic Aid, established as the co ordinating agency of Greek development co-operation in 2002, be given a strengthened role in the system.

This will imply reinforcing Hellenic Aid’s capacity. Since the organisational structure laid out in 2002 is not yet fully in place, the priority should be for all Hellenic Aid directorates and sections to become operational and effective, establishing the Evaluation Unit as an independent body and setting up the Technical Services Directorate in the most cost-effective way possible. Organisational structure and procedures should be further rationalised, as expected through the new law being prepared on the organisation of the Greek development co-operation system. Hellenic Aid should reinforce its staff, numbering less than 40 persons at present, both in numbers and capacity. In this respect, Greece should develop a strategic approach to the management of Hellenic Aid human resources in terms of recruitment, training and career development for staff based both in Athens and in partner countries, in order to have the appropriate level and mix of expertise within the staff and ensure continuity in delivering the aid programme.

Adapting aid delivery modalities to the aid effectiveness agenda

Apart from the case of the Balkan programme, the cornerstone for the delivery of Greek bilateral programme is the annual call-for-proposals procedure. While this is a useful tool to support a project approach, it does not allow for longer-term arrangements and the larger scale programmes needed to increase aid predictability and build sustainable capacity in partner countries. This system also generates high transaction costs and presents the risk of a supply-driven approach. To prepare for the projected increase in aid volume, Greece needs to consider a new development co operation approach complementing the call for proposal mechanism. In doing so, Greece should build on the lessons learned  from the implementation of its Hellenic Plan for the Economic Reconstruction of the Balkans (HiPERB or Balkan programme).

Greece also needs to deepen the implementation process of the aid effectiveness agenda deriving from the Paris Declaration which it has endorsed. To do so, it can usefully refer to the Greek action plan for co ordination and harmonisation released in November 2004.  Greece should establish strategic country programmes based on partner country strategies for all its priority partners, in order to ensure ownership of Greek development aid. When identifying its support, Greece should also take into account its comparative advantage as well as other donors’ involvement in the partner country. Equally, Greece will need to review its way of programming and delivering aid in order to facilitate alignment and harmonisation. This should imply greater involvement in multi-donor programmes, participation in sector-wide approaches and introduction of multi-year financial programming. Delegated co-operation may also be an option to consider since it can be a good way to save transaction costs as the Greek programme expands.

Greece is encouraged to pursue its effort towards a more decentralised approach through further devolution of authority at the field level, by adding specialised aid staff and relying on greater local capacity within Greek embassies. This will facilitate the harmonisation and alignment process in country.

Since NGOs will remain an important implementing partner for the Greek aid programme, Greece should further streamline the aid delivery system through these actors. This could be done firstly by establishing longer-term partnerships with a selection of effective and efficient NGOs. Secondly, Hellenic Aid could strengthen the eligibility criteria and simplify reporting requirements for NGOs receiving public funds to ensure they are appropriate, both in terms of compliance with public accountability rules and manageable administrative follow up for NGOs and Hellenic Aid. Greece could seek advice from other DAC member countries and is also invited to enhance its dialogue with NGOs; it could activate the National Advisory Committee on NGO issues for this purpose.

The evaluation unit which is projected to be set up in the coming months should allow Greece to go beyond an input-based approach focusing on project monitoring to develop a results-based approach to development aid, relying on ex post evaluations. To fully benefit from this shift, Greece will need to put in place adequate mechanisms to ensure lessons learnt are translated into knowledge management and linked to programme management. It should, as a priority, evaluate its education programme to ensure that this significant component of its bilateral programme is an efficient and cost-effective way of building sustainable capacity in partner countries.

Recommendations

• Greece should pursue the consolidation of its development co-operation system
• With a view to strengthening its capacity, Hellenic Aid should put in place all units of the organisational structure laid out in 2002, and rationalise its procedures. It should adopt a strategic approach to the management of its human resources in terms of recruitment, training, and career development, and provide development assistance specialists to embassies in priority countries.
• Greece is encouraged to develop new ways of programming and delivering aid, in addition to an improved call-for-proposals system. In line with the aid effectiveness agenda, it should establish strategic country programmes based on partners’ own strategies in each priority country and review its instruments in order to facilitate joint approaches with other donors and increase aid predictability. Efforts towards decentralising the programme and further delegating authority should be pursued.
• Greece is encouraged to develop a results-based approach to its aid programme. An evaluation unit, along with adequate mechanisms to build a knowledge management system linked to programme management, should be set up. A priority should be to review the developmental relevance and impact of Greek tertiary scholarships schemes, given their importance in the Greek aid programme. 

Humanitarian aid

Humanitarian assistance is given high priority within the Greek international development co operation programme, which itself is seen by the Greek government as being an important dimension of foreign policy. The rapid and substantial Tsunami response in Sri Lanka and the Maldives, which resulted in Greece being characterised as a “Global Humanitarian Power” by United Nations Secretary General Kofi Annan, illustrated the government’s commitment to humanitarian response ‘in every part of the world in need’. Greece used its recent presidency during its membership of the Security Council to draw attention to humanitarian issues, further underlining the priority it attaches to humanitarian action which the government sees as reflecting the character, experience and values of the Greek people.

Humanitarian action by Greece, which extended to 25 countries in 2004, involves a wide range of government agencies and civil society actors. Implementation is co-ordinated by Hellenic Aid within the Ministry of Foreign Affairs. Greece is committed to reducing the relative emphasis on neighbouring countries and increasing its response to humanitarian needs in other regions. In doing so, Greece may need to consider further strengthening the capacity of Embassies to contribute to humanitarian action in areas of protracted humanitarian crises.

As a new donor, Greece can draw on its own direct and fairly recent experience both as a recipient of humanitarian assistance and a provider of assistance to neighbouring countries experiencing conflict, reconstruction and transition. Greece sees other comparative advantages in being small, quick and flexible.

The Greek humanitarian assistance programme has a number of distinctive features including a strong sense of public engagement, close involvement of other government departments and an informal style of collaboration. Scaling up the humanitarian response whilst maintaining the positive aspects of these features will be a significant challenge in terms of organisation, partnerships and systems. In this context, while improving the management system for humanitarian aid, every effort should be made to preserve the flexibility and engagement which currently characterise the Greek humanitarian response.

Recommendations

• As the scale of Greek humanitarian response grows, more formal systems of coordination within government and with external actors should be developed.
• The development of an explicit overall humanitarian strategy will help to ensure that all those contributing to the growing response do so on the basis of a clear statement of policy and priorities. Such a strategy would also provide transparent guidance on assessing the opportunity costs of different interventions.
• There is a case for further strengthening the capacity of Embassies to contribute to humanitarian action in areas of protracted humanitarian crises.
• If, as expected, NGOs become more active partners in implementing Greek humanitarian assistance, there will be a need to further streamline procedures and build capacity to cope with an expanded response.
  

Related documents: Full report of the Peer Review of Greece (81p, English)