Poor countries could lose $67 billion in aid

Poor countries risk receiving $67 billion less than what they have been promised from the European Union (EU) by 2010 unless the bloc improves the quality of its development aid, anti-poverty campaigners have warned. The EU's development aid ministers are to assess what progress has been made in realizing commitments to increase aid at a Brussels meeting May 15. Although EU officials say the ministers will express confidence that pledges are being upheld, non-governmental organizations (NGOs) contend that the actual increases in aid that make 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 percent of the $64 billion that the EU reportedly gave in development assistance last year was not genuine. Some $18 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 $67 billion less than what they have been promised by 2010, the report says. The study also states that aid is often used to further European commercial interests, rather than having poverty alleviation as its primary goal. Of the 15 countries that formed the Union before it expanded eastwards in 2004, only Britain and Ireland have ceased making aid conditional on recipient countries buying goods and services from the donor countries. In 2001, all EU countries then agreed to "untie" their aid from domestic commercial interests, yet seven of the 15 "tied" more than one-fifth of their aid budgets in 2000-2004. Greece resorted to this practice for half of its aid, while Spain, Germany and Austria tied at least one-third of theirs. Justin Kilcullen, head of the Irish Catholic aid agency Trocaire and president of CONCORD, expressed concern about how $9 billion of EU aid was spent on technical assistance last year, much of which was 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 in an interview. "There is this often shocking situation where an aid elite is coming in to developing countries and living in luxury, providing services on large salaries." Lucy Hayes from the European Network on Debt and Development complained that an excessive proportion of EU aid is being used for debt cancellation. Almost $15 billion of the EU's reported development assistance for 2006 went in debt cancellation, mostly for Iraq 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… from Europe to Africa," she said. "It is moving 500 meters 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, according to the officials, under rules drawn up the Organization for Economic Cooperation and Development in Paris. That grouping of industrialized 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 recognized 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 $25 billion more in development aid by 2010 than they did at the time, with half of the increase going to Africa. Yet CONCORD has estimated that real aid to Africa has fallen. In 2004, Africa received 41 percent of EU development aid, once debt cancellation is removed from the equation. In 2005, this declined to 37 percent. "Because of the historical relationship between Africa and Europe, there is a need for a moral commitment and a political commitment in Europe to African growth and development," said Hussaini Abdu from ActionAid's office 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 newly infected people 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, for example, much concern has been voiced 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 percent of development assistance for Liberia is going back to the developed world," he said. "It is being used to finance companies coming from Europe."