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The EC has launched a new aid instrument for the African Caribbean Pacific (ACP) community: the “governance incentive tranche”, a modality designed to incentivise ACP-governments to carry out governance reforms. In this paper the authors analyse whether this new initiative incorporates the principles spurred by the aid effectiveness debate and adopted by the Paris declaration (2005).

Evidence suggests that in design and practice, the incentive tranche is surprisingly similar to some of the unsuccessful aid modalities of the past. The paper argues that in order to fully grasp the complexity of donor behaviour, the donor’s domestic issues and political arrangements have to be brought into the analysis. The authors identify weak points of the ‘governance incentive tranche’ (ECGIT) in the light of the aid effectiveness criteria and offer some explanations, mainly relating to intra-donor political and institutional incentives, as to why it does not represent an application of the principles the European Community and the other European donors so enthusiastically proclaim. Conclusions include:

• the case of the ECGIT confirms the argument that since the introduction of the new aid approach, practice has not caught up with discourse
  
• the ECGIT exemplifies that there are a lot of barriers, pitfalls and problems linked to the transition towards the new aid effectiveness principles because the latter challenge a lot of the existing institutional frameworks
  
• the call for increasing aid budgets and the coming to life of additional aid sources from the new Member States will only further complicate the situation
  
• 'widening' of European development policy cannot take place without 'deepening' and there is an urgent need for a reflection process on new structures and the task division.
  
  
  

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