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Sleight-of-hand eats into aid
David Cronin, Mail & Guardian (SA)
May 18, 2007

Poor countries risk receiving €50-billion less than they have been promised from the European Union by 2010 unless the quality of development aid improves, anti-poverty campaigners have warned.

The EU-s development aid ministers met in Brussels this week to assess what progress had been made in realising commitments to increase aid. But while EU officials are confident that pledges are being upheld, NGOs contend that the actual increases in aid that makes a real difference on the ground are unimpressive.

In a new study, the European NGO Confederation for Relief and Development (Concord) calculates that almost 30% of the €47,5-billion that the EU reportedly gave in development assistance last year was not genuine. About €13,5-billion of this amount went in debt cancellation and in helping refugees and foreign students living in Europe.

If current trends continue, poor countries could receive €50-billion less that they have been promised by 2010, the report says.

The study also found that aid is often used to further European commercial interests, rather than having poverty alleviation as a primary goal.

Of the 15 countries that formed the EU before it expanded eastwards in 2004, only Britain and Ireland have ceased making aid conditional on recipient countries buying goods and services from donor countries.

In 2001, all EU countries agreed to "unite" their aid from domestic commercial interests, yet seven of the 15 "tied" more than one-fifth of their aid budgets in 2000/04. Greece resorted to this practice for half of its aid, while Spain, Germany and Austria tied at least one-third of theirs.

Just Kilcullen, head of the Irish Catholic aid urgency Trocaire and president of Concord, expressed concern that €7-billion of EU aid was spent on technical assistance last year, much of it never requested by developing countries. "In Cambodia, we know that 740 international advisers were paid more than the wage bills of 160 000 civil servants," he said. "There is this often shocking situation where an aid elite is coming into developing countries and living in luxury, providing services on large salaries."

Lucy Hayes from the European Network on Debt and Development (Eurodad) complained that an excessive proportion of EU aid is being used for debt cancellation. Almost €11-billion of the EU-s reported development assistance for 2006 went on debt cancellation, mostly for Irag and Nigeria. Hayes argued that debt cancellation should be funded separately from official development assistance. She described it as "scandalous" that poor countries are receiving less aid because it is being used to cancel debts resulting from "dodgy decisions on lending" by richer countries.

She also noted that most of the debt cancelled in Nigeria was export credit debt, incurred to fund projects designed to promote Western business. Including such debt cancellation as aid amounts to a misleading accounting trick, she suggested. "This isn-t money that is going 5000km from Europe to Africa," she said. "It is moving 500m from the ministry of foreign affairs or development to the treasury."

EU officials have defended the inclusion of debt relief data in aid statistics. Such data may be considered aid, officials say, under rules drawn up by the Organisation for Economic Cooperation and Development. That grouping of industrialised nations has been tasked with defining the eligibility criteria for development aid.

"Those rules need to be changed," Hayes said. "Debt relief and aid to students and refugees need to be taken out. At the moment, however, there isn-t the political will to do so."

While she recognised that supporting refugees in Europe is vital to uphold human rights, she argued that it cannot be considered development aid. Financing foreign students in Europe can bring more benefits to European economies than those in developing countries, she noted. Many students opt to remain in Europe, thus contributing to a "brain drain" and a shortage of highly educated workers at home.

In 2005, the EU-s governments agreed to spend €20-billion more in development aid by 2010, with half of the increase going to Africa.

Yet Concord has estimated that real aid to Africa has fallen. In 2004, Africa received 41% of EU development aid, once debt cancellation is removed from the equation. In 2005, this declined to 37%.

"Because of the historic relationship between Africa and Europe, there is a need for a moral and political commitment to African growth and development," said Hussaini Abdu from Action Aid in Nigeria.

"We are not under any illusions about aid being the only means to development. But there is a huge development gap between Africa and the rest of the developing world. And it will take aid for that gap to be bridged."

He added that the debt crisis and the impoverishment of Africa has left governments "so devastated that they cannot fund education", with the result that 80-million children do not go to school. "Two million Africans died of Aids last year alone," he said. "This year there will be an estimated three million people newly infected by HIV/Aids. Four out of five of these cannot access medication."

Yet, rather than addressing Africa-s most pressing needs, rich nations appear fixated on furthering their own countries- commercial objectives, he said. In Liberia, there is concern about the need to provide a decent future for child soldiers who became entangled in its civil war.

"Today, what we are finding is that almost 47% of development assistance for Liberia is going back to the developed world," he said. "It is being used to finance companies coming from Europe." -IPS

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