Poor Could Lose 67 Billion Dollars

Poor countries risk receiving 50 billion euros (67 billion dollars) less than what they have been promised from the European Union 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 realising 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 organisations (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 percent of the 47.5 billion euros (64 billion dollars) that the EU reportedly gave in development assistance last year was not genuine. Some 13.5 billion euros (18 billion dollars) 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 euros 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 2000-04. 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 the non- governmental organisation CONCORD, expressed concern about how 7 billion euros (9 billion dollars) 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 told IPS. "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 (EURODAD) complained that an excessive proportion of EU aid is being used for debt cancellation.

Almost 11 billion euros (15 billion dollars) 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 being 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 5,000 kilometres from Europe to Africa," she said. "It is moving 500 metres 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 Organisation for Economic Cooperation and Development (OECD) in Paris. That grouping of industrialised nations has been tasked with defining the eligibility criteria for development aid.

"Those rules need to be changed," Hayes told IPS. "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."