Posted by: Euforic Services | May 15, 2009

Development Aid in times of Crisis: Concord Roundtable on annual AidWatch Report

The growth in the volume of development cooperation lagged behind targets in 2008 in several European Union members countries. What is worse, several countries announced cuts in development cooperation for 2009: Ireland, Austria, Italy but also Lithuania and Estonia. Is this how the financial crisis is going to impact development cooperation? Is development cooperation no longer affordable for European governments? Are cuts in development budgets based on a changing public opinion and decreasing public support for development aid?

These are some of the questions that came up during the launch of the Concord AidWatch report 2009 and the discussions in the roundtable that followed. Listen to the opening statements of the roundtable:

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Fanny Nkhoma-Mbawa of Oxfam International in Malawi illustrated with some concrete examples how the crisis affects developing countries. Cuts in development aid are reversing the successful results achieved in Malawi to retain trained medical workers, over the last few months Zambia lost 25% of jobs in copper mining, in Eritrea remittances – representing 21% of GDP – went down with 31%. The results are fewer jobs, less income and cuts in budgets of key programs.

According Andrea Maximovic of Solidar, the question is not whether Europe can afford development cooperation, it is whether Europe can afford NOT to honor its commitments to increase aid. The crisis that is originating in the developed world is hitting developing countries hard. While there is still a chance to meet the MDG’s, we cannot fail the aid targets we set ourselves.

Noerina Kaleeba, President of ActionAid International reaffirms this. The world is a village – if Europe does not show leadership now it will backfire and we will regret this 5 – 10 years later. Listen to Ms. Kaleeba

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Unconditional and untied aid works, stresses Kabeela. As an example she refers to the struggle against HIV/AIDs in her country Uganda where the percentage of new infections has dropped spectacularly through an intense struggle led by people living with AIDS and supported by development aid. In Zambia development aid generated a tenfold increase of treatment of HIV/AIDS since 2003. Kabeela acknowledges that aid has its problems. It needs fixing but her experience shows that as long as aid is not tied to goods and services from the donor, and as long as it is not a political tool of the donor or the recipient, aid can work.

The AidWatch report concludes Europe is not delivering on its commitments in terms of volume and quality of aid. Italy was one of the countries announcing a cutback in aid late last year. This concerns only a minor budget category, clarified Filippo Alessi of the Permanent Representation of Italy to the EU, and Italy remains committed to achieve its targets. Listen to his words:

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He raised the issue of the influence of the public opinion regarding development cooperation. Does a crisis at home reduce public solidarity? It may not be as simple as that. Oxfam International recently conducted a survey in Italy and found that 72% of the people interviewed felt that 0,7% GNI was a reasonable target for the volume of development aid and 85% of the people felt that current levels of Italian aid should be increased or maintained.

Ms. Renata Hahlen of the European Commission (DG Development) stated that aid remains very important in combating poverty and complementing economic growth processes. She also observed that the current crisis profoundly affects all financial flows towards developing countries: remittances are dropping, direct foreign investment is pulling out. “But aid is back” she observed, “we have been accused of coming in slowly, but the crisis shows it also goes slowly”. Listen to her words:

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Concord emphasizes that at the upcoming General Affairs and External Relations Meeting of the European Council, this Monday 18 May 2009, it is imperative that the EU shows leadership and ensures a sufficient volume of good aid is available to support the achievement of the MDGs. Concord wants all EU countries to commit to individual targets for aid volumes and not hide behind a collective target. A timetable to achieve the targets would have to be established for each country.

Jasmine Burley of Concord warned of all kinds of practices that inflate the aid volume while no “fresh” transfers are being made. Debt cancellation is a good thing, without doubt but should the cancellation of export credits given to companies in the donor countries be counted as aid? And what about future interests over credits that still have a grace period? Undoubtedly this is a complicated technical accounting issue. But it is also a political issue that according to many participants in the debate needed further thought.

If only because the debate on what is aid and what is not-aid seems endless. The so-called “whole-country” approach that Italy is promoting acknowledges all the forms of support a country may give to development should be taken into account, with ODA being only one component besides support in terms of opportunities for trade, private investment flows etc. The concept does not aim to water down the definition of ODA, Filippo Allessi reassured the roundtable audience. But Jasmine Burley of Concord wondered whether in the “whole-country” approach trade barriers and subsidies would also count as a negative contribution. Andrea Maximovic warned that all the priority given to climate change may lead to aid being re-directed from other priorities towards activities that do not necessarily target the poor or help achieving the MDG’s.

Regarding the question where such fresh money should come from two types of answers dominated. Maximovic, Mbawa and Kaleeba all flagged the insignificance of the volume of annual development aid transfers compared with the billions that are freed instantly to address the economic and financial crisis in Europe and the USA.

Another option mentioned were the taxes that developing countries lose themselves because of tax havens and evasion and avoidance of tax by multinational companies. As a result, ActionAid estimates Africa loses some 50 billion US$ by the end 2009. The fact that the G20 in London recently called for action on this is encouraging according to a participant representing ActionAid but the G-20 needs to be closely monitored to ensure practices do actually change.

See also Euforic’s newsfeeds on Concord and on the European elections 2009


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