The New European Financial Architecture for Development: Change or Continuity?

Abstract

After years of discussions, the European Union’s (EU’s) new development finance architecture finally came into being under the umbrella of the ‘Status Quo Plus’. This article aims to, firstly, bring much-needed clarification in the nebulous landscape of EU development finance; and secondly, gain a more profound understanding of recent changes by examining to what extent they witness change or continuity. Based on a large variety of empirical data and secondary literature, we find that EU development finance has witnessed significant institutional changes while ideological trends are continued. Institutionally, we elaborate on the simplification of instruments, a shift in their accessibility – in favour of national development agencies and private actors whereby the European Investment Bank (EIB) loses its monopoly on commercial guarantees – and a reshuffling of power play in favour of the European Commission and (larger) EU Member States. In terms of policy content and underlying ideology, however, we observe a deepening of the trend towards financialization within EU (development finance) institutions which ties in with the geopoliticization of aid. We conclude that the ‘Plus’ represents institutional change that nevertheless primarily served (intentionally or not) to support a continuing ideological commitment to selling development finance to the market. The conclusions summarize the main findings and formulate suggestions for further research. European Union (EU), development, financialization, geopoliticization, private finance, European Investment Bank (EIB), blending, public development banks