Global Policy Forum

Watching Aid Fall Short

In 2010, the European Union fell short of its development aid targets by 15 billion euros.  A study by the Concord coalition of advocacy organizations predicts that the situation is likely to get worse rather than improve in the coming years, due in part to state practices that inflate aid budgets and the economic crises faced by Greece, Ireland and Portugal.  An ongoing shortfall in aid threatens the sustainability of NGO activities and may mean development targets are not met.

By Timothy Spence

May 20, 2011

The European Union missed its target of aid to developing countries by 15 billion euros in 2010 and is on course fall well short of future goals, according to a report on the world’s largest donor.

The study by CONCORD coalition of advocacy organisations says that despite the 54 billion euros (71.5 billion dollars) in aid provided by the EU in 2010, its effectiveness is damaged by "inflated" budgets, a lack of transparency, and the failure of several large countries - including Germany, Italy and Spain - to meet their commitments.

Germany, the EU’s largest economy, and financially wobbly Spain and Italy together accounted for 9.5 billion euros (12.6 billion dollars) in the shortfall in the EU’s aid targets last year. Nine of the bloc’s 27 countries kept or exceeded their promises on aid.

"Money for targeted aid that has the potential to change society is at risk," Jean Kamau, who heads the Kenya office of the anti-poverty group ActionAid, told a news conference for the release of the annual AidWatch report. She urged Europeans to "recommit to the principles of assistance … because there is a real need and there are real opportunities."

"Europe is off track," said Nick Roseveare, head of London-based Bond, an independent group that promotes development aid. He said the 15-billion-euro gap between promises and actual donations "represents a serious lack of achievement against pledges have been made."

Aid advocates fear that the shaky finances of several EU countries that have already prompted bailouts totalling 256 billion euros for Greece, Ireland and Portugal could further hurt overseas development assistance.

EU leaders have traditionally seen overseas aid as an extension of their "soft power", agreeing to provide annual development aid equivalent to 0.51 percent of gross national income (GNI) by 2010, and 0.7 percent by 2015 for the 15 older EU nations. For the 12 nations that have joined the bloc since 2004, the target was 0.17 percent in 2010 and 0.33 percent by 2015, reflecting their own internal challenges of bringing infrastructure and economies up to the level of the western countries.

The current overall rate is 0.43 percent of GNI and the CONCORD group warns that at current levels of spending, aid will barely move beyond that, to 0.45 percent, by 2015.

But European officials defend their policies that have made the EU the largest donor entity, providing 58 percent more aid in 2010 than the United States (30.9 billion dollars), and more than half of all global donor assistance. EU Development Commissioner Andris Piebalgs has urged national governments to live up to their aid commitments as a "matter of credibility for the EU", his spokeswoman Catherine Ray told IPS.

But analysts say it will take political courage to spend more on foreign aid while domestic budgets are pared. Simon Maxwell, a senior researcher at the Overseas Development Institute (ODI), an independent think tank in London, says Europe has a "moral imperative" to maintain its aid commitments despite its own financial woes.

EU countries "can meet their commitments, they should meet their commitments, because the scale of need remains very large, but also because they made a promise and people should keep their promises," Maxwell told IPS by telephone. "The efficient working of our global society depends on trust, and making promises and breaking promises is the quickest way to destroy trust."

The CONCORD report analysed data from the EU and OECD, which issued its own report on development aid earlier this year. CONCORD represents 42 relief and development organisations in Europe.

The report also shows that in 2010:

- Many nations "inflated" their aid budgets by including 5 billion euros that provided debt relief, aid to refugees living in Europe and student exchanges as part of their external aid budgets, although the money never reaches needy nations.

- Security interests and military operations have skewed development assistance, with nearly 30 percent or European aid flowing to embattled Iraq, Afghanistan and Pakistan.

- The European Commission and national governments routinely ignore their own policies on channelling more assistance to civil society organisations, empowering women and achieving the aid levels needed to help achieve the United Nations’ poverty-reducing Millennium Development Goals by 2015.

But the CONCORD analysis notes that Europe remains a leader in helping less advantaged nations, and several EU nations are well ahead of the pack. Sweden, Luxembourg, Denmark, Netherlands, Belgium, Ireland, Finland and Britain have met or exceeded the EU 2010 targets, while the first four exceed the 2015 marker.

Among the newer EU states, Cyprus has exceeded the 2010 target of 0.2 percent, while Malta, Slovenia and the Czech Republic were closest to meeting their pledges.

Maxwell of ODI says Britain has made a "laudable commitment" to boosting its aid budget despite the governing coalition’s sweeping austerity measures. Germany, on the other hand, is falling well short of its goals despite its strong economy.

"In a year when the country's economy is growing at the highest rate since reunification, and much faster than the European average, Germany's budget for 2011 includes the smallest increases for development assistance since 2005," Mikaela Gavas, an ODI research, told IPS by e-mail. "At this pace, Germany will not reach 0.7 percent until 2022."

CONCORD and its coalition have been publishing AidWatch since 2006. The latest report was released a week after leaders of the worlds 48 least developed countries, meeting in Istanbul, joined United Nations officials in calling for stepped up aid and investment to east their nations out of poverty.


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