Bursting the Bubble

EU Falls Short Of Development Aid Declarations

17 October 2013 | by

While writing this text, my unconditional reflex is to start with saying that today, the EU and the United Nations celebrate the International Day for the Eradication of Poverty. Sadly, a quick look at the numbers does not give much reason for festivity. In addition, the occasion is marred by tragic events, such as those on the Mediterranean Sea in the last days. Instead of a celebration, today should be marked with a thorough reflection on the responsibility of the world’s wealthiest nations for the developing countries and on the commitment to help them stand on their own feet.

At a first glance, the EU has nothing to be ashamed of in terms of foreign aid. As a whole, it has spent more than €55 billion on official development aid (ODA) in 2012. This equalled 51 % of all development aid worldwide, making the EU the largest aid donor on the globe. The second largest one, the USA, made a contribution equivalent to 24 %, which was twice less than the EU, both in absolute terms and in proportion to its gross national income.

But is Europe doing enough? The proportion of aid to total GNI is the key to a more accurate picture. The UN estimates that in order to reach the Millennium Development Goals and successfully fight poverty, the funding provided to the world’s poorest nations by the most developed ones must amount to at least 0.70 % of their GNI.

In 2005, the European Council approved a two-tier plan for the EU member states: ‘Old’ members pledged to meet the 0.70% objective, whereas the EU12 countries were requested to donate 0.33% of their GNI. The Council declared that the EU’s collective spending on ODA would add up to 0.56% GNI by 2010 and will reach the 0.70% GNI target by 2015.

How likely that will be is shown through statistics. Last year, only 4 member states reached or surpassed the target, while the rest fell short of their declarations. Those above the threshold were Luxembourg (1.00% GNI), Sweden (0.99%), Denmark (0.84%) and the Netherlands (0.71%).

The ‘peloton’ was formed by the UK (0.56%), Finland (0.53%), Ireland (0.48%), Belgium (0.47%), France (0.46%) and Germany (0.38%). Austria, Portugal and Malta barely exceeded 0.20%, while the weakest performers, all remaining of the EU12 along with Spain, Greece and Italy, stood between 0.15 and 0.08 %.

On average, EU’s foreign aid in 2012 summed up to 0.39 % of its GNI, which is enough to make the EU the most generous among the world’s economies. It is remarkably more than the USA (0.19 per cent) or Japan (0.17%), but what is disturbing are the trends. The EU’s development aid decreased from 0.44% in 2010. Out of the 27 member states, only four (Luxembourg, Austria, Poland and Latvia) increased their contribution, while fifteen reduced their ODA expenditure.

Above all, there is little hope for improvement. The 0.70% target for 2015 includes both the external aid funded from the EU budget and that provided by individual EU states. Regrettably, the volume of funding foreseen in the multiannual financial perspective for 2014-2020 gives no reason to expect that the 0.70% target will be achieved. During the MFF negotiations, the €70 billion proposed by the Commission was cut down to €58.7 billion, which requires the individual commitment of member states to be significantly increased if the 2015 target is to be met. Needless to say, the prospects for that are miserable.

The commitment to development aid has been rather dormant over the last few years. This stagnation is a consequence of the slow pace of economic recovery in Europe and until it accelerates, any major shift in development aid funding is unlikely. However, soon I will try to show the bright sides – the strong support to global solidarity among the Europeans and the ways to improve foreign aid without bursting the limited financial boundaries.

What do you think?