Court of Auditors attacks EU’s food aid programme to Russia

Date: 01/02/01

By Simon Taylor

The EU's spending watchdog has slammed a food aid programme to Russia, the biggest in the Union's history, saying the scheme was a waste of funds and expressing doubts that it was needed at all.

Maarten Engwirda, a Dutch member of the European Court of Auditors (ECA), told a Parliament budget control committee last week that the decision to provide €377 million in emergency food aid to the Russian Federation in 1999 was based on "political" considerations and not genuine need.

He said the Court's own analysis was that "the necessity of the aid was not proven" and the European Commission itself had concluded there were no food shortages in Russia at the time.

Dutch Socialist MEP Michiel van Hulten is asking the EU executive whether the food aid package was really a measure designed to protect the interests of the Union's agricultural sector rather than deal with any humanitarian crisis. He wants the Commission to explain why it had performed an about-turn by backing the food aid plan when its own experts had said there were no food shortages in Russia.

"Why did the Commission change its mind so radically between September and November 1998, bearing in mind that according to the Court the EU adopted its aid package at the very moment Russian cereals exports were reaching record levels?"

Van Hulten asked External Relations Commissioner Chris Patten.

The auditor said the scheme had only partially achieved one of its main goals, to benefit the poorest members of society. "The situation of the neediest people improved rather little ... as the people at the lower end of the social ladder had hardly any financial resources with which to buy the products," he told MEPs.

Engwirda also criticised delays in delivering the food aid. "The deadlines for implementation were greatly violated with more than half of the goods arriving at their destination after the harvest, when demand for the products was weakest and, for instance, storage costs the highest," he said.

The ECA also found evidence that the aid programme influenced prices for local products although one of the key conditions of the scheme was that it should not disturb the market for domestically-produced foodstuffs. Engwirda said the Commission should have analysed the program's impact on private sector operators in light of warnings by the World Bank.

The EU decided to launch its biggest-ever emergency food aid programme in 1998 after Russia was hit by a poor harvest in the midst of its worst financial crisis following the fall of the Soviet Union. Since Russia was its second largest market for meat exports, the Union wanted to maintain a presence there as an exporter and a donor by sending cereals, beef and pigmeat and milk powder.

But the Court found that this aim could have been achieved more cheaply and effectively by using export refunds, which make up for low prices on external markets.

The auditors said the scheme had fulfilled one of its aims by improving the situation of pensioners because the funds raised by selling the food products were used to pay arrears.

The Commission has defended its handling of the programme, pointing out that despite delays 97% of the food was delivered within nine months. It also claims that the negative effects on local markets were minimal and says benefits were felt throughout the Russian Federation.

The EU's spending watchdog has slammed a food aid programme to Russia, the biggest in the Union's history, saying the scheme was a waste of funds and expressing doubts that it was needed at all.