Western Aid Falls Prey To Deficit Squeeze -- When Needed In North Africa (4/14)     Print

On both sides of the Atlantic outflows of development aid are slowing. The reasons are similar everywhere: pressures to reduce deficits by cutting government spending, especially on foreign aid – a cutback that is relatively painless for these governments because it does not affect any significant part of the electorates in EU nations or in the U.S.

The downside is the risk of seeing the poor countries slide deeper into poverty, perhaps conflict and even become failed states. Western governments – most recently the Obama team of Secretary of State Hilary Clinton and Defense Secretary Bob Gates – have been stressing the value of development aid – beyond altruism – as a way to prevent conflict in much of the world and thus spare the human and financial costs of civil wars and humanitarian interventions. Now that presumably cost-effective investment is liable to go missing from the tool-kit of the trans-Atlantic community.

These cutbacks have come recently to the U.S., where “Tea-Party” fiscal hawks have appeared in Washington as a powerful faction since the Congressional elections in November 2010. The U.S. has slashed “foreign operations” (including the State Department and U.S. Agency for International Development) by $8.5 billion. These new budgetary restraints come at a time of crisis and political unrest especially in the North Africa where aid has been discussed as a way of consolidating democracy amid regime changes.

In the EU, the slowdown started earlier: last year there was an accumulated shortfall of $19 billion on a $49 billion target of Official Development Aid.  Only 0.43 percent of the EU’s GNI (Gross National Income) was given toward development assistance when the objectives for 2010 were to have this amount reach 0.56 percent of GNI. What is more, not only is the generosity of donors coming into question but also the sustainability of aid flows since development assistance is increasingly being supported by new lending, not grants that do not have to be repaid.

The U.S. also lags behind its targets for Official Development Aid (0.18 percent of GNI compared to the target for 2015 of 0.7 percent). Actual U.S. aid is much larger in reality than these figures because so much American philanthropy (think Bill Gates, for example) falls outside the official government-supplied aid.

In practice, the savings Western Nations can obtain from aid cutbacks will be meager compared to these countries’ large amounts of debt.  And there may be costs in terms of international stability. Western aid is seen as a major tool in trying to stabilize emerging democracies in North Africa, including the goal of preventing big migrations across the Mediterranean to EU countries that are already feeling social strains over Muslim minorities.

If EU member states continue cutting aid, EU development commissioner Andris Piebalgs asserts that “we [in Europe] will face consequences -- permanent instability and military conflicts – on our periphery."

Oil-rich Arab states may pick up part of the burden, but their aid is unlikely to benefit from the accountability and development experience that accompanies Western aid flows.

Georgio Comninos, Editorial Assistant of European Affairs