Brexit ‘may mean huge loss for EU as global donor’, Parliament report warns

A school for sighted and blind children in Dakar, Senegal, partly-funded by EU and UK overseas aid money. [Matt Tempest/Flickr]

EXCLUSIVE/ Britain’s departure from the EU will challenge the bloc’s role as the world leading aid donor, and could see EU aid shrink by up to 3%, according to an authoritative new study by the European Parliament.

The EU is the world’s largest aid donor, and the UK in absolute terms, is the second biggest, giving some $18.7bn.

The withdrawal of the UK from the EU by 2019 “may therefore mean a huge loss for the EU as a global donor”, the 40-page report warns.

The publication comes as the UK looks to review its aid strategy, under a famously aid-sceptic new development minister, Priti Patel.

At a major aid conference in London on Tuesday (21 March) Patel pledged a new focus on smaller, grassroots charities.

UK aid minister promises to keep 0.7% target post-Brexit

The UK’s new aid minister has promised to keep the country’s aid target of 0.7% of GDP, despite herself once campaigning for the Department for International Development (DfID) to be shut down.

She had previously questioned the UK government’s (and EU target) of spending 0.7% of GDP on aid and employed a special advisor who advocated the abolition of the Department for International Development.

That comes against a background of a right-wing media campaign in the UK, led by the Daily Mail and Daily Telegraph, to cut overseas aid.

Speaking at the BOND development conference, Patel announced a new fund operated with the Charity Commission for small charities with under £250,000 per annum income.

She said: “I believe smaller organisations are a crucial part of the Great British offer on international development.

“Your organisations are found in every corner of the UK, often run by volunteers and highly valued and trusted by your local communities,” Patel stated. “And it is often your organisations that make some of the most direct connections with the people we’re trying to help and those wanting to help them. You are highly effective at building trust with local communities and tailoring your specialist services around people’s actual day-to-day needs.”

Tuesday’s report from the policy department of the Directorate-General for External Policies of the Parliament is the first to take an in-depth look at what Brexit may mean for the EU’s ODA [Official Development Aid] Budget.

It warns that “the UK’s leaving would challenge the EU’s role as the world’s leading donor: EU aid may decrease by up to 3%, and it could lose between 10% and 13% of its world share”.

In particular, it points to a likely reduction in aid to neighbouring states in North Africa and Eastern Europe, possibly a cut of up to 1% to 4%.

Admitting that analysis so far on Brexit’s implications for aid “are scarce”, the report goes on to survey three possible outcomes – a Brexit which leads to a ‘nationalist’ British stance on aid, and one which produces a ‘realist’, or ‘cosmpolitan’ outlook.

In the worse-case scenario, the report believes a post-Brexit UK could cut its aid budget by 30%, based on recent experiences with other member states.

“Under this nationalist scenario, there would be no possibilities for UK-EU collaboration,” it states.

Wall of silence from development NGOs on Brexit threat

EXCLUSIVE / Actors, scientists and now even historians have put their names forward to argue for Britain to stay in the EU. But with less than four weeks to go to the UK referendum, there has been a resounding wall of silence from key development NGOs on the dangers – or even opportunities – posed by a Brexit.

There was no immediate comment from either Oxfam or Save the Children, two major UK-based NGOs.

The most optimistic outlook would be for the UK to largely keep its present spend on ODA, and thus perhaps spend around half in conjuction with the EU.

However, it admits there “is a degree of uncertainty as to the international role that the EU will opt for after Brexit.

“It may bet on being a stronger global player (increasing aid in order to compensate for the British aid loss, sticking to its current aid allocation and seeking a collaborative climate with the UK), or, alternatively, there may be a retrenchement to the nearest borders, acting instead as a regional power.”

Two issues are immediately at stake, the first that, largely, UK aid money channelled through EU institutions and with other member states’ contributions, creates a bigger ‘leverage’ affect on pulling in funding from other institutions for African, Caribbean and Pacific (ACP) nations.

That multiplier effect is likely to be lost most dramatically for UK aid, but also for a large chunk of EU ODA.

The second is the immediate affect on the next so-called Multiannual Financial Framework, I.E. the budget covering the seven years from 2021-2027, when the UK will no longer be a member of the EU, and so Brussels will face a significant shortfall in its ODA budget.

Cracks appear in EU-ACP unity at Cotonou meeting in Dakar

Dissent was heard at the high-level meeting in Dakar last week of the EU and the 79-member states of the African, Caribbean and Pacific group.

Longer-term, there is the question of a successor agreement to the current Cotonou Agreement with the EU and ACP nations, which expires in 2020.

That is currently bogged down in difficult talks, and – according to various NGO and UK government insiders spoken to by – the EU will miss some of the negotiating and logistical firepower of London’s well-resourced and experienced DfID.

The Parliament report does hold out the prospect that the UK, post-Brexit, could continue to contribute to EU aid via mechanisms used by EFTA members such as Norway and Switzerland.

The UK, along with Sweden, Denmark, the Netherlands, Luxembourg, are the only EU member states to meet the 0.7% of GDP spent on aid target set by the United Nations in the 1970s.

Germany and France lag far behind the UK.

The report concludes “Brexit may mean a huge loss for the EU as a global donor.

“In any event, the UK’s exiting the EU could have a significant impact in financial, operational and financial terms on the EU’s role as leading donor.”

Even this analysis is based on the assumption that the pound sterling remains largely stable against the euro in the aftermath of Brexit.

And the report warns that – while some member states may wish to replace the UK’s leading role in EU ODA – “others could see Brexit as providing an opportunity to reinforce a more nationalistic discourse when it comes to aid and as a result cut their budgets”.

What would 'Brexit' mean for Development?

On June 23rd Britain will go to the polls to make a momentous decision: whether to remain in or leave the EU, writes Linda McAvan MEP.

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