0.7%? 0.07%? 7%? The lure and wonder over how much aid countries should give

A few weeks back, Shadow Deputy Prime Minister, Deputy Labour Leader, and Shadow Secretary of State for International Development Harriet Harman gave a speech at LSE, outlining her concern that Conservative members would not support the raising of UK ODA to 0.7% of GNI. You can gather how concerned she was for the future of development if the “Tory-led” government (well its MPs) didn’t support a legislation to get the government to spend 0.7% of its GNI on aid, especially give the freezing of aid spending this fiscal year.

Oooh, Labour seemed so scared that 0.7% will never been reached. But what’s the ruckuss over this 0.7%/GNI on aid? Why this concern over getting 0.7% and will this mean anything for development? This entry hopes to show that yes 0.7% is a nice target to reach but the aim for it has not included any talk on aid reform or aid effectiveness, aid coordination or a donor-recipient context at all. It hopes to show that development is not just about a 0.7% or and % target really and but getting changes in polices and operations.

First the background to 0.7%. This question came up during the Q&A and even Harman herself couldn’t answer it properly. Yes, 0.7% is a UN target which traces back to the UN General Assembly (UNGA)’s 25th Session in 1970, Resolution 2626. The key text comes in paragraph 43:

Each economically advanced country will progressively increase its official development assistance to the developing countries and will exert its best efforts to reach a minimum net amount of 0.7 per cent of its gross national product at market prices by the middle of the Decade.

(emphasis added)

Going back even further, it was not “0.7%” but in fact “1%”, a target from the World Council of Churches in 1958–see the introductory note by the OECD-DAC and the first page of this DAC Journal article regarding the target. A larger detailed background comes from a Working Paper from the neoliberal Think Thank the Center for Global Development. The paper, Ghost of 0.7%: Origins and Relevance of the International Aid Target, explains the rise of an aid target of 1%, debated in the 1968 UNCTAD meetings and then a target set by the Pearson Commission in 1968. The exact reasoning was:

From there, the rationale for reaching the 0.70% target for ODA was straightforward. ODA had already reached 0.54% in 1961. An increase to 0.6% would have been considered too modest since countries like France had reached 0.72% by 1968. I remember one staff discussion in which we debated whether the ODA target should be 0.70% or 0.75%. Consensus reached was in favor of 0.70%, as a ‘simple, attainable and adequate’ target

(Aziz in Clemens and Moss, 2005:8) (emphasis added)

The rest you can read from the Clemens and Moss article (focus on pages 3 to 8, I’ll tackle the rest of the article later). 0.7% has been reached only by a few countries momentarily since the 1970 resolution–see pages 2 and 3. The cries to reach this UN target came about in the eight Millennium Development Goal (MDG)–specifically 8 B. Although not in the exact wording, the UN MDG indirectly urges all donor nations to reach the UN target. A few years later during the 2002 Monterrey Consensus, the issue of reaching 0.7% again came up–see page 14 paragraph 42. The next session in 2008 at Doha (not the Trade Doha Round) again emphasised the point of reaching the 0.7 target–page 18 paragraph 43. Thus it is an urge to all donors (of the OECD-DAC) to reach that target*.

Is the target a useful one in the sphere of international development? The DAC article shows that the formulation for an aid target started off with the Dutch Economist Jan Tinbergen. The Clemens and Moss article goes further to explain how it was approved by development economists in the 1960s especially basing it on the well-known Harrod-Domar model (which I touched upon briefly in my What is International Development? section). However, the chaps at CGD claim 0.7% is a useless base number in today’s world–see pages 11 to 20 of the report. They create a whole range of economic and econometric analysis to prove their point.

So the few countries who reached 0.7 or more were silly to do so, and the UK is also silly in chasing after the target and Labour is an idiotic political party to chant for it. Yes, definitely thirty plus years away from resolution 2626, giving 0.& of your GNI is an extremely abstract figure, especially given that each donor’s GNI changes constantly and theres a wide difference of GNIs from say the US to the UK, from Japan to Austria, from Sweden to Australia. Don’t give just because the UN said you should give. Then how much should you give?

It’s ludicrous to expect and have each country give as much as they have to the developing world. International aid doesn’t work like charity–although some say it does and many people think it’s just passing out money literally. Contrary to the anti aid and neoliberal drum beaters like Clemens and Moss and the many in CGD (like William Easterly), the 0.7% target should still stay and is still relevant just like the MDGs. It’s a cheering and urging idea. As I’ve mentioned in MDG post, without having goals like the MDGs (and in this case 0.7), the focus on international development will dry up. I’ll come to what the debate over what happens with 0.7, but simply using an economic framework (and not producing a strong alternative), people like Clemens and Moss are removing the rail tracks without providing a new pathway.

Ok, now the ruckuss of Labour’s chant (Ed Mililband’s Labour) to get a 0.7% promise to be kept and what’s 0.7 going to be. Let’s look back and some political documents–in this case the Labour party’s manifestos in 1997, 2001, 2005 and 2010.

1997 (I can’t find a pdf version or the full document. Please inform me of a better link thanks). Tony Blair’s team promised to “reaffirm the UK’s commitment to the 0.7 per cent UN aid target”. Well and good.

2001. See page 41: “With Labour the aid budget will rise to 0.33 per cent of GNP by 2003-04, reaching £3.6 billion – a 45 per cent increase in real terms since 1997 level. We remain committed to the UN target of 0.7 per cent of national income devoted to development and will make further substantial increases over the next Parliament. We remain committed to our bill, blocked by the Tories, to consolidate our poverty-focused approach to development”. The rest of the page specifies that aid will be reformed to focus on recipients interests but also human rights. Ok….

2005. See page 90: “Now, for the first time ever the UK has a clear timetable – 2013 – for achieving the UN target of 0.7 per
cent of national income devoted to development. Globally we are pressing for a doubling of aid…”. The chant of 0.7% again…

2010. Page 8:3 “We remain committed to spending 0.7 per cent of national income on aid from 2013, and we will enshrine this commitment in law early in the next Parliament”. Unfortunately, they lost the election.

0.7 or bust! is the Labour cry. But words and no action? Using the OECD Stat. Extracts Database, here’s how the Labour party (which created DFID) fared in action in reaching 0.7% of GNI on aid:

1998:
0.27 %/GNI
1999:
0.24 %/GNI
2000
0.32 %/GNI
2001
0.32 %/GNI
2002
0.31 %/GNI
2003
0.34 %/GNI
2004
0.36 %/GNI
2005
0.47 %/GNI
2006
0.51 %/GNI
2007
0.36 %/GNI
2008
0.43 %/GNI
2009
0.52 %/GNI

(Note: I chose net disbursements and price levels are 2008 current prices, using US$. This is copied from the OECD database. DFID may give a different figure but I trust the OECD as it is non-partisan). The results clearly show that UK Labour NEVER reached close to 0.7 of its GNI on aid. It left office with 0.52(some say its 0.56) mark. In terms of grades, that’s ok– a First Class Honours but the trend tells you something else. Between the periods of 1998-99 and 2001-02 and 2006 aid fell, between 2006-07 (after the G8 summit in Gleneagles where Blair and Brown pushed for more aid to Africa) aid fell significantly. Between 2000-01 aid did not rise. So Labour, who is crying out for the Coalition to “keep its promise” didn’t really do so well during its time. This also goes to the very blinded Labour supporters–the Labour Campaign for International Development who are promoting the Keep the Promise Campaign, although they themselves failed to reach the 0.7 goal that was the main thing common in all their four manifestos.

Suppose then by 2013 the Conservative-Lib Dem coalition does reach a spending level of 0.7% GNI. Congrats to them development work is done? Is development developed and the world is a “better place for you and for me and the entire human race?” Haha, if that was so, those countries which have reached 0.7 should have popped champagne bottles. Reaching 0.7 in the speech giving by Harriet Harman would save millions of lives and not reaching it would not. A matter of life or death? Again, those countries who have reached 0.7 or more have possibly save millions, but it is idealistic to say millions will die if you don’t reach it.

Increasing aid, as mentioned above is not about charity. Aid is political and since the 1980s, it has been given with conditions that promote the neoliberal paradigm. Even after neoliberalism/the Washington Consensus was discounted (but not ended), aid from any donor, bilateral or multilateral or private is still very much along with rules that foster pure capitalist notions and not development. So raising money is fine. But you can give 0.7, or 0.07 or 7% of your income (as some super rich countries should give), but if you do so along with a fixed set of norms that has been detrimental to the recipient–and you–then is is useless to give the money in the first place. Simple analogy: I can give you $100 or $1 million. You would be happier with 1 million but not so if I tell you to spend the 1 million on my company’s goods and thus I gain back the money.

Unfortunately, Harman and her shadow team are creating this ruckuss that you should get behind the drive towards 0.7% Just spend that amount or you’re guilty of killing millions. This article further shows her plan but the comments following shows the anti-aid nature of some of the British public. The fact is aid can be raised towards a nice figure (though outdated) of 0.7%, provided that you REFORM the aid. 0.7% of GNI goes to bilateral aid, multilateral sources and others. I you reach 0.7% but your aid given through the World Bank, the IMF or any IO is still along side neoliberal or strict conditions, then you might as well not have spent 0.7% at all.

UK Labour is not entirely guilty of aid only and no aid reforms. DFID under Labour’s rule criticised the World Bank (DFID, 2000, 2004, 2009) and through a joint publication with HM Treasury and the FCO, it criticised the concept of conditionality (DFID et al, 2005). However, in opposition, this focus on aid reform/aid effectiveness seems to have largely evaporated. Yes Harman did tackled the issues marginally in her Q&A during the LSE talk but otherwise it seems like the whole Labour party thinks 0.7 is it and nothing else. A better way to talk about aid along with any aid rise is to focus on how to use the aid. The ODI has many articles on aid effectiveness; see this for example. ODI in fat is much more pro aid and supports the 0.7 target but at the same time, is not blind like Harman & Co. in just reaching 0.7 without looking at aid reform, changing policies and even aid coordination–Harman also has not talked about that.

This then applies to any donor which wants 0.7 and those who don’t chase after the target–the US (where CGD is based and has influenced development aid spending). Raise aid yes, but without reforming it or tuning it towards development, it should not be raised at all. Keeping aid or withdrawing aid isn’t really viable, but missing the topic of aid reform along side aid volumes will never end poverty. UK Labour and others, are you listening?

DFID, 2000, Working in Partnership The World Bank group, Institutional Strategy Paper, London: Department for International Development

http://webarchive.nationalarchives.gov.uk/+/http://www.dfid.gov.uk/Documents/publications/ispworldbank.pdf

DFID, 2004, Working in Partnership with the World Bank, London: Department for International Development

http://webarchive.nationalarchives.gov.uk/+/http://www.dfid.gov.uk/pubs/files/ispworldbank2.pdf

DFID, 2009, The UK and the World Bank 2007-2009, London: Department for International Development

http://webarchive.nationalarchives.gov.uk/+/http://www.dfid.gov.uk/pubs/files/world-bank-2009.pdf

DFID, Foreign and Commonwealth Office and HM Treasury, 2005, Partnerships for poverty reduction: rethinking conditionality, London: Department for International development

http://www2.ohchr.org/english/issues/development/docs/conditionality.pdf

*Some countries have long reached that and surpassed that target. The well-known ones are the Nordic countries except Finland–something I just learnt. You can check it out using the OECD Stat Database

As I’ve mentioned before, I have no association to ANY political party in any country.

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