COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing Global Europe

EN EN
EUROPEAN
COMMISSION
Brussels, 16.7.2025
SWD(2025) 552 final
COMMISSION STAFF WORKING DOCUMENT
IMPACT ASSESSMENT REPORT
Accompanying the document
Proposal for a
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
establishing Global Europe
{COM(2025) 551 final} - {SEC(2025) 548 final} - {SWD(2025) 553 final}
Offentligt
KOM (2025) 0551 - SWD-dokument
Europaudvalget 2025
1
Table of contents
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT................................................................5
2. PROBLEM DEFINITION ...................................................................................................................13
3. NECESSITY AND ADDED VALUE OF EU’S ACTION - WHY SHOULD THE EU ACT?..........23
4. OBJECTIVES: WHAT IS TO BE ACHIEVED? ................................................................................24
5. WHAT ARE THE AVAILABLE POLICY OPTIONS? .....................................................................30
6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS? ............................................................37
7. HOW DO THE OPTIONS COMPARE?.............................................................................................44
8. PREFERRED OPTION .......................................................................................................................56
9. HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED? ..................................57
ANNEX 1: PROCEDURAL INFORMATION.............................................................................................58
1. LEAD DG, DECIDE PLANNING/CWP REFERENCES...................................................................58
2. ORGANISATION AND TIMING ......................................................................................................58
3. CONSULTATION OF THE RSB .......................................................................................................58
4. EVIDENCE, SOURCES AND QUALITY .........................................................................................61
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT).................................................62
ANNEX 3: WHO IS AFFECTED AND HOW? ...........................................................................................74
1. PRACTICAL IMPLICATIONS OF THE INITIATIVE .....................................................................74
2. SUMMARY OF COSTS AND BENEFITS ........................................................................................75
3. RELEVANT SUSTAINABLE DEVELOPMENT GOALS................................................................77
4. IMPACTS OF THE PREFERRED OPTION ON HUMAN RIGHTS ................................................79
ANNEX 4: ANALYTICAL METHODS ......................................................................................................80
ANNEX 5: COMPETITIVENESS CHECK .................................................................................................81
ANNEX 6: EU ADDED VALUE .................................................................................................................84
2
Glossary
Term or acronym Meaning or definition
EU European Union
DNSH Do No Significant Harm
DOAG Decision on the Overseas Association including
Greenland
EBRD European Bank for Reconstruction and Development
ECA European Court of Auditors
EFSD+ European Fund for Sustainable Development Plus
EIB European Investment Bank
EIP Economic and Investment Plan
ENP European Neighbourhood Policy
EUR Euro
GDP Gross Domestic Product
GE Global Europe
GEPMS Global Europe Performance Monitoring System
GERF Global Europe Results Framework
HUMA Humanitarian Aid
INSC International Nuclear Safety Cooperation
3
IPA Instrument for Pre-Accession Assistance
MFA Macro-Financial Assistance
MFF Multiannual Financial Framework
MIP Multiannual Investment Plan
NCQG New Collective Quantified Goal
NDICI Neighbourhood, Development and International
Cooperation Instrument
NGO Non-Governmental Organisation
ODA Official Development Assistance
OECD Organisation for Economic Co-operation and
Development
REFIT European Commission's Regulatory Fitness and
Performance Programme
RF Results Framework
RGF Reform and Growth Facility
SDGs Sustainable Development Goals
SO Specific Objective
TFEU Treaty on the Functioning of the European Union
ULCM Ukraine Loan Cooperation Mechanism
UN United Nations
4
US United States of America
USD United States Dollar
WBIF Western Balkans Investment Framework
5
1. INTRODUCTION: POLITICAL AND LEGAL CONTEXT
The EU’s external action in a changing international landscape
The global political and economic landscape poses challenges of unprecedented
magnitude. Russia’s war of aggression against Ukraine has brought war back to the European
continent. The situation in the Middle East is leading to instability across the region and further
humanitarian needs. Growing unfair competition and more aggressive economic and
geopolitical stance have undermined the global multilateral system reflecting a shift from
cooperation to competition and rising conflicts. Competition on technology and access to
critical raw material are key concerns. Less than 20% of the Sustainable Development Goals
targets1
are on track and the gap to reach them by 2030 continues to widen2
. Global fragility is
on the rise3
, and the impacts of climate change and biodiversity loss continue to increase.4
Humanitarian needs continue to rise: in 2024, EUR 45 billion are needed globally for
humanitarian assistance, more than double compared to 2019. The United States’
administration’s disengagement from development cooperation, humanitarian aid, and
multilateral institutions marks a geopolitical and geoeconomic shift, with significant effects for
both the EU and its partners globally.
In such an increasingly difficult and volatile context, building and leveraging sustainable
partnerships with third countries and international organisations to promote the Union’s
fundamental interests and values5
is a defining challenge for the EU’s external policies. With
a view to foster the Union’s prosperity, competitiveness, sovereignty, security, resilience,
preparedness, and global influence while upholding the highest standards on rule of law and
democratic values, the overall objectives for EU external action per policy are described in the
box below.
• Enlargement is a political and geostrategic imperative: it is an investment in long-
term security, peace, stability and prosperity in Europe. Assistance to candidate
countries and potential candidates aims at preparing them, through investment and
reforms, to Union membership. The objective is to support merit-based accession
processes, through alignment with Union values, laws, rules, standards, policies and
practices, as well as socio-economic convergence with the EU.
• The Union is to develop a special relationship with neighbourhood countries, aiming
at establishing an area of prosperity, stability, security, and good neighbourliness,
founded on the values of the Union and characterised by close and peaceful relations
based on cooperation and economic stability.
1
United Nations (2024) The Sustainable Development Goals Report.
2
2024 Financing for Sustainable Development Report https://desapublications.un.org/sites/default/files/publications/2024-
04/2024_FSDR_ChIIIE.pdf
3
OECD States of Fragility Report https://www.oecd.org/en/publications/states-of-fragility-2025_81982370-en.html
4
IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment
Report of the Intergovernmental Panel on Climate Change. IPCC, Geneva, Switzerland, 184 pp., doi: 10.59327/IPCC/AR6-
9789291691647.
5
Article 21 of the Treaty on European Union
6
• The objective of the EU’s international partnerships is to advance sustainable
development, poverty eradication, peace, and human rights while promoting European
values and interests in the world. Global Gateway is the key strategy in that regard,
supporting fair and sustainable infrastructure worldwide while boosting
competitiveness and security of global supply chains.
• The objective of EU humanitarian aid is to provide principled and needs-based
humanitarian assistance to save and preserve life, prevent and alleviate human suffering
and safeguard the integrity and dignity of populations affected by natural hazards or
human-induced disasters, including in protracted crises and through disaster
preparedness before crises occur.
The scale of current and upcoming challenges require the EU to adapt its external action
financing, to fulfil these policy objectives and better serve its strategic interests while
addressing crises and future critical trends post-2027.
The context in view of the next multiannual financial framework
Excessive complexity and inherent rigidities have hampered the EU budget’s impact in
the ongoing and previous implementation periods. Currently, several programmes may
finance similar types of activities, but without the same rules and conditions, and there is
insufficient flexibility to respond to unforeseen needs. This leads to inefficiencies and
administrative burden for beneficiaries, Member States and the Commission. In addition, a
difficult budgetary situation (with the start of NextGenerationEU repayments, the increasing
number of EU priorities and the tight fiscal situation of Member States) reinforces the need to
reduce inefficiencies and administrative burden.
The Political Guidelines6
of the European Commission 2024-2029 acknowledge that ‘our
spending is spread over too many overlapping programmes – many of which fund the same
things but with different requirements and difficulties to combine funding effectively’. The
Guidelines set out that the next long-term budget needs to be more focused, simpler, with
fewer programmes and more impactful.
In line with the Political Guidelines, the Commission adopted on 11 February 2025 the
Communication ‘The road to the next multiannual financial framework’7
, which states that ‘the
next long-term budget will have to address the complexities, weaknesses and rigidities that are
currently present and maximise the impact of every euro it spends’. The Communication also
underlines that flexibility is key in guaranteeing the budget’s ability to respond to a changing
reality.
In this context, impact assessments for programmes under the next multiannual financial
framework (MFF) focus on how to streamline the architecture of the EU budget, thereby
assessing the most important policy choices underpinning the legislative proposals for the
future EU programmes. Policy aspects are considered in the analysis of the context, the
problem definition and the objectives, which inform the choices on the programme
6
https://commission.europa.eu/document/download/e6cd4328-673c-4e7a-8683-f63ffb2cf648_en
7
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52025DC0046
7
architecture. Given that the proposed architecture of the next MFF will be significantly
different from the current structure, the impact assessment does not include funding scenarios
and, consequently, only qualitative cost-benefit analysis is possible.
This reflects the specificities of this exercise, as acknowledged in the Commission’s better
regulation rules. This impact assessment complies with Tool #9 of the better regulation toolbox,
which states that ‘the special case of preparing a new multiannual financial framework is a
unique process requiring a specific approach as regards scope and depth of analysis’.
Objectives for the financing of EU external action in the next MFF
While the 2021-2027 architecture already resulted from a streamlining process of external
financing, the objective set in the above-mentioned Communication is to continue our efforts
to better align external action financing with the EU’s strategic interests in view of
mutually beneficial partnerships. This objective sets the parameters for this impact
assessment as well as options presented in view of the legislative proposal. The impact
assessment accompanies the Commission proposal for the basic act of the Global Europe
Instrument, the main external MFF spending programme. Such basic act provides the financial
allocations, the objectives for the actions it is meant to finance as well as the available toolbox,
while referring to the policy framework which underpins the implementation of the instrument.
The following regulations form the legal framework for 2021-2027 corresponding to the
scope of this impact assessment:
• The Neighbourhood, Development, International Cooperation Instrument – Global
Europe (NDICI-Global Europe)8
.
• The Instrument for Pre-Accession Assistance (IPA III)9
.
• Humanitarian aid (HUMA)10
.
• The Ukraine Facility11
.
• The Reform and Growth Facility for the Western Balkans12
.
• The Reform and Growth Facility for the Republic of Moldova13
.
8
Regulation (EU) 2021/947 of the European Parliament and of the Council of 9 June 2021 establishing the Neighbourhood,
Development and International Cooperation Instrument – Global Europe, amending and repealing Decision No 466/2014/EU
and repealing Regulation (EU) 2017/1601 and Council Regulation (EC, Euratom) No 480/2009
Commission Delegated Regulation (EU) 2021/1530 of 12 July 2021 supplementing Regulation (EU) 2021/947 of the European
Parliament and of the Council establishing the Neighbourhood, Development and International Cooperation Instrument –
Global Europe, amending and repealing Decision No 466/2014/EU of the European Parliament and of the Council and
repealing Regulation (EU) 2017/1601 of the European Parliament and of the Council and Council Regulation (EC, Euratom)
No 480/2009.
9
Regulation (EU) 2021/1529 of the European Parliament and of the Council of 15 September 2021 establishing the Instrument
for Pre-Accession assistance (IPA III)
10
Council Regulation (EC) No 1257/96 of 20 June 1996 concerning humanitarian aid
11
Regulation (EU) 2024/792 of the European Parliament and of the Council of 29 February 2024 establishing the Ukraine
Facility
12
Regulation (EU) 2024/1449 of the European Parliament and of the Council of 14 May 2024 on establishing the Reform and
Growth Facility for the Western Balkans
13
Regulation (EU) 2025/535 of the European Parliament and of the Council of 18 March 2025 establishing the Reform and
Growth Facility for the Republic of Moldova - European Commission
8
The above-listed regulations will expire at the end of 2027 (with the exception of Humanitarian
Aid), at the same time as the MFF 2021-2027 laid down in Council Regulation 2020/209314
.
A proposal for a more integrated successor instrument is thus needed.
Enlargement: a renewed momentum
Twenty years after the largest enlargement of the EU and ten years after the most recent
accession (Croatia), enlargement is again at the top of the EU agenda with nine candidate
countries and one potential candidate. The importance of European integration was further
demonstrated during the COVID-19 pandemic, which put in the spotlight Europe’s
interconnectedness and the need to face global challenges together. The three membership
applications from the EU’s eastern neighbours in the wake of Russia’s war of aggression
against Ukraine in 2022, and the ensuing decisions by the European Council, are further
testimony of the geopolitical weight of EU enlargement. The enlargement policy framework
for the Western Balkans is historically based on the 2003 Thessaloniki agenda, laid down in
the stabilisation and association agreements and strengthened by the 2018 Western Balkans
strategy15
and the 2020 revised enlargement methodology16
. Enlargement is a strategic
imperative for the EU in the current challenging geopolitical context.
A credible, merit-based prospect of EU membership can be a key driver of transformation,
fostering reconciliation, stability, and socio-economic prosperity. It is a strategic choice of the
(potential) candidate. EU accession is dependent (and conditional) on the progress made on the
political, economic criteria and the alignment with the EU acquis established at the
Copenhagen European Council in 1993 while abiding by the fair share principle17
. The rule of
law, democracy and fundamental values are the cornerstones of the EU’s enlargement policy.
Past enlargements have helped strengthen the Single Market, opened trade and financial flows,
thus contributing to economic growth, environmental protection, and job creation in the EU
and the acceding countries.
The 2024 Communication on pre-enlargement reforms and policy reviews18
confirms that the
EU must deepen as it widens and calls for EU and future Member States being ready at the
time of accession. The EU needs to provide sufficient support to enable candidate countries
and potential candidates to adopt the relevant acquis, including building technical and
administrative capacity, notably taking into account that some of the chapters require large
investments especially under policy clusters 4 (Green agenda and connectivity) and 5
(Resources, agriculture and cohesion). The EU path of the Western Balkans and Türkiye has
been supported through the Instruments for Pre-Accession Assistance19
since 2007. In the
current MFF, much of IPA III is dedicated to the Economic and Investment Plan for the
14
https://eur-lex.europa.eu/eli/reg/2020/2093/oj/eng
15
EUR-Lex - 52018DC0065 - EN - EUR-Lex (europa.eu)
16
Revised enlargement methodology (europa.eu).
17
Pre-accession assistance is based on both a performance-based approach and the ‘fair share’ principle. According to the ‘fair
share’ principle, assistance must be targeted and adjusted to the specific situations of beneficiaries, to ensure an appropriate
level of support to all of them and avoid a disproportionately low level of assistance for some beneficiaries as compared to
others.
18
Communication on pre-enlargement reforms and policy reviews - European Commission (europa.eu).
19
(IPA) I, II and III
9
Western Balkans, which supports sustainable connectivity, human capital, competitiveness and
inclusive growth, and the twin green and digital transition. Continued support is furthermore
provided to security, migration management, fighting organised crime and corruption.
Since 2022, Ukraine, Moldova and Georgia have been granted candidate status and
Ukraine and Moldova have opened accession negotiations. The European Council also decided
in March 2024 to open accession negotiations with Bosnia and Herzegovina.
The accession paths of Moldova, Georgia and partially also Ukraine have continued to be
supported under NDICI-Global Europe. For Ukraine, faced with the limitations of the EU
budget and given the Union’s strong political commitment to support Ukraine for as long as
necessary, in February 2024, the EU adopted the Ukraine Facility20
. The Facility allows
Ukraine to benefit from unprecedented support with up to EUR 50 billion over 2024-2027 in
grants and loans, promoting the recovery, reconstruction, modernisation and growth of the
Ukrainian economy, embedded in Ukraine’s EU accession path. It is complemented by a
comprehensive financial assistance package of EUR 45 billion by the EU and G7 partners,
backed by the establishment of a Ukraine Loan Cooperation Mechanism. As part of it, an
exceptional Macro-Financial Assistance loan of up to EUR 18.1 billion was adopted by the co-
legislators in October 2024. The Ukraine Loan Cooperation Mechanism provides Ukraine with
non-repayable financial support, stemming from extraordinary profits from immobilised
Russian central bank assets, for the repayment of the Macro-Financial Assistance loan.
In 2023, the European Commission adopted ‘A new Growth Plan for the Western Balkans’21
.
Building on the Union’s full and unequivocal commitment to the Union membership
perspective of the Western Balkans, the Growth Plan aims at bringing some of the benefits
of membership to the region before accession, as well as to boost economic growth,
accelerate the socio-economic convergence and tap on reforms in fundamental areas, such as
connectivity, digitalisation, energy, public administration reform, the fight against organised
crime, anticorruption and visa policy alignment. The anchor is the integration of the region in
the EU’s Single Market, including the Digital Single Market. An integral part of the Growth
Plan is a new performance and reform-based Reform and Growth Facility for the Western
Balkans22
, complementing IPA III. It has EUR 6 billion in grants and loans over the 2024-2027
period.
In October 2024, the European Commission adopted a ‘Growth Plan for the Republic of
Moldova’23
worth EUR 1.8 billion and underpinned by a Reform and Growth Facility for the
period 2025-2027. The Growth Plan, which is the largest EU financial support package since
Moldova's independence, will accelerate socio-economic and fundamental reforms (Pillar 1),
enhance access to the EU Single Market (Pillar 2) and increase financial assistance through a
dedicated Reform and Growth Facility for Moldova (Pillar 3). Together, the Plan and Facility
will enable and incentivise reforms and the investments needed to accelerate the accession
process as well as sustainable growth and decarbonisation of Moldova’s economy.
20
The Ukraine Facility - European Commission (europa.eu)
21
New Growth Plan for the Western Balkans - European Commission (europa.eu)
22
pdf (europa.eu)
23
Commission Communication on the Moldova Growth Plan
10
Türkiye remains a key partner of the EU. However, accession negotiations are at a standstill,
as Türkiye has not reversed the negative trend of moving away from the EU, with serious
backsliding especially on the rule of law and on fundamental rights. The EU and Türkiye
continue their engagement in line with the European Council conclusions of June 2021 in a
phased, proportionate and reversible manner24
. Cooperation on migration continues in the
framework of the 2016 EU-Türkiye Statement.
Neighbourhood East and South: creating long term and mutually beneficial partnerships
The European Neighbourhood Policy governs the EU's relations with thirteen of its closest
neighbours. Creating long term and mutually beneficial partnerships based on common
values and dialogue, investing in a people-centred development and deploying a
comprehensive approach encompassing humanitarian, development, political and security
policies, all underline the EU’s strategic focus towards the neighbourhood.25
The European Neighbourhood Policy was reviewed in 201526
to add three joint priorities for
cooperation (economic development for stabilisation, security, migration and mobility) and put
differentiation at the centre, recognising different aspirations of partner countries through
tailor-made bilateral partnerships. At its core is the ambition to deepen engagement with civil
society and social partners. The European Neighbourhood Policy offers partner countries
greater access to the Single Market and to EU programmes.
Neighbourhood East
In the neighbourhood East, the Eastern Partnership was established in 2009 with the main
purpose to enhance the political association and economic integration of the six Eastern
partners27
. For the period beyond 2020, the new agenda for the Eastern Partnership28 is
centred around governance and investment and sets resilience as an overarching priority. In
December 2023, the EU moved Moldova, Ukraine and Georgia under the enlargement policy.29
Neighbourhood South
The neighbourhood South covers ten countries of the Mediterranean and Middle East region30
.
Relations with the region have been revitalised by the new Agenda for the Mediterranean
of 202131
, which focuses on five priority areas: (1) Human development, good governance and
the rule of law; (2) Resilience, prosperity and digital transition; (3) Peace and security; (4)
Migration and mobility; and (5) Green transition. The EU has also upgraded its relationship
with the Gulf countries through its ‘Strategic Partnership with the Gulf’, which covers areas
24
European Council conclusions on external relations, 24 June 2021 - Consilium (europa.eu)
25
e6cd4328-673c-4e7a-8683-f63ffb2cf648_en (europa.eu)
26
Joint Communication JOIN/2015/050 final of the European Commission and High Representative of 18 November 2015 on
the Review of the European Neighbourhood Policy
27
Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine
28
Joint Communication JOIN(2020) 7 final of the European Commission and High Representative of 18 March 2020 on the
Eastern Partnership policy beyond 2020: Reinforcing Resilience – an Eastern Partnership that delivers for all
29
Joint Communication JOIN(2020) 7 final of the European Commission and High Representative of 18 March 2020 on the
Eastern Partnership policy beyond 2020: Reinforcing Resilience – an Eastern Partnership that delivers for all
30
Algeria, Egypt, Israel, Jordan, Lebanon, Libya, Morocco, Palestine, Syria and Tunisia
31
Joint Communication JOIN(2021) 2 final of the European Commission and High representative of 9 February 2021 on a
Renewed partnership with the Southern Neighbourhood – a New Agenda for the Mediterranean
11
such as trade, digitalisation, energy, people to people exchanges and partnerships at
institutional level.
Building upon the 2021 Agenda, the upcoming Pact for the Mediterranean will aim at taking
advantage of the proximity between the EU and the region, in order to create a common space
that can be mutually beneficial to both shores of the Mediterranean. Focus will be on concrete
projects structured around a bilateral dimension, with Strategic and Comprehensive
Partnerships (based on the example of those already signed with Egypt, Jordan and Tunisia),
and regional initiatives, including strategic investments. The appointment of a Commissioner
with a dedicated portfolio for the Middle East, North Africa and the Gulf further underlines the
strategic importance of the region and reflects the interrelations among the three areas with a
key impact on the EU.
Over 2021-2027, NDICI-Global Europe supports the implementation of the European
Neighbourhood Policy. The allocation for the entire neighbourhood region is set at EUR 19.3
billion, reinforced with an additional EUR 3.6 billion for the Southern neighbourhood allocated
during the mid-term revision of the MFF. Both the renewed Eastern Partnership and the Agenda
for the Mediterranean are accompanied by their respective Economic and Investment Plans,
with the ambition to mobilise investments up to EUR 17 billion for the Eastern32
and EUR 30
billion for the Southern neighbourhood,33
bearing mutual benefits on sustainability,
competitiveness, energy transition and security. This is complemented by support to the macro-
economic stability of key partner countries in the region.
A paradigm shift in the EU’s international partnerships
Eradicating poverty is the primary objective of the EU’s development cooperation, as set out
in Article 208 of the Treaty on the Functioning of the European Union34
. At global level, the
EU’s compass is the universally endorsed UN Agenda 2030 and its 17 SDGs35
. Despite the
efforts, the SDG financing gap remains vast, and the current financial system is ill-equipped to
close it. Simultaneously, poly-crises from geopolitical tensions to conflicts, threats to the
climate, environment and biodiversity, economic coercion and increasing fragility call for both
swift responses and sustainable solutions.
Since 2021, the EU has revamped its model of international cooperation beyond its immediate
neighbourhood in line with new global realities. This paradigm shift derives from a
recognition that the EU should move away from donor-recipient dynamics and present
partnership offers that are bolder, sustainable and based on shared interests and values. Long-
term mutually beneficial partnerships with countries in Sub-Saharan Africa, Asia and the
Pacific, as well as in Latin America and the Caribbean, should underpin the new EU economic
foreign policy and efforts to strengthen a rules-based multilateral order.
32
Joint Staff Working Document of the European Commission and High representative of 2 July 2021 on Recovery, resilience
and reform: post 2020 Eastern Partnership priorities
33
Joint Staff Working Document of the European Commission and High representative of 9 February 2021 on Renewed
Partnership with the Southern Neighbourhood Economic and Investment Plan for the Southern Neighbours
34
OJ C 326, 26.10.2012, p. 47
35
Sustainable Development Goals sdgs.un.org
12
The Global Gateway strategy is at the core of the EU’s economic foreign policy agenda. It is
a key enabler for European competitiveness and has been designed as a positive offer to EU
partners, enabling the EU to deliver on the twin transition and human development objectives
while bringing mutual benefits to the EU and its partners alike and helping to close the SDG
financing gap. By mobilising investments worth EUR 300 billion in the EU’s partner countries
by 2027, the strategy aims to promote greater public and private investments in sustainable
connectivity, notably through transport, climate and energy, digital infrastructure, health,
education and research, which also leads to strengthening the Union’s geopolitical and geo-
economic presence. It encompasses not just hard infrastructure, but also investments in
resource efficiency and sustainable food systems, skills, access to sustainable financing,
regulatory support, voluntary technology transfer and knowledge sharing, while at the same
time supporting a conducive regulatory and policy environment and promoting EU and
international standards, values and principles.
Global Gateway is implemented in a Team Europe approach36
, which helps to pool funding,
expertise and to nurture strategic cooperation. The EU responded the COVID-19 pandemic by
developing the Team Europe approach, which brings together the EU, its Member States, their
diplomatic networks, implementing agencies and development finance institutions, export
credit agencies, the EIB, the EBRD, as well as the private sector.
Furthermore, the Commission and the High Representative adopted political strategies to set
out the framework for relations with partner countries and regions in Africa37
, Asia and the
Pacific38
and Latin America and the Caribbean39
. In November 2023, the EU and its Member
States, and the 79 Members of the African, Caribbean and Pacific States signed the successor
to the Cotonou Agreement: the Samoa Agreement40
.
For the period 2021-2027, under NDICI-Global Europe, the initial allocation for Sub-Saharan
Africa, Asia and the Pacific, and the Americas and the Caribbean totalled EUR 41.1 billion.
The budget for thematic programmes was set at EUR 6.4 billion, while EUR 3.2 billion were
allocated to rapid response actions worldwide and EUR 9.5 billion to a general reserve (the
‘emerging challenges and priorities cushion’).
36
Joint Communication JOIN(2024) 25 final to the European Parliament, the Council, the European Economic and Social
Committee, the Committee of the Regions, and the European Investment Bank – Building sustainable international
partnerships as a Team Europe
37
The Joint Communication “Towards a comprehensive strategy with Africa” and the joint statement “A Joint Vision for
2030”, following the 6th EU-African Union Summit in 2022, consolidated a renewed partnership for solidarity, peace and
sustainable economic development and prosperity between Europe and Africa. In this context, the Africa-Europe Investment
Package of EUR 150 billion has been designed to support these common ambitions.
38
The Council Conclusions on an EU Strategy for cooperation in the Indo-Pacific, the Joint Communication “A strategic
partnership with the Gulf” and the Joint Communication “The EU and Central Asia: New Opportunities for a Stronger
Partnership” reinforced the EU approach in Asia and the Pacific to strengthen resilience and economic cooperation, foster
prosperity and improve the work with partners in the region.
39
Political engagement between the EU and the Latin American and Caribbean countries has been reinforced through the Joint
Communication “New Agenda for Relations between the EU and Latin America and the Caribbean”, which was published in
June 2023 on the road to the 2023 EU-CELAC Summit. The Global Gateway Investment Agenda represents the operational
arm of this political commitment.
40
Partnership Agreement between the European Union and its Member States, of the one part, and the Members of the
Organisation of African, Caribbean and Pacific States, of the other part, OJ L, 2023/2862, 28.12.2023
13
EU humanitarian action: projecting EU solidarity and humanity
In a global context of rising needs, climate change, and geopolitical power shifts threatening
multilateralism and politicising humanitarian aid, EU humanitarian action is one of the most
tangible, quick and visible elements of EU solidarity and humanity, providing assistance on
the basis of needs and in line with humanitarian principles, in coordination with the UN System.
41
The EU is one of the world’s leading humanitarian donors with a budget of around EUR
15 billion for the period 2021-2027, providing assistance, relief and protection to people in
third countries who are victims of natural or human-induced disasters, as established in the
Treaty on the Functioning of the European Union.42
Humanitarian aid is a shared competence and EU Member States can act in parallel. The
Commission may take initiatives to enhance the efficiency and complementarity between
actions of the EU and Member States. The overall policy framework for humanitarian
assistance is outlined in the 2007 European Consensus on Humanitarian Aid,43
jointly
adopted by the Parliament, the Commission, the Council and EU Member States. It reaffirms
the EU’s commitment to the humanitarian principles – humanity, neutrality, impartiality and
independence – and to the respect of international humanitarian law. The Consensus confirms
the EU’s support for a stronger and coordinated international humanitarian system and stresses
the importance of strengthening disaster risk reduction, as well as effective linkages between
emergency relief, anticipatory action, and long-term development aid.
Moreover, the 2021 Communication on “The EU’s humanitarian action: new challenges, same
principles”,44
provides for a clear and comprehensive approach. Since its adoption, the
unfolding of the crises in Afghanistan, Ukraine, Sudan and Gaza have driven needs to
unprecedented levels and have further illustrated the magnitudes of the challenges faced by
the humanitarian aid sector.
2. PROBLEM DEFINITION
Introduction
Today, following years of instability in the EU’s neighbourhood and beyond, the geopolitical
stakes for the EU are far higher than when the 2021-2027 MFF was adopted. The EU operates
in a highly volatile and unpredictable environment, characterised by geopolitical rivalry45
,
geoeconomic competition, strategic dependencies, competitiveness challenges, the worsening
41
Joint Communication on the Climate-Security Nexus | EEAS
42
OJ C 326/47, 6.10.2012, Article 214
43
Joint Statement by the Council and the Representatives of the Governments of the Member States meeting within the
Council, the European Parliament and the European Commission, OJ C 25, 30.1.2008
44
Communication from the Commission to the European Parliament and the Council on the EU’s humanitarian action: new
challenges, same principles, COM(2021) 110 final, 10 March 2021
45
Veron, P., Perceptions of the EU’s international cooperation: navigating troubled waters, ECDPM, 2025,
https://ecdpm.org/work/perceptions-eus-international-cooperation-navigating-troubled-waters
14
triple planetary crisis of climate change, biodiversity loss and pollution, and increasing global
fragility. The trend towards greater polarisation, global friction, resource scarcity and
competition is likely to be a defining feature in the period to 2040. The shift from cooperation
to competition poses critical questions for the EU’s future role in the global stage.46
The growing challenges to the international rules-based order and the global economic
governance are defining elements of this friction47, challenging the premises of the EU’s
long-term foreign policy vision48. Multilateral institutions have become less effective and trust
in them is declining49
, while reciprocal and transactional foreign policy is gaining ground and
redirecting focus to bilateral relations and short-term gains. War on the EU’s doorstep and
rising centres of influence50
impacting the global value chains call for a higher degree of
European open strategic autonomy and preparedness. Slow economic growth since the start of
the century combined with deteriorating trade dynamics challenge the EU’s competitiveness51
.
Simultaneously, and whilst the SDG financing gap continues to widen, official development
assistance contributions by developed countries are shrinking. In March 2025, the US
announced it had terminated more than 80% of its external aid programmes under USAID
while the remaining ones were to be administered by the State Department. Budgetary
constraints drive several EU Member States and other likeminded partners to reduce ODA.
The EU’s economic security, open strategic autonomy, competitiveness, prosperity, resilience,
as well as its capacity to promote its interests, values and standards are inextricably linked to
these global developments. As emerging economies and established powers alike position
themselves as leaders in key sectors, the EU economy faces critical dependencies and
vulnerabilities, including in its supply chains and in the access to sources of energy and
strategic resources, such as critical raw materials. There is a heightened understanding among
the stakeholders, EU institutions and citizens about these risks. 66.2% of the respondents of
the Open Public Consultation (OPC) expected that EU external financing promotes EU
interests, including European competitiveness52
. In similar vein, and among its external action
priorities for the next MFF, the European Parliament calls on the Union to boost
competitiveness and the security of global supply chains53
. This challenge was also addressed
by the participants to the ‘European Citizens’ Panel on a new European Budget fit for our
ambition’, which recommended the EU budget to support and invest in areas such as
46
Choosing Europe’s future; global trends to 2040, https://espas.eu/files/espas_files/about/ESPAS-Global-Trends-to-2040-
Choosing-Europes-Future-EN.pdf
47
Hurrell. A., Geopolitics and Global Economic Governance, Oxford Review of Economic Policy, 2024, 2,
https://academic.oup.com/oxrep/article/40/2/220/7691461
48
Michalski A. and Parker C., The EU’s evolving leadership role in an age of geopolitics: Beyond normative and market
power in the Indo-Pacific, European Journal of International Security, 2024, 2, https://doi.org/10.1017/eis.2023.34
49
Muench S. et al., Risks on the Horizon, 2024, EU Policy
Lab,https://publications.jrc.ec.europa.eu/repository/handle/JRC137493
50
Vinjamuri, L. (editor), Competing Visions of International Order, 2025, Chatham House, 2025-03-27-competing-visions-
international-order-vinjamuri-et-al
51
Draghi, M., The Future of European Competitiveness, 2024, https://commission.europa.eu/topics/eu-
competitiveness/draghi-report_en
52
The breakdown of the 66.2%: 42.1% of the respondents expected promotion of the EU’s interests (including European
competitiveness) “to a large extent’ while 24.1% “somewhat” expected it.
53
European Parliament resolution of 7 May 2025 on a revamped long-term budget for the Union in a changing world,
https://www.europarl.europa.eu/doceo/document/TA-10-2025-0090_EN.html
15
democracy, internal security as well as independence from external actors, economic power,
technological development and cultural influence to strengthen EU diplomacy.
Furthermore, global fragility is on the rise. Compounded by the impacts of climate change,
demographic trends and increasing levels of poverty and inequalities within and between
countries are important drivers of social unrest, political instability and conflict. The
complexity of crises in fragile contexts puts to the test the EU’s capacity to swiftly implement
rapid and impactful responses, accompanied by coherent short to medium- and long-term
actions directed towards stability and, where possible, investments. The existing international
financing architecture is neither fit nor fair for fragile countries, leaving them vulnerable to
relapse and conflict or turning to other political allies. The importance of tackling fragility is
recognised by the EU stakeholders and institutions. 76.8% of the respondents of the OPC
expected EU external financing to contribute to the engagement in fragile contexts54
. Less than
50% of the respondents believed that EU external financing is sufficiently flexible to respond
in a timely manner to crises and secure stability at the EU’s borders and beyond55
. However,
at the same time the OPC results signal that flexibility should always complement
predictability. The Council has also recalled the urgent need to build resilience, particularly in
the conflict-affected and fragile contexts, with a focus on addressing immediate needs and
investing in prevention.56
In the coming years, and in strong correlation with fragility, the EU will likely face continuous
migratory pressures and challenges of forced displacement, fuelled by conflict,
demographic developments and weak economic development. The European Citizens’ Panel
acknowledged the importance to address the root causes of migration via development and
humanitarian aid focusing on Africa and conflict-affected countries.
In addition, and while the world has fewer democracies than autocracies for the first time in 20
years, the EU will face a range of risks in the areas of space, cybersecurity, artificial
intelligence, hybrid threats, disinformation, and particularly foreign information, manipulation
and interference by foreign powers, radicalisation and terrorism. Simultaneously, civic and
democratic spaces may shrink further, curbing the ability of civil society organisations to act
and limiting the involvement of young people in policymaking57
. These issues were identified
in the OPC, in particular by CSOs working on human rights and democracy. The European
Citizens’ Panel stressed that the Charter of Fundamental Rights of the EU is a compass in
enlargement, bilateral partnerships, migration and other matters where integration is key.
The above-mentioned dynamics are gradually affecting EU policies and challenge sectoral
approaches to policymaking.58
Against this backdrop, the link between EU external and
54
The breakdown of the 76.8%: 54.5% of the respondents expected engagement in the fragile contexts “to a large extent”
while 22.3% “somewhat” expected it.
55
Only 7,8% of the respondents “to a large extent” believe that the EU funding is sufficiently flexible to respond to crises and
secure stability at the EU’s borders and beyond.
56
Council conclusions of 26 May 2025, ahead of the 4th
International Conference on Financing for development
https://data.consilium.europa.eu/doc/document/ST-9394-2025-INIT/en/pdf
57
The respondents of the Open Public Consultation expected that the EU external funding contributes to a wide array of
objectives, inter alia human rights, democracy and rule of law, peace and security, green and digital transitions, migration and
asylum, and fight against disinformation.
58
Strategic foresight report 2023; https://commission.europa.eu/document/download/ca1c61b7-e413-4877-970b-
8ef619fc6b6c_en?filename=SFR-23-beautified-version_en_0.pdf
16
internal policies has become increasingly relevant but is currently not sufficiently catered for
– neither in the external nor in the internal financing instruments – and the interplay of external
and internal financing instruments is sub-optimal. In particular, the EU needs to rethink how
its external engagement can repower its prosperity to remain a credible player on global
challenges. This calls for a careful allocation of resources to support EU’s growth, which will
stem from a new combination of different components: an enlarged Single Market, a stable and
dynamic neighbourhood, a string of partnerships aiming at reducing strategic dependencies and
expanding economic opportunities across the globe. In this respect, the EU will face the
challenge of striking the right balance between acting with others when it can and reinforcing
its capability to act autonomously when it wishes or is obliged to do so. Strengthening alliances
may be just as crucial as building new ones.59
While current external financing instruments are effective in delivering on their expected
results, the changing geopolitical landscape and the era of poly-crises have exposed some
architectural weaknesses in their design. Sub-optimal policy coherence and flexibility in the
implementation of the EU’s external financing instruments hamper the Union’s capacity to
advance strategic interests and address fragility and crises situations. This observation was
supported in the responses of the OPC. Companies suggested the Union to ensure coherence
and long-term vision as well as flexibility and speed in its (Team Europe) projects.
Development finance institutions called for a greater flexibility, allowing for quick responses
especially in situations of fragility. At the same time, it was essential for the respondents of the
OPC that Europe remains a credible partner, reinforcing its position as a global force for
stability, sustainability and shared prosperity.
Following the problem definition, three problem drivers have been identified, as explained
below. These problem drivers, driving sub-optimal coherence and flexibility, have been
identified at the level of the architecture of the external financing instruments, to advise the
policy makers on certain weaknesses and gaps in the instruments. The identification of problem
drivers is supported by stakeholder views (including OPC) and/or the Commission’s
operational practice over the past years.
1) IMPLEMENTATION LEVEL
Insufficient adaptative capacity to a fast-changing world because the interplay between
programmable and non-programmable actions is not always fit for purpose. Programmable
actions refer to action that is typically programmed multiannually, to advance policy objectives
under the pre-accession, neighbourhood and international partnerships policies. Non-
programmable actions are more reactive in nature, though very often planned in advance. The
combination of these two types of tools is important to foster a coordinated and impactful EU
response to local contexts and developments.
2) INSTRUMENT LEVEL:
Partner country, regional and global contexts evolve rapidly while the split between IPA III,
NDICI-Global Europe and humanitarian aid is not conducive to swift adaptation. Different
59
Choosing Europe’s future; global trends to 2040, https://espas.eu/files/espas_files/about/ESPAS-Global-Trends-to-2040-
Choosing-Europes-Future-EN.pdf
17
strands of external action financing are currently fragmented into different financing
instruments, with the exception of the Neighbourhood policy and International Partnerships
policy financing which are part of NDICI-Global Europe. The current framework creates
rigidities between instruments, including on shifting of funds between different instruments. It
also gives rise to high coordination efforts which can hamper synergic and coherent approaches
at the regional level, for instance in the contexts of fragility (i.e. humanitarian-development-
peace nexus), and interplay between the Enlargement and Neighbourhood policies. This
fragmentation has limited the EU’s responsiveness to unforeseen developments in the
enlargement region with new membership applications, leading to the creation of ad hoc
instruments to cater for new needs. Several contributions to the OPC consider the previous
merge of external financing instruments as a positive development. They consider that this
merge significantly streamlined the collaboration between the EU and its implementing
partners.
3) TOOLBOX LEVEL:
There is only a limited interplay between current internal and external financing instruments,
which stems from inadequate policy coherence between internal and external policies. This
inadequacy does not serve the Union’s new objective to build mutually beneficial packages
with partner countries.
Furthermore, the existing toolbox (implementation modalities) is not sufficient to advance the
EU’s strategic interests. While private sector involvement is needed to boost sustainable
development in partner countries and to support the EU priorities such as competitiveness,
traditional development finance instruments are not sufficiently appealing to private
investors60
. This means that European private sector’s potential is underused in the external
financing instruments. Two-thirds of the respondents to the OPC considered important to
encourage private sector investments to increase the total funding for development to achieve
the SDGs. As shown by the OPC results, companies in particular supported the idea of creating
a more competitive and more compelling Team Europe offer in terms of scale, flexibility and
speed. While the private sector has called for new tools in the context of the Global Gateway
Business Advisory Group61 62
, the OPC results also illustrated that the European private sector
expects the toolbox to be enlarged with new innovative mechanisms. The Council has also
reiterated the importance of mobilising private finance towards sustainable development,
including to leverage domestic, bilateral, triangular and multilateral public resources to achieve
scale and impact. It has called for effective use of innovative financial instruments with
financial additionality.63
Finally, under the current MFF, increased needs in fast-changing contexts have demonstrated
the insufficient capacity to leverage EU funds and optimise the impact of external funding.
60
Bilal S. and Klasen A., Delivering on Global Gateway: Strengthening Development and Export Finance Complementarity
and Coordination, 2025, ECDPM,https://ecdpm.org/work/scaling-global-gateway-boosting-coordination-development-
export-finance
61
Digital SME Alliance et al., Discussion Paper: SMEs as part of the Global Gateway Strategy, 2024,
https://www.digitalsme.eu/global-gateway-smes-voice-their-requests-to-the-commission/
62
EBCAM, EMCAM recommendations to policy makers: Engaging the European Private Sector in the Global Gateway
Strategy for Africa, 2025, https://www.ebcam.eu/images/PDF/Position_paper_EBCAM_2025_02.04.pdf
63 https://data.consilium.europa.eu/doc/document/ST-9394-2025-INIT/en/pdf
18
The next sub-chapters look into policy-specific challenges more in detail.
The enlargement’s key challenge: accelerating socio-economic convergence
The next enlargement is perceived as a ‘geostrategic investment in peace, security,
stability and prosperity’ and a direct response to Russia’s war of aggression against
Ukraine64,
, as well as an ‘economic and moral imperative’65
. The EU promotes the (potential)
candidate countries’ gradual integration into the Single Market prior to accession, based on
their alignment with EU rules and standards, as a possibility to unlock some of the accession
benefits and obligations earlier on. This contributes to the competitiveness of the EU’s
economy and make it more fit to tackle global challenges, including the green and digital
transitions. Enlarging the EU could, among others, further facilitate energy infrastructure
development and bolster the EU’s energy security, affordability, and decarbonisation.
According to the most recent enlargement package66
, the Western Balkans and Türkiye are
moderately prepared to accede to the Union. This has also been confirmed by external
evaluations67
, ECA audits68
and the result frameworks for the performance of the EU budget.
Ukraine, Moldova and Georgia have a similar preparedness. This being said, the limited
administrative capacity to align with the acquis and the cost of implementation, while keeping
pace with EU regulatory developments, requires financial support and in-depth strengthening
to advance complex accession negotiations and deliver on structural reforms. The scale of the
investment needed to implement the acquis will be significant for many sectors69.
Mobilising
the necessary financing will be key as much as developing the capacity to identify and make
these investments.
The slow progress of socio-economic convergence70
, which is in part induced by slow
progress on reforms, lack of political will, lack of data and administrative capacity constraints,
limits the benefits of a deepened integration and market opening. Tangible and irreversible
progress, starting with the fundamentals (including democracy, rule of law, fight against
corruption and organised crime) of the EU accession process is needed. Keeping pace with EU
regulatory developments will remain challenging. For instance, achievement of
decarbonisation will be ambitious given the diversity of national energy mixes. Another
example is customs, where candidate countries must be equipped upfront to control and
supervise the (new) EU external borders according to EU standards and rules, facilitating trade
64
Communication from the Commission to the European Parliament, the Council, the European Economic and Social
Committee and the Committee of the Regions. 2023 Communication on EU Enlargement Policy, Brussels, 8.11.2023 COM
(2023) 690 final, 8.11.2023, available here
65
Mission Letter to Marta Kos, Commissioner-designate for Enlargement
66
Strategy and Reports - European Commission
67
Evaluation of the European Union’s External Financing Instruments (2014-2020 and 2021-2027)
68
Special Report 01/2022: EU support to the rule of law in the Western Balkans (europa.eu)
69
For example, based on the 2004 enlargement, the investments needed for the current candidate countries to implement the
environmental acquis will be of the magnitude of at least EUR 100 billion.
70
The Western Balkans’ level of economic convergence in terms of GDP per capita in purchas g power standards is at between
30% and 50% of the EU average and is not progressing fast enough impacting on the prosperity, stability and security of the
region.
19
and supporting competitiveness, while securing the flow of goods. Similarly, the EU needs to
provide sufficient support to enable candidate countries to adopt the relevant acquis, including
building technical and administrative capacity.
Ukraine faces, in addition, the challenge of Russia’s war of aggression resulting in
destructions of key infrastructures, critical assets and the contamination of
approximately 25% of its territory with mines and explosive. This will entail massive
reconstruction costs. Moreover, as a result of EU commitments, significant resources would be
required to integrate Ukrainian and EU Defence industrial and technological bases.
Specific challenges affecting the EU’s neighbouring countries71
Economic performance in the neighbourhood is held back due to weaknesses in the business
environment and constraints to human capital, especially related to demographic
challenges, low level of digitalisation, the low-quality of education and training systems and
an ever-increasing brain-drain. Lack of decent and safe jobs and insufficient investment in
active inclusion and non-discrimination leave many potential contributors outside the labour
market. The private sector, on the other hand, struggles to find talents with the right skills.
Investment is disincentivised by limited fiscal space, inadequate standards of rule of law as
well as persistent weaknesses in administrative capacity and governance. The economies are
rattled by high inflation and public debt levels that call for economic reforms. Connectivity
gaps, a heavy predominance of the informal sector, and an undiversified production base that
is largely focused on sectors with low value added are also persisting problems.
The countries face challenges in their public health and social protection systems and
significant gender inequalities. Many partners also face challenges with democratic
governance, fundamental rights and justice reform, high corruption and weak public
administrations with lack of reliable statistics. There is often a lack of political will to
address these challenging reforms because they touch upon vested interests and require long-
term commitment beyond the mandate of the governments.
Recent and prolonged conflicts such as conflicts in the Middle East, the conflict between
Armenia and Azerbaijan, and Russia’s war of aggression against Ukraine, impact the whole
area. They increase political instability and the migratory pressure to the EU. These conflicts
also create new hybrid threats, increasing inflation, exacerbating poverty, as well as food and
energy insecurity in the EU. They disrupt EU value chains and the supply of commodities and
critical raw materials. The EU is also confronted with the growing influence of foreign actors
(e.g. Russia, China), including in the provision of critical infrastructures such as digital and
telecommunication networks, and a “battle of narratives”, including that of alleged double
standards by the EU.
These challenges will limit progress in other key priority areas - the investment agenda of green
and digital transition, transport, energy, and private sector development, but also in the
reconstruction of Ukraine and Gaza. The limited socio-economic convergence with the EU in
71
Maghreb and Mashreq countries, and Israel (neighbourhood South), Armenia, Azerbaijan, Belarus, Georgia, Moldova,
Ukraine (neighbourhood East), Western Balkans and Türkiye
20
the case of the Western Balkans, Türkiye, Ukraine, Moldova and Georgia pose a particular
challenge to their enlargement perspective.
Focus on Middle East, North Africa and the Gulf
The Middle East, North Africa and Gulf region includes diversified realities, with both
fragile/conflict affected countries and partners that are key to maintain its stability.
There is a large unexploited potential to develop connections in sectors such as trade, digital,
energy, connectivity and culture. Harnessing this potential will require investing smartly in
political and economic exchanges with a diversified set of stakeholders. The growing share of
young people will also need to be factored in as it is a source of opportunities and challenges.
At the same time, the region is grappling with a complex set of challenges that have profound
implications both locally and for the EU. The evolution of the conflicts in the Middle East in
the recent years has compounded the concerns related to the significant migration and refugee
crisis. In this respect, the growing instability has become a focal point of geopolitical concern.
The level of destruction created by the conflicts (in Gaza, Lebanon or Syria) has also raised
pressing needs for large-scale reconstruction. Countries in the region face the daunting task
of rebuilding vital infrastructure, housing, and essential services against a backdrop of
constrained financial resources. The limited financing options available are further exacerbated
by the economic ramifications of prolonged instability, leaving governments and local
communities without the means to effectively address these urgent needs.
Addressing all these challenges will be key to achieve shared stability and security, prosperity
and mutual opportunities so that the EU’s investment in the region can provide clear political
dividends.
Finally, the EU’s engagement with Gulf countries is increasingly important, particularly
given their strategic importance in addressing regional and global challenges. Arab donors are
important geopolitical actors, assertive donors, and active agenda-setters in multilateral and
international fora.
International partnerships: addressing the SDG financing gap through strategic
investment in a context of increased global fragility
With only 17% of the SDGs targets72 on track, the world is lagging behind. The OECD
estimates that the annual investment gap to reach them in developing countries stands at about
USD 4 trillion annually73
. This gap increased in the wake of the COVID-19 pandemic and was
further accelerated by Russia’s war of aggression against Ukraine. The decision of the US
administration and other major donors to significantly scale down development assistance and
humanitarian aid will likewise have a negative impact.
72
The-Sustainable-Development-Goals-Report-2024.pdf
73
OECD (2025), Global Outlook on Financing for Sustainable Development 2025: Towards a More Resilient and Inclusive
Architecture, OECD Publishing, Paris, https://doi.org/10.1787/753d5368-en
21
Thus, it is in the EU’s and its citizens’ direct interest to engage with developing countries
around the world. The EU’s partner countries in Sub-Saharan Africa, Asia and the Pacific
and Latin America and the Caribbean are at the crossroads of all the defining “mega
trends” of our time, affecting the security and prosperity of the EU. The Union’s failure to
engage with partners both bilaterally and in multilateral fora would mean slower progress on
all three pillars of sustainable development (economic, social and environmental), with
repercussions to global stability:
• Economic and social growth are hampered by structural constraints: weaknesses in
the business environment, lack of access and low quality of education, large
infrastructure gaps, weak regulatory and institutional environments, and an
undiversified production base that is largely focused on extractive sectors with low
value added. This has direct consequences on poverty and inequalities.
• The triple planetary crisis of climate change, biodiversity loss and pollution are
global problems that do not know borders and impact all ecosystems on land and at sea
as well as food security. They call for global action to transition to low-carbon and
resource efficient economies and adapt to climate change impact. Both the EU and its
partner countries committed to addressing climate change and biodiversity under the
Paris Agreement and the Kunming-Montreal Biodiversity Framework.
• Digitalisation and the fast pace of technological innovation, including the advent of
artificial intelligence, prove to be challenging. Partner countries are becoming
increasingly dependent on high-risk communication networks and digital
infrastructure. Next to this, there remains a significant digital divide, increasing cyber
threats, and inadequate digital and cyber regulation.
• Strengthening of health systems and their resilience as well as preparedness for
preventing and combating global health threats remain insufficiently tackled around the
world.
• The access to quality education and training in many partner countries remain too
low, also when it comes to basic skills, resulting in a mismatch between education and
the labour market, further undermining economic growth.
• Many countries around the world continue to face significant gender disparities as
well as gender-based violence. Civic and democratic spaces have shrunk, limiting
even further the involvement of civil society organisations and young people in policy
making.
The complexity of crises in fragile contexts puts to the test the EU’s capacity to react and
implement impactful responses, building on coherent short to medium- and longer-term actions
directed towards stability and, where possible, investments. While the Union has confirmed its
position as the world’s leading donor, international public funding can only offer a partial
contribution to cover the financing gap.
Therefore, addressing the issue of financing for development, including through leveraging
broader public and private funds and facilitating debt sustainability, is essential. Progress
has been made through the Team Europe approach to bring in the private sector and other new
22
actors, such as export credit agencies, to deliver on the EU policy objectives. Tools need to be
further developed to attract private investors to advance sustainable development globally.
Greater cooperation with emerging markets and developing economies will be needed to both
tackle inequalities and support EU interests worldwide.
Humanitarian aid: crisis of funding, morale and legitimacy
The global humanitarian system is grappling with an unprecedented increase in the scale,
frequency and complexity of crises, combined with significant aid cuts from major donors and
severe violations of International Humanitarian Law. The humanitarian community confronts
a massive crisis of funding, morale, and legitimacy.
Humanitarian needs are at an all-time high and continue rising. By the end of 2024, 325.3
million people in the world need humanitarian assistance and protection, and global funding
requirements for the humanitarian response have skyrocketed to nearly EUR 45 billion, more
than double compared to 2019.
On the one hand, the rise in humanitarian needs is driven by multiple and often
overlapping factors, including the multiplication and escalation of conflicts, insecurity, the
aggravating impact of climate change acting also as a threat multiplier, which results in more
impactful natural disasters and exacerbates displacements, as well as disease outbreaks and
socioeconomic inequality. Food insecurity and malnutrition, limited access to water and
sanitation and to other basic services are only some of the major humanitarian challenges today.
On the other hand, the costs of humanitarian operations are on the rise, making it even more
difficult for donors and aid organisations to fulfil the demands for humanitarian assistance.
Systematic violations of international humanitarian law, including the restriction of
humanitarian access, security challenges and targeting of aid workers, hinder the protection of
civilians, undermine long-term prospects for development and continue to drive the increase
of humanitarian needs and cost of humanitarian assistance.
In addition, the decision of major donors to cut humanitarian funding create severe gaps in
global aid efforts, as it forces humanitarian organisations to scale-back or delay emergency
operations, thus leaving millions of people without critical support.
Therefore, there is an urgent need to reform to humanitarian system and make it more
efficient and cost-effective, accountable, resilient and in line with humanitarian principles of
humanity neutrality, impartiality and independence, including by promoting joint work on
supply chains, locally led responses, anticipatory action, disaster risk management, cash
assistance as well as predictable and flexible funding to respond quickly and efficiently to
emergencies.
In response to mounting pressures on the global humanitarian system, the UN Under-Secretary-
General and Emergency Relief Coordinator (USG/ERC) launched on 10 March 2025 the
‘Humanitarian Reset’ – an initiative aimed at overhauling the global humanitarian system.
The Humanitarian Reset is closely linked to the UN80 initiative, a comprehensive reform
process launched by the UN Secretary-General António Guterres, to review the UN working
23
methods, mandate, and eventual programme realignment, in conjunction with the UN’s 80th
anniversary.
Leveraging EU engagement with High-Income Countries
The full potential of engagement with High-Income Countries has not been entirely exploited,
notably in view of promoting and defending EU interests either bilaterally or via
multilateral alliances as soon as opportunities arise. Despite upstream investment, the EU has
not timely capitalised on its collective strength in multilateral fora to lead on key areas of
strategic interest (e.g. UN Tech Envoy in 2022), leaving the field to other actors.
3. NECESSITY AND ADDED VALUE OF EU’S ACTION - WHY SHOULD THE EU ACT?
EU’s external action financing seeks to partner with third countries, as well as promote
multilateral solutions to global challenges. It enables the EU to defend its interests, to promote
its values and standards, to support the objectives of its internal policies, ensure its security and
protect its citizens. EU’s external funding should focus more on strengthening the Union’s
competitiveness and reducing dependencies, notably through securing critical supply chains.
Moreover, it is in the EU’s own interest to preserve its role of a trusted global player.
The mid-term evaluation of EU's External Financing Instruments for the 2021 - 2027
Multiannual Financial Framework74
(hereinafter ‘mid-term evaluation’) confirmed the added
value that the External Financing Instruments bring to EU’s external relations, as they provide
a more integrated and sizable offer to partner countries, improving their capacity to address
shared priorities with the EU and contributing to sustainable development. Additionally,
mainstreaming climate, biodiversity and gender in EU external action contributes to achieving
the SDGs.
As a party to most multilateral processes, the EU can engage with multilateral and regional
partners in key policy areas. Compared to its Member States acting separately, the EU,
together with Member States, can achieve greater impact by coordinating common positions
and speaking with a stronger voice. As a world’s leading proponent and defender of multilateral
and rule-based global governance system, the EU has credibility as an honest broker and
defender of core international human right instruments. This leverage in multilateral and
regional fora also enables the Union to project globally its policies and values, as well as
influence the shaping of global norms and regulatory standards. The EU’s financial
commitment is an integral part of the overall engagement in several multilateral agreements
(e.g. climate and biodiversity).
Through the increased use of budgetary guarantees and blending operations, the EU
incentivises and pools together public and private investments, including to the benefit of
countries and sectors having difficult access to financial markets. Through blending and
guarantees, between 2021 and 2023, the EU mobilised public and private investments worth
74
Evaluation of the European Union's External Financing Instruments for the 2014 - 2020 and 2021 - 2027 Multiannual
Financial Frameworks; Register of Commission Documents - COM(2024)208 (europa.eu)
24
EUR 50 billion to accelerate progress towards the SDGs. EU non-action would widen the SDGs
financing investment gap and further deteriorate the situation of fragile countries while
weakening the EU as a geopolitical and geoeconomic actor and as global player in multilateral
fora.
Finally, the EU triggers collaboration among development financial institutions. Macro-
financial assistance loans provide much needed financing for countries experiencing balance
of payments crises, with favourable conditions.
The EU added value is explained in further detail in annex 6.
4. OBJECTIVES: WHAT IS TO BE ACHIEVED?
4.1. General objective: more strategic and responsive external financing
instruments
The objectives of EU external action are multifaceted and lie at the crossroads of Treaties-
based objectives, international commitments and political priorities that guide the EU
engagement with partner countries75
, candidate and potential candidate countries.
Importantly, the mid-term evaluation on the EU’s external financing instruments confirms
that the current instruments are largely fit for purpose. The evaluation corroborates that
NDICI-Global Europe is on track to deliver against the objectives it was expected to fulfil at
the time of its adoption. Moreover, the objectives of NDICI-Global Europe continue to be
relevant, and the instrument effectively serves the roll-out the Global Gateway strategy. In a
similar vein, the mid-term evaluation shows that IPA III has demonstrated its general
effectiveness as a pre-accession instrument and is likewise on track to meet its objectives. The
instrument is aligned with the enlargement methodology and mirrors EU policy developments,
such as the focus on green, digital and economic priorities.
Nonetheless, the changing geopolitical landscape and poly-crises in recent years have exposed
some architectural weaknesses in the design of the external financing instruments. As
explained in chapter 2 on problem definition, sub-optimal policy coherence/toolbox and
flexibility of the EU’s external financing instruments hamper the Union’s capacity to advance
strategic interests and address fragility and crisis situations.
The problem definition guides the general objective of the impact assessment: the EU should
design external financing instruments that effectively advance the EU’s strategic interests
while being responsive to fragility and crisis situations. As mentioned in Chapter 1, the
Communication on ‘the road to the next multiannual financial framework’76
strives for external
action financing that is better aligned with the EU’s strategic interests. Furthermore, the mid-
term evaluation confirms that, while current external financing instruments have improved in
75
Political priorities are set in the political guidelines for the Commission 2024-2029 as well as the Strategic Agenda 2024-
2029 adopted by the European Council in June 2024.
76
https://commission.europa.eu/document/download/6d47acb4-9206-4d0f-8f9b-
3b10cad7b1ed_en?filename=Communication%20on%20the%20road%20to%20the%20next%20MFF_en.pdf
25
terms of coherence and flexibility of EU external action, the context of multiple and protracted
crises has overstretched this flexibility.
To pursue its economic foreign policy agenda and to address fragility and crisis situations in
an increasingly uncertain geopolitical environment, the EU should better balance flexibility
and predictability in the design of its external financing instruments. The next chapter outlines
the specific objectives of the impact assessment, which contribute to the general objective. The
latter indicates the long-term goal while the specific objectives indicate the ways to achieve
this goal.
The specific objectives reflect the fact that the next external financing instrument should be
enabling in nature. It needs to be able to serve various external action objectives and the EU’s
strategic interests in more than 100 countries well into the next decade, in a world where the
pace of change is unprecedented compared to the previous MFFs. The specific objectives have
therefore been drafted with this reality in mind while responding to the problem drivers
(chapter 2).
Moreover, considering the ringfenced problem definition and general objective, it also needs
to be stressed that this impact assessment does not suggest a complete overhaul of policy
objectives of the next external financing instruments. The focus is on ensuring the right
architecture at the levels of implementation, instrument and toolbox.
The specific objectives guide the criteria to assess the effectiveness, efficiency and coherence
of the policy options in chapters 6 to 7.
4.2. Specific objectives
Three broad specific objectives (SO), each with their sub-set of objectives, illustrate the general
objective of the impact assessment described in 4.1. The below intervention logic explains in
a nutshell the relationship between the problem drivers, general objective and specific
objectives, which is then followed by more detailed descriptions.
26
Intervention logic
27
4.2.1. Provide adaptability and stability by striking the right balance between
programmable and non-programmable actions
The first specific objective is to provide adaptability and stability by striking the right balance
between programmable and non-programmable actions in external financing instruments
(SO 1).
Programming is a process that sets the framework for a partnership with a country or region,
through the identification of priority areas for cooperation and, where relevant, the allocation
of financial resources. By nature, external action encompasses both structural and crisis
policies and tools. Structural policies, such as international partnerships, pre-accession and
neighbourhood, are implemented through programmable actions. Crisis-responsive policies
and tools (humanitarian aid, macro-financial assistance, as well as rapid response notably
linked to peace, security and resilience) translate in non-programmable actions. A good
interplay between programmable and non-programmable actions is needed to provide capacity
to adjust to new priorities, emerging needs and crisis situations (SO 1.1), while at the same
time ensuring predictability to establish mutually beneficial medium- to long-term
partnerships with partner countries for strategic interests supporting the EU’s growth and
competitiveness (SO 1.2).
In fragile and politically complex countries, the EU should have adequate flexibility and
capacity to adapt and respond rapidly and effectively to situations of crisis, instability and
conflict and support affected populations. An indicative amount of funding allocated to non-
programmable actions per region should cater for this need. Typically, such actions are carried
out under humanitarian aid, rapid response actions and macro financial assistance. Longer term
mutually beneficial partnerships and cooperation between EU and a partner country require
predictability and therefore programmable actions as a basis.
These partnerships require multiannual planning with shared priorities and, where relevant,
indicative financial allocations, fostered in a dialogue with a partner country/region, to deliver
on the EU’s strategic interests. In particular, the development of investments under Global
Gateway as well as engagement on socio-economic, migration and governance/security
interests, are only possible with a medium-term funding, providing a sufficient level of
predictability for both the EU and the partner country. Regional programming offers a high
degree of flexibility, allowing to build mutually beneficial packages when opportunities arise
in partner countries.
Lastly, both programmable and non-programmable actions could be reinforced, when needed,
by a reserve available to all components of the instrument to react and adjust to emerging
challenges and priorities.
4.2.2. Increase responsiveness by simplifying the architecture of the instruments
The second specific objective is to increase responsiveness via an integrated approach by
further simplifying the architecture of current instruments (SO 2). As noted above, the
Communication on the road to the next MFF stressed the need for a more focused and simpler
EU budget. Therefore, this impact assessment suggests merging the current external financing
instruments, NDICI-Global Europe, IPA III, various Facilities (Ukraine, Western Balkans,
Moldova) and humanitarian aid funding into one instrument.
28
This approach would integrate under one instrument indicative allocations for regions – i)
Enlargement and Neighbourhood East; ii) Middle East, North Africa and the Gulf; iii) Sub-
Saharan Africa; iv) Asia and the Pacific and v) Americas and the Caribbean – and for a global
envelope (SO 2.1). This would remove the financial and operational barriers that may exist
between the current standalone instruments, as described in chapter 2.
A simplified broader instrument enhancing geographisation would strengthen the support at
regional and country level to the extent possible, mobilising all the available policy tools. In
turn, a global envelope would serve to support truly global initiatives, addressing global
challenges and threats.
A merged instrument could strengthen the humanitarian-development-peace policy nexus77
and increase the resilience of partner countries (SO 2.2). The recurrent, protracted and complex
nature of many crises calls for both swift reactions and capacity to develop longer-term
interventions that address humanitarian needs as well as development and peacebuilding
challenges in a coherent way. Better synergy would ensure that humanitarian funding can focus
on acute needs and partnerships funding can focus on long-term resilience, promoting peaceful
and robust communities. The nexus approach is closely associated with the need for increased
flexibility: when partner countries go through unexpected turmoil or natural disasters, more
structural development cooperation should be able to be substituted with crisis tools, such as
humanitarian aid, among others. On the other hand, there are situations where longer term
investments such as Global Gateway interventions can help stabilise fragile contexts.
An integrated instrument could optimise the interplay between enlargement and
neighbourhood policies and allow to better respond to policy changes in partner countries (SO
2.3). EU assistance could be recalibrated in cases where countries are backsliding on the EU
accession process, through enabling their transition between pre-accession assistance and other
types of financing. Integrating support to accession candidates and potential candidates into a
simplified external action instrument would also avoid the creation of ad hoc instruments in
response to emerging needs and priorities in the neighbourhood.
The budgetary architecture should ensure Ukraine’s needs are covered while minimising
the impact on the overall effectiveness of external financing. Ukraine will need the support
of the EU and its allies to continue withstanding Russia’s war of aggression and weather its
economic fallout. Ukraine’s economy has continued to show resilience, but risks remain
exceptionally high given the uncertainty of the intensity and duration of the war, including with
respect to the continued damage to energy infrastructure. The architecture of external financing
should combine strong and predictable support to Ukraine’s accession path and reconstruction
efforts with the advancement of the EU’s broader external policy objectives (SO 2.4).
77
Following the outcomes of the 2016 World Humanitarian Summit, the Humanitarian-Development-Peace nexus is intended
to ensure strong cooperation, collaboration and coordination between humanitarian, development and peacebuilding efforts at
the national level to ensure collective outcomes on the basis of joined-up, coherent, complementary and risk-informed analysis,
planning and action https://www.undp.org/crisis/humanitarian-development-and-peace-nexus
29
4.2.3. Advance policy coherence and EU’s strategic interests by creating and updating
tools
NDICI-Global Europe already enables the EU to advance its strategic interests and values.
However, there is a need to further advance EU’s strategic interests and policy coherence
through tools that are fit for purpose (SO 3).
To this end, an enhanced coherence between external and internal policies is crucial (SO
3.1), starting with better aligned priorities. For this, better legal consistency, coherence,
synergies and complementarity should be ensured in both the external and internal financing
instruments, notably through equivalent provisions. Articulation with the European
Competitiveness Fund will be crucial to take various work streams (e.g. critical raw materials
and related value chains78
, economic security and the Clean Industrial Deal) to the next level.
The next external financing instrument should support the Union’s open strategic autonomy by
facilitating the diversification of value and supply chains, ultimately improving local value
addition in partner countries and strengthening the market position of EU companies both
within the Single Market and globally, in coherence with the Competitiveness Fund and
synergies that both programmes create.
To effectively strengthen the interconnections between internal and external policies, the
external financing instrument should allow to build customised, mutually beneficial
packages with partner countries in all regions (SO 3.2). The interplay between different
policy objectives (e.g. trade, climate, energy, migration) is essential to build these packages,
such as Comprehensive Partnerships and Clean Trade and Investment Partnerships. This work
stream should be strengthened by fostering private sector’s access to public and private
funding (SO 3.3) through enhanced toolbox79. Existing tools include grants and more
recently also guarantees and blending. As elaborated in the chapter on the problem definition
and problem drivers, the private sector needs to play an enhanced role to contribute to EU
external action objectives. In its recent conclusions the Council also stressed that sustainable
development goes hand in hand with an enabling business environment that incentivises private
investment.80
While grants, guarantees and blending should be continued, the Union should
further integrate the private sector in the external financing instrument by allowing new tools
such as guarantees to export credit agencies as well as the option to provide direct support to
companies. Finally, safeguarding the Union’s strategic interests in the external action would
benefit from entrusting the indirect management of the EU funds, whenever possible, to
European organisations.
Strengthening performance-based financing would help further align EU policy objectives
and spending (SO 3.4). Following fifteen years of experience in budget support worldwide
and the introduction of the new facilities in the enlargement region, support has already moved
towards delivery-based models making disbursement conditional on achieved results. For
candidate countries and potential candidates, maintaining this approach would allow to
78
Communication on ‘a secure and sustainable supply of critical raw materials in support of the twin transition’ https://eur-
lex.europa.eu/legal-content/EN/TXT/?uri=celex:52023DC0165
79
Companies who responded to the OPC call for new, innovative mechanisms to be included in the toolbox,
including more integrated European offer with better risk-sharing capabilities.
80
https://data.consilium.europa.eu/doc/document/ST-9394-2025-INIT/en/pdf
30
continue incentivising key socio-economic reforms and accelerating economic convergence
with the EU in view of accession. Policy-based loans should be introduced where relevant, and
especially in the candidate countries, which strive for EU accession through reforms.
5. WHAT ARE THE AVAILABLE POLICY OPTIONS?
5.1. What is the baseline from which options are assessed?
The baseline scenario to assess the policy options for the next financing period is the status
quo, i.e. the 2021-2027 external financing instruments as described in the previous sections.
5.1.1. NDICI-Global Europe
The mid-term evaluation of external financing instruments concluded that NDICI-Global
Europe has overall shown to be fit for purpose. It confirmed that its objectives, its geographic
and investment-oriented approach as well as its flexibility features (including financial
flexibility and the emerging challenges and priorities cushion) were relevant to effectively
implement EU external action priorities, including the Global Gateway strategy and the
Economic and Investment Plans for the Eastern Partnership and Southern neighbourhood.
NDICI-Global Europe superseded several distinct external financing instruments of the 2014-
2020 MFF, thus achieving a major simplification of external funding and bringing about
effectiveness and efficiency gains. Nevertheless, the mid-term evaluation noted that NDICI-
Global Europe could still better contribute to an integrated approach balancing EU
interests, partnerships and values, further reconciling the EU’s internal/thematic policies and
external action objectives. In particular, the evidence gathered for the independent study that
backed the mid-term evaluation and the related findings pointed to certain gaps in the response
capacity, hence the need for further adaptations.81
As regards the investment component in NDICI-Global Europe aimed at leveraging both
public and private investments, the European Fund for Sustainable Development Plus
(EFSD+), the mid-term evaluation noted that it has gradually demonstrated its catalytic effect
to leverage additional finance for Global Gateway. Going forward, a stringent prioritisation
was considered essential to focus on areas with the greatest transformative impact, catering for
EU strategic interests and shared priorities with partners.
The mid-term evaluation also stated that rigidities in the instrument, including the number of
targets, constrain its flexibility. The evaluation emphasised in particular that while the
emerging challenges and priorities cushion – a reserve composed of unallocated funds
available to increase the budgets of any of the three NDICI-Global Europe pillars, namely the
geographic programmes, thematic programmes and rapid response actions – had proven to be
a valuable tool providing a prompt response to crises, unforeseen events and Union priorities,
its use showed a mismatch between the available funds and the actual needs, concluding that a
more strategic prioritisation was needed.
81
Evaluation of the European Union's external financing instruments (2014-2020 and 2021-2027); Independent study in
support of the evaluation Volume I, Synthesis report, Publications Office of the European Union, p. 50
31
For the sake of clarity, some key principles and elements of the instrument are explained below.
This will support the description of the policy options, assessing their impact as well as their
comparison against the baseline in the next chapters.
• Programming of the instrument: The financial resources under the geographic and
thematic pillars of NDICI-Global Europe have been programmed through a
comprehensive process resulting in a set of country, multi-country, regional and
thematic multiannual programming documents. These documents define the priority
areas, specific objectives, expected results, indicators and indicative allocations for the
period 2021-2027 with partner countries and regions, ensuring a high degree of
predictability for the partnerships. A mid-term review of the programming was foreseen
to make sure programming would adapt to changes on the ground, and financial
allocations backing country programmes were set for 2021-2024 only, while the second
tranche (2025-2027) was programmed as part of the mid-term review of programming.
This approach aimed at balancing predictability and flexibility objectives.
• Spending targets: Under NDICI-Global Europe, a specific emphasis is put on certain
priorities through spending targets that provide a certain level of predictability for
policy outcomes.
- At least 93% of funding shall fulfil the criteria for Official Development
Assistance.
- At least 30% of funding should contribute to step-up efforts on climate objectives.
In addition, in her State of the Union address in September 2021, Commission
President von der Leyen announced an additional EUR 4 billion for climate finance
until 2027.
- Indicatively 10% of funding should support management and governance of
migration and forced displacement, as well as address the root causes of irregular
migration and forced displacement when they directly target related specific
challenges.
- At least 20% of the Official Development Assistance spending should be dedicated
to social inclusion and human development.
- At least 85% of new actions should have gender equality as principal or significant
objective. At least 5% of these actions should have gender equality and women’s
and girls’ rights and empowerment as a principal objective.
- NDICI-Global Europe should contribute to the ambition of providing 7.5% of
annual spending under the MFF to biodiversity objectives in the year 2024 and
10% of annual spending under the MFF to biodiversity objectives in 2026 and 2027,
while considering the existing overlaps between climate and biodiversity goals.
• Flexibility components: besides certain financial and operational flexibilities (e.g.
carry-over of funds to the following year, reuse of decommitted funds, room of
manoeuvre in programming and implementation), NDICI-Global Europe’s features an
emerging challenges and priorities cushion, as explained above. In addition, the rapid
response actions respond swiftly, in particular to crisis and resilience challenges,
complementing the geographic programmes.
32
5.1.2. IPA III
IPA III has demonstrated its effectiveness as a pre-accession instrument and is delivering on
its main objectives. The mid-term evaluation of external financing instruments showed that
IPA III is well-aligned with the enlargement policy priorities, with a programming
framework allowing for a focused and strategic allocation of resources. The absence of pre-
allocated financial envelopes for each beneficiary country provides flexibility in programming,
enabling the EU to respond to changing priorities and needs.
IPA III has further created a performance-based approach, which makes beneficiaries more
responsible for progress and allows for modulation of assistance. This approach is intended to
create a virtuous cycle of reform, where beneficiaries are incentivised to make progress in key
areas in order to receive increased assistance. However, the mid-term evaluation highlights that
the instrument's flexibility has been limited by the fact that annual planning has, through
implementation, prevailed over strategic multi-annual programming.
The mid-term evaluation states that IPA III is coherent with the NDICI-Global Europe policy-
oriented approach and key EU internal policies as well as EU policies for the region,
demonstrating a strong foundation for supporting the beneficiary countries in their accession
process.
The implementation of IPA III was affected by the EU's response to Russia’s war of
aggression against Ukraine. The bilateral programming for 2023 was postponed to 2024 in
all six beneficiaries, with unconditional disbursements, which limited the strategic focus and
performance-based programming of IPA III for that year.
5.1.3. Humanitarian aid
Humanitarian assistance provided in accordance with the Regulation on humanitarian aid was
not part of the above evaluation on external financing instruments, given its separate legal
basis. A comprehensive evaluation assessing the European Commission’s humanitarian aid
during the 2017-2022 period concluded that the EU’s humanitarian aid objectives remain
relevant in the face of a rapidly changing humanitarian landscape and increasing humanitarian
needs. EU’s humanitarian interventions were effective overall and addressed the most
pressing needs, although effectiveness varied across countries, regions and sectors. The
European Union’s funding was considered essential by its humanitarian partners across
different regions, including more geographically remote ones with limited EU presence.
5.1.4. Ukraine Facility
Given the damage to the Ukrainian economy, society and infrastructure caused by Russia’s war
of aggression, Ukraine requires significant support and institutional capacity. Under the 2021-
2027 budgetary structure, it was necessary to set up a dedicated, exceptional, medium-term
single instrument bringing together the bilateral support provided by the Union to Ukraine,
ensuring coordination and efficiency.
The Ukraine Facility provides a balance between flexibility and programmability of the
Union’s response to address Ukraine’s financing gap and recovery, reconstruction and
modernisation needs, while at the same time supporting the country’s reforms effort as part of
33
its accession path to the Union. It is a pivotal instrument in the European Union's strategy to
address the multifaceted challenges confronting Ukraine in the wake of Russia's war of
aggression. This dedicated support mechanism, offers up to EUR 50 billion in predictable
financial support. It aims at bolstering Ukraine's resilience, fostering its recovery and
facilitating its path towards sustainable development and EU membership.
Pillar 1, totalling EUR 38.27 billion, comprises both grants (EUR 5.27 billion) and loans
(EUR 33 billion) aimed at addressing the financial needs of the Ukrainian State to maintain
macro-financial stability while supporting reforms and investments aimed at the recovery,
reconstruction and modernisation of Ukraine. Funds under this Pillar are subject to the
successful implementation of the Ukraine Plan, with quarterly disbursements based on the
achievement of specific results. Financing not linked to cost is fully embedded in the
Regulation.
Pillar 2 consists of a 'Ukraine investment framework', equipped with EUR 9.3 billion
(EUR 7.8 billion in loan guarantees underpinned by EUR 5.46 billion grants for provisioning
and EUR 1.5 billion for blended finance grants), designed to attract and mobilise public and
private investments for Ukraine's recovery and reconstruction.
Pillar 3, amounting to EUR 4.76 billion, provides technical assistance and support measures
to facilitate Ukraine's alignment with EU laws and regulations.
5.1.5. Reform and Growth Facility for the Western Balkans
The Facility is the financial pillar of the Growth Plan for the Western Balkans. It covers
the period from 2024 to 2027. The main aim of the Facility is to support Western Balkan
partners’ alignment with the EU’s values, laws, rules, standards, policies and practices, with a
view to future EU membership. Combining financial and policy tools under a comprehensive
approach, it also aims at supporting Western Balkan partners in their progressive integration
into the EU Single Market and socio-economic convergence with the EU.
The Facility complements IPA III, focused on enlargement related support. It is expected to
demonstrate the benefits of closer EU integration even before accession. Support under the
Facility is provided through:
• the Western Balkans Investment Framework, in the form of grants and loans, for
investments underpinning the Reform Agendas, such as investments in infrastructure
projects (EUR 3 billion);
• loans disbursed directly to Western Balkan partners’ budgets to accelerate growth based
on key socio-economic reforms (EUR 2.6 billion)82
.
Similarly to the Ukraine Facility, the Reform and Growth Facility for the Western Balkans
embeds financing not linked to cost. Each partner in the region prepared a Reform Agenda,
setting out planned reforms to achieve the Facility’s objectives, and in order to receive the
funds allocated to each of them, based on their level of ambition.
82
The remainder is mainly required to provision the bilateral loans under the Facility.
34
5.1.6. Reform and Growth Facility for the Republic of Moldova
Following the model of the Growth Plan for the Western Balkans, the EU established a Growth
Plan for the Republic of Moldova, which includes increased financial assistance, enhanced
access to the Union single market and support for socio-economic and fundamental reforms.
At the heart of the Growth Plan lies the Reform and Growth Facility, which will provide
increased financial assistance to support progress on socio-economic and fundamental
reforms. It will disburse up to €1.9 billion in financial support, composed of up to EUR 1 500
million in concessional loans and EUR 385 million of non-repayable financial support. The
Facility, including the provisioning for loans, is financed primarily from the bilateral
allocations foreseen for Moldova in the NDICI-GE budget covering the period 2025-2027.
In line with the performance-based approach followed in other Facilities, the disbursement of
EU funding to Moldova is made conditional upon progress achieved in the implementation of
reforms defined in the country’s Reform Agenda. The Reform Agenda sets out the key socio-
economic and fundamental reforms that Moldova intends to undertake in 2025-2027 to
accelerate its convergence with the EU. It covers all sectors that are vital to promote Moldova's
economic growth and integrate it into the EU single market. Funds will be released twice a
year, based on requests by the Government of Moldova and following verification by the
Commission that all relevant conditions have been met.
The non-repayable support covers support provided by the Union for projects approved under
the Neighbourhood Investment Platform (NIP), one of the regional investment platforms in
place under NDICI-GE, as well as complementary support. This complementary support
includes support to civil society organisations and technical assistance, which will facilitate the
implementation of reforms and Moldova’s path to EU accession. In addition, the Facility is
expected to mobilise up to EUR 2 500 million of new investments from the international
financial institutions and the private sector.
5.2. Description of the policy options
The sub-optimal policy coherence and flexibility in the EU’s external action financing to
advance its strategic interests and to address fragility and crisis situations define the problem
of this impact assessment. In this respect, the balance between flexibility and predictability
is the fundamental policy parameter that governs the design of possible policy options.
Evidence gathered in the independent study supporting the mid-term evaluation showed that
while the current instruments equipped the EU to better play its role both as a development and
geopolitical actor, the context at global, regional and national level had become even more
challenging, reducing the scope for effective EU leverage. The report concluded that there was
a need for more differentiated response strategies (underpinned notably by greater levels of
flexibility) as well as enhanced capacities to exploit windows of opportunities as they arise83
.
In today’s world of shifting international context and megatrends that will shape the next
decades, the balance between flexibility and predictability is not theoretical, but a crucial policy
83
Evaluation of the European Union's external financing instruments (2014-2020 and 2021-2027); Independent study in
support of the evaluation Volume I, Synthesis report, Publications Office of the European Union, p. 59
35
and political choice. This observation, guides the choice of options analysed in this impact
assessment. They are limited to three, so as to inform the key decisions on the future
instruments. Breaking them down into more detailed sub-options bears the risk of distracting
the analysis from the fundamental policy choice.
Far reaching financial predictability means that the amounts dedicated to individual countries
are known for the duration of the entire MFF. When translated into operational terms, via
detailed design of regional and country envelopes, this multiannuality gives a high degree of
certainty of the EU involvement and aid. Such predictability gives a stable horizon for both the
EU and the beneficiaries but leaves little room for manoeuvre. Flexibility, on the other hand,
can include various layers. Financial flexibility can be ensured through the use of
decommitments, carry-overs, transfers, and reserves while operational flexibility relates to
room of manoeuvre in programming and implementation. Preserving the flexibilities of
NDICI-Global Europe including its general reserve (the cushion), financial flexibilities would
need to be a guiding principle for the next instrument, regardless of the option chosen.
However, operational flexibility can be further calibrated, which is being explained in the
descriptions on options later in this chapter.
The distinction between flexibility and predictability – in other words, agility to respond to
unforeseen crises and seize opportunities, in contrast to funding which can be anticipated,
calculable and foreseeable by partners – is not always clearcut. Also unprogrammable funding
requires a degree of planning. For example, humanitarian aid and macro-financial assistance
need predictability regarding the amounts of funding available for crisis tools from the onset
of the MFF. Moreover, programmable funding can be built in a flexible manner, for instance
via large regional envelopes and keeping part of the funding unallocated.
Given the political importance and the amounts at stake, the budgetary architecture for
Ukraine is another core challenge to be analysed. The issue of how the EU navigates the
Ukraine challenges, including the extraordinary budgetary proportions, has wide ranging
impacts on the external funding under the future MFF. Different options can be assessed with
regards to how well they allow to strike a balance between providing credible support to
Ukraine and ensuring the external financing’s overall efficiency in pursuing strategic objectives
in other geographic areas.
To guide this impact assessment, the specific objectives listed in Chapter 4 constitute the
criteria grid against which the three following policy options are assessed:
• Option 1: A fully flexible external financing instrument based exclusively on strategic
priorities defined annually, with no multiannual planning. Ukraine-related support for
pre-accession and reconstruction needs would be covered above MFF ceilings.
• Option 2: An external financing instrument based on indicative geographic and global
envelopes covering programmable and non-programmable funding for multiannual
planning, balancing flexibility and predictability. Ukraine related support for pre-
accession and reconstruction needs would be covered above the MFF ceilings.
• Option 3: An external financing instrument based on indicative geographic and global
envelopes covering programmable and non-programmable funding for multiannual
planning, balancing flexibility and predictability. Pre-accession needs for Ukraine
36
would be covered by this instrument inside MFF ceilings while the reconstruction needs
of Ukraine would be covered above the MFF ceilings.
Finally, the design of all three policy options encompasses cooperation with enlargement
partners, with the neighbourhood East and South, as well as with Sub-Saharan Africa, Asia and
the Pacific, and the Americas and the Caribbean, as well as macro-financial assistance and
humanitarian funding, with the assumption that they would be covered under the same external
financing instrument. The 1996 Regulation on humanitarian aid would continue to provide the
legal basis, principles and rules for delivery of such aid, while it would draw on the funding
allocations of the post-2027 instrument.
5.2.1 Option 1: a fully flexible external financing instrument – Ukraine-related support
for pre-accession and reconstruction needs above MFF ceilings
Option 1 discusses how a more transactional model of engagement with partner countries
would look like in the EU context while testing it against the specific objectives. Option 1
would ensure full flexibility to swiftly react and allocate funding on an ad hoc basis according
to changing strategic interests and needs at any given time. The funding priorities in option 1
would be exclusively based on strategic priorities defined annually, with no multiannual
planning and no spending targets. The MFF would frame the funding available for a
multiannual period.
EU strategic interests and political priorities in the short-term would guide the allocation of the
amounts available in the instrument on an annual basis, implying a negotiation with the
budgetary authorities on these priorities. The financial flexibility (see above under 5.2) as
provided in the current external instruments is assumed to be continued under option 1. In
addition, this option would provide a full operational flexibility. Having no multiannual
planning would translate into having no programmable earmarked financial allocations for EU
interventions per partner country or region. Country packages would be identified only for a
limited number of countries and for short-term, ad hoc priorities.
Option 1 would not include spending targets as EU interests and political priorities would be
the exclusive drivers to define interventions and allocate funding.
5.2.2 Option 2: an instrument based on regional and global envelopes with indicative
financial allocations covering both programmable and non-programmable
components – Ukraine-related support for pre-accession and reconstruction needs
above MFF ceilings
Under option 2, the instrument would be more balanced between flexibility and
predictability in clear contrast with the fully flexible instrument in option 1. The instrument
would be based on regional pillars and one global pillar, each of them covering both
programmable and non-programmable interventions. It would thus be structured primarily
by regions, with dedicated funding indicatively allocated to each region and to the global pillar.
This option would allow the combination of programmable and non-programmable funding,
37
both adjustable to changing circumstances. Under this option the financial flexibility (see above
under 5.2) as provided in the current external instruments would also be assumed to be
continued while operational flexibility under the programmable components is increased
compared to the baseline with a new focus on reinforced regional programmes. In this
approach, the programming would be done in a way that ensures built-in flexibility through
regional programmes, and by a phased approach. This would cater for agile adaptation to needs.
To ensure predictability, part of the geographic and global envelopes would be programmed
at the start of the MFF. For the programmable parts, multiannual indicative programmes would
be adopted, where relevant, for regions, countries and global actions, by the Commission
following comitology procedure.
Option 2 would include an adjusted Official Development Assistance target (compared to the
baseline).
Ukraine’s accession path via programmable allocations and unforeseeable reconstruction
needs would be covered above MFF ceilings. Given the size of the disruption posed by the
situation in Ukraine, such a mode of financing would also ensure that there is no outsized
impact on the overall financial allocations under the next instrument, thus protecting the
integrity and stability of the EU's overall financial planning. Sourcing the entirety of
Ukraine’s funding above MFF ceilings would allow the EU to better respond to unpredictable
challenges and needs and their significant budgetary implications, as they appear in a still
highly uncertain context, without hampering the financing instrument in providing swift
support in case of unforeseen needs in other geographic areas.
5.2.3 Option 3: an instrument based on regional and global envelopes with indicative
financial allocations covering both programmable and non-programmable
components – Ukraine pre-accession needs covered by this instrument inside MFF
ceilings and Ukraine reconstruction needs above MFF ceilings
This option would be identical to option 2, except that Ukraine’s programmable allocations
aimed at supporting its accession to the EU’s path would be inside the MFF ceilings. This
option would ensure an equal treatment in terms of budgetary approach of all candidate and
potential candidate countries.
6. WHAT ARE THE IMPACTS OF THE POLICY OPTIONS?
The aim of this chapter is to qualitatively assess the economic, social and environmental
impact of the three options presented in chapter 5.
The starting point of this chapter is the general objective of the impact assessment, i.e. to
design external financing instruments that effectively advance the EU’s strategic interests while
being responsive to fragility and crisis situations. The specific objectives presented in chapter
4 are used as a yardstick when assessing the economic, social and environmental impact.
38
Limitations
Considering the more than 130 partner countries (including the candidate countries) and the
full spectrum of SDGs that the EU external financing instruments may support, the economic,
social and environmental impact is considered at a high level of aggregation. The impact on
the EU is considered when relevant.
As explained, the policy framework for EU external action with its specific areas and various
forms of action – ranging from investments in partner countries’ infrastructure to support the
green and digital transition to assistance to health and education systems, to name a few –
provides the context, guiding the economic, social and environmental objectives to which
external instruments are expected to contribute. This policy framework, the broader EU
political priorities as well as commitments subscribed by the EU or defined in agreements
between the EU and third countries at bilateral, regional and multilateral level guide the
objective-setting of the external financing instruments and their implementation.
Therefore, the three options chosen are not analysed through the prism of specific policies
driving the EU external action nor is it attempted to measure the impact of EU contributions in
specific areas. This would not be feasible nor meaningful in an MFF-related impact assessment,
given that the external financing instrument is an enabling vehicle for the EU to support various
policies. This is why it is important to stress the limits of what this impact assessment may
deliver, when it comes to projections regarding performance at intervention level or at a more
‘macro’ level.
Option 1: a fully flexible external financing instrument – Ukraine-related support for
pre-accession and reconstruction needs above MFF ceilings
Economic impact
Option 1 allows for swift reaction and allocation of funding based on constantly evolving
strategic interests, which can lead to a use of resources that better responds to fast changing
needs and opportunities (meets Specific Objective 1.1).
It has the potential to foster innovation and adaptability in response to changing economic and
geopolitical conditions, including emerging priorities under economic foreign policy. It would
also allow to swiftly mitigate unintended economic consequences of the EU’s environmental
legislation in partner countries (meets Specific Objective 3.1).
However, the lack of predictability in funding allocation may lead to uncertainty for partner
countries and implementing partners (e.g. development finance institutions), which can hinder
economic development but also fails to deliver stability and support the implementation of
long-term reforms (fails to meet Specific Objective 1.2). In the same vein, option 1 may come
with a reduced ability to attract private sector investment, as the lack of predictability makes it
more challenging for investors to engage in the long run (fails to meet Specific Objective 2.1
and 3.3.). This would affect the EU’s capacity to project its longer-term strategic interests. In
these respects, option 1 would have a limited capacity to support long-term partnerships, the
new Clean Trade and Investment Partnerships and any similar long-term partnerships,
including in the context of Global Gateway (fails to fully meet Specific Objective 3.2).
39
While option 1 would in principle allow a swift roll-out and utilisation of the updated toolbox,
it would not create an enabling condition for new tools such as guarantees for Export Credit
Agencies or direct support to the EU companies, which require medium- to long-term horizon.
Without certainty of the EU’s steady involvement in a partner country through de-risking and
contribution to an enabling business environment, private sector’s ability to take risk would
not be supported in an optimal manner (fails to meet Specific Objective 3.3).
Furthermore, due to frequently changing funding priorities, there is a risk of inefficient
allocation of resources, which could come with negative economic impact to the EU but also
to partner countries. Under this option, key long-term objectives would risk systematic
subordination to short-term needs and could negatively impact the EU’s ability to fulfil its
financial obligations as stipulated by multilateral commitments. Finally, the need for annual
adjustments and negotiations could increase complexity and administrative costs for the EU.
Social impact
Option 1 allows for swift reaction to humanitarian and other basic needs, which can lead to
more effective responses to crises and support to vulnerable populations (meets Specific
Objective 1.1).
However, it would overlook preparedness and resilience dimension – a lesson learnt from the
COVID-19 crisis and a growing EU priority that requires long-term planning and investment.
Moreover, option 1 would not achieve humanitarian and development objectives through
multilateral organisations that depend on donors’ medium- to long-term commitment.
The lack of long-term partnerships and predictable funding may weaken social outcomes in
partner countries, such as poverty reduction, education, health and other long-term
development objectives (fails to meet Specific Objectives 2.1 and 2.2). It may not foster social
change in partner countries to the tune of their international commitments, thus altering
consistency between internal and external policies (fails to meet Specific Objective 3.1).
Environmental impact
Option 1 allows for swift reaction to emerging environmental challenges, which can sometimes
lead to more effective responses (meets Specific Objective 1.1). This could materialise through
quick responses to environmental crises and urgent support to affected communities.
However, these benefits are expected to be limited as most environmental challenges such as
climate change and biodiversity loss are global, long-term challenges requiring multiannual
planning and provision of resources, e.g. in line with the New Collective Quantified Goal
agreed by the European Commission and EU Member States in 2024.
In addition, the lack of long-term partnerships, predictable funding allocation and thematic
priorities may drastically impact the predictability of EU’s environmental, climate-related and
circular economy funding, which requires important infrastructure and technological
investments. This would undermine the EU’s ability to fulfil its financial obligations under the
Paris Agreement and for the implementation of the Kunming-Montreal Global Biodiversity
Framework. Furthermore, it may weaken environmental outcomes in partner countries (e.g.
establishment of natural protection areas). The prioritisation of flexibility may compromise the
40
EU’s ability to meet its climate objectives should candidate countries not receive adequate
corresponding support. In this respect, Option 1 has a reduced ability to support sustainable
development, climate change mitigation and adaptation initiatives as well as biodiversity
initiatives (fails to meet Specific Objective 2.1 and 2.2), undermining the coherence between
internal and external policies (fails to meet Specific Objective 3.1).
Further remarks
Option 1 would respond to the continued pressure for increased adaptability of the EU external
financing instruments in a challenging geopolitical context. However, even if financial and
operational barriers between the current standalone instruments were considerably reduced
under one instrument, option 1 would fall short in providing an integrated approach for regions.
In addition, considering that the respondents of the Open Public Consultation deem it important
that the EU continues to support multiple policy objectives, the ‘short-termism’ at the core of
option 1 would not create an enabling environment to engage in the full range of economic,
social and environmental priorities to the extent needed. In fact, due to its focus on crises and
opportunities, option 1 would mainly serve short-term economic, social and environmental
objectives, to the detriment of longer-term development interventions that are also necessary
to sustain the coherence between internal and external action. This means that it would fall
short of the potential of one instrument to provide not only short-term but also medium- to
long-term interventions to advance sustainable development in the EU’s candidate and partner
countries. This would hamper the EU’s objectives of economic, social and environmental
development in these countries and could also undermine long-term development and security
of the EU itself.
Option 2: an instrument based on regional and global envelopes with indicative financial
allocations covering both programmable and non-programmable components –
Ukraine-related support for pre-accession and reconstruction needs above MFF ceilings
Economic impact
Option 2 ensures predictability in funding allocation, conducive to more effective partnership-
building and investment horizon, providing partner countries and implementing partners with
a degree of stability (meets Specific Objective 1.2). At the same time, the combination of
programmable and non-programmable funding at the regional or global level allows to flexibly
respond to emerging economic foreign policy opportunities and crises (meets Specific
Objective 1.1).
Furthermore, option 2 can better attract private sector investment as the predictability-
flexibility balance would facilitate developing de-risking modalities such as guarantees and
support to the EU companies, thus making it easier for companies and investors to plan ahead
and invest in long-term projects (meets Specific Objective 3.3). The EU’s capacity to cover
financial risk would result in a greater leverage effect and subsequent positive economic impact
in EU’s partner countries and the EU alike. Similarly, option 2 would enable to provide
guarantees through export credit agencies.
Option 2 would improve the interplay between internal and external policies. A more coherent
approach at regional level would allow the EU to better respond to opportunities in partner
41
countries and build alliances in a multi-polar world. Therefore, option 2 would meet the EU’s
expectation of mutual benefits and alignment with its strategic interests, such as regulatory
convergence, promotion of mutually beneficial partnerships, implementation of key reforms to
improve stability in partner countries, competitiveness, economic security and secure value
chains for digital and emerging technologies, clean energy, clean tech and critical raw
materials. Option 2 and its regional approach would enable an efficient use of the toolbox that
would help scaling-up of the Global Gateway offer and to launch of Clean Trade and
Investment Partnerships (meets Specific Objectives 3.2 and 3.3).
The use of indicative financial allocations for regions can lead to more effective use of
resources, (meets Specific Objective 2.1), thus potentially reducing complexity and even
administrative costs. Finally, a broader instrument may decrease administrative costs in the
form of single support measure and technical assistance under one package (that may
incorporate various components from investments to migration management).
Social impact
Option 2 allows predictable and stable partnerships with partner countries, which can lead to
more effective social outcomes, such as poverty reduction and quality education, including for
vulnerable populations (meets Specific Objective 1.2). The use of indicative financial
allocations for regions and countries can lead to a more integrated approach to social
development. In particular, the humanitarian-development-peace nexus would be significantly
facilitated under option 2 (meets Specific Objective 2.2).
The longer-term perspective under option 2 also encourages investment in key social services,
with important impacts in terms of addressing some demographic challenges and lack of
employment opportunities especially for the youth. This, in turn, has wider effects on societal
cohesiveness and migration.
When it comes to Global Gateway and its 360°-approach84
to ensure local value added in the
value chains, option 2 and its multiannual perspective for sustainable and high-quality projects
would benefit local communities.
Finally, the use of indicative financial allocations for regions and countries can enable greater
coherence between external and internal policies, as the EU strives to embed its role as a
responsible global leader promoting decent work and social inclusion worldwide under the
European Pillar of Social Rights Action Plan (meets Specific Objective 3.1). This coherence
may, in turn, facilitate social development in partner countries.
84
Global Gateway investments adhere to principles of (1) democratic values and high standards; (2) good governance and
transparency; (3) equal partnerships, (4) green and clean, (5) security-focused, and (6) catalysing private sector investment.
While respecting these principles, the Global Gateway 360-degree approach is about creating an enabling environment for
sustainable and quality investments, which promotes high social, environmental and governance standards (ESG), supports
climate neutrality and the green and digital transition and enhances respect for human rights, the rule of law, non-discrimination
and promoting decent work, education, gender, youth, social rights and the reduction of inequalities. It requires macro-
economic stability and fiscal policies aimed at creating an enabling environment for private sector investment (cfr. the “Collect
More Spend Better” agenda around Domestic Resource Mobilisation and Public Finance Management and actions supporting
access to finance for SMEs).
42
Environmental impact
Option 2 ensures predictable and stable funding for environmental challenges, such as climate
change and biodiversity loss, which can lead to more effective responses given that mitigating
climate change, halting biodiversity loss and building a circular economy require important
infrastructure and technological investments (meets Specific Objective 1.2). The use of
indicative financial allocations for regions and countries under one instrument can lead to a
more integrated approach to environmental development (meets Specific Objective 2.1 and
2.2). This tailor-made approach allows the EU to continue delivering on the commitments of
developed countries to support developing countries in the implementation of major
multilateral environmental agreements concluded in the recent years.
As environmental problems know no borders, a stable and region/country-specific approach
brings also environmental benefits to the EU (meets Specific Objective 3.1).
However, if the option is only guided by EU strategic interests, it may become overly focused
on economic development and prosperity. This may lead to trade-offs brought by twin
transition and neglect of environmental concerns. Even if such scenario did not materialise, the
EU should tackle upfront any such perception risk. Possible negative perceptions can be
mitigated by ensuring the highest environmental, social and governance standards, for instance
in projects associated with the extraction of critical raw materials, as well as by effective
communication.
Further remarks
Option 2 would ensure vertical adaptive capacity, due to its in-built flexibility at the regional
level. This means that while part of the funding would be programmed for long-term
investment priorities, a part would be non-programmable, leaving room to react to crisis
situations through humanitarian aid, macro-financial assistance, and rapid response. Moreover,
the programmable part would be adaptable to the opportunities related to investment and
creation of strategic partnerships in the region, thus providing flexibility in the planning of
long-term development projects. A carefully deliberated balance between programmable and
non-programmable funds is needed also for the synergies and interlinkages with internal
priorities, as some of them will require a long-term investment horizon (e.g. green and digital
transition, competitiveness), while others may also benefit from swift reactions (e.g.
migration).
Simultaneously, combining structural and crisis tools under the same regional envelope under
one instrument would allow for a better alignment of priorities and more synergic approach to
partner countries’ economic, social and environmental development, with strong potential for
positive sustainability impact. This aligns with the outcome of the Open Public Consultation
where respondents stressed that the future external financing instrument should serve multiple
policy objectives85
.
85
Policy objectives included in the OPC were green transition, digital transition, migration and asylum, peace and security,
human rights, democracy and the rule of law, public diplomacy and fight against disinformation, preparation for EU accession,
engagement in fragile contexts.
43
Finally, separating Ukraine, through a separate funding source above the MFF ceiling, from
the other Union candidates might cause some issues regarding the enlargement policy’s
consistency and raise concerns of unequal treatment of enlargement partners (fails to meet
Specific Objective 3.4). However, responding to the economic fallout of Russia’s war of
aggression is closely linked to Ukraine’s socio-economic convergence with the EU. Despite
Ukraine’s economy demonstrating resilience, uncertainty remains high, with risks to the
budget, as the conflict continues to severely impact Ukraine’s people, economy, and
infrastructure. A single funding source above MFF ceilings may allow to better support
overlapping objectives: Ukraine’s path towards meeting the economic accession requirements
and post-war economic recovery and reconstruction (meets Specific Objective 2.4).
Option 3: an instrument based on regional and global envelopes with indicative financial
allocations covering both programmable and non-programmable components – Ukraine
pre-accession needs covered by this instrument inside MFF ceilings and Ukraine
reconstruction needs above MFF ceilings
The difference between option 2 and option 3 is that the latter would build on programmable
accession funding for Ukraine under the external instrument, inside MFF ceilings, and source
financial resources for reconstruction needs above MFF ceilings. Therefore, the above-
mentioned economic, social, and environmental features of option 2 in terms of predictability
and policy coherence under a single external financing instrument also apply to option 3.
Economic impact
By catering for both pre-accession support (covered under the instrument) and reconstruction
support (financed over and above the MFF ceilings but channelled through the instrument),
option 3 would allow to combine predictability of pre-accession support to Ukraine and
credible funding for post-war reconstruction. Option 3 further promotes equal treatment of
enlargement partners along their merit-based accession paths (meets Specific Objective
3.4). Consequently, this approach would ensure fair conditional support to all candidates and
potential candidates while covering Ukraine’s funding needs and economic recovery (meets
Specific Objective 2.4).
However, sourcing EU support to Ukraine from two different budget sources raises the
difficulty of drawing a distinction between pre-accession and reconstruction financing for
Ukraine. This distinction can be particularly challenging to make with regard to the economic
accession criteria (fails to meet Specific Objective 2.4).
Social impact
Ukraine remains at an early stage of accession preparation in the field of social policy86
, also
suffering from the social consequences of Russia’s war of aggression. Ensuring targeted and
predictable pre-accession support through option 3 for greater convergence and alignment with
the EU could visibly support accession-related progress on social matters (meets Specific
Objective 3.4).
86
2024 Communication on EU enlargement policy, COM(2024) 690 final
44
On the other hand, a single funding source for Ukraine such as under option 2 may allow to
better address priority overlaps from a social policy perspective and to accommodate
continuing uncertainties. In many cases, supporting Ukraine’s progress on social policy
implementation is linked to reconstruction efforts, given the need to address the destruction of
housing and social infrastructure. As a fallout from Russia’s war of aggression, the country
presents a critical need for investments, at local and regional level, in infrastructure to provide
proper social services and healthcare. Conversely, option 3 would not allow for such synergies
(fails to meet Specific Objective 2.4).
Environmental impact
An advantage of option 3 is that it more visibly focuses funding on alignment with EU
environmental standards. Option 3 would also allow for increased predictability to the benefit
of the EU’s environmental and climate-related objectives in Ukraine.
On the other end, Russia’s war of aggression has caused and risks to continue causing
significant environmental damage in Ukraine. In this volatile context, two different funding
sources would hamper the EU's ability to adjust its strategies to mitigate and adapt to the
adverse effects of climate change in the very specific context of a war-torn country (fails to
meet Specific Objective 2.4).
Further remarks
Option 3 would allow to align the architecture of external financing with the streamlined
approach of pre-accession funding under one instrument.
7. HOW DO THE OPTIONS COMPARE?
This chapter compares the three options to the baseline, which is the current external financing
architecture covering NDICI-Global Europe, IPA III, Facilities, funding for humanitarian aid
and macro-financial assistance. The specific objectives, introduced in chapter 4, are used as a
yardstick when comparing the options to the baseline. This comparison is made from the
effectiveness and coherence point of view, i.e. to what extent the baseline and the options would
reach the specific objectives designed to tackle the problem drivers (introduced in chapter 2).
The assessment is qualitative and does not include a cost-benefit nor a cost-effectiveness
analysis87
. However, efficiency is qualitatively evaluated in the predictability-flexibility axis.
To conclude this chapter, the impact assessment illustrates the capacity of different options to
deliver on EU external policies priorities, with a focus on creating strategic partnerships,
ensuring stability, supporting the implementation of the Global Gateway, addressing fragility
and crisis situations, as well as EU engagement in Global Funds.
87
The reasons for these limitations are explained in Annex 3.
45
Finally, the comparison table at the end of this chapter provides a visualisation of the
comparison between the baseline and the options. The options’ relation to the baseline is
marked as (++), (+), neutral, (-) and (--). The different degree of plusses (++) (+) indicates that
the options fare better than the baseline when using the specific objectives as a yardstick, while
the different degree of minuses (-) (--) indicates the opposite, i.e. deterioration88
.
Provide adaptability and stability by striking the right balance between programmable
and non-programmable actions - Specific objective 1
Baseline
NDICI-Global Europe revolves around three pillars that contribute to the overall effectiveness
and flexibility of the instrument: a geographic pillar and a thematic pillar that are both
programmable, providing a multiannual financing prospect for partner countries and on
thematic priorities, along with a (non-programmable) third pillar for rapid response actions,
notably to react to emerging and existing crises. NDICI-Global Europe’s flexibility is also
demonstrated by its broad and enabling nature, which has allowed to successfully roll out the
Global Gateway strategy. A key feature is the ‘emerging challenges and priorities cushion’. In
the first years of implementation, the cushion proved to be a strategic tool, responding to crises,
unforeseen events and Union priorities, notably by supporting partner countries facing the
COVID-19 pandemic, Ukraine following Russia’s war of aggression, and migration-related
challenges.
How do the options compare?
Against this backdrop, and when looking at their potential to create long-term partnerships
while adapting to new situations, all three options come with strengths and weaknesses.
When compared to the baseline, option 1 would provide a maximum capacity to adjust to new
priorities, emerging crises and humanitarian needs as its prioritisation would be based on
annual decision-making. The independent study underpinning the mid-term evaluation noted
that even though the current instruments increased responsiveness to crises, the flexibility of
the regulatory framework has been stretched to the limit and certain financial resources
depleted89
. One finding from the mid-term evaluation was that multi-year programming does
not always facilitate alignment to rapidly shifting policy context on both partner countries and
EU side. In addition, a large majority of respondents to the Open Public Consultation also
considered that the EU external financing is not sufficiently flexible to respond in a timely
manner to crises at EU’s borders and beyond. These would plead in favour of a fully flexible
instrument under option 1.
However, skipping programming would hamper long-term strategic planning both for the EU
and for its partners. In this respect, option 1 would downgrade the baseline as regards
predictability. As mentioned in chapter 2, respondents of the Open Public Consultation are of
the opinion that flexibility should complement predictability.
88
Categorisation as follows: significant upgrade (++), upgrade (+), downgrade (-), significant downgrade (--)
89
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46
When compared to the baseline, options 2 and 3 would be neutral in terms of predictability,
with programmable components under each geographic pillar and under the global pillar,
allowing to establish long-term partnerships and address longer-term challenges. When it
comes to flexibility and adaptability, options 2 and 3 represent an improvement as the non-
programmable part within each geographic region and the global pillar would leave more room
to react to crisis situations through humanitarian aid, macro-financial assistance and rapid
response. Option 2 is more flexible than option 3 because all Ukraine related funds are placed
over and above the MFF.
Increase responsiveness by simplifying the architecture of the instruments - Specific
objective 2
Baseline
The set-up of NDICI-Global Europe merged 11 previous instruments, thus radically
simplifying the financing framework and improving the coherence of the EU’s external action.
However, IPA III stayed separate as a dedicated instrument to support accession processes,
unforeseen needs called for the introduction of new facilities, and humanitarian aid remained
aside.
How do the options compare?
All three options would further simplify the financing architecture by bringing funding for
enlargement, neighbourhood, international partnerships, humanitarian aid and macro-financial
assistance under one roof. As compared to the baseline, this would result into greater
responsiveness of EU funding as well as more coherence between regions.
Options 2 and 3 would compare better to the baseline as their dual short and medium/long-term
focus would facilitate coherence between different tools and would significantly facilitate the
humanitarian-development-peace nexus as medium-term policy tools (programmable funds)
and crisis policy tools (non-programmable funds) would be combined for each region for
synergetic effect.
Regarding the budgetary architecture for Ukraine, option 2 foresees a single dedicated funding
stream through which the Union could address flexibly the interlinkages between Ukraine’s
accession path and post-war reconstruction. In the current uncertain context, isolating
Ukraine’s funding would further allow to limit potential impacts on the overall pre-accession
assistance envelope, thereby improving support predictability for other enlargement partners.
Advance policy coherence and the EU’s strategic interests by creating and updating tools
- Specific objective 3
Baseline
NDICI-Global Europe provides an enabling framework to pursue coherence between internal
and external policies and includes a wide array of tools while allowing the development of
mutually beneficial partnerships. With EFSD+, the current instrument already promotes the
use of the EU funds for leverage and catalytic effect. Spending targets for climate and migration
47
improve coherence with internal policies, along with the commitment to contribute to the MFF
target for biodiversity.
How do the options compare?
All three options would increase coherence compared to the baseline. This is because all three
options pool NDICI-Global Europe, IPA III, Facilities, and funding for humanitarian aid under
one instrument. In addition, updated tools (such as macro-financial assistance and policy-based
financial assistance to partner countries) extend the toolbox to build mutually beneficial
packages. Updated toolbox would include a wide array of tools, including guarantees and loans
as well as support to the EU companies, matching short-term opportunities that arise, which
would lead to better leverage and catalytic effect.
Options 2 and 3 would compare better to the baseline when assessing them against the yardstick
of policy coherence and strategic interests. Given that options 2 and 3 include both medium-
term and crisis tools, the greater predictability offered to partners would be beneficial to
implement longer-term reforms. It would also favour the EU private sector and facilitate
engagement with the latter, allowing for the best possible use of the updated toolbox. In turn,
this would boost both the EU’s competitiveness and partner countries’ sustainable
development.
The independent study supporting the mid-term evaluation noted in its conclusions the need to
improve coherence and synergies between development and accession objectives, broader
foreign policy objectives and advancement of EU interests and values90
. From the internal-
external policy coherence point of view, all three options represent an improvement from the
baseline, as they would include equivalent coherence provisions with the Competitiveness
Fund and other relevant internal funds while ensuring better alignment. Options 2 and 3 would
however fare better. Indeed, while option 1 would allow for more flexibility and adaptability
and increased coherence between different tools within the same region or between regions
within the instrument, it would lack a long-term strategic planning which is essential for
aligning internal and external policies.
In particular, options 2 and 3 would support more ambitious climate action in EU partner
countries to address the risk of carbon leakage, and thereby foster the competitiveness of EU
businesses. They would help establish new markets for EU cleantech companies and support
the EU’s own green industrialisation agenda and policy initiatives such as the new Clean
Industrial Deal. Options 2 and 3 would also allow to mainstream EU priorities in the EU budget
action, including a more coherent implementation of the Do No Significant Harm principle,
with a strengthened focus of resilience by design91
. Options 2 and 3 with the inclusion of a
longer-term approach would, through the strengthening of candidate countries' capacity to
address climate challenges, support an enlarged EU in meeting its own climate targets.
The independent study to the mid-term evaluation noted that the implementation of the
geographisation principle promoted by NDICI-Global Europe had contributed to better
90
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91
The Do No Significant Harm principle is considered in more detail in a separate, horizontal impact assessment on
performance.
48
coherence of EU external financing with EU policy priorities at country level92
. Given that the
Commission Communication on the road to the next multiannual financial framework noted
the need to better align EU policy objectives with spending priorities to strengthen the impact
of EU action, options 2 and 3 would better realise such objectives. They would further
implement the policy first approach, with an appropriate balance between short term responses
and long-term strategic planning.
Efficiency
The baseline offers a high degree of certainty for outcomes through multiannual country
programming and a high number of spending targets. A degree of flexibility is ensured through
the cushion and the rapid response pillar, as well as regional programmes. However, the
rigidness of multiannual programming at country level and spending targets hamper the
instrument’s agility. In addition, sub-optimal interplay between policies may lead to further
rigidities and thus inefficiencies. As regards targets, the independent study for the mid-term
evaluation noted that while they reflect certain EU priorities, they complexify programming.
Feedback from the Open Public Consultation in the setting of the mid-term evaluation also
pointed to the limitations of targets as a policy monitoring tool93
.
Option 1 provides opportunity for swift reprioritisation which, at the outset, indicates efficiency
gains in the use of funds. However, option 1’s potential costs related to reduced (policy)
predictability, annual reallocation of resources, as well as increased complexity of decision-
making and its associated administrative costs are likely to outweigh the expected benefits.
Furthermore, as option 1 provides no or only limited multiannual investment for partner
countries, it may simply make the EU’s offer less interesting to partner countries. All things
considered, the overall balance is likely to be negative, indicating that option 1 may not provide
significant added value compared to the baseline, even though it considerably increases the
flexibility of the external financing architecture.
The benefits of options 2 and 3 related to predictable and stable partnerships, improved
humanitarian-development-peace nexus, strengthened coherence and interplay between
external and internal policies, increased catalytic effect through updated tools as well as
regional flexibility in responding to economic foreign policy opportunities and crises offer a
better frame to manage the costs and benefits ratio of the EU’s external action. Options 2 and
3 may thus provide added value when compared to the baseline.
Regarding the budgetary architecture for Ukraine, option 2 provides the possibility to put
forward a comprehensive and coherent support framework for the country and to avoid creating
separate funding streams with overlapping objectives, with potential efficiency gains.
Capacity to deliver on external action priorities
In terms of capacity to deliver the key policy objectives, options 2 and 3 appear as the best
options when compared to the baseline:
92
Idem., p. 12
93
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49
• For enlargement partners, options 2 and 3 provide predictability concerning pre-
accession support while equipping the Union with the flexibility to react to new
challenges and priorities. Option 1 would not provide enough medium- and long-term
perspective to credibly accompany candidates and potential candidates on their
accession paths towards membership.
• The predictability provided by options 2 and 3 would also be key for other closer
neighbours and strategic partners with whom the EU aims at building strategic relations
based on an integrated offer. The potential of making full use of the EU toolbox to
support reforms, stability and prosperity would be substantially limited under the
extreme flexibility foreseen in option 1.
• Given that Global Gateway is an offer taking a comprehensive approach tailored to
partners’ needs, creating an enabling environment for sustainable and quality
investments, which promotes high social, environmental and governance standards,
options 2 and 3 are better suited to achieve its objectives. In addition, with the flexibility
added to programmable funding, options 2 and 3 would allow to build more integrated
investment packages to support greater sustainable resilience, while strengthening
partnerships that are important for Europe’s own strategic autonomy and its green and
digital transitions.
• For very fragile countries, option 1 would suitably provide crisis tools complemented
by humanitarian assistance to cover immediate needs. However, this option would lose
sight of the medium to long-term objectives for an integrated and country-adapted
approach, based on knowledge of the local contexts and a long-term vision for
resilience-building and supporting institution building when conditions allow. Going
beyond the provision of basic needs and laying the groundwork for greater stability and
resilience would be hampered by the absence of a multiannual perspective. This
integrated approach would benefit from the model under options 2 and 3 to yield better
outcomes, given the capacity of programmable funds to engage beyond humanitarian
aid and crisis response. In the same vein, pursuing engagement in extremely fragile
countries - including those with open conflicts, or complex settings, where partnering
with the country’s de facto authorities is not possible – requires flexible EU financing
that addresses all drivers of fragility.
• While issues related to migration and forced displacement are not limited to fragile
countries, a comprehensive approach to migration also requires stronger engagement
with countries of origin and transit. The next instrument will have to further support
comprehensive partnerships, which would need to be underpinned by a balanced
financing model in options 2 and 3.
• Regarding multilateral engagement, notably in support of global funds, options 2 and 3
appear as the best options to balance flexibility and predictability (including for
partners), thus fostering a higher return on investment while pushing for an effective
reform agenda within the United Nations and other multilateral fora.
50
Comparison table
94 Specific objectives constitute the yardstick when options are compared to the baseline.
Specific objectives94
Baseline Option 1 Option 2 Option 3
Effectiveness A fully flexible instrument Instrument balancing
flexibility and
predictability – Ukraine
covered over and above
MFF ceilings
Instrument balancing
flexibility and
predictability – Ukraine
partially covered by the
instrument inside MFF
ceilings
SO1 Strike the right balance between programmable and non-programmable
SO1.1 Ensure predictability by
establishing mutually
beneficial medium- to
long-term partnerships
with partner countries
Good level of predictability
for partner countries through
country and regional
Multiannual Indicative
Programmes
No predictability for partner
countries as priorities would
be decided annually, without
multiannual planning. It is
likely that a majority of
countries would not receive
any funding, to the detriment
of medium to long-term
partnerships.
Under this option, also the
Team Europe approach
would be considerably
weakened, with less
predictability leading to a
more difficult coordination
of EU and Member States’
cooperation.
(--)
Partial predictability for
partner countries with
minimum amounts in country
envelopes.
Regional programming
would also bring financial
predictability. In case of
positive developments in a
country, the EU would be
ready to step in via regional
envelopes.
When it comes to the Team
Europe approach, this option
would allow for meaningful
coordination.
Partial predictability for
partner countries with
minimum amounts in country
envelopes.
Regional programming
would also bring financial
predictability. In case of
positive developments in a
country, the EU would be
ready to step in via regional
envelopes.
When it comes to the Team
Europe approach, this option
would allow for meaningful
coordination.
51
(neutral) (neutral)
SO1.2 Ensure capacity to
adjust to new priorities,
emerging crises and
humanitarian needs
Limited capacity to adjust to
new priorities. Possible
mainly via the mobilisation
of the cushion and mid-term
review of programmable
allocations.
Maximum capacity to adjust
to new priorities and
emerging crises and
humanitarian needs ensured
through annual prioritisation.
(++)
Partial capacity to adjust to
new priorities, emerging
crises and humanitarian
needs ensured through the
non-programmable
components and the cushion
as well as the indicative
allocations of funds for each
pillar that will allow for
flexibility in case of
unforeseen needs. Placing of
Ukraine-related support
above MFF ceilings is an
important flexibility feature.
(+)
Partial capacity to adjust to
new priorities, emerging
crises and humanitarian
needs ensured through the
non-programmable
components and the cushion
as well as the indicative
allocations of funds for each
pillar that will allow for
flexibility in case of
unforeseen needs.
(neutral)
SO2 Simplification of instruments
SO2.1 Ensure integrated
approach through
allocations indicatively
allocated for regions
and a global envelope
under one instrument
Limited integrated approach
as funding scattered between
3 instruments
The merged instrument
would allow a coherent
approach worldwide.
(+)
The merged instrument
would allow a coherent
approach worldwide. The
interplay between the short-
term and medium-term
components of each region
would increase coherence
between tools under each
region.
(++)
The merged instrument
would allow a coherent
approach worldwide. The
interplay between the short-
term and medium-term
components of each region
would increase coherence
between tools under each
region.
(++)
SO2.2 Improve humanitarian-
development-peace
policy nexus
Nexus approach under all
pillars, and in particular
through the “resilience”
component of the rapid
Nexus approach would be
strengthened by the
integration of humanitarian,
development and security
Nexus approach would be
strengthened by the
integration of humanitarian,
development and security
Nexus approach would be
strengthened by the
integration of humanitarian,
development and security
52
response pillar. Coherence
with humanitarian aid is
ensured only through Article
5 in NDICI-Global Europe.
tools under the same
instrument.
(+)
tools under each of the
different regional and global
pillars of the instrument.
(++)
tools under each of the
different regional and global
pillars of the instrument.
(++)
SO2.3 Improve interplay
between enlargement
and neighbourhood
policies (e.g. in case of
backsliding or policy
changes in these
countries)
No interplay since
enlargement and the
neighbourhood have separate
basic acts.
The merged instrument
would allow an interplay.
(++)
The merged instrument
would allow an interplay.
One separate funding stream
above MFF ceilings for
Ukraine would allow for a
higher degree of
responsiveness and
flexibility within the
country’s envelope, also
without affecting other
enlargement partners or
geographies.
(++)
The merged instrument
would allow an interplay.
Distinguishing Ukraine pre-
accession and reconstruction
limits the funding’s
responsiveness to unforeseen
developments affecting both
pre-accession and
reconstruction efforts, with
possible negative spillover
effects on funding for other
partners.
(+)
SO2.4 Ensure that there is a
specific leeway for
funding the needs in
Ukraine
Support under NDICI-Global
Europe is not sufficient to
address this SO. Therefore, a
dedicated instrument was
created over and above MFF
ceilings. This allowed the
Union to address Ukraine’s
acute financing needs, while
protecting the integrity and
stability of the EU's overall
financial planning.
All Ukraine-related support
being over and above MFF
ceilings would increase the
EU’s spending capacity. This
would also ensure that
programmable and non-
programmable components
from which other regions
would benefit from remain
stable and predictable, not
subject to disruptions, thus
protecting the integrity and
stability of the EU's overall
financial planning.
Ukraine-related support
being above MFF ceilings
would increase the EU’s
spending capacity. This
would also ensure that
programmable and non-
programmable components
from which other regions
would benefit from stable
and predictable funding, not
subject to disruptions, thus
protecting the integrity and
stability of the EU's overall
financial planning. A single,
dedicated, funding stream for
Ukraine above MFF ceilings
All Ukraine’s reconstruction
related support being above
MFF ceilings would increase
the EU’s spending capacity,
while providing predictable
pre-accession support
through the instrument. This
would ensure that
programmable and non-
programmable components
from other regions would
benefit from stable and
predictable funding, not
subject to disruptions, thus
protecting the integrity and
53
(++)
would allow to put forward a
comprehensive framework
addressing pre-accession
objectives, reconstruction
objectives, as well as their
interlinkages, in line with the
Ukraine Facility approach.
(++)
stability of the EU's overall
financial planning.
(+)
SO3 Create and modify tools to advance policy coherence and the EU’s strategic interests (e.g. competitiveness)
SO3.2 Build customised,
mutually beneficial
packages with partner
countries in all regions
NDICI-Global Europe as an
enabling framework allows
mutually beneficial packages
but lacks some tools such as
direct loans.
Would encompass a
comprehensive toolbox to
build mutually beneficial
packages.
(++)
Strengthened interplay
between policies would
facilitate building mutually
beneficial packages.
(++)
Strengthened interplay
between policies would
facilitate building mutually
beneficial packages.
(++)
SO3.1 Ensure coherence
between external and
internal policies
including via Global
Gateway
The need for coherence is
acknowledged in Article 5 of
NDICI-Global Europe. In
practice, coherence limited to
the use of spending targets,
with the exception of
migration.
Enhanced coherence through
equivalent coherence
provisions with the
Competitiveness Fund and
other relevant internal funds
while ensuring better
alignment of implementation
modalities.
(+)
Enhanced coherence through
equivalent coherence
provisions with the
Competitiveness Fund and
other relevant internal funds
while ensuring better
alignment of implementation
modalities.
(+)
Enhanced coherence through
equivalent coherence
provisions with the
Competitiveness Fund and
other relevant internal funds
while ensuring better
alignment of implementation
modalities.
(+)
SO3.3 Foster private sector’s
access to public and
private funding through
enhanced toolbox
Catalytic effect is
incorporated in NDICI-
Global Europe via the use of
guarantees
Would include a wide array
of tools, including guarantees
and loans, matching short-
term opportunities that arise,
which would lead to better
Would include a wide array
of tools, including guarantees
and loans, matching short-
term opportunities that arise,
which would lead to better
Would include a wide array
of tools, including guarantees
and loans, matching short-
term opportunities that arise,
which would lead to better
54
leverage and catalytic effect.
However, the associated lack
of predictability would
hamper the engagement with
the private sector.
(neutral)
leverage and catalytic effect.
Associated predictability
ensures investment horizon.
(++)
leverage and catalytic effect.
Associated predictability
ensures investment horizon.
(++)
Efficiency Outcomes Certainty for outcomes
through multiannual country
programming but the sub-
optimal interplay between
policies may lead to
inefficiencies.
The lack of predictability and
ad hoc nature of the
engagement may lead to
inefficiencies. Outcomes
may suffer due to weak
planning and leverage.
(-)
Certainty for outcomes
ensured through mutually
beneficial packages, linking
the internal and external
tools. Programming at the
regional level allows
adaptations, hence greater
efficiency.
(++)
Certainty for outcomes
ensured through mutually
beneficial packages, linking
the internal and external
tools. Programming at the
regional level allows
adaptations, hence greater
efficiency.
(++)
Coherence Internal-external Internal-external coherence
ensured in article 5 but
working methods sometimes
do not follow through.
Spending targets for climate
and migration improve
coherence, along with the
commitment to contribute to
the MFF target for
biodiversity.
Would allow quick
adaptations according to
annual changes in internal
priorities but no spending
targets or mainstreaming
(e.g. climate, biodiversity,
migration) could hamper
achieving long-term
objectives. EU’s
commitment to long-term
multilateral goals would not
be served in an optimal way.
(+)
Enhanced coherence through
cross-references with the
Competitiveness Fund and
other relevant internal funds
while ensuring better
alignment of implementation
modalities. Updated toolbox
serves the EU’s strategic
interests, e.g.
competitiveness.
(++)
Enhanced coherence through
cross-references with the
Competitiveness Fund and
other relevant internal funds
while ensuring better
alignment of implementation
modalities. Updated toolbox
serves the EU’s strategic
interests, e.g.
competitiveness.
(++)
55
Economic,
social and
environmental
sustainability
All 17 SDGs Aligned with Agenda 2030
and its SDGs
Weak predictability hampers
the objective-setting,
monitoring and evaluation of
SDGs but strong flexibility
allows addressing crisis
situations swiftly
(+)
Regional predictability on
policy themes under the
programmable parts
facilitates objective-setting,
monitoring and evaluation of
SDGs while flexibility to
address crisis situations is
guaranteed through non-
programmable funds.
(++)
Regional predictability on
policy themes under the
programmable parts
facilitates objective-setting,
monitoring and evaluation of
SDGs while flexibility to
address crisis situations is
guaranteed through non-
programmable funds.
(++)
56
8. PREFERRED OPTION
Based on the analysis of impacts and comparison, option 2 emerges as the preferred choice to
be retained for the proposal.
When assessing effectiveness, coherence and efficiency of the three options against the
baseline, by using the specific objectives of the impact assessment as the yardstick of the
comparison, options 2 and 3 stand out due to their flexibility-predictability equilibrium that
best supports these objectives. It thus provides a step ahead in policy coherence and flexibility.
While pressure is on the latter, the option 2 better reconciles different political objectives by
retaining an important degree of predictability. In terms of expected impact, both options 2 and
3 are more likely than option 1 to support the promotion of EU strategic interests and the
sustainable development of partner countries. Options 2 and 3 would also likely better address
the interlinkages between the different SDGs, balancing the three dimensions of sustainable
development (economic, social, and environmental).
Options 2 and 3 provide a simplification from the REFIT point of view. They consolidate the
current funding architecture by integrating several instruments (NDICI-Global Europe, IPA
III, Facilities), one funding source (humanitarian aid) and the legal basis for one additional
tool, macro-financial assistance, under one umbrella organised by region, with a
complementary global pillar. This streamlines the funding process, reducing financial and
operational barriers that exist in standalone instruments. Simplification thus contributes to
clearer processes and management of resources.
The inclusion of both medium to long-term support and crisis tools under one instrument also
enables options 2 and 3 to adapt to changing circumstances while maintaining a focus on
development goals, anticipating impacts of critical megatrends and mutually beneficial
interests. This adaptability is crucial for addressing both planned and unexpected needs
efficiently and in a future-proof way, which is a key aspect of regulatory fitness.
Compared to option 1, options 2 and 3 - with their dual structure of programmable and non-
programmable funding - allow for both predictability in funding and flexibility to respond to
unexpected developments (including crises). This contributes to an efficient allocation of
resources and, when coupled with conducive working methods, will reduce administrative
burdens by avoiding the need for constant adjustments of programmable frameworks. It should
lead to reductions in complexity and administrative costs while also providing stakeholders
with long-term planning.
Finally, options 2 and 3 enhance coherence between internal and external policies on one hand
and between external policies on the other. The geographisation principle, including the use of
regional envelopes facilitates alignment with the EU's strategic goals (e.g. via Global Gateway,
Comprehensive Partnerships, Clean Trade and Investment Partnerships, other similar
partnerships). This alignment also allows for more coordinated efforts in addressing social,
economic, and environmental challenges, thus ensuring that policies are mutually reinforcing
rather than working in silos or at unintended cross purposes. In this respect, options 2 and 3
have the capacity to better integrate policy objectives like competitiveness, economic security,
resilient value chains, and environmental sustainability, given that these goals are strategically
pursued together and that also the relevant internal funds include equivalent coherence clauses.
57
The enabling and coordinated approach supports the EU's strategic interests effectively,
supporting long-term goals without fragmentation of regulations and modalities.
As compared to option 3, option 2 would ensure continuity with the Ukraine Facility’s
approach, address short-, medium- and long-term needs comprehensively, and cover the
interlinkages between Ukraine’s accession path and post-war reconstruction. Furthermore,
option 2 would allow to strike a balance between providing credible support to Ukraine in an
uncertain context while protecting the external instrument’s ability to deliver on needs and
priorities in other geographical areas.
To summarise, from a REFIT perspective, option 2 provides benefits by simplifying regulatory
frameworks, enhancing the efficiency and adaptability of resource allocation and by fostering
policy coherence, thereby supporting the EU's strategic interests, long-term goals and crisis
response effectively and efficiently. In other words, in response to the problem definition,
option 2 can best help to design an external financing instrument that effectively advances the
EU’s strategic interests while being responsive to fragility and crisis situations.
9. HOW WILL ACTUAL IMPACTS BE MONITORED AND EVALUATED?
This initiative will be monitored and evaluated through the performance framework for the
post-2027 budget, which is examined in a separate impact assessment. The performance
framework should provide for an implementation report during the implementation phase of
the programme, as well as a retrospective evaluation to be carried out in accordance with
Article 34(3) of Regulation (EU, Euratom) 2024/2509. The evaluation will be conducted in
accordance with the Commission's Better Regulation Guidelines and will be based on
indicators relevant to the objectives of the programme.
This impact assessment focusses on the architecture of the next external financing instrument,
following the February 2025 Communication on the next MFF. The instrument itself will be
enabling in nature, and is expected to cater for in an increasingly flexible manner various
external action objectives that are listed in the annex of the future regulation. The specific
objectives of the impact assessment will therefore not constitute the base for operational
objectives and indicators. The indicators of the future instrument will focus on societal
objectives as has been the case until now under NDICI-Global Europe and IPA III. These
indicators are specified in the future Performance Regulation.
The future monitoring and evaluation arrangements, including the Performance Regulationwill
partly build upon the existing Global Europe Performance Monitoring System and IPA III
Results Framework and the lessons learnt. Experience in the framework of the implementation
of the Ukraine, Western Balkans and Moldova Facilities, as well as of the Recovery and
Resilience Facility95
, will be highly beneficial when it comes to both reform and investment
performance measurement.
95
Regulation (EU) 2021/241 of the European Parliament and of the Council of 12 February 2021 establishing the Recovery
and Resilience Facility
58
ANNEX 1: PROCEDURAL INFORMATION
1. LEAD DG, DECIDE PLANNING/CWP REFERENCES
Lead services: DG for International Partnerships (INTPA) and DG Enlargement and Eastern
Neighbourhood (ENEST)
DECIDE reference: There is no Decide planning reference.
2. ORGANISATION AND TIMING
The preparation of the impact assessment was supported by an Inter-Service Group (ISG)
which met at the various stages of the process. The ISG was composed of the following
services: AGRI, BUDG, CLIMA, CNECT, EEAS, ECFIN, ECHO, FPI, HOME, HR, JUST,
JRC, LS, MARE, MENA, MOVE, SG, TRADE.
3. CONSULTATION OF THE RSB
This impact assessment was scrutinised by the Regulatory Scrutiny Board (RSB) in a hearing
which took place on 4 June 2025, following an upstream meeting on 4 April 2025. The RSB
provided an opinion without a qualification, referring to the specific approach related to the
MFF process.
The table below summarises the main points of the opinion of the Regulatory Scrutiny Board
(RSB), indicating how its recommendations have been integrated into the evaluation.
Recommendations in the RSB opinion Integration of the RSB’s
recommendations into the evaluation
report
The intervention logic is not consistent
with the issues raised in the report. The
scope of the report covers the
implementation architecture rather than
the policy substance.
The revised SWD explains more in detail the
various components of the intervention logic.
The intervention logic does not cover policy
substance as such, given the broad and
enabling nature of the external financing
instruments, both in terms of scope (policy
areas covered) and in terms of geographical
remit (wide range of partner countries
covered). The focus of the intervention logic
is on the architecture. However, the chapter
on problem definition includes sub-chapters
on policy-specific challenges.
59
The report should analyse [...] notably which
parts of [the current funding landscape]
should be discontinued or reoriented. The
intervention logic should be revised to better
account for the issues facing external action
funding.
The revision of the intervention logic should
better reflect the sub-objectives outlined
under the specific objectives and the
formulation of additional policy options
should be adjusted to align with them, the
specific and the general objective.
The intervention logic is influenced by and
builds on the Political Guidelines for the
2024-2029 Commission and the February
2025 communication on the next MFF. The
revised SWD further develops the
connection between the general objective
and the specific objectives, as well as the
architecture of the options.
The problem definition is supported by
problem drivers. The specific objectives
have been developed as a mirror image to the
problem drivers, following the Better
Regulation guidance. Considering that the
balance between flexibility and predictability
is the main choice to be made in view of the
future external financing instrument,
formulating additional policy options was
not considered meaningful nor helpful.
Additional options, and especially sub-
options, would have led to more fragmented
and scattered assessment, deviating policy
makers’ attention from the main issue. The
reasoning related to the choice of options,
and dimensions of flexibility and
predictability, are however further illustrated
in the revised SWD.
The evidence base of the problem
description is not comprehensively
developed and relies too heavily on
conclusions from previous evaluations
that are not sufficiently substantiated by
robust evidence. The link between the
problem definition, objectives and the
options is neither clear nor complete.
The related mid-term evaluation was
conducted at a very early stage of the
implementation of the current instruments,
with the first operational results related to the
financial execution only available as of 2024.
However, in the independent study
underpinning this evaluation, evidence was
based on surveys, hundreds of interviews,
document reviews and case studies as well as
targeted stakeholders’ consultations and an
open public consultation.
To strengthen the evidence base, the revised
SWD further details the results from the
Open Public Consultation and points to the
experience coming from the operational
60
practise over the past years. The evidence
base has also been strengthened by policy
reviews, academic articles and stakeholders’
policy documents.
The options offer limited choice to policy
makers and are not aligned with and do
not address all of the problems. The report
does not assess whether the trade-offs
between flexibility and predictability on
the one hand, and complexity and
simplicity of the funding landscape on the
other hand, provide sufficient analytical
dimensions to adequately identify options
and fully assess their impacts.
The full range of measures and policy
options needed to tackle identified problems
and achieve the objectives should be
developed.
The options are limited to three, so as to
inform the key decisions on the future
instruments. Breaking them down into more
detailed sub-options risked distracting the
analysis from the fundamental policy choice
without bringing any added value. The
options are tested against the specific
objectives of the impact assessment, guiding
the policy maker on the balance between
flexibility and predictability.
The options chosen are not analysed through
the prism of specific policies driving the EU
external action. Also, the SWD does not
attempt to measure the impact of EU
contributions in specific policy areas. This
would not be feasible in an MFF-related
impact assessment, given that the external
funding instrument is an enabling vehicle for
the EU to support various policies.
The report does not analyse the
unintended consequences that can result
from the intervention, and in particular if
they can be adverse and entail costs for
various stakeholders
Annex 3 provides an indicative list of the
preferred option’s (option 2) possible costs
and benefits. The annex builds on the
problem definition and objective-setting of
the impact assessment. The assessment of
costs and benefits does not extend beyond
this scope. It does not mean, however, that
the preferred option would not have impacts
beyond the objective-setting of the impact
assessment as far as costs and benefits are
concerned.
The report does not sufficiently describe
the governance mechanisms
Governance mechanisms are not in the focus
of the problem definition and the general
objective of the impact assessment.
The report does not specify how the
Global Europe instrument fits with wider
objectives of other parts of the next MFF,
Policy coherence is addressed in the problem
definition, problem drivers, specific
objectives and in the assessment of
economic, social and environmental impacts.
61
particularly on the link between internal
and external policies
Specific objective 3 has been revised in SWD
to further clarify the synergy with the
Competitiveness Fund.
The report is unclear what monitoring
and evaluations arrangements will be put
in place to measure the achievement of
objectives and EU budget impact
The new external financing instrument will
be monitored and evaluated through the
Performance Framework for the post-2027
budget, which is examined in a separate
impact assessment.
The impact assessment on external financing
instrument focusses on architecture,
following the February 2025
Communication on the next MFF. The
instrument itself will be enabling in nature
and is expected to cater for in an increasingly
flexible manner various external action
objectives that are listed in the annex of the
regulation on the external financing
instrument. The specific objectives of the
impact assessment will therefore not
constitute the base for operational objectives
and indicators. The indicators of the future
instrument will focus on societal objectives
as has been the case until now under NDICI-
Global Europe and IPA III. These indicators
are specified in the new Performance
Framework.
4. EVIDENCE, SOURCES AND QUALITY
The evidence for the impact assessment is based on three main sources:
- the independent study conducted for the mid-term evaluation of the 2021-2027
financing instruments. In this external study, evidence was gathered, among others, via
surveys, interviews, document reviews and case studies as well as targeted stakeholder
consultations at headquarters level and an open public consultation published on the
Have Your Say website.
- the open public consultation (with an end date on 7 May 2025) on the next external
financing instruments.
- The final recommendations of the European Citizens’ Panel on a new European Budget
fit for our ambitions
62
In the context of the independent study i) a review of documentation and analytical data was
conducted, ii) close to 350 key stakeholders were interviewed, iii) in the OPC, 235 responses
from 58 countries were received (incl. 43 separately uploaded contributions), iv) targeted
consultations with different stakeholder groups were held and v) 67 written EUD contributions
and 172 responses through two survey exercises were also received. This mix of qualitative
and quantitative methods, using both primary and secondary sources, provided a
comprehensive evidence base.
The independent study used a mixed-methods approach. It relied on a theory of change
focussing on the transition from the previous EFIs to the current ones and four main evaluation
questions: i) on responsiveness to EU and partner countries’ policy priorities; ii) on efficiency
and flexibility in programming and delivery (i.e., the processes by which the instruments are
deployed); iii) on interlinkages and EU added value; and iv) on EU’s leverage to achieve
expected results. Multiple sources were systematically used to triangulate the information
collected.
The results of the open public consultation for this impact assessment are explained in a
separate synopsis report (see annex 2).
ANNEX 2: STAKEHOLDER CONSULTATION (SYNOPSIS REPORT)
1. Introduction
The Commission conducted an open public consultation to gather evidence for this impact
assessment. The open public consultation was open from 12 February to 7 May 2025. The
consultation received 730 responses from participants across 82 countries. Replies were
submitted by a diverse range of stakeholders, including EU citizens, non-governmental
organisations, public authorities, business associations and academic institutions. Overall, this
synopsis report provides a broad overview of the feedback received, offering insights into how
the EU can adapt its external action financing to pursue its strategic objectives while better
meeting global challenges. It is worth noting that the survey has no claim to representativeness.
The views presented in this synopsis report are not the views of the European Commission but
of stakeholders that participated in this open public consultation.
2. Overview of closed-ended questions
As shown in the following chart, 69.3% of respondents agreed to a large extent that EU external
funding should help contribute to EU policy objectives for human rights, democracy, and the
rule of law. Other areas that have received significant support are, in this order, the green
transition, peace and security, and engagement in fragile contexts.
63
For the second question on the objectives of EU external funding, 59.4% of replies agreed to a
large extent that EU funds should contribute to further developing partnerships with third
countries, notably in Africa, Asia, and Latin America, as well as accelerating the achievement
of the SDGs, including through the Global Gateway strategy. Providing humanitarian
assistance abroad stands as the second preferred option, with half of respondents expressing
that EU funds should contribute to this objective.
Moving to the third question, the statement to which most respondents agreed to a large extent
tackles the need to strengthen the synergy between EU external funding and EU
internal/national funding in the EU’s external border regions. By adding the percentages of
those who expressed their agreement (to a large extent and somewhat), the statement that
64
gathered more support recognises the importance for the EU to encourage private sector
investments to increase the total funding for development and humanitarian assistance.
3. Overview of open-ended questions
Replies to open-ended questions
Regarding the open questions where participants could add other priorities as well as further
comments, there was a strong call for enhancing EU economic diplomacy by supporting
European businesses in third markets and prioritising sustainable development models.
Respondents also stressed conflict prevention, peacebuilding, and resilience in fragile contexts
as essential components of EU external action, advocating for streamlined administrative
processes, in particular for non-governmental organisations as well as promoting greater public
awareness to ensure impactful and accountable international cooperation.
The respondents emphasised the importance of involving local communities, civil society
organisations and small businesses as well as bottom-up approaches in EU-funded projects to
ensure that initiatives align with the needs and expertise of partner countries at an appropriate
level. Additionally, protecting and promoting human rights, gender equality, and democracy
were highlighted as crucial measures to support governance and rule of law, particularly in
politically challenging environments. Enhancing transparency of external funding mechanisms
was also mentioned.
Respondents noted the need to enhance institutional capacity building, which would promote
better governance and sustainable development. There was a call for enhancing the role of
partner countries in EU-funded projects and improving infrastructure, particularly for
sustainable transportation and water management.
65
Participants stressed the importance of preserving dedicated funding for civil society
organisations, human rights, and democracy, and highlighted concerns over merging financing
instruments, which could dilute their effectiveness. There was also a strong call for thematic
funding that would address issues like inequalities and climate change while ensuring that
guarantees and blending should not divert attention from priority issues, nor increase the
indebtedness of partner countries. The replies urged that the increased EU investment in
external action should be better communicated to further gain public support. The call for
strengthened partnerships also extended to cultural and academic exchanges.
4. Overview of the issues raised in the position papers per theme
i. Contribution of external funding to support EU strategic interests
• Some respondents highlighted that a well-funded external action budget is a means for
the EU to assert its global leadership. As regards the EU’s strategic interests, others
pointed out that proper financing of EU external action is also crucial to achieve a more
secure and prosperous Europe. In some responses, the need to increase investment in
conflict prevention and peacebuilding was particularly stressed as a strategic and
economic necessity also for the EU.
• A few respondents recalled that while linking external action with EU competitivity is
important, it should be done through mutually beneficial partnerships in areas such as
critical raw materials. Also, the political interests of the EU should be properly
calibrated with those of partner countries in a meaningful dialogue.
• Many respondents emphasised that external funding should not be driven solely by EU
geopolitical strategies and interests but should also align with national development
plans and local aspirations in third countries. Many also stressed the importance of
supporting civil society organisations, even in countries that are not perceived as
strategic for the EU.
ii. Simplification of external financing instruments
• Several respondents expressed concerns on a possible merge of various external
financing instruments which in their view would blur the mandates and the distinctions
of each instrument and force priorities to compete as well as reduce predictability.
Many respondents thus urged to maintain dedicated instruments, including for pre-
accession and Ukraine’s reconstruction. The importance of preserving a separate
instrument and budget line for humanitarian assistance as well as keeping international
partnerships under a dedicated instruments was also highlighted. In this context, the
66
risks related to the prioritisation of short-term objectives at the expense of long-term
impacts were emphasised by many.
• Respondents also pointed the simplification that already took place under the current
MFF and that, in the next MFF, only some targeted improvements would be more
appropriate instead of a further merge.
• A widespread consideration was that merging humanitarian, development and
peacebuilding interventions risks reducing predictability and undermining the EUs
credibility as a reliable partner in fragile and conflict-affected settings.
• At the same time, certain respondents supported a simpler architecture for external
action, with a policy-based budget, promoting a financial toolbox covering all funding
solutions that European businesses need, from grants to equity to debt and advisory
services.
• Many also pointed to the need for a more integrated approach in the EU external action.
Respondents also recognised that there was a need to establish stronger links to connect
humanitarian, development and peacebuilding operations in situations of emergency,
conflicts, protracted crisis or fragility. This was seen as forming a basis for the EU
engagement in these settings, in particular to uphold humanitarian-development-peace
nexus.
• One respondent noted that if funding was merged via a further simplification, it would
be essential to establish specific earmarking for humanitarian, development and pre-
accession funding and provide for the principles under which reallocations can be made.
• Several respondents were of the opinion that funding for Ukraine should be kept
separate and be additional to the EU’s commitments as regards official development
aid to the rest of the world.
iii. Flexibility and predictability of the funding of EU external action
• The need for increased flexibility to respond to emerging priorities and crises in partner
countries was highlighted in many responses and position papers. Flexibility was also
seen as important in aligning development efforts within the humanitarian-
development-peace nexus and with development effectiveness mechanisms, ensuring
that funding responds to the evolving needs of partner countries.
67
• Several respondents pointed to the need for both predictability and flexibility to ensure
that funding reaches those most in need while maintaining the ability to respond to
emerging crises. In the replies, it was also widely stressed that flexibility needed to
complement rather than replace predictability.
• Many respondents said that predictable funding and long-term programming is essential
to support sustainable development and related policy areas in partner countries. These
respondents pointed out that predictability provides the stability needed for
implementing partners to plan and execute programmes with a multi-sectoral
coordination. Some replies further noted that predictability ensures long-term systemic
reforms, notably to tackle underlying drivers of conflict and insecurity.
• A few respondents also underscored that investments with a longer perspective were
needed to create resilient systems in critical areas such as health, social protection,
nutrition and food systems.
• Predictable long-term funding was also seen as an investment to support the EU
Preparedness strategy.
iv. Funding modalities
• Many respondents emphasised the need for a balanced approach and complementarity
between funding modalities to maximise impact. The open architecture of the European
Fund for Sustainable Development Plus needed to be improved, also to ensure that it
meets the geostrategic needs for the EU.
• A respondent pointed to the need to engage deeper in frontier markets as their stability
was seen of essence to the neighbourhood countries and Europe. In this regard,
guarantee instruments that adequately cover the risks of development finance
institutions are essential.
• Some respondents suggested involving Export Credit Agencies to encourage EU
private sector involvement.
• One respondent suggested the possibility to use debt swaps in fragile and conflict-
affected states.
• Some respondents called for simplified and more flexible funding schemes (including
simplified calls for proposals), especially to encourage the involvement of local and
regional governments and other grassroots and community-based actors.
68
v. Spending targets/ODA and earmarking
• Many respondents endorsed spending targets in varying degrees for official
development aid (ODA), human development and education, inequalities, climate,
biodiversity, gender, migration and for funding to be distributed via civil society
organisations.
• While some suggested earmarking as a tool to secure funding for specific policy areas,
a few respondents warned against its excessive use.
• Many contributors shared the view that 50% of the EU’s bilateral official development
aid should be allocated to least developed countries (LDCs) and fragile and conflict-
affected states in the next MFF.
• Increasing the engagement with civil society organisations was a request made by many
contributors, notably by supporting funding channels through them. Therefore, some
participants suggested earmarking 15% of resources for civil society across the future
instrument.
vi. Global Gateway
• Some participants identified the need to bring Global Gateway closer to EU companies,
including SMEs, and increase their understanding of how companies can use the
instrument. A respondent suggested establishing an EU Business Consortium
Mechanism to promote Global Gateway investment projects, create European
consortiums and competitive full-scale offerings under a Team Europe approach.
• Supporting fair competition for European industries globally, addressing trade-
distorting policies was mentioned. In this regard, ensuring access to critical raw
materials and technologies for electric vehicles and battery production was noted.
• The replies stressed the need to invest adequately in R&I and higher education, in line
with Global Gateway priorities to strengthen European competitiveness. On the
partnerships for R&I financed from other European funds, a respondent noted that these
could be considered as Team Europe initiatives, implemented under Global Gateway,
with the aim to support the green and digital transition in partner counties.
• Most contributions shared the view that the Global Gateway initiative should ensure
that funding continues to be allocated to conflict-affected and fragile contexts. Some
69
pointed out that Global Gateway strategy should ensure the continuity of the current
commitment to human development.
• In the context of Global Gateway, there were respondents who thought it was critical
to scale up grant mechanisms, resisting shifts towards loans, guarantees, and private
sector-led investments.
• Some respondents pointed out that implementing Global Gateway would benefit from
partnering with local and regional governments due to their capacity to localise global
challenges, to raise citizens’ awareness, and to create an enabling environment for
investment. Moreover, fostering cooperation with local and regional governments
would be a step towards implementing the Global Gateway’s 360-degree approach.
• The continuation of the Team Europe approach in international cooperation was
perceived by some respondents as crucial to maximise effectiveness because it
contributes to the reduction of administrative burden.
vii. Fragility
• Some respondents wanted to see conflict prevention and peacebuilding as objectives in
all external financing instruments of the EU. They pointed out that this would
demonstrate both the commitment of the EU to these principles and its commitment to
being a reliable partner in times of fragility and conflict.
• Some highlighted the need to meaningfully engage with civil society in the design and
implementation of external action programming to ensure effectiveness in fragile
contexts. Several voices raised the need to support civil society organisations through
scaled-up “people first” partnership models which help meet the challenges
encountered in fragile and conflict settings.
• Some replies noted that emergency bridge funds and adaptable programme frameworks
were essential, especially in fragile contexts to act effectively, also enabling the civil
society organisations to act.
• According to some contributions, it was necessary to recognise the unique role of local
and regional governments in fragile contexts, maintaining, for instance, open channels
of communication in a highly polarised political climate and contributing to community
resilience.
70
5. Stakeholder differentiation
i. Trade unions
• Trade unions believe the EU should promote good democratic governance by
enhancing the promotion of social dialogue. This would entail building inclusive
stakeholder engagement with trade unions supporting capacity building efforts of social
partners.
• They ask the EU to put social fairness and decent work and the core of the next MFF.
As they see it, the current narrative of a necessary improved competitiveness of the
economy and business development must be brought together with a social narrative.
Moreover, the green and digital transitions must ensure that transformations are socially
just.
• Trade unions consider that the next MFF must ensure adequately funded external action
to meet the 0.7% of GNI target for ODA by 2030. They state that the use of EU ODA
must remain focused on the reduction of poverty and inequalities, promotion of decent
work and promoting SDGs in partner countries. They also want to see gender equality,
environmental justice, human rights and democratic values mainstreamed.
ii. Businesses
• Companies that participated in the OPC acknowledge the importance of competitive
European financing to support European companies’ competitiveness in third markets.
They defend that Global Gateway’s instruments should support the EU’s efforts to meet
the challenges related to the current uncertain geopolitical landscape.
• Adding new innovative mechanisms to the toolbox is a request made by several
companies. These mechanisms should amplify the scope of Global Gateway projects to
allow for smaller volume projects with a high impact.
• Companies welcome the ambition of the EU to move towards a more focused, simpler
and more impactful budget. Reducing the administrative burden and developing a more
integrated European offer with better risk-sharing capabilities between all players are
two ways to reach this objective.
• Some companies think that the next MFF should seek more coherence and a long-term
vision so that projects generate lasting impacts. They ask Team Europe to fully
reconsider the conditions, to accelerate and ease access to blending facilities for projects
71
driven by European companies in order to create a more competitive and compelling
Team Europe offer in terms of scale, flexibility and speed.
• Some companies also agree that the use of public-private partnerships should be further
encouraged, with more technical assistance to support local authorities. They also ask
to maintain a standalone framework programme for research, development and
innovation, and put a focus on fostering innovation that has an industrial application.
iii. Development finance institutions
• Development finance institutions ask the EU to maintain different instruments for
different mandates and objectives. As they see it, the future architecture should keep at
least 3 separate instruments to address short-term/humanitarian needs, the longer-term
development/investment agenda and the EU accession one. They believe that a single
instrument will reduce the potential of EU’s impact globally and may bring more
bureaucracy.
• Reducing bureaucracy and harmonising procedures is another claim made by these
institutions. For them, the continuation of a Team Europe approach in international
cooperation is key to maximise effectiveness since this approach also contributes to the
reduction of the administrative burden. Moreover, they believe that the EU should
leverage the full potential of financial regulations, enabling reliance on Member States’
systems and practices for budget implementation, allowing cross-recognition of audits
and accounting practices, and simplifying contracting templates and conditions to
ensure uniform application globally.
• Some contributors detect a need to build on implementing partners’ track-record with
private companies and institutional investors, as well as their local presence, to
maximise impact and crowd in further external investments.
• A greater margin of flexibility should be built into all EU agreements with
implementing partners, allowing for quick reactions to unexpected events and
emergencies. This is especially relevant in fragile contexts, where a more integrated
and flexible programming and financial decision-making across all available
instruments must be ensured.
• Some development institutions express that EU political interest should not overshadow
mutually agreed objectives with partner countries. Contributors welcome the European
Commission’s ambition for a simpler, more focused and responsive long-term budget
that reflects its strategic priorities. However, it is essential that the next generation of
72
instruments continues to reflect a rights-based approach, the promotion of rule of law,
good governance and inclusive development, without contradicting partner countries’
national development plans.
• A more streamlined and integrated approach to international cooperation and external
action is critical, according to some contributions. The combination of grants for
technical cooperation, blending and guarantees should continue to be used in a balanced
manner, adequately with the local context and to the sector targeted.
iv. Multilateral organisations
• Multilateral organisations think the EU should continue to build on multilateral
cooperation and the protection of human rights. In this sense, it is essential to protect
the financial envelope for external action to remain prosperous, safe and economically
competitive, recommitting to the 0.7% ODA target, in line with the EU’s multilateral
and global commitments.
• The next MFF can balance adaptability with structured, result-focused programmes
supported by high-frequency monitoring and crisis cushions. Multilateral organisations
affirm that localising the SDGs agenda, investing in conflict prevention, livelihoods
and basic development is as important for Europe’s security as defence spending and
significantly less costly. The next MFF is also an opportunity to explore innovative and
context-specific ways to remain engaged in support of local communities and through
locally-led CSOs.
• To enhance the effectiveness of its external action, multilateral organisations propose
the EU leveraging its partnerships with key stakeholders, including civil society, the
private sector, international financial institutions and the UN system. With the private
sector, the EU could consider developing more blended finance instruments to mobilise
private capital for sustainable development.
• On migration, they ask the EU to maintain and prioritise funding dedicated to bridging
the humanitarian-peace-development nexus and addressing forced displacement,
ensuring adequate resources to support displaced individuals and the communities
hosting them. Investing in climate diplomacy and in educational and training systems
are also key messages.
73
v. Public authorities
• Local and regional governments (LRGs) ask to be considered as essential stakeholders
to deliver the EU’s value-based offer. Through decentralised cooperation, European
LRGs have the capacity to localise global challenges and citizens’ awareness. From
their view, the EU needs to further elaborate and provide entry points on how LRGs
can concretely be a part of the equation to ensure effective territorial development and
policy coherence.
• In contexts where the dialogue is fragmented at the national level, LRGs remain in
charge of humanitarian relief, emergency and disaster risk reduction. That is why they
propose creating a dedicated programming for LRGs and their European partners to
provide ongoing support to populations in urgent need.
• LRGs also consider essential to maintain distinct financial channels for urgent crises
and ongoing geographical and thematic programmes.
• They would like the EU to ensure structured participation for LRGs by consistently
establishing dedicated focal points in EU Delegations and developing innovative
funding mechanisms which simplify current schemes to be more flexible and accessible
to LRGs.
vi. NGOs
• If the EU wants to be a credible and reliable partner in the world, NGOs claim that the
EU needs to deliver on its commitments by applying a principled and inclusive
approach to its programming. A do-no-harm and human security approach that
prioritises the dignity, rights and resilience of individuals and communities is also
essential to ensure that EU-funded initiatives effectively address poverty and
inequality.
• Funding support for Ukraine should be additional and kept separate from the EU
external action heading, as it should not substitute support to other partners.
• According to NGOs, the EU must reject the use of ODA for restrictive migration
policies and border management, in line with OECD DAC rules. Additionally, the EU
should equally refrain from attaching migration management conditionalities to its
international relations agreements and abide by the International Asylum and Human
Rights conventions.
74
• On democracy and human rights, some NGOs consider relevant to embed democracy
at the centre of Global Gateway and invest at least 20% of the geographic pillar and at
least 50% of the thematic pillar to support democracy, human rights and civil society.
They also propose creating a budget line for democratic openings abroad.
• Several NGOs point out that Global Gateway investments should include peacebuilding
initiatives and prioritise human rights.
• On climate, the next MFF should pay particular attention to directing climate adaptation
finance toward climate-vulnerable, conflict-affected countries because of the low share
of adaptation finance they currently receive, and the particular challenges posed by the
interplay between climate, conflict and fragility.
• NGOs would like the EU to strengthen safeguards for international cooperation through
application of stricter “do no harm” criteria, social and human rights safeguards and
mandatory environmental and climate impact assessment across all Team Europe
Initiatives and Global Gateway programmes.
• NGOs ask to prioritise grant-based financing for biodiversity while leveraging Global
Gateway to attract private investment in conservation and nature restoration. According
to them, this will help scale impactful solutions for nature and communities while
building the technical capacity to de-risk investment in biodiversity and nature-based
solutions.
• When it comes to food security, NGOs propose providing earmarked funding for food
and nutrition security, prioritising agroecological principles, nutrition outcome and
gender equality in food systems.
ANNEX 3: WHO IS AFFECTED AND HOW?
1. PRACTICAL IMPLICATIONS OF THE INITIATIVE
The annual report on the implementation of the European Union’s external action instruments96
outlines the key aspects of the EU’s financial support for international partnerships,
humanitarian aid, foreign policy and enlargement. The accompanying staff working document,
and the results annexes of the annual report give an overview of different categories of
96
https://international-partnerships.ec.europa.eu/publications-library/2024-annual-report-implementation-european-unions-
external-action-instruments-2023_en
75
beneficiaries97
, based on the indicators of the Global Europe Results Framework98
as well as
the IPA III results framework99
.
Notably, the report reflects the important support provided by the EU to address the global and
regional consequences of Russia’s war of aggression against Ukraine, to tackle various other
global challenges, and to implement the Global Gateway strategy. The annual report also
indicates how the external financing instruments support the EU’s efforts to implement global
commitments, notably the United Nations 2030 Agenda and Sustainable Development Goals
and the Paris Agreement on Climate Change. It presents examples of EU-funded interventions
in Europe and across the globe that illustrate the EU’s continuing efforts to deliver results.
As the enabling nature and objectives of the preferred option (either 2 or 3) are comparable to
those of NDICI-Global Europe and IPA III, the table provides an important indication of the
possible beneficiaries under the new instrument. Considering the updated toolbox and given
that the preferred option would allow extending cooperation to the Export Credit Agencies as
well as direct support to the EU companies, the preferred option (either 2 or 3) is likely to
involve more private sector actors, compared to the baseline.
2. SUMMARY OF COSTS AND BENEFITS
This annex provides an indicative list of the preferred option’s possible costs and benefits. The
annex builds on the problem definition and objective-setting of the impact assessment. This
means that the focus is on the preferred option’s capacity to advance the Union’s strategic
interests while addressing fragility and crisis situations, and associated costs and benefits. The
assessment of costs and benefits does not extend beyond this scope. It does not mean, however,
that the preferred option would not have impacts beyond the objective-setting of this impact
assessment as far as costs and benefits are concerned.
This is a qualitative reading of costs and benefits, focussing on intangible factors. The list is
not based on a quantitative analysis as such analysis would require monetisation of both direct
costs and direct benefits. While the direct benefits are quantified to a certain degree , these
benefits have not been monetised. Therefore, the current external financing instruments do not
provide a stable evidence base for drawing hypotheses to be tested quantitatively in the context
of the preferred option.
In addition, when assessing the costs and benefits of the preferred option, it must be taken into
consideration that the EU support to a partner country can only be seen as a contributing factor
towards any societal results achieved. For example, the key treaty objective to reduce and in
97
See in particular the Staff Working document accompanying the annual report and its annex on results:
https://op.europa.eu/en/publication-detail/-/publication/bfc002cc-bdca-11ef-91ed-01aa75ed71a1
98
https://capacity4dev.europa.eu/resources/results-indicators/global-europe-results-framework_en
99
https://commission.europa.eu/strategy-and-policy/eu-budget/performance-and-reporting/programme-performance-
statements/instrument-pre-accession-assistance-ipa-iii-performance_en
76
the long-term eradicate poverty in partner countries provides a highly ambitious agenda. Many
factors, both internal and external, affect the development of partner countries. An important
number of official aid providers play an active role, together with an increasing number of
private donors. In addition, it is for the partner countries’ governments to adopt and implement
the necessary reforms and policies that are the driving force behind achievements. Furthermore,
the nature of the EU’s external action, i.e. the high number of both objectives and beneficiary
countries, hampers making quantitative aggregations and generalisations.
In light of the general objective of this impact assessment, which is ring-fenced to the EU’s
capacity to promote its strategic interests and address fragility and crisis situations, the
preferred option’s non-monetised costs and benefits are illustrated in the below table. For the
sake of meaningful analysis, the costs and benefits are compared to the baseline.
I. Overview of costs and benefits – Preferred Option Baseline
Description of costs Type of costs Comparison
to the baseline
Geographisation under NDICI-GE entailed learning and therefore costs to
the EU as it required a greater involvement of EU delegations. Increased
geographisation (i.e. regional focus) and the integration of different tools,
both programmable and non-programmable under the preferred option
entails another, new change which requires further learning as well as
possible organisational adjustments and may thus come with costs.
Administrative
costs
0
If success of the preferred option is measured in part or in full through the
yardstick of strategic interests and mutually beneficial packages that
respond to country-level opportunities, this may risk leading to a perception
that the EU is neglecting environmental and social concerns in the EU’s
partner countries unless such perception risk is mitigated through effective
communication.
Political and
reputational
costs
-
Description of benefits Comparison to the baseline
The use of indicative financial allocations for regions can lead to more
effective use of resources, via flexible planning, thus potentially reducing
complexity and even administrative costs.
++
Predictability inherent to the preferred option facilitates building an
investment horizon, thus contributing to long-term partnerships and
economic opportunities.
++
Preferred option provides the ability to attract private sector investment as
the predictability-flexibility axis inherent to the instrument can make it
easier to develop EFSD+ de-risking modalities and for companies and
investors to plan ahead and invest in long-term projects. The EU’s capacity
to cover financial risk would result in a greater leverage effect and
+
77
subsequent positive economic impact in the EU’s partner countries and the
EU alike.
The humanitarian-development-peace nexus would be improved ++
EU’s expectation of reciprocity and promotion of its strategic interests –
such as competitiveness and securing robust value chains for clean energy,
clean tech and critical raw materials, would be served
++
Capacity to react to crises would be improved via increased flexibility ++
Regional approach would enable an efficient use of the comprehensive
toolbox, including for the scaling up of the Global Gateway offer and
engaging in the new Clean Trade and Investment Partnerships
++
EU companies would benefit from an updated and comprehensive toolbox ++
EU taxpayers would benefit from a possibly lower administrative costs
under single instrument in a form of single support measure and technical
assistance under a mutually beneficial package (that may incorporate
various components from investments to migration management)
++
Increased ability to channel funds towards key political priorities in external
action via increased flexibility
++
A more integrated and comprehensive approach and packages per
country/region, enabling better correlation between the type of engagement
in a specific country
++
3. RELEVANT SUSTAINABLE DEVELOPMENT GOALS
The economic, social and environmental impacts of the preferred option have been assessed at
a high level of aggregation in chapter 6. This section of annex 3 provides further analysis at the
level of relevant SDGs. The potential positive SDG impacts have been assessed in the light of
the problem definition and objectives of this impact assessment. Considering the enabling
nature of the preferred option, the positive SDG impact may however extend beyond the
objective-setting of the impact assessment.
Positive SDG impacts of the preferred option 2
The preferred option would combine structural and crisis tools in the same regional
envelopes under one instrument. In principle, this would allow for a better alignment of
priorities and more synergic approach to partner countries’ economic, social and
environmental development, with strong potential for positive SDG impacts.
This alignment of priorities is closely associated with the humanitarian-development-peace
nexus, which would be significantly facilitated under the preferred option as it could further
the transition from short-term to long-term interventions, which is important in the context
of protracted crises. This aspect is relevant for the achievement of several SDGs, including
78
to ensure equitable access to water and sanitation (SDG 6) and to prevent epidemics and
strengthen health systems (SDG 3). In addition, and through its synergic approach, the
preferred option has the potential to step up progress on poverty reduction (SDG 1),
sustainable food systems and access to food in vulnerable situations (SDG 2) while
addressing multidimensional inequalities (SDG 10).
When aligned with Global Gateway, the predictability-flexibility axis inherent to the
preferred option would provide certainty for companies – including through de-risking
modalities. While such modalities already exist to a certain extent, predictability for
companies could be further improved, for instance by allowing a wider use of equity, loans
and guarantees. Considering the partner countries’ calls for increased concessional
financing, the EU’s capacity and readiness to accept and take risk would result in a greater
leverage effect and subsequent positive SDG impact in the EU’s partner countries –
especially if EU support continues to be delivered by respecting the highest environmental,
social and governance standards with due attention to transparency. In this respect, the
preferred option would have a positive impact on SDG 17 for its potential to mobilise
additional financial resources for partner countries.
Global Gateway’s unique 360-degree approach to develop an enabling ecosystem around
investments, including skills and conducive regulatory environment, would significantly
benefit from the multiannual planning safeguarded by the preferred option (especially when
compared to option 1). In return, by leveraging the power of a Team Europe approach
through Global Gateway, the preferred option could facilitate effective delivery of solutions
to green, digital, transport, health, education and innovation challenges, thus contributing to
partner countries’ economic, social and environmental development through multiple SDGs,
including strengthening resilience of supply chains by promoting inclusive and sustainable
industrialisation (SDG 9) and decent work and economic growth in partner countries (SDG
8).
The predictability of the preferred option, when topped up with a revamped toolbox, would
serve not only the partner countries’ economic, social and environmental development but
also the EU’s expectation of reciprocity and promotion of its strategic interests, such as
competitiveness and securing robust value chains for clean energy, clean tech and associated
critical raw materials. The approach would contribute to the achievement of SDGs 7
(affordable and clean energy), 8 (decent work and economic growth), 9 (industry, innovation
and infrastructure), and 13 (climate action) in the EU. This interplay between internal and
external policies could be further strengthened if the external dimension, especially the
diversification of value chains with partner countries, were reciprocally incorporated in the
anticipated Competitiveness Fund and if the modalities and their related rules were
harmonised in internal and external financing instruments.
When duly anchored with the rationale of Global Gateway to ensure local value added in the
value chains, the preferred option and its multiannual perspective in the investments for
sustainable and high-quality projects would come with benefits for local communities. In
this regard, and when reinforced with mainstreaming of objectives at appropriate level, the
preferred option could maintain a strong focus on human development, supporting
achievement of gender equality and empowerment of all women and girls (SDG 5) as well
as extending equal access to quality education (SDG 4). Mainstreaming would ensure
79
certainty for SDG outcomes when a robust monitoring system is put in place with
internationally comparable indicators.
The Team Europe approach is now an integral part of the EU external action, central to the
EU’s international partnerships, be it under Global Gateway, in fragile contexts or through
multilateral engagement. Given the aim to further develop the Team Europe approach, the
preferred option would improve policy coherence by allowing the EU and Member States to
operate in a more joined-up fashion, especially by ensuring a better cooperation between
public and private actors. If resources are deployed coherently and with the right amount of
predictability, the preferred option would allow the EU and its Member States to increase
the scale, impact and visibility of the EU external action, thus further contributing to SDG
17 on partnerships.
In principle, the preferred option enables supporting and contributing to all 17 Sustainable
Development Goals. The future results framework should build on the Global Europe Results
Framework (GERF) and continue to be aligned with the SDGs. This would allow to make
progress towards a common approach to measuring and communicating the SDG results of the
EU and its Member States.
Finally, the current reporting considers the transversal and interlinked nature of SDGs, as one
single commitment is often connected to several SDGs. Therefore, it is mandatory to report on
one single main SDG and, where applicable, up to nine other SDGs to which a project
contributes significantly. With this system, the sum of financial flows related to the main SDG
will always equal the total amount of financial flows, yet it is possible to report several SDGs
for one project by using the ‘significant’ SDG field. As a result, a better understanding of the
interlinkages between SDGs can be obtained. This practice should be continued.
4. IMPACTS OF THE PREFERRED OPTION ON HUMAN RIGHTS100
One of the Treaty-based general objectives of the EU’ external action (Article 3(5) and Articles
8 and 21 TEU) is to support and promote democracy, the rule of law and respect for human
rights. The preferred options would uphold this principle, through dialogue and cooperation
with partner countries and regions. It aims to apply a human rights-based approach guided by
the principles of ‘leaving no one behind’, equality and non-discrimination on any grounds. The
rights-based approach encompasses all human rights, whether civil and political or economic,
social and cultural in order to integrate human rights principles to all activities supported by
the EU external action.
100
Given that this impact assessment underpins an initiative with an external dimension, reference is made to human rights,
instead of fundamental rights
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ANNEX 4: ANALYTICAL METHODS
This impact assessment is qualitative, and it is based on multi-criteria analysis. The specific
objectives of the impact assessment (chapter 4) constitute the criteria against which the baseline
and three options have been assessed, while comparing the options to the baseline (chapter 7).
Similarly, the specific objectives have been used as a yardstick when assessing the economic,
social and environmental impacts of the options.
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ANNEX 5: COMPETITIVENESS CHECK
Price and cost
competitiveness
Positive Negative Not
applicable/c
annot say
Comments
Cost of input x The instrument contributes to diversified value
chains (examples include clean tech, renewable
energy, critical raw materials, through Global
Gateway and Clean Trade and Investment
Partnerships)
Cost of capital, access to
risk capital
x Cost of capital is reduced through guarantees, grants
and blending, including by the inclusion of export
credit agencies as implementing partners for EU
guarantees. These make funding available for
situations where funding is usually not accessible
(challenging market conditions).
Cost of labour x Requirements in the future instrument would
generally refer to existing standards that the EU
companies would have to comply with in any case
Compliance costs x No additional compliance costs for EU companies
Cost of output x No impact on cost of output
Capacity to innovate Positive Negative Not
applicable/c
annot say
Comments
Capacity to produce and
bring R&D to the market
x Future instrument enables supporting e.g. digital,
health and energy innovations (e.g. vaccines
development in Africa under NDICI-GE) while
promoting European standards in global markets.
This is however not the main objective of the
instrument.
Capacity for product
innovation
x Future instrument may support the development of
product innovation in partner countries, with
potential benefits to the EU. This is however not the
main objective of the instrument.
Capacity for process
innovation
x Future instrument may support the development of
industrial processes in partner countries, with
potential benefits to the EU. This is however not the
main objective of the instrument.
International
competitiveness
Positive Negative Not
applicable/c
annot say
Market shares (single
market)
x Through access to inputs (like renewable energy and
CRM) and better connectivity, the instrument will
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facilitate EU companies to be competitive in the
single market
Market shares (external
markets)
x Presence in the external market through investments
and improved regulatory environment may facilitate
better market access for companies from EU MS.
Global Gateway projects may be implemented by
companies from EU MS.
SME competitiveness Positive Negative Not
applicable /
cannot say
Comments
x The impact is potentially positive. While nothing
impedes EU SMEs to participate in the EU
interventions, the future instrument does not include
specific provisions for SMEs. Presence in the
external market through investments and improved
regulatory environment may facilitate better market
access for companies from EU MS. Global Gateway
projects may be implemented by companies from
EU MS.
As part of a new economic foreign policy, the future external financing instrument will
play an important role in improving the EU’s competitiveness and complement the
interventions financed by the future Competitiveness Fund.
Global Gateway will continue to be further embedded in the next external financing
instrument to boost sustainable development in the Union’s partner countries while
creating new opportunities for the EU’s private sector, thus boosting the Union’s
competitiveness. Compared to traditional development cooperation, Global Gateway has
two additional goals with a direct positive impact on the EU private sector (i) strengthening
EU economic resilience by building strategic autonomy in key sectors and developing
more resilient value chains between the EU and our partner countries (e.g. green hydrogen,
CRM, semi-conductors, batteries); and (ii) enhancing the EU’s geostrategic position by
maintaining EU competitiveness in globally contested sectors/markets (e.g. digital,
railway).
Under the new instrument, Global Gateway investment packages will be developed across
the globe in key areas intertwining Europe’s economic interests with those of its partners.
This will be key to improve the EU’s ability to diversify supply and value chains and
reduce dependencies. It will allow EU’s partners to develop their societies and economies,
but also create opportunities for the EU Member States’ private sector to invest and remain
competitive, whilst ensuring the highest environmental and labour standards, as well as
sound financial management.
The instrument will further support the economic convergence with the EU of candidate
countries and potential candidates. Funding through the new instrument will accelerate
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their early and gradual integration into the Single market, thereby allowing companies to
integrate in European value chains, and enhancing both investment and trade. As such, the
enlargement process, to be supported through the new instrument, is an integral part of the
Union’s competitiveness agenda.
The impact on SMEs
The impact of the next external financing instrument on the EU’s SMEs is potentially
positive.
A discussion paper101
provided by the European Entrepreneurs, the Digital SME Alliance,
Liguris, MIM Solutions and Trade Promotion Europe for the Global Gateway Business
Advisory Board in 2024 drew attention to both the pros and cons of the Global Gateway
strategy regarding the involvement of EU SMEs. While the discussion paper considered
that Global Gateway is helpful in encouraging SMEs to enter new markets as well as for
creating partnerships, the paper pointed out the difficulties related to complexity of
processes and access to information, SMEs’ own resource constraints, competition with
larger companies as well as lack of legal certainty and poor institutional environment in
certain partner countries.
The updated toolbox of the preferred option tackles these challenges. This will be further
supported by Global Gateway’s 360-degree approach that will put an increased focus on
improving the regulatory environment and skills in partner countries, which would in turn
improve the operational environment for SMEs.
However, while nothing impedes EU SMEs to participate in the EU interventions, the
future external financing instrument does not include provisions targeted specifically for
or at EU SMEs. Considering the multiannual character and many policy objectives that the
external financing instruments are expected to serve, the new instrument will be enabling
in nature as far as SMES are concerned.
101
https://www.european-entrepreneurs.org/wp-content/uploads/2024/04/GG-April-2024-Plenary_SME-
paper_290424.pdf
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ANNEX 6: EU ADDED VALUE
By building on the chapter 3 of the impact assessment, this annex provides additional
information on the EU added value created through external financing instruments, policy
by policy.
1. Enlargement: an investment in peace, security, stability and prosperity
The importance and added value of EU enlargement has been amply documented, and EU
enlargement remains a “geostrategic imperative, an investment in peace, security, stability
and prosperity”.
The EU’s support to candidate countries and potential candidates has generated an added
value through its substantial financial resources, long-term commitment, convening power,
and ability to pool and complement resources at large scale. Thanks to this support,
countries that acceded the EU have experienced accelerated growth and significant
changes in their societies and economies.
Today, this added value is relevant more than ever in light of the geopolitical challenges
and the limited socio-economic convergence, fuelled also by the constraints in the
administrative capacities of the candidate countries and potential candidates. In addition to
alignment with the EU acquis, the EU should support the acceleration of the rate of the
upwards convergence of enlargement partners from the current levels of between 30% and
50% of the EU average.
Gradual integration in the Single Market has become an important element in preparing
enlargement partners ahead of the accession and this requires EU support. Enlargement
partners will not meet the accession requirements without adequate dedicated pre-
accession assistance. The new facilities for Ukraine and the Western Balkans, as well as
the proposed facility for Moldova, which combine grants with loans linked to certain
conditionalities, showcase the leverage stemming from the EU budget.
The EU needs to maintain the momentum of European integration, especially after the
membership applications of Ukraine, Moldova and Georgia. The EU is best placed to have
a holistic and integrated approach on incentivising reform efforts, which can bring
candidate countries and potential candidates closer to the EU. This includes reforms for
unlocking the potential of the Single Market, guaranteeing the integrity and security of the
Schengen area, responding to crises and migration challenges, strengthening the fight
against organised crime and corruption, fostering regional integration and resilience,
transforming societies and economies, promoting environmental sustainability, supporting
human-centric digital transitions and building administrative capacities of our partners for
implementing the EU acquis. This will subsequently benefit the whole EU, its future
growth even more so as an enlarged EU will gain more influence in today’s multi-polar
world.
Action at Member States’ level cannot prepare an enlarged Union starting with its single
market. None of the Member States, even those highly active in the region through their
own agencies, would be able to mobilise the level of financing required for supporting the
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accession path, ensuring the scale of support, forging multi-level partnerships, unveiling
the synergies and leveraging the whole EU toolbox as well as complementarities with
internal/thematic policies.
2. Neighbourhood East and South: differentiated and tailor-made support for a
strengthened Neighbourhood
Through the European Neighbourhood Policy, the EU combines financial, technical and
human resources to engage in a mutually beneficial comprehensive cooperation with its
partners based on common values and dialogue. This approach enables the EU to act with
a stronger voice in regional matters. A strengthened Neighbourhood partnership is a
strategic imperative for the EU’s growth and influence.
The added value of the EU’s support in the Neighbourhood stems from its scale,
consistency, predictability and capacity to coordinate diverse policies allowing for a
comprehensive approach, pooling greater resources and tapping into the whole EU
toolbox. The EU can provide a coordinated and sustainable response of the neighbouring
states to regional challenges like effective migration management, fight against organised
and serious crime offline as well as online, terrorism and radicalisation as well as conflict
prevention.
The added value of the EU in the Neighbourhood region derives from the established
framework of the European Neighbourhood Policy (ENP). The EU has the necessary
weight to support the efforts of the Neighbourhood partner countries, providing financial
assistance and directly supporting reforms aiming at better governance towards sustainable
growth. Moreover, both Neighbourhood regions are subject to regional spillovers. The EU
can support addressing some common challenges, while at the same time offering
differentiated a tailor-made support. Notwithstanding the crucial role of the Member
States, in particular under the Team Europe approach, the goals of the ENP could not be
achieved by Member States alone at bilateral level.
3. Focus on Middle East, North Africa and the Gulf
Thirty years after the launch of the Barcelona process, the Southern Neighbourhood
continues to represent an essential partner for the EU, given its geographical, cultural and
economic proximity to the EU. The EU’s interest in a stable and prosperous Southern
Neighbourhood remains at the top of the agenda and, for most of the countries in the region,
the EU remains their most important partner, in particular in terms of trade and economic
cooperation.
At the same time, the Gulf countries have a huge interest and leverage in the region, but
the EU will need to put all its weight to strengthen their engagement. Our expertise,
investment capacity and the possibility to develop closer relations are key factors of
interest for the Gulf countries. The EU could build on them to develop mutually beneficial
partnerships.
With the withdrawal of the US from the region, the EU has a window of opportunity to
strengthen its role in the Middle East, North Africa and Gulf. Creating a bridge between
the regions and finding common ground with partners to our mutual benefit will require
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making tailored offers that make use of the entire EU toolbox. These ‘packages’ will
require a multifaceted and integrated approach that acknowledges the untapped
opportunities for mutual economic gain and the interdependencies among the regional
challenges.
4. International partnerships: a tailored approach based on shared interests to
advance sustainable development
The EU and its Member States are the leading provider of Official Development Assistance
globally, accounting for 42% of the total in 2023, or EUR 95.9 billion. Compared to
Member States’ bilateral development cooperation, action at EU level brings the added
value of size and leverage. In addition, by combining financial strength with that of
Member States, development banks and development finance institutions in a Team
Europe approach also reduces duplication and enhances coherence. The EU provides
coordinated and tailor-made assistance on the ground, thanks to its economic power and
diplomatic presence, as well as a wide array of tools.
The EU’s partnerships at country, regional or multilateral level are of key importance to
foster cooperation in areas of common interest, contributing to sustainable development,
security – including economic security – and resilience. In addition, multiannual
programming allows the EU to set priorities and objectives for a long-term period to
address the challenges based on partner countries and EU interests, while only a minority
of donors and Member States are able to commit to medium and long-term funding.
Flexibly adapting multiannual priorities will be equally important.
Building partnerships is particularly important to ensure that the EU supports ambitious
climate, biodiversity, environmental, and disaster risk reduction actions globally. If partner
countries fail to take effective climate mitigation and adaptation actions, and do not
transition to more circular and resource efficient economies, this will affect both partner
countries and the EU, including through repercussions on the EU’s own domestic energy
and climate policies, food security, worsening climate conditions in Europe, and
exacerbating conflict threats and displacement in partner countries with direct effects for
the EU. In 2023 alone, natural disasters were estimated to have caused USD 280 billion in
damages. The EU is highly vulnerable to these impacts – as Europe is warming at a faster
rate than the global average. Efforts to limit climate change will help protect EU public
and private investments and assets both in the EU and internationally, including
infrastructure, assets, supply chains, and energy security. Supporting ambitious climate
action in EU partner countries will help address the risk of carbon leakage and thereby
ensuring the competitiveness of EU businesses. It will also help establish new markets for
EU cleantech companies and support the EU’s own green industrialisation agenda and
policy initiatives such as the new Clean Industrial Deal.
EU external financing instruments have a clear added value in implementing the external
dimension of the EU migration policy. Only few Member States have bilateral cooperation
funds that include migration cooperation, and EU funds are best placed to support the
various aspects of the external migration policy, such as partnerships on anti-smuggling or
legal migration that combine Member State and EU contributions. The EU external
funding can be mobilised rapidly and for all aspects of migration management, including
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mutually beneficial Talent Partnerships with partner countries to stimulate labour mobility
and skills development, as well as return, readmission and reintegration.
The EU is also better placed to intervene in complex contexts, as only few Member States
have the capacity to operate a crisis response or peace-building facility comparable in
scope. The EU should support affected populations in fragile states and conflict areas,
adapt to their evolving settings and address the multi-faceted drivers of fragility,
vulnerabilities and instability, including access to basic services, ensuring tailor-made
Humanitarian-Development-Peace nexus approaches. It is also critical to maintain
engagement in fragile contexts for crises prevention and respond quickly and assertively
to both emerging and protracted crisis situations.
5. Humanitarian aid: the EU’s commitment to address global humanitarian
needs
Together with Member States, the EU is one of the leading humanitarian aid donors
globally. Action at the EU level is needed to address, as much as possible, the gap between
growing humanitarian needs and limited resources available, showing solidarity with
people in need. As the EU supports humanitarian action in more than 110 countries, non-
action would mean loss of human life and increased human suffering. Member States often
look to the EU as a donor to provide assistance in crises where they are not able to intervene
in a national capacity.
The EU’s added value relies on the efficiency and effectiveness of operations, thanks to
swift implementation through a broad network of over 200 humanitarian partners and close
coordination with civil protection instruments, including for disaster prevention,
adaptation and mitigation of the effects of climate change.
The volume and flexibility of mobilising financial resources, including drawing on
budgetary reserves, are pivotal to ensure a prompt and relevant response to humanitarian
crises. In addition, the EU has a strong humanitarian emergency response capacity, which
helps filling operational gaps by deploying expertise (e.g. health expertise for Ebola or
Mpox outbreaks) and providing common logistics services (e.g. Humanitarian Air Bridge).
It also has pre-positioned stockpiles to humanitarian actors, for instance in support of
Ukraine’s demining process and winter preparedness and in support of people affected by
conflicts in Middle East, where the EU helped humanitarian partners and the Member
States to transport medicines, medical supplies, shelter, water and sanitation products, and
educational items.
The EU’s humanitarian presence in the field allows for granularity in the context analysis,
supports and co-shapes the humanitarian response with partner organisations and other
donors – notably Member States, even in the most politically complex contexts.
The EU has also established itself as a leader in humanitarian policy and advocacy, able to
speak and negotiate in different United Nations and other multilateral fora and contexts, to
ensure compliance with international humanitarian law and humanitarian principles, and
reduce restrictions of humanitarian access, which continues to drive the increase of
humanitarian needs and cost of humanitarian assistance.
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It also plays a pioneering role in areas such as innovative financing, working also in
partnership with Multilateral Development Banks and private sector to address
humanitarian needs in protracted crisis and fragile contexts and to explore new ways of
working and bring in new finance. It also helps deliver on the twin green and digital
transitions in humanitarian assistance worldwide, for example through humanitarian action
that takes into account risks and include preparedness measures to respond to possible
future crises. EU action also aims at reducing the environmental footprint of humanitarian
aid by mainstreaming environmental considerations across projects and programmes.
The EU acts as an emergency responder and in major crises, as well as in forgotten crises
at global scale. Its position and response to a particular crisis often act as an incentive for
other donors to respond. It plays an important coordinating role, covering the full range of
humanitarian work from pledging conferences to advocacy.