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AidWatch 2018: EU aid: A broken ladder?

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EXECUTIVE SUMMARY

The quantity and quality of European official development assistance (ODA) spending is at a critical crossroad. Three years after adopting the 2030 Agenda for Sustainable Development, the EU and its member states are no closer to meeting the collective target of 0.7% ODA as gross national income (GNI). In 2017 the EU recommitted to the development effectiveness agenda, as confirmed by the revised European Consensus on Development. But latest European trends for ODA spending, which indicate increasing emphasis on domestic objectives, seem to be at odds with the key principles of this agenda. This year’s CONCORD AidWatch report takes stock of what the EU has achieved in 2017 and analyses whether the latest European practices for ODA delivery comply with effectiveness principles and ensure no-one is left behind.

In 2017, the EU and its 28 member states (EU28) remained the biggest development donor worldwide. However, the level of ODA decreased for the first time in six years. In 2017, EU 1 See Annex 1 for a full explanation of CONCORD’s methodology for counting inflated aid. member states disbursed €72.65 billion of ODA, almost 3% less than in 2016. This decrease is justified by the reduction in debt relief and in-donor refugee costs, two elements that, together with imputed student costs, tied aid and interest repayments, do not contribute to positive development in partner countries. This “inflated aid”1 in 2017 represented 0.09% of EU28 GNI, putting the EU’s ODA contributions even further below their collective 0.7% ODA/GNI commitment. At this rate, once inflated aid is discounted, the EU28 will not be able to close the gap to 0.7% before 2057: almost 30 years later than the target for 2030. Trends on ODA to least developed countries (LDCs) are not reassuring either: EU contributions to LDCs across the years have only marginally improved and are far from keeping up with the overall increase in EU’s ODA. It is difficult to observe the commitment to leaving no-one behind in this trend.

EU´s commitment to finance sustainable development, confirmed in the new Consensus, might be further undermined considering the ongoing modernisation of ODA at Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC) level. Different reporting reforms that can impact the quality of ODA have been ongoing since 2016, namely for in-donor refugee costs, private sector instruments and tied aid, concessional loans and debt relief, and peace and security. These can bring both opportunities and risks towards genuine aid and the hardfought development effectiveness principles. Particularly in view of the important discussion on the upcoming EU multiannual financial framework (MFF), it is now fundamental to take stock of European ODA practices that prioritise non-development objectives, such as migration control, addressing security threats and commercial expansion, at the expense of effective development cooperation. These are against the key principles of ownership by developing countries, focus on results, inclusive development partnerships and transparency and accountability. And they can ultimately undermine the commitment to leave no-one behind – a pledge to put the most marginalised people first in global development, by combatting discrimination and tackling inequalities in and between countries.

How ODA is delivered can significantly impact poverty and inequality. The role of development professionals in EU institutions and member states is vital in addressing existing risks and upholding development effectiveness principles. Some countries are managing to guarantee the quantity and quality of their ODA, reaching the 0.7% target while keeping inflated aid levels low. So, this is feasible and needed. It is crucial to avoid any further shifts by EU governments that undermine the integrity of ODA and development cooperation, ensuring no-one is left behind.

THE NEXT MULTIANNUAL FINANCIAL FRAMEWORK

  1. The 2030 Agenda for Sustainable Development, the Paris Agreement on Climate Change and human rights conventions form the guiding framework for the whole EU budget including external action. This guiding framework must clearly influence the objectives, thematic focus, partnerships and ways of working in all headings, regulations and programmes.

  2. Establish transparent governance mechanisms in the instruments’ regulations to ensure accountability towards Lisbon Treaty principles and objectives, including development objectives, and to counterbalance the risk of overemphasis on flexibility.

  3. Ensure that the whole of Heading VI is at least 92% ODA eligible, and actions under Heading VI are aligned with development effectiveness principles.

  4. Across the external action heading, commit to:

a) devoting 20% of the budget, through ring-fencing, to human development and social inclusion, understood as education, health and social protection; this should not include gender-targeted actions that deserve separate commitments and funding, although of course they are not mutually exclusive;

b) allocating 85% of ODA to programmes with gender as a principal or significant objective (G1 and G2 on DAC gender marker) and 20% specifically to targeted actions (G2);

c) setting 50% for climate- and environment-relevant spending; applying a two-track holistic approach (mainstreaming and specific action);

d) providing at least 0.2% of GNI to LDCs by 2025.

  1. Apply strong standards to blended finance and guarantees to make sure financial and, more importantly, development additionality are assessed and demonstrable; development effectiveness principles are respected; risks to people’s rights and livelihoods and the environment are effectively minimised; women’s and girls’ rights, economic opportunities and decent work creation for all are effectively promoted; the public sector and public goods are not undermined, but rather strengthened; and debt sustainability and accountability are always factored in when designing new financing mechanisms.

  2. Establish a clear commitment to working in dialogue and partnerships with civil society in all external action instruments through adequate modalities for civil society participation in EU development policy-making and thematic and geographic programmes and operations.
    Establish budget targets or specific civil society facilities in all geographic programmes.