February 12, 2003
The Basic Principles for the Development Cooperation Policy of the Republic of Latvia
- Situation Description
1.1. During a relatively short period of time since reestablishment of its independence, Latvia has brought into being a number of reforms that were needed in the national economy and for the society at large; it can be said that currently the country is at the final stage of the transition period. The main evidence to such a claim would be the recent recognition of Latvia as a country with market economy, its accession to the World Trade Organization (WTO) in 1999, the invitation to join NATO and the completion of the accession negotiation with the European Union (EU).
1.2. At the same time, it should be recognized that successful development of national economy, security an sustainable development depend not only the country's political, economical and structural reforms, but also on the on-going processes in the European region and world-wide. Therefore Latvia is interested in promoting cooperation and in providing its assistance, including the Development assistance for the developing countries and other economies in transition, focusing to neighboring countries specifically.
1.3. Cooperation in various areas, including that of the Development, is built with an aim to ensure democratic reforms and adherence to the human right norms, as well as to ensure economical and social growth, attaining sustainable development and with an aim of diminish poverty in developing countries and countries with economy in transition.
1.4. Development Policy is one of the central elements in Foreign Policy of the European Union, which Latvia plans to join in 2004, together with the Union's foreign political relations, including the Common External and Defense policy and international trade policy. On the global scale, EU already is one of the major players in each of these areas separately and it is forecasted that the forthcoming EU enlargement stage will strengthen its role further:
- EU already is an important force in international relations. The enlarged EU will have at least 25 member states with population close to half a billion;
- At the moment EU is the largest trade block. After the enlargement the region will form one fifth of the global trade; it will be the source of about 50% of the outgoing investments and will receive about 30% of the incoming investments;
- EU already is the largest Official Development Assistance(ODA) and humanitarian aid provider world-wide – it provides nearly a half of the global ODA, 22% of which are administered at the Community level. EU member states in 2002 have undertaken to enlarge its ODA budget resources with an aim to reach an average EU ODA/GDP (official Development ratio to Gross Domestic Product) of 0.39% by 2006 and this is only the first step to reach the 0.7% as is recommended by the United Nations (UN). Negotiations regarding on the participation of the new member states in contributing to the Development Assistance, ODA inclusive, will take place in the future, though it is clear by now that the new member states will have to partake in building the Community Development policy.
1.5. Latvia already provides support to economies in transitions and to developing countries both through bilateral relations and via international organizations. Latvian experts have participated at various events for sharing valuable experience in diverse areas; they have acted as national consultants or as consultants to international organizations. Until now Latvian participation in providing assistance has not been based on a specific program or strategy, it has mainly been a required reaction to specific situations. For development assistance (relying on very approximate data) in 1999 on the whole the total of LVL 88 773; LVL 29321 in 2000 and close to LVL 898 201 in 2001 have been allocated, including the multilateral cooperation (total for ODA and OA LVL 1 098 764; see Appendix 1).
1.6. Besides – on November 22, 2001, the Saeima (i.e. Latvian Parliament) adopted amendments to the law "On Customs Duties (Tariffs)" that accounted for partial implementation of the General Priority System Scheme in developing countries, providing access to free market for the least developed countries.
1.7. The year 2010 could be defined as a point of reference – according to the "graduation policy" of the World Bank and the respective forecasts, in 2010 the income level per capita (which currently is USD 5225 as per year 2000 price level) in Latvia could exceed the benchmark, according to which the Bank reviews the country's overall economical situation in order to verify its ability to maintain long-term development program without the Bank's financial support. This date of reference could also be used to as a date from which Latvia could become a full fledged donor country.
1.8. At the same time it should be noted that the transition to the status of a donor country is a gradual process and, as was mentioned above, Latvia already provides assistance of various kinds; besides, the volume of Latvian assistance increases from year to year. Moreover, several countries, the current assistance providers to Latvia, have decided on gradual decrease of their assistance to Latvia, referring to the eventual Latvian accession to EU. The United Nations Development Programme (UNDP) also plans to cease its operation in Latvia in 2004.
1.9. Until now Latvia has made its contribution payments in special funds and programs, providing humanitarian aid on occasions of natural disaster and eradication of effects from natural and other calamities, as well as consulting countries with economy in transition regarding the implementation of economical reforms. Granting assistance on ad hoc basis with the resulting need for separate decisions from the Cabinet of Ministers or that of Ministry of Finance hinders planning activities, efficient use of resources, and the provision of comprehensive situation description on Latvian assistance to international organizations.
1.10. Latvia has undertaken to adopt and apply the primary legislation of the European Commission (EC) on Development Assistance policy from the moment of accession to EU without exceptions or transition periods. Besides, Latvia has undertaken to coordinate its Development Assistance policy and to coordinate its foreign assistance programs with EU and member states, including a coordinated access to international organizations and conferences[LM1] as well as has undertaken liabilities to contribute to Community's assistance programs.
1.11. In addition to participation in EU development policy, Latvia should further bilateral and multilateral projects, providing assistance to developing countries and countries with economy in transition, taking into consideration its own priorities.
1.12. Upon accession to EU just like other EU member states, Development cooperation policy gradually will become one of the central foci of Latvian foreign policy (with regard to countries that are not EU member states or other donor countries) implementation mechanisms.
- Definition of Problems that Require Certain Governmental Policy to be Solved
2.1. Latvia's commitment to draft its foreign economic policy in full compliance with EU norms (including development policy) from the moment of accession to EU is approved by the decision of the Board on EU Integration (BoEUI – March 20, 2000; meeting protocol No.3). In addition to that, Latvian National program on EU integration defines overtaking EU liabilities in all aspects of developmental policies as one of the primary activities (LNPIES[LM2], code LA-062). In the Progress Report of the European Commission of 2002 and 2001, it was recommended to develop the administrative capacity to ensure participation in EU development policy.
2.2. As was already stated above, along with the existing and the planned payments Latvia will have to get involved and to contribute to Community aid programs. Even though the negotiations on Latvian contribution to European development funds will take place after the accession to EU (negotiations must be complete by 2005), it could be predicted that the total Latvian payment for Development contribution and Official assistance will gradually increase.
2.3. Uncoordinated activities and the lack of comprehensive policy do not allow for an equally efficient use of available resources as that of the EU member states and that of many other donor states. Thus the opportunity to inform about the Latvian progress is lost as well as is that of offering coordinated Latvian expertise in the areas of its comparative advantages. On the top of that, the current situation when concrete assistance cooperation projects and funding is subject to various Latvian coordinating institutions can be viewed as hindersome for gathering statistical information and as one that does not provide exact data on the volume of the assistance actually provided.
2.4. Participation in multilateral (both EU and UN, etc.) Development assistance and cooperation programs along with being a national liability is also an opportunity for Latvian companies, experts and non-governmental institutions to offer their goods and services. Currently Latvian physical and legal persons have the right to take part in tenders announced by PHARE (Assistance Program for the Restructuring Needs of the Economies in East European Countries), OBNOVA (assistance for areas having suffered from Balkan conflicts promoting rebuilding and reconciliation of the parties involved as well as by eliminating the violence break-outs) and TACIS (Technical Assistance for the Commonwealth of Independent States – assistance program for the reorganization of Russian and other USSR inheritor state economies). Following Latvian accession to EU, the companies will have an opportunity to partake in assistance programs of MEDA (Mediterranean Development Assistance), ALA (Asia and Latin America) and EDF (European Development Foundation – refers to Koton agreement states); however, the lack of coordinated activities and comprehensive policies will not permit the full use of these opportunities.
2.5. Drafting the fundamentals of Development policy and later those of the programs, plans and, quite likely, the Law on Developmental cooperation, could help to systematize, coordinate and improve mechanism for provision of Latvian assistance, as well as to secure the bridge between the assistance and inter-state trade development.
2.6. In addition to the above said, the absence of a coordinated Development program hinders the coordination of Latvian activities in various international forums and organizations – from bilateral relations, participation at EU Development policy, various multilateral and international organizations and programs.
2.7. One of the most significant bases for successful Development policy implementation is the involvement of the civic society. The significant number of the registered NGOs (more than 4500 in 2001) proves the desire of Latvian residents and opportunities for their participation in representing their interests. By furthering the development policy, the opportunities of NGOs will be extended to partake in implementation of this policy.
- Basic Principles of the Policy
3.1. The fundamental principles of the Development cooperation policy of the Republic of Latvia are in line with the objectives of the Latvian foreign policy and the objectives defined in the UN Millennium Declaration.
3.2. The Development cooperation policy of the Republic of Latvia shall be implemented both within multilateral Development cooperation and bilateral and tripartite Development Cooperation.
3.3. The directions of the Development cooperation policy of the Republic of Latvia according to the areas are the following:
Political – activities in assistance projects with an aim to implement the objectives of Latvian foreign policy – integration into the European economical and political structures, building relationships with neighboring countries, etc.;
Economical – participation in development policy projects that could have a positive impact upon Latvian economical development both directly and indirectly;
Humanitarian – humanitarian aid projects, envisaged for the elimination of the effects of natural and other catastrophes;
Educational – assistance projects presenting Latvian history and culture thus expanding the level of information on Latvia world-wide;
National administration – technical assistance projects for conveying Latvian experience in internationally acclaimed institutions from successful Latvian national and municipal organizations, for example, social security, especially pension and social assistance, etc..
- Policy objectives
Primary objectives of the Development Cooperation Policy of the Republic of Latvia:
4.1. Latvia is active in fostering bilateral relationships between countries; therefore an objective of the Development cooperation policy of the Republic of Latvia is to lay foundation for foreign bilateral assistance provision for developing countries and countries with economy in transition. By balancing the common interests and by diversifying the areas of cooperation, Latvian security can be strengthened, economic development and welfare could be furthered. Improving bilateral cooperation and development with developing countries in the assistance provision area, Latvia would have an opportunity to achieve a more successful representation of its own interests in the respective counties, simultaneously building advantageous cooperation in economics, science and culture. At the same time conditions will be created to show Latvia as a country with successful course of reforms and as a provider of assistance to other countries.
4.2. Another objective results directly from the main focus of the Latvian foreign policy – accession to EU. By integrating EU, Latvia should be prepared to fulfill the criteria set to its candidate states by the EU, to harmonize national legislative norms according to the EU normative acts. One of the priorities of the Latvian government in this area is the process of learning the principles of EU development policy and preparation to overtake those principles as well as coordination of the national development cooperation policy with EU common development policy.
4.3. Latvia is interested in further active participation in international assistance programs of international organization in providing aid to developing countries that promotes reaching such important objectives as poverty reduction, compliance with principles of democracy, environmental protection, adequate health care, education opportunities and the improvement of living conditions in the world's poorest countries. By taking a part in the assistance programs of UNDP, World Bank, IMF, Latvia is given an opportunity to get truly involved in promoting development in the countries of this region. Partaking in UNDP, WB and IMF aid programs, Latvia has a real opportunity to get involved in promoting development in the countries of this region.
4.4. Coordination of Latvian activities in international financial and economical organizations in Development cooperation policy area[LM3].
- Policy Results and Indicators for their Attainment
5.1. What has been achieved in Latvia until now in the area of development policy should be viewed as a good beginning in the process of becoming an assistance donor to other countries. Development cooperation policy will create preconditions for a more results orientated work organization. By developing the basis of contractual and legal norms, as well as the administrative capacity, a consolidated system will be created in the area of development policy.
5.2. It should also be noted that both the UN and EU and directions and priorities of Developmental policies of other organizations in general are subject to continuous changes and development. Therefore, Latvian security, national economical development and welfare were mentioned as central objectives of the Development cooperation policy. Development cooperation of the Republic of Latvia will be one of the central mechanisms of the foreign policy for the implementation of the foreign interests in relation to countries that are not EU member states or other developed countries.
- Directions of Action for Attaining Policy Objectives and Results
6.1. Directions of actions for attaining Development cooperation policy objectives and results:
- The participation of Latvia in EU development policy is defined along these lines: political dialogue, cooperation in the areas of development and trade, provision of meaningful experience for the implementation of reforms for countries with economy in transition and developing countries as well as participation in assistance projects and provision of humanitarian aid to countries having suffered from natural disasters or other crises;
- Latvian involvement in bilateral cooperation with developed countries will be continued, so will be the cooperation with countries with economies in transition from planned economy to free market economy. Thus Latvian experience in its period of economical transition will be shared and consultations provided. The CIS region should be viewed as the primary area for Development cooperation of the Republic of Latvia and the countries of the Balkan region – in some specific areas – to enable Latvia to provide within the limits of its ability a contribution to furthering development on the basis of the common historical and cultural ties with these countries. Cooperation with countries with economy in transition will be continued in the future as well, for example, with an aim to pass over Latvian experience in the implementation of reforms;
- In addition to that Latvia will cooperate with the institutions of third countries – active implementers of development policy, with an aim to create and participate in common projects, implemented in countries where Latvian national and municipal reform experience could be useful (for example, there already exists successful cooperation with the Canadian International Development Agency (CIDA) where funding from Canadian Development policy is used and Latvian experts convey their experience to institutions in Ukraine).
- Active participation in the events of international institutions, programs and policies aimed at attaining the objectives defined in the UN Millennium declaration (government programs for attainment of Millennium declaration will be prepared), as well as cooperation for the implementation of humanitarian aid programs. Latvia will stick to its established practice in providing assistance to elimination and liquidation of catastrophe effects by liaising directly with the affected areas. Latvia shall partake in assistance programs where support of several countries and international organizations is required. UN, WB, IMF and EBRD should be mentioned as the main partners for multilateral cooperation in the area of development policy.
6.2. In addition to the all above mentioned, public information campaigns should be organized as well as informative events on the objectives of the Development cooperation policies, its priorities and Latvian activities for raising civic awareness and support for successful development and implementation of Development cooperation policy.
- Assessment of the Impact on National and Municipal Budgets
7.1. In addition to the current and the planned Latvian payments to international organizations, from the moment of accession to EU, annual payments to EU budget will be contributed, 5% out of which will be allocated for Community Development programs. Starting from 2007, Latvia will have to join the European Development foundation, on which the payment negotiations will take place eventually.
7.2. Just like other EU member states, Latvia is allocating a small part of the GDP for development policy needs. Thus, for example, the Czech Republic has announced that it is determined to increase the Development policy budget up to 0.1% from the GDP until the accession to EU. Even though it is clear that the new EU member states will not be able to implement the so-called "Monterey Agreement" of the EU member states, stipulating that by 2006 the average ODA/GDP ratio should be 0.39%, while the ODA/GDP of each member being at least 0.33%, it is expected that the new member states will take an active part in Community Development policy. It is quite clear that the new member states will be allowed to have a period of transition, though they will be required to consent to the general principles and to increase gradually their contribution to Development cooperation policies.
- Plan for Further Action
For building Development cooperation policy of the Republic of Latvia, a Development cooperation policy program (plan) of the Republic of Latvia and its implementation mechanism should be prepared. The required changes to legislation should be researched. In this context the primary areas of action would be the development of the legal basis, strengthening of the institutional capacity, building cooperation with institutions responsible for development policy as well the development of the budget program, analogous to the practice of the donor countries.
8.1. Coordination of the EU Development policy, bilateral and multilateral assistance projects, compilation of the Latvian expert data base (data base of areas and institutions) by gathering information on specialists and areas where Latvia could offer assistance to other countries; amendments of the legal basis – harmonization of Latvian and EU legal norms and translation work in the area of the development policy, activities related to taking over the EU liabilities within the development policy framework and participation in EU development policy implementation[LM4];
8.2. Establishment of the consultative board of the Ministry of Foreign Affairs where national institutions, municipalities, non-governmental institutions would be represented, Council of the National Economy and academia as well, and where any changes in and amendments to legislation could be discussed and prepared for submission to the Cabinet of Ministers, as well as Development cooperation programs, fully in line with the priorities defined by the Ministry of Foreign Affairs, and planning of specific assistance programs would take place.
8.3. Establishment of a common Development cooperation budget program of the Ministry of Foreign Affairs starting from 2004 that would include the possible volunteer Latvian payments for specific international organizations, as well as resources pre-planned for bilateral and multilateral Development cooperation programs, humanitarian aid and other funding needs of the Official and Development cooperation events of the Republic of Latvia, in accordance with the annual program of the government;
8.4. Public information, building public understanding by explaining the need to become assistance provider to other countries, promotion of the dialogue with public at large in the area of the Development cooperation policy.
- Provision of Reviews and Assessment Procedures
Along with the establishment of the respective structure, mechanisms and funding schemes, it is also planned to prepare Programs/plans for the Development Cooperation policy of the Republic of Latvia for certain period of time in the future (five years). Noting that international programs can be only evaluated from a long-term perspective, it should be planned to submit to the Cabinet of Ministers for review their previous program/plan assessment simultaneously or in sequence with the program/plan submission for the following time period.
Latvian Participation in Assistance programs in 1999-2000 (only approximate data, with no regular payment indications for international organizations and excluding expert assistance assessment, without the breakdown into the Official Development Assistance and Official Assistance).
- LVL 49 470 – payment for the blankets taken out of the national material reserves;
- LVL 15 573 – for expense coverage related to material distribution for the provision of humanitarian aid to earthquake victims in the Republic of Turkey;
- LVL 9630 – for sending expenses of the humanitarian aid;
- LVL 8100 – for ensuring the program "Promotion of stability in the Balkan area";
- LVL 3000 – for transportation expenses of the humanitarian aid materials;
- LVL 3000 – first payment in the UN Development Program budget that Latvia has made as a donor country;
Total amount of payments allocated for Assistance programs in 1999 exceeds
LVL 88 773.
- LVL 26 361 – assistance to flood victims in the Republic of Rumania;
- LVL 2960 – payment into the UN Development program funds;
Total amount of payments allocated for Assistance programs in 2000 exceeds
LVL 29 321.
The Official Development assistance (ODA) of the Republic of Latvia and Official Assistance (OA) in 2001 (excluding expert assistance, foreign student support, administrative expenses of ministries related to assistance provision as well as excluding the assessment of other assistance provided).
The total ODA is LVL 898 201 (including Latvian payments to international organizations LVL 889 092, and bilateral humanitarian assistance to Afghanistan – LVL 9109) or 0.019% from the GDP.
The total OA is LVL 200 563 (including Latvian payments to international organizations LVL 200 269 and bilateral humanitarian aid for Ukraine – LVL 294) or 0.004% from the GDP.
Total ODA and OA – 1 098 764 or 0.023% from the GDP.
In addition to that:
- as to the data of the Ministry of Education and Science – more than 1000 foreign students have studied in Latvia, a part of this number of students has been funded from the national and municipal budget resources;
- the numerous expert exchange visits should be mentioned, consultations (at the parliament, national chancery, ministries and in organization under ministerial supervision regarding which there is no sufficient data of statistics and that are not coordinated);
- as to the data of the Ministry of Defense, Latvian medical professionals and peace maintenance forces have provided assistance to civilians;
- maintenance costs for refugees and asylum seekers during the first year;
- costs incurred by ministries and administrative costs of other institutions related to assistance provision.
The above mentioned activities could be included in the official and development assistance of Latvia, thus the amount of the official assistance provided actually is larger than this. However, noting the absence of data gathered and processed on regular basis, these activities until now have not been coordinated, methodology for the assessment of the assistance provided by experts is absent, and within the current framework of the existing funding schemes to institutions of higher education, it is impossible currently to estimate the assistance provided.
The Minister of Foreign Affairs
The State Secretary
The Director of the Legal Services
The Official Reponsible for Control
The Official Responsible
February 12, 2003
 Development Policy is an indispensable part of the body of the EU normative acts related to foreign relations. Article 3 of the EU foundation agreement stipulates that the development policy is one of the instruments for attainment of the EU common objectives. Development policy is further regulated by Articles 177-181 of this Agreement, stipulating policy objectives and tasks, procedure of acceptance as well as duties of the member states in implementing EU development policy. In accordance with the Foundation Agreement of the European Union, namely the Article 180 thereof, it is the duty of the EU member states to partake in the implementation of the EU development policy as well as to harmonize their own development policies with the EU development policy.
 In the area of the official development assistance – the total amount of assistance provided in the form of financial resources, goods or services and that is funded from national budget.
 Bilateral development cooperation – cooperation between two countries where one country (the donor country) provides assistance in development area or humanitarian aid to another country (hereinafter – bilateral cooperation).
 Multilateral development cooperation – several countries provide assistance in the area of development or humanitarian aid, relying on assistance mechanisms or programs of international organizations of financial institutions (hereinafter – multilateral cooperation).
 The least developed countries (LDCs) – 49 poorest countries world-wide according to the UN classification.
 Latvian total payments to Development assistance and Official assistance – both funding for Development assistance (ODA – a part of annual payments to the UN and EU budgets, as well as payments to other organizations, participation in bilateral and tripartite assistance projects, bilateral humanitarian aid, later also the payments in the European Development fund, etc.) and also the so-called Official Assistance (OA – payment in bilateral and multilateral assistance for certain countries, mainly EU candidate states, Russia, Ukraine, etc.).
 Data is being updated in accordance with the Organization of the Economical Cooperation and Development (OECD) guidelines for the calculation of the official assistance and by establishing methodologies with the respective area ministries.
[LM1]Original text – slightly misleading grammatically.
[LM2]Latvian abbreviation? What does it stand for?
[LM3]Fragment in original.
[LM4]A fragment in the original.