Bleak outlook for development assistance in 2012

There is a collective denial amongst many foundations and NGOs about what will happen to overseas development assistance (ODA) from Europe. Three trends mean that old-fashioned aid is under threat as never before

The economy, stupid. Government spending is under immense pressure in Europe, the USA and some other industrialised economies. Even if ODA were cut only proportionately, this would be serious. ODA will, though, be cut much more and what is left will be re-defined to national advantage. The important thing will be to preserve aid that is popular in the donor country (health, education) and that does lasting long-term good
Europe’s shift to the right.There are only three socialist governments in power in Western Europe (Belgium’s very shaky coalition, Denmark’s centre-left minority government and Norway’s ever-stronger Labour-led coalition). Two of them are only in power as a result of awkward electoral manoeuvering to keep the far right out of government (in both Flemish-speaking Belgium and in Norway, parties on the extreme right of politics get a lot of seats but the mainstream right-wing parties in both countries refuse to contemplate coalitions with them). This rightward shift in popular thinking may accelerate. It makes traditional arguments about moral duty even less compelling than they were. Protecting ODA means giving politicians on the right arguments that they can use effectively with their own voters
The emergence of the middle-income economies. India still receives over $200 million of UK development assistance a year (while giving about $1 billion itself to poorer countries), China remains an active bidder for funds from multilaterals such as the Global Fund for AIDS, TB and Malaria. As the Chinese buy up infrastructure and the Indians own ever more of Europe’s steel industry, it will become impossible to continue this ODA — much as governments may want to, in the interests of buying favour or commercial advantage

There is an intellectual accelerant for this fire as Bill Easterly and Dambisa Moyo get more and more space for their critiques of development policy. As the details emerge of past giving to Egypt (the second largest recipient of US aid) and Libya (which got more ODA in 2008 than at any time since the fall of its monarchy in the 60s), expect more discussions of ODA to be illustrated by those pictures of Tony Blair emerging from a private jet to discuss “governance”.

The “development community” is mostly government officials talking to people who have made their careers in development policy. This community has become deaf to reality and talks of arcane shifts in the aid effectiveness agenda as if those shifts were game changers that would give politicians the ammunition that they need to defend — maybe even extend — ODA.

I’m planning to write a series of five blogs. I will look at

each of the three changes in detail
what Europeans really do care about and how it can be used to defend ODA
what foundations and aid partners need to do if they want to maintain spending on the environment, health and population