DEVELOPMENT: Experts Urge Overhaul of Global Aid Policies

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By Ramesh Jaura*Picture credit: IFAD

BERLIN - Two former German policy-makers and practitioners of international development cooperation have decided to break taboos and call in a joint paper for an overhaul of national, European and international aid policies as a befitting response to rapid globalization that "has changed the world more than many in the field of development policy cooperation would like to believe". They also cast a rather critical look at the 0.7 percent aid target, generally considered as development community's 'holy cow' .

"The (present) global development structures and programs are lagging behind the new realities of economic and political needs. There is no longer a ‘North/South’ or ‘donor/recipient’ structure. Developmental paternalism that ‘donors’ continue to practice must therefore give way to genuine partnership and ownership by partners," say authors of the paper, Eckhard Deutscher and Erich Stather, made available to IDN.

Deutscher is a former President of the Development Assistance Committee (DAC) of the 34-nation Organisation for Economic Co-operation and Development (OECD), which comprises major ‘traditional’ donors. Stather is a former Secretary of State in Germany’s Federal Ministry for Economic Cooperation and Development (BMZ).

Deutscher and Stather are of the view that the forthcoming development policy challenges in the face of profound political and global change call for fundamental structural reforms in the European Union where 27 national development policies plus the EU are a development obstacle in itself. These should be "Europeanized" as part of a European foreign policy, they say.

"The labyrinth and bureaucratic inefficiencies of the EU development policy structures should be reformed. Also the German development policy needs much more orientation to multilateralism," Deutscher and Stather emphasize.

They are of the view that “a classification of the world in developed and developing countries, in Western leadership roles or a classification of countries in North and South is now completely out of touch with reality.” Content and objectives of development policies however do not require a fundamental reorientation. These are broadly defined in the Millennium Development Goals (MDGs) and other relevant international agreements.

“But there are negative structures in the global 'aid system', which are not responding to global changes. On the one hand, the development policies of OECD countries continue to be focused on national self-reference; internationally agreed reforms are yet to be implemented.

“On the other hand, new donors like China, India or Brazil, have challenged the OECD rules of the game successfully with quite demonstrable political results. Many developing countries are criticizing the existing development cooperation more and more openly. This paper wants to point the way to a future of success, efficiency and effectiveness," says the paper.

The paper pleads for continuing traditional development cooperation with poorer developing countries while their economic integration (especially that of African countries) into the regional and world markets gets better. But "development policy should in no case remain solely focused on poverty reduction." The paper sees the future of development cooperation in more strategic investments to foster economic growth. At the same time, these must address risks where global public goods are in danger, such as climate, environment, energy, human rights, good governance and the fight against corruption.

Reform should begin in Europe

"The need for reform is of particular importance for Europe," says the paper, adding: "The ever-increasing fragmentation of international cooperation today is anachronistic, inefficient and costly: More than 300 governmental implementing organizations, 24 development banks, multilateral programs 270, 40 UN entities painting a picture of self-interest and confusion."

In order to reverse that trend, the paper pleads for the need to begin necessary reforms in Europe: instead of national flags, Europe should have a voice that carries weight in multilateral organizations like the UN and other international bodies such as the World Bank and IMF, all EU policies should be coherent; bilateral official development assistance (ODA) should be managed in Brussels; and as proposed by former IMF Managing Director Michel Camdessus, a European Development Bank should replace the European Bank for Reconstruction and Development (EBRD) and the European Investment Bank (EIB).

Further, development agencies in EU countries should be no longer the grant recipients of governments, but apply to public tenders for the implementation of international cooperation projects. This would increase competitiveness and quality in equal measure.

For Germany this would mean setting up a Ministry of International Cooperation and Development, which is no longer limited solely to economic cooperation in the strict sense, but also promotes international investment policies, says the paper.

As a common European foreign policy and a European diplomatic service are put in place, and national European foreign policies become increasingly irrelevant, the existing Foreign Office (AA) and Economic Cooperation and Development Ministry (BMZ) would be replaced by a new Ministry, Deutscher and Stather say.

The Ministry would be responsible for coordinating all national and global issues, will have overall responsibility for all ODA, and the residual powers of the traditional national foreign policy. Responsibilities for co-operation with civil society and non-governmental organizations (NGOs) will also lie with this Ministry.

ODA

The authors of the paper are of the view that effectiveness and efficiency are more important than the volume of ODA funds. “The fixation on the ODA target of 0.7% of gross domestic product, with highly questionable criteria and standards, should be replaced by a commitment by the donor countries, including emerging markets as 'new donors', to allocate an annual 5 percent of their national budgets for investment cooperation and international projects, especially in order to protect global public goods.

"At the same time, the impacts of development cooperation need to be better measured and evaluated. Instead of using questionable methods to evaluate themselves and to celebrate their own projects, development partners and independent international NGOs should analyse the impact of development programs carried out in accordance with uniform standards," the paper says.

It also calls for "replacing developmental paternalism on the part of donors" by "real partnership and ownership". In development cooperation of the OECD countries structures exist that are increasingly rejected by the partner countries vehemently. "At times bureaucrats (of aid-giving countries) exercise more influence on the development of a country than the government.

Deutscher and Stather plead for budget support, in particular sectoral aid and basket financing, which in their view should have priority over traditional programs or project aid. "This must be combined with greater transparency and accountability. Evaluations of the effectiveness of development investments must be regularly carried out in accordance with commonly agreed criteria with the partners," aver the paper's authors who have experience both as policy-makers and practitioners.

*Ramesh Jaura is global editor of IDN and its sister publication Global Perspectives, chief editor of IPS Germany as well as editorial board member of Other News. He is also executive president of Global Cooperation Council, board member of IPS international and global coordinator of SGI-IPS project for strengthening public awareness of the need to abolish nukes. [IDN-InDepthNews – March 28, 2013]

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