Case: Policy coherence in general

01-06-2011 MEP Tarabella questions the Commission on the privatisation of the coffee industry

The main source of income for Burundi is coffee production, covering 80% of its export revenues. The state of Burundi entirely controlled the coffee industry for many years until 1997. From then on the ownership was handed over to the coffee growers, enhanced by the World Bank. This privatisation excluded all Burundian companies from bidding in public procurement procedures, meaning that all coffee has to be sold unprocessed passing all their property rights on further down the chain where they are being snapped by foreign multinationals.

In 2009 the World Bank decided to make a granting of its aid to the national budget and to a number of projects conditional, while in 2008 the EU gave 19 million euro funding for the renovation of 145 coffee washing stations for a price of USD 130.000; while in 2009 a multinational bought 13 stations for less than USD 75.000.
Marc Tarabella (S&D) wrote a question on the privatisation of the coffee industry, questioning the Commission on the spending of EU public funds. Fair Politics welcomes the question by Tarabella as this is a clear case of incoherence between the World Bank and the EU, undermining EUs development aid policy.

Monitor fair: S&D

Parliamentary question
E-003921/2011
20 April 2011
WRITTEN QUESTION, by Marc Tarabella (S&D)

Subject: Privatisation of the coffee industry in Burundi
Burundi, the third poorest country in the world, relies on coffee for 80 % of its export revenue. Coffee is the main source of income for almost 750 000 families in Burundi. The coffee industry had been controlled entirely by the state for many years. Since 1997, however, the government has gradually been handing over ownership of the industry to the coffee growers. In 2005, the World Bank called for the complete deregulation of the industry and the privatisation of all 133 factories. The privatisation process brought in by the World Bank effectively excludes all Burundian companies from bidding in public procurement procedures. This strategy means that coffee-growers are forced to sell their coffee unprocessed, passing all their property rights on further down the chain. The coffee is thus being snapped up by foreign multinationals. In 2009, the World Bank decided to make the granting of its aid to the national budget (external aid accounts for 51 % of Burundis budget, with the EU contributing EUR 212 million) and to a number of projects (including a donation of USD 25 million to provide free healthcare for children under five and pregnant women) conditional upon the invitation to tender being issued. In 2008, the EU gave EUR 19 million of Stabex funding for the renovation of 145 coffee washing stations (an average of USD 130 000 per station), and yet in 2009, the multinational company Webcor bought 13 stations for an average price of way below USD 75 000. With this in mind, I should like the Commission to answer the following questions:
1. In the run-up to a second invitation to tender being issued in April 2011, are European public funds once again going to be used to line the pockets of private overseas companies, at the expense of both the income and food sovereignty of local people?
2. Bearing in mind the fragile social, economic and political situation in the region, is the EU intending to take action on this matter concerning Burundi?
3. Does the EUs aid policy not clash with that of the World Bank, of which the EU Member States are shareholders? Are the EU and the World Bank consulting each other enough as regards the use of public funding that is intended to boost development?