FEEDBACK – “EU Aid Uncovered : How to reach the target on time?”, CONCORD AidWatch report 2017 | November 22, 2017
A yearly tradition, the European Confederation of Development NGOs, CONCORD, published its new Aidwatch report, an analysis of the quantity and quality of development aid provided by EU Member States and the European Commission. The report launch event brought together a panel of speakers including Heidi Hautala, MEP; Laurent Sarazin, representative of the Commission’s DG […]
A yearly tradition, the European Confederation of Development NGOs, CONCORD, published its new Aidwatch report, an analysis of the quantity and quality of development aid provided by EU Member States and the European Commission.
The report launch event brought together a panel of speakers including Heidi Hautala, MEP; Laurent Sarazin, representative of the Commission’s DG for International Cooperation and Development (DEVCO); Helena Lagerlöf, representative of the Swedish Permanent Representation to the EU, as well as Amy Dodd, from CONCORD. They discussed trends in current aid expenditure and explore strategies to bring ‘development effectiveness’ back to the center of European development cooperation.
CONCORD’s report reveals that collectively, the European Union is far from meeting the long-standing goal to allocate 0,7% of GNI for Overseas Development Assistance (ODA) by 2020. Though the European Commission and the 28 Member States together remain the world’s largest development donor in 2016, the report shows that the European Union’s total collective ODA in 2016 only reached 0.5% GNI. In addition, more than half of the increases in aid from EU States in the last two years are the result of spending on areas that do not contribute to ‘genuine’ development outcome in partner countries.
The misleading increase of development aid
According to CONCORD, only 5 EU Member States succeeded in reaching the 0.7% target: Denmark, Luxembourg, Sweden, the UK and Germany. Other member States still fall long short of the 0.7 target, like France with only 0.38% of its GNI to ODA in 2016.
Over the past few years, 23 out of the 28 EU member states have increased their national aid budget to the Least Developed Countries (LDC), collectively it accounts for a 27% increase over two years.
However, the AidWatch report reveals that less aid is spent on reducing poverty and development purposes in developing countries but more is spent on in-donor-country refugee costs, securitization, and debt relief.
Spain, for example, has increased its total ODA by 193%, but 53% of Spanish ODA reported in 2016 is debt relief for Cuba. For the first time, Germany reaches the 0,7% aid target, thanks to a surge in refugee costs which account for 25% of German ODA in 2016. Within the 0.7% Club, only Luxembourg and Sweden can be credited to have exceeded the 0.7% target with spending contributing to genuine development outcome in partner countries.
“We need development effectiveness principles back to the top of the agenda – quality of aid is what matters”
MEP Heidi Hautala
Therefore, CONCORD developed the concept of “inflated aid”, which enables it to account for, and calculate, the aid that is not spent on achieving genuine development outcomes for people in partner countries. This ‘inflated aid’ accounts for 20% of the total ODA reported by the EU28 in 2016.
Distinguishing between ‘inflated’ and ‘genuine’ aid
In 2016, CONCORD report finds that ‘inflated aid’ has increased by 43 %, as a proportion of total European aid, compared to the previous year. For example, in 2016, only 11.4 billion euros of the 15.6 billion total aid managed by the EU institutions can be classified as ‘genuine aid’ (tied aid and interest accounting for a large part of the 18.8% ‘inflated aid’).
For Member States, the share of in-donor refugee costs is one of the main features of this ‘inflated’ aid: EU donors reported a total of 10.88 billion euros for refugee costs in 2016, a 43.77% increase compared to 2015. As for Germany, an important share of Belgian ODA was used for in donor refugee costs (17% in 2016, compared with 3.6% in 2010).
The massive flows of migrants who have sought refuge in Europe in the last years have increased the hosting countries’ spending. As allowed by OECD rules, many EU Member States accounted these costs of managing refugees as development aid. Conveniently, it helps countries to show better results in terms of reaching aid targets. However, it is highly questionable whether assisting refugees in Europe genuinely contribute to what development aid is aimed to be about: reducing poverty and inequalities in developing countries. As a matter of fact, three EU Member States do not include these costs in as ODA spending (Luxembourg, Cyprus and Croatia).
“Aid drives migration. Development will not stop migration”
Helena Lagerlöf, Minister Counsellor,Permanent Representation of Sweden to the EU
These examples illustrate the foregone conclusion of CONCORD stating that with only genuine aid being accounted, it would take the EU and its Member States another 30 years to reach their commitment to 0.7% GNI. This worrying trend undermines the integrity of aid and development cooperation: EU and its members States must uphold their treaty obligations and commitments for international development.