EU aid spending slumps as refugee crisis recedes

A fall in spending on refugees drove EU aid spending down in 2017. [Anjo Kan/Shutterstock]

Development aid to countries in the Global South stagnated in 2017, according to new figures published by the OECD (Organisation for Economic Cooperation and Development) on Monday (9 April). It also showed a declining share of aid spent on refugees.

The annual report by the Development Assistance Committee (DAC) at the Paris-based thinktank put the total of foreign aid from official donors at $146.6 billion in 2017, a fall of 0.6% in real terms from a year earlier.

In total, aid from the 20 EU countries fell by 1.2% to $82.7 billion in 2017, representing 0.49% of their combined gross national income (GNI). For their part, net disbursements by the EU institutions fell by 6.7% in real terms to $16.5 billion.

For many European countries, the drop in their net ODA spending was merely the result of lower in-donor refugee costs reported in 2017, a sign that the impact of the refugee crisis on European countries began to recede in 2017, after peaking in 2015 and 2016.

DAC countries reported spending $14.2 billion for in-donor refugee costs, 9.7% of total aid spending, compared to 11% in 2016.

Of the EU countries, France, Italy and Sweden saw the largest increases in their aid budgets.

The question of how the costs of accommodating refugees can be treated as development aid has been one of the most controversial issues in the development policy world in recent years.

In 2016, the spending costs for migrants, refugees and security in donor countries increased by 43%. In the EU, Austria, Germany, Greece and Italy, spent more than 20% of their ODA on refugee costs.

At a meeting last October, the DAC countries agreed a ten-page guideline on refugee costs after more than two years of haggling. Temporary sustenance costs, such as food and shelter, will be counted as aid, while costs on refugees arriving including security screening, border control, detention centres will no longer.

A handful of countries met the United Nations’ target of spending 0.7% of GNI on aid: Denmark (0.72%), Luxembourg (1.00%), Norway (0.99%), Sweden (1.01%) and the United Kingdom (0.70%). Having narrowly hit the 0.7% target in 2016, largely on the back of a spike in its domestic refugee spending, Germany fell below the target in 2017.

“We have seen some progress, albeit modest,” said OECD Secretary General, Angel Gurria, presenting the figures at a press conference in Paris.

He pointed out that aid to the world’s poorest countries had increased by 4% to $26 billion.

“It is good to see more money going where it is most needed, but it is still not enough. Too many donors are still far behind the 0.7% target,” he added.

“I am encouraged to see a rise in ODA being spent in the least developed countries,” added DAC Chair Charlotte Petri Gornitzka.

If the question of in-country refugee costs appears to have been temporarily resolved, multiple battles on what can be counted as aid are still ongoing.

Belgium, France and Portugal are among a group of countries that want to increase the scope for military, peace and security expenses, potentially including concessional arms sales, to be classified as ODA.

Meanwhile, civil society organisations are critical of the increasing use of ‘blended’ finance instruments by the EU, member states and development finance institutions, which typically combine a small amount of public capital or a loan with private finance.

Donor countries are keen on ‘blending’ instruments which are less reliant on taxpayer funds. Critics says that private sector funds go disproportionately to wealthier developing countries where infrastructure projects are more likely to be profitable, squeezing the poorest countries.

Creativity is the new mantra in development aid

The lines defining aid have become increasingly blurred in recent years. Reluctance among donor countries to hit the 0.7% target, has led them to get creative.

 

The blurring of what is and is not development aid have prompted many to question the value of the UN target.

“The rules that govern aid mean that rich countries are still not meeting their commitments to the world’s poorest,” said Jeroen Kwakkenbos, a policy and advocacy manager at the European Network on Debt and Development (Eurodad).

“The main problems are that firstly, the rules that govern aid allow rich countries to direct ODA to their own domestic costs. This distorts their aid figures and has created an unreliable reporting system. In-donor costs should not be classed as development aid,” he added.

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