Today the EU is the main partner of developing countries in assistance, trade and direct investment sectors. The EU and its member states provide 55% of all the development assistance provided in the world.

With the population of more than 450 million and one-fourth of the world's industry, the EU is the largest aid provider and the largest trade partner for 100 countries. As such, it can considerably influence the political and economic decisions that determine the prosperity and stability in Europe and, consequently, prosperity and security of Europeans. Community development cooperation policy is based on the principle of sustainable human and social development. Promotion of human rights, democracy, the rule of law and good governance are an integral part of it.

The activities of the EU member states in the field of development cooperation started in 1957 by signing the Treaty of Rome, which provided for the establishment of the European Development Fund with the aim of extending technical and financial assistance to African countries. The LOME Convention, which defined the goals and principles of cooperation with the partner states, was signed in 1975. At that time, cooperation with Asian and Latin American countries, as well as with African, Caribbean and Pacific States (ACP), based on the equality principle, was started.

However, the LOME Convention was unable to prevent economic recession. Thus, to make development cooperation more efficient, a new agreement – Cotonou Agreement –was signed. It is designed to strengthen cooperation between developing countries and the EU, as well as to define more clearly and precisely the strategy and methods for reducing poverty and hunger in the world.

At the end of 2005, the European Consensus on development was adopted. This is first overall document for EU' and its member states' development cooperation policy.  There are including main objectives, which have to achieve implementing development cooperation policy as well as countries, which qualify as beneficiaries. At the same time there is stated that it is necessary to ensure that assistance has to been provided for the poorest in low-income and middle – income countries.

International Commitments 

Aid volume

In 2000 Latvia joined the UN Millennium Declaration and committed itself to implement the Millennium Development Goals targeted at reducing poverty in less developed countries. In order to reach these goals, the developed countries committed themselves jointly to increase the funding allocated for development goals to 0.7% of GNI by the year 2015. In order to work towards this goal, the EU has established an interim goal – to reach collectively at least 0.56% of GNI by 2010, thus providing a gradual increase for development cooperation funding.

The "old" EU member states have undertaken to reach at least 0.51% ODA of their GNI by 2010, whereas the "new" member states – 0.17% ODA/GNI.

European Commission, 2004

Aid effectiveness 

In 2005 at the High-level forum on aid effectiveness in Paris international donors and partner countries agreed on five principles for aid effectiveness:

• partner countries exercise effective leadership over their development policies;
• donors base their overall support on partner countries' national development strategies, institutions and procedures;
• donors' actions are more harmonised, transparent and collectively effective;
• managing resources and improving decision-making for results;
• donors and partners are accountable for development results.

Paris declaration commitments are binding for the EU and member states have agreed to reach additional aims until 2010:

• providing all capacity-building assistance through coordinated programmes with an increasing use of multi-donor arrangements;
• channelling 50% of government assistance through country systems;
• avoiding the establishment of new project implementation units;
• doubling the percentage of assistance provided through budget support or sector-wide arrangements;
• reducing the number of uncoordinated missions by half.

Financial instruments 

Starting 2007 in framework of the new EU Financial perspective several geographic and thematic financial instruments will be used to achieve Community development policy goals. Geographic instruments include: the Development Cooperation Instrument, the European Neighbourhood and Partnership Instrument, the Instrument for Pre-Accession Assistance. Thematic instruments include: the European Democracy and Human Rights Instrument, the Instrument for Stability, and the Instrument for Nuclear Safety. 

The European Development Fund (EDF) is the main EU development cooperation financial instrument for Africa, Caribbean and Pacific countries. Latvia is committed to contribute to the next – 10th EDF – starting 2008-2013. 10th EDF consists of an amount of up to EUR 22,682 billion and the contribution of Latvia during six years will form 0.07% of overall fund or EUR 15,9 million (LVL 11,2 million).

Priorities 

European Community is providing aid to different parts of the world; however, the main priority is Africa that falls far behind the reaching UN Millennium Development Goals (MDG). Preparing for the first UN MDGs overview conference in 2005, EU member states agreed to channel collectively at least 50% of total ODA to Sub-Saharan Africa. 

EU provided over USD 14 billion in development aid to Africa in 2004. 

Member states implement their own national development cooperation policies alongside to Community's development policy. Member states can cooperate with non-EU states collectively or on an individual basis, or in cooperation with the community.