The European Community (EC) is the world's second largest multilateral channel for development assistance (after the World Bank). Its combined programmes are the fifth-largest among the 22 Members of the OECD Development Assistance Committee (DAC), and EC programmes have grown an average 3.3 per cent annually over the past five years, while the combined effort of DAC countries declined by 4.7 per cent annually. The Community's allocation of resources to lower income countries has not kept pace, however, with the overall growth of the ODA budget over recent years.

EC programmes operate within a complex organisation and management structure, and Brussels faces serious challenges of implementation in adapting its operations to achieve agreed development objectives. There have been important steps in the evolution of the European Commission structures: a Common Service has been created to implement co-operation activities for the four Directorates General. But there is still a need to strengthen the capacity of delegations in the field to work fully with partners in advancing local ownership and co-ordination.

The EC has a strong role to play in improving the coherence of policies affecting developing countries. The report analyses this question in fields such as agriculture, trade, fisheries agreements and Community fishing fleet subsidies. Co-ordination with other donors also seems to be improving, which bodes well for better overall partnerships between donors and partner countries.

In 1998, the development co-operation policy of the following DAC Member countries will be reviewed: Canada, Finland, Germany, Luxembourg, Spain, and the United States.