Dominica & the EU – Political and Economic relations
Dominica has had a formal relationship with the European Union (then the European Economic Community) since 1979. As a former British colony, which became independent in 1978, it was the entry into the EEC by Britain in 1973 which offered Dominica and other Commonwealth countries in Africa, Caribbean and the Pacific (ACP) the possibility of negotiating their future relations with the EU.
The overall aim of EU co-operation is to improve the quality of life of the populations in the beneficiary countries through targeted and sustainable programmes. In 2010 the EU Delegation to Barbados and the Eastern Caribbean, which covers Dominica, disbursed €130 million in development co-operation aid amongst the ten countries it is accredited to in the region.
Historically EU-ACP co-operation has been underpinned by four Lome agreements and now the Cotonou Agreement signed in 2000, through which the European Development Fund (EDF) provides grant aid towards development projects and programmes. The European Commission manages the funds and jointly implements the projects. Lome also introduced the STABEX system, to compensate ACP countries for the shortfall in export earnings due to fluctuations in prices.
Today the EU is Dominica largest grant aid partner for development. Apart from the EDF which runs in five year cycles, between 1993 and 1999 Dominica benefitted from STABEX transfers totalling €42.5 million. These payments were given for loss of export earnings from bananas. The EU assistance was used to develop a more competitive agricultural sector, as well as the maintenance of the banana industry and the provision of social recovery for displaced farmers and their families.
In addition to STABEX, in 1999, as the foreseeable withering of the banana regime became clear and in recognition of Lomé IV and Cotonou commitments in support of the traditional ACP banana industry and its access to EU markets, another instrument, the Special Framework of Assistance (SFA) to traditional ACP Banana producers, was created to provide assistance in the transitory period. Programmed on an annual basis for a period of ten years and using funds from the EC budget (as opposed to the EDF), the SFA was aimed at further assisting ACP banana producing countries in their efforts to enhance the competitiveness of the banana sector; diversify agriculture, enhance human resources and in general the economy of Dominica; and to create safety nets for former banana producers. Dominica was allocated €52.5 million (including interest) of SFA resources for implementation in areas such as tourism development, water supply, agricultural competitiveness, private sector development and construction of banana inland reception and distribution centres.
Projects and programmes supported by the EU in Dominica include upgrading of the facilities at the country's main airport whereby night landing equipment and navigational aids were provided; establishment of a Social Investment Fund; implementation of an eco-tourism project which includes the Waitukibuli national trail programme; private sector growth and development programme which emphasise the strengthening of customs as well as the investment environment in the country; the development of a solid waste landfill; and upgrade of water supply infrastructure in the Carib territory, as well as water and sewage sanitation. The present EU 10th EDF intervention in Dominica focuses on macro-economic budget support, which has a financial envelope of €5.7 million.
Dominica also benefits from the EU's Fluctuation in Export Earnings (FLEX) mechanism, which was introduced in 2000 for ACP countries, to assist governments facing sudden loses of revenues. It provides additional budgetary support in situations where countries have registered a 10% loss in export earnings and a 10% worsening of the programmed public deficit. For 2010 and 2011 Dominica received €270,000 and €2.18 million in FLEX support respectively.
As a response to the present global financial crisis affecting ACP countries, the EU in 2009 proposed a set of measures called Vulnerability FLEX (VFLEX). It is aimed at assisting developing countries that are hit worst by the downturn in trade and falling revenues. This instrument focuses on ensuring spending on social safety nets and is based on the forecast of fiscal losses and other vulnerability criteria. In 2009 the European Union decided to top-up Dominica's 10th EDF allocation with additional VFLEX support of €5 million.
The European Investment Bank (EIB) also helps to implement the EU’s cooperation and development policies outside the EU and has made loans available to Dominica. The EIB has provided credit lines to the Dominica Agricultural Industrial Development Bank for the financing of small and medium enterprises.
The EU is placing increasing emphasis on climate change, alternative energy and food security as well as mainstreaming issues such as environmental protection, gender and governance in its development co-operation. The EU is committed to the promotion of Human Rights, the rule of law and democracy worldwide. The European Union Delegation continues to work closely with all stakeholders in Dominica and has assisted with the establishment of the Non-state Actors Panel which is actively involved in all aspects of our cooperation from programme formulation to implementation.