Migration as a Threat to Foreign Aid?

Migration as a Threat to Foreign Aid?
Photo by Robert Cotič

The current migration crisis poses a threat to foreign aid. By that, I certainly do not mean that the refugees and asylum seekers themselves are dangerous, but rather how Western governments respond to the crisis is already having a negative impact on foreign aid, one that will worsen significantly in the coming years.

In short, donors are using the crisis as a justification for hijacking funds meant for development assistance abroad and spending them at home. Because Europe is accepting far more refugees than other donor countries and is also home to the most generous aid donors, the menace is gravest there.

Citizens of donor countries commonly challenge the wisdom of spending large amounts of money abroad when needs are great at home — especially at times of crisis.

For instance, periodically, when the United Kingdom experiences significant flooding, British voices — including some right-wing media and Conservative members of parliament — call for aid money to be redirected to domestic humanitarian assistance and flood defences. Normally such demands are to no avail, including because the UK aid budget is legally set at 0.7% of gross national income, the UN target set in 1970.

The way Western countries report their aid spending creates a perverse incentive, however, to use aid at home in response to the migration crisis. According to a quirk in the rules set at the Organisation for Economic Co-operation and Development (OECD), donor governments can include in their calculations of “official development assistance” (ODA) spending the cost of refugee resettlement during their first year in the donor country, including housing, language training, and social benefits, even though none of this money goes to developing countries.

Generally, the percentage of aid spent on refugees in OECD donor countries is relatively low. Between 2010 and 2014, refugee resettlement represented on average 4% of total ODA, according to OECD data. The current refugee crisis has the potential of affecting ODA flows in two ways. First, the increased spending on refugee resettlement will artificially inflate ODA numbers, making donors seem more generous in their aid to developing countries than they actually are. This could help some inch closer to or reach the 0.7% target without actually increasing spending overseas.

The second scenario is more insidious: cutting the funds allocated to overseas assistance and spending them on refugees at home, while keeping up the appearance of maintaining foreign aid levels. In other words, donor countries can axe aid programs to poor people in developing countries without it showing up in the overall ODA statistics.

The latter scenario is by no means just cynical speculation; the process has already begun. Already, several of Europe’s most generous countries are cutting their development co-operation budget and reallocating funds to refugee resettlement at home.

According to a recent article, the Netherlands and Norway are explicitly slashing hundreds of millions of dollars from overseas aid to pay for refugees at home. Denmark might spend one-third of its ODA on refugee resettlement in 2016 and Sweden as much as 60%. The impact on their actual development co-operation programs and partners will be devastating.

Some smaller donors, such as Bulgaria, Poland, and Luxembourg, have stated that they will not include refugee costs when they report their ODA figures, a noble decision. Most countries, though, will continue to do so. As in the case of new initiatives to fund climate change adaptation in developing countries, each new announcement poses the risk that the money will be taken from existing programs rather than constituting supplementary funding.

It is not yet clear how the new Canadian government intends to fund its initiatives and what the impact will be on current aid programs in developing countries.

The focus on refugee resettlement in Western countries also detracts attention from the 11 million refugees and internally displaced persons in the Middle East and almost 60 million more in other conflict-affected regions. Currently, about 86% of refugees are living in developing countries, according to the UN High Commissioner for Refugees. Their needs are vastly under-served and their living conditions — especially those confined to camps — could deteriorate further if the coming cuts to aid programs affect humanitarian assistance, which they probably will.

Resettling refugees in donor countries is an important activity. However, counting that spending as foreign aid should never have been allowed, as it does not actually seek “the promotion of the economic development and welfare of developing countries as its main objective,” which is the core requirement for aid to constitute ODA, according to the OECD definition.

Rather than expand the eligibility of such expenses to cover the first three years of a refugee’s resettlement in the donor country, as some countries are currently advocating, it would be far more beneficial for development assistance to stop counting it as ODA altogether. That will help decouple the migration crisis in donor countries from the short- and long-term needs of developing countries, and help defend both humanitarian assistance and development co-operation from donor countries eager to raid the aid budget’s piggy bank. Moreover, protecting foreign aid budgets — especially when paired with other proactive measures — should also help prevent future large-scale displacement of populations.

The original French version of this blog was published by Huffington Post Québec on 14 March 2016. It will also appear in Markus Bökenförde (ed.), Reflections on Global Cooperation and Migration, Duisburg, Germany: Käte Hamburger Kolleg/Centre for Global Cooperation Research, 2016.

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