In a recent preliminary report published by the European Commission regarding the state of play of the 2015 Official Development Assistance (ODA) data, the EU remains the biggest world donor. Collectively across the EU, the ODA increased and reached €68.226 billion, and 0.47% of EU gross national income. This is all very well, as “this growth brings hope, because it is happening in a time of structural economic crisis and strong political pressures to reduce development aid donations,” says Francesco Petrelli, spokesperson for Oxfam Italy.
However, with the OECD estimating that developing countries lose 3 times more to tax havens than they receive in foreign aid each year, the ODA is not enough to meet the targets outlined in the United Nations Sustainable Development Goals in September 2015, and does not tackle the global issues of tax avoidance, corruption, and money laundering that were brought to the forefront so prominently on the world stage by the Panama Papers leaks.
“We are speaking a lot about the private sector, commerce, and investments, however perhaps we have reached a point where it is time to talk about structural obstacles that we face such as tax evasion, tax justice, and the debt that unfortunately has returned to the forefront in some countries in the Global South,” sustains Petrelli.
According to the report, the ODA “still remains a major source of finance for least developed countries (LDCs) and fragile states”, and collectively across the EU, ODA increased and reached €68.226 billion, and 0.47% of EU gross national income.
The highest donors were Sweden, with their ODA at 1.4% of Gross National Income. The UK reported an increase with 0.7%, as did Germany at 0.52% and Italy at 0.21%.
“EU leaders have time and time again promised to reach the 0.7% benchmark, which has been one of their key promises to finance development in the future”, says Luca De Fraia from ActionAid Italia. “A few countries have, but the vast majority has not, and many well-performing nations have recently cut their aid spending. There is also little sign that developing countries are front and centre of deciding how that aid is spent. The EU has previously signed agreements to ensure developing countries’ ownership when programming aid as this is vital to ensuring communities’ needs are met.”
perhaps we have reached a point where it is time to talk about structural obstacles that we face such as tax evasion, tax justice, and the debt that unfortunately has returned to the forefront in some countries in the Global South
However, another concern raised with the ODA is with regards to the ongoing refugee crisis. Criticisms have been levelled at the EU with regards to the ODA being used for refugee costs instead of the budget of €5.3 billion.
According to Concord Europe, “EU leaders have also failed to address the growing trend of EU Member States diverting aid from projects in poor countries to cover costs at home, for example domestic expenditure related to the handling of the large-scale migration flows in some EU countries. It is a moral and legal duty to help refugees who have arrived in our countries, but it should not come at the expense of communities in the world’s poorest countries.
“The blurring of the lines between development work – which is aimed at lifting people out of poverty - and security projects meant to strengthen border control and stop people on the move” is of concern to NGOs such as Oxfam Europe. They are calling for “a guarantee that development aid will not be used as a bargaining chip to prevent migration, but will be needs-based and aimed at eradicating poverty and inequality in accordance with the Lisbon Treaty” amongst other things.
Whilst there is agreement that using the development aid budget to save lives in the immediate emergency operations is acceptable, however integration costs should not be included in the ODA budget.
“Whilst development aid is used to save human lives and support the first welcome operations, refugee costs can be included in the ODA budget,” sustains Petrelli. “However, it is not acceptable that the funds are used for integration costs. The problem with the published data is that it does not allow us to see what proportion of the ODA is used for humanitarian operations, and instead what else is apportioned to other actions that have nothing to do in regards.”
With at least $1 trillion US dollars being taken out of developing countries each year due to money laundering, tax evasion, and embezzlement, the question of whether the EU Official Development Assistance (ODA) budget is enough to tackle the big structural obstacles of fiscal evasion and corruption unveiled most recently by the Panama Papers leaks is being put to the European politicians.