EU Aid - Genuine Leadership or Misleading Figures?: An independent analysis of European governments' aid levels

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European Governments provide over half of the world's development aid. In international development negotiations over the last five years they have provided crucial international leadership. In 2005 they pledged further increases to aid levels in order to help fight world poverty. If these pledges are honoured, Europe will provide at least $38 billion more aid a year from 2010 onwards.
   Joint European NGO ReportApril 2006 EU aid: genuine leadershipor misleading figures? An independent analysis of European Governments’ aid levels  About this report  This report has been produced by anunprecedented broad collaboration of European NGOs. Contributions were receivedfrom all the major European developmentNGO networks and from NGOs and NGOplatforms in all 25 EU countries. A list of organisations formally endorsing the report isavailable at the end. The report is available at: For more information send your query Acknowledgements This report has been written by Hetty Kovachand Alex Wilks at the European Network onDebt and Development (Eurodad). Eurodad has been assisted by a SteeringGroup whose members are: Han Verleyen(11.11.11), Romilly Greenhill (ActionAidInternational), Iacopo Viciani (ActionAidItaly), Dragan Nastic (BOND), Katia Herrgott(Coordination Sud), Florent Sebban(Eurostep), Michael Obrovsky (ÖFSE) andLuis Morago (Oxfam International). European aid-watching initiative This initiative contributes to the Global Callto Action against Poverty mobilisation. It ispart of a broader process of monitoring andadvocating on European aid being undertakenby a range of organisations and networksunder the umbrella of CONCORD, theEuropean confederation of development andrelief NGOs. This includes a seminar in early  April 2006 during which European NGOsdiscussed further joint advocacy activities onEuropean aid. More information: 2 EU aid: genuine leadership or misleading figures? Contents PART ONE  EU aid: genuine leadership or misleading figures?3  Flattering official numbers4  Where countries really stand: behind the official figures6  Change the aid reporting rules9  Conclusions and demands11PART TWO: COUNTRY PROFILES12 Austria13Belgium14Denmark15Finland16France17Germany18Greece19Ireland20Italy21Luxembourg22The Netherlands23Portugal24Spain25Sweden26United Kingdom27NEW MEMBER STATESCyprus28Czech Republic28Estonia29Hungary29Latvia30Lithuania30Malta31Poland31Slovakia32Slovenia32European Commission33Report signatories34Endnotes35  EU aid: genuineleadership ormisleading figures? European Governments provide over half of theworld’s development aid. In internationaldevelopment negotiations over the last fiveyears they have provided crucial internationalleadership. In 2005 they pledged furtherincreases to aid levels in order to help fightworld poverty. If these pledges are honoured,Europe will provide at least $38 billion more aida year from 2010 onwards. Increases in high quality aid are vital for thefight against poverty. Providing more aidwould enable millions of people in desperatepoverty to get access to health, education andproductive opportunities. In 2002 European Governments set themselvesa collective target of providing 0.39% of theirgross national income (GNI) for OfficialDevelopment Assistance (ODA) by 2006 andindividual minimum targets for each country of 0.33% of ODA/GNI by 2006. This commitmentwas renewed and expanded in 2005, followingcivil society campaigning, with EuropeanGovernments agreeing to contribute 0.51%ODA/GNI by 2010.New official figures released by theOrganisation for Economic Cooperation andDevelopment (OECD) in April 2006 and theEuropean Commission in March 2006 show that European Member States are fulfillingtheir promises and are actually ahead of theircollective target and doing better than expected. However, there is no room for complacency. This briefing shows that, according to ourcalculations € 13.5 billion– or almost onethird– of reported European ODA in 2005 didnot provide any new aid for developingcountries. This vast amount of apparent aidspending was in fact money for debtcancellation and for foreign student costs andrefugees in donor countries.Official debt data reveals that more than € 9billion of EU aid in 2005 was spent on thecancellation of two countries’ debt: Iraq andNigeria. Iraqi and Nigerian debt is largely export credit debt. It was issued primarily as a means of subsiding European companiesoperating in developing countries and never had any development purpose. While cancellationof this debt is vital, the resources released forpoverty reduction will be far smaller than theheadline figures suggest. European UnionGovernments’ insistence on accounting for thiscancellation in their official aid figures alsocontravenes the United Nations Monterrey agreement, which calls for debt cancellation to befunded additionally to Official Development Assistance. In addition, assuming that in 2005 Europeancountries continued to spend similar levels of theirODA on these items as in the previous five years, a further € 840 million will have been spent onhousing refugees within European countries, and € 910 million of EU aid on educating foreignstudents within European countries. While spending on foreign students andrefugees in Europe is important, these are notexpenses which the public rightfully expects tobe described as development assistance. This isbecause they provide no new resources fordeveloping countries and are not tied todevelopment objectives of improving thewelfare and human security of the poor. If these items are removed from headline aidfigures, as the NGOs from across Europe whohave combined forces to produce this analysisbelieve they should be, then Europe has still a long way to go in its fight against worldpoverty. This report calls for a clean up in aidreporting to ensure that the only aid that iscounted is aid that saves lives and not simply that which saves face. Current aid reporting rules are set by theOrganisation for Economic Cooperation andDevelopment. The OECD allows EuropeanGovernments to regularly include spending ondebt relief as aid and to count spending onrefugees and foreign students in their owncountries as ODA. This must be changedimmediately in order to prevent Governmentsfrom misleadingly inflating aid figures. Thecredibility of Europe is at stake. EU aid: genuine leadership or misleading figures? 3 1234  Flattering officialnumbers The latest figures released by the Organisationfor Economic Cooperation and Developmentand the European Commission show thatEuropean Member States spent nearly € 45billion on Official Development Assistance in2005. This means that European MemberStates have already reached their collective EUtarget of 0.39% of ODA/GNI a year earlier thanthe target date they had set themselves in 2002.Most EU countries are also able to report thatthey have reached the minimum target forindividual member countries of 0.33%.The collective European aid average is pulledup by a minority of well-performing EuropeanUnion Governments – Sweden, Luxembourg,the Netherlands and Denmark – who have allbeen spending at or above the United Nationsaid target of 0.7% ODA/GNI for some years.  Another seven EU countries have recordedthat in 2005 they have already hit, or are justabove, the minimum EU 2006 aid target.These are France, Austria, Belgium, Ireland,Finland, Germany and the United Kingdom. 4 EU aid: genuine leadership or misleading figures?   0.920.870.820.810.530.520.480.470.470.410.350.    S   w  e  d  e  n   L  u   x  e  m   b  o  u  r  g    N  e   t   h  e  r   l  a  n  d  s   D  e  n  m  a  r   k   B  e   l  g    i  u  m  A  u  s   t  r   i  a   U  n   i   t  e  d    K   i  n  g   d  o  m   F   i  n   l  a  n  d   F  r  a  n  c  e   I  r  e   l  a  n  d   G  e  r  m  a  n   y   I   t  a   l   y   S  p  a   i  n   G  r  e  e  c  e   P  o  r   t  u  g   a   l 2005 Official headline aid figures THE OFFICIAL PICTURE: ODA as a Percentage of GNIfor the EU 15 Member States, 2005 Why more aid? More aid is badly needed. Between 1.4 and 1.9 billion people worldwide live in poverty. Thispoverty results in needless deaths and low quality of life. For example about 500,000 womenworldwide die each year from complications arising from pregnancy and childbirth and in2002 alone 3.1 million people died of HIV/AIDS. More aid can make a real difference to people’s lives. Since 1970, aid has contributed to thedoubling of school enrolments and the halving of child mortality. A further aid increasecould make a massive difference in the level of investment in anti-poverty interventions. Forexample, US$ 800 million per year in aid would enable Vietnam to reach the MillenniumDevelopment Goals (MDGs) lifting millions of its citizens out of poverty and enabling themto have access to clean water and health.  A greater volume of aid is important, but not sufficient. Aid allocation and administrationalso need dramatic improvements so that more spending is predictable and poverty-focussed. Developing country Governments need to take steps to meet their internationalcommitments and enable their citizens to be involved in determining policies andmonitoring spending. Aid increases must also go hand in hand with more policy coherencein trade, agriculture and financial policies. Figure 1 Source: OECD (2006) 5678 Box 1.
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