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10/12/2016

OECD postpones decision on accounting of refugee costs

Development Policy

OECD postpones decision on accounting of refugee costs

Many European countries are using their ODA budgets to cover the costs of hosting refugees.

[Freedom House/Flickr]

Major aid donor countries last week failed to agree on whether the costs of hosting refugees should be included in their official development assistance calculations. The reform has been pushed back until 2017 or 2018. EurActiv France reports.

As European countries continue to be buffeted by the migration crisis, many have been forced to dip into their official development assistance (ODA) budgets to cover the costs of hosting refugees.

This system of interconnected budgets is backed by certain countries whose public finances are under strain, but has been broadly denounced by other actors, who fear that this redirection of funding will inevitably lead to cuts in aid to the poorest countries.

Reform could see more aid money diverted to refugee crisis

Donor countries will adopt new rules on official development assistance on 18 and 19 February. The accounting of costs linked to security, refugees and the fight against extremism will be up for discussion. EurActiv France reports.

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The development ministers of the OECD’s Development Assistance Committee (DAC) discussed the issue of the accounting of costs associated with the refugee crisis at their annual high level meeting in Paris last Friday (19 February).

But so far, the 29 countries have been unable to agree on how the new system for recording these expenses would work.

Improving consistency

In the meeting’s conclusions, the development ministers stated, “It is necessary to improve the consistency, comparability, and transparency of our reporting of ODA–eligible, in-donor refugee costs, by aligning the respective methods for calculating these costs. We therefore agree to set up a clear, transparent, and inclusive process to this aim.”

But the process started at this meeting will not provide solutions in the short term. “We will reconvene in 2017 or 2018 to take stock of progress in implementing the decisions we have taken today,” the conclusions added.

OECD to redefine Official Development Assistance

Several European countries are trying to have new types of expenditure defined as Official Development Assistance (ODA), which already includes various forms of “phantom” aid, such as hosting foreign students or receiving refugees. EurActiv France reports

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“The DAC members failed to reach an agreement on stopping the use of development assistance to finance the hosting of refugees in their own countries. So this question remains unanswered,” said Friederike Röder, the director of One France.

Impact on the poorest countries

Since the beginning of the migration crisis, several European countries have diverted part of their ODA budgets to deal with these new expenses.

Under the OECD’s own rules, countries are allowed to record their spending on the hosting of refugees as ODA for up to 12 months.

Member states deepen development aid diversion to refugees

The Global South is losing out, as EU members dig into their development aid budgets to meet the costs of their asylum policies. EurActiv France reports.

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But European countries are a long way from the front line in the refugee crisis. According to the World Bank, the direct and indirect costs to Jordan of hosting Syrian refugees will reach around $2.5 billion per year, or one quarter of the state’s annual revenue.

Broadening ODA

The high-level meeting also confirmed a certain number of decisions aimed at broadening the scope of the expenses that can be accounted for in a country’s development assistance column.

Certain kinds of spending linked to peace-keeping and security in developing countries will be eligible for accounting as ODA under the reformed rules, including efforts to prevent violent extremism, military training in the Global South and the strengthening of police forces.

“This is a slippery slope. It is extremely disappointing to see governments taking measures to transform aid into a tool to promote their own security agendas. Governments should finance counter-terrorism measures through their security budgets, not by plundering their development aid funds,” said Sara Tesorieri, the deputy head of Oxfam’s EU office.

UN official: More development doesn’t mean less immigration

François Crépeau, Special Rapporteur on the human rights of migrants in the Office of the United Nations High Commissioner for Human Rights, said today (18 June) that the assumption that more development aid would reduce immigration was wrong.

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The expansion of official development assistance to include security spending, and the new opportunities this presents for abuses of the system, have caused great concern among NGOs. And the OECD has no system in place to ensure that countries adhere to the rules.

“The governments said they had proposed a series of guarantees for the use of funds normally assigned to development assistance in security operations, but they should also put in place a system of surveillance on the ground,” Tesorieri said.

Another decision by the DAC should open up ODA to increased participation form the private sector, by enabling countries to record private spending as development assistance. But again, observers fear that this will only make it more likely for donor countries to give contracts to their own companies in developing countries, at the expense of investing in public services like healthcare or education.

Background

The rules concerning the recording of public development aid are set by the Development Assistance Committee (DAC) of the OECD. This international forum of the 29 largest providers of aid decides which countries are eligible for development aid and what kind of spending constitutes international aid.

The OECD has begun the process of redefining Official Development Assistance (ODA), to go with the new post-2015 Sustainable Development Goals.

Further Reading

OECD