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What Brexit means for UK NGOs and foreign aid

Cpl Ashley Keates/RAF

From ensuring life-saving programmes are not yanked mid-project to preserving long-term funding for British agencies and EU-UK collaboration on aid policy, the Brexit stakes for the humanitarian sector are sky-high.

Brexit throws up a lot of questions for the UK’s role in international relief. Will British NGOs have to shrink once cut off from EU funding? How might the UK pool its aid funding with the EU if it’s not a member? Are UK NGOs disqualified from bidding on new grants, and what might the impact be on policy on both sides of the Channel?

The EU has many different budgets, funds, and spending “instruments”, but here we examine the key issues facing emergency relief under ECHO, its humanitarian aid department. Slightly different rules and procedures – and concerns – apply to other expenditure.

Status quo and transition

If the UK leaves the EU with a deal, levels of funding for British NGOs from ECHO should, in theory, remain stable until 31 December 2020.

This date is significant for two reasons. First, it is the end of the transition period under the draft Withdrawal Agreement, albeit with the option to extend to the end of 2022. Crucially for NGOs, it is also the expiry date for the current framework partnership agreements.

FPAs laying out roles, rights, and obligations between parties are a requirement to apply for ECHO funds. They normally last four years, but the last ones, issued in 2014, have had their validity extended to the end of 2020.

In 2017, British NGOs received €214 million from new grants from ECHO’s €2.5 billion budget, according to EU data, about 28 percent of all NGO allocations.

Funding levels, however, are already starting to drop off in 2019 as UK NGOs pick up fewer ECHO grants. A statement from UK aid minister Penny Mordaunt at the end of March mentioned “a reduced number of bids this year”.

According to aid agencies and the UK government department responsible for foreign aid, DFID, this was due in part to a disclaimer inserted by the EU into contracts last year that said British NGOs must prove they could continue funding a programme in the event of a no-deal Brexit.

In response, Mordaunt announced last August that the government would underwrite all contracts signed up to between 23 August and 29 March 2019. This promise was extended last month to contracts signed before and after these dates.

“Everybody is nervous and uncertain.”

Whether this latest no-deal Brexit reassurance is enough to boost confidence and reverse the trend for UK NGOs remains to be seen.

“It remains a hugely challenging environment to work in,” one NGO worker told The New Humanitarian. “Everybody is nervous and uncertain.”

“I would be amazed if the volume of applications was the same,” said Barnaby Willits-King, senior research fellow at the Overseas Development Institute. “It is a huge amount of work to put in a bid, and as a British NGO you would definitely feel at a disadvantage even if it isn’t official EU policy.”

After Brexit

After the end of 2020, everything will change, but it is not clear how.

Mordaunt told the House of Lords last year: “We will stop funding in the way we currently do in 2020. There will be a tail of funding that runs out from that, because programmes will be running down.”

Right now, the UK pays around £1.5 billion a year into the EU’s development and humanitarian aid budgets.

Whether the UK will continue to contribute to the EU’s overseas aid funds after 2020 is subject to negotiation. If it does, one of the government’s so-called red lines is that British NGOs should have access to this funding. They also want some yet-to be-determined role in governing how the money is spent.

Since Britain is legally obliged to maintain the same level of of aid spending, thanks to its law committing 0.7 percent of GNI to aid, that will leave the UK with an extra £1.5 billion that must be spent on aid.

The government has said it may have an interest in continuing to give some of this money to EU budgets that are focused on specific areas, one of which is humanitarian aid. In that sector, Mordaunt said last year, the EU “is one of the better performing multilateral partners. It operates in places we do not have a presence. For us to replicate that would be disproportionately costly.”

If the UK does want to continue paying into the EU humanitarian budget, the next question is how.

As things stand, only member states can contribute to budgets, with two exceptions. One involves Trust Funds, which have a strong humanitarian focus, although they manage development aid too. The other option is the assigned revenue fund, which is used by Norway.

There may be new post-Brexit options, said Mikaela Gavas, co-director of the Centre for Global Development’s Cooperation in Europe Programme, who was confident there would be grounds for negotiation.

Although the UK has asked the EU to create new instruments open to British funds, there is no evidence the European Commission is considering this. And funding will be much easier to negotiate than governance, which is yet to be discussed.

Whatever ad hoc funding arrangements are negotiated, the UK has in recent years contributed approximately one fifth of ECHO’s budget and so, depending on the deal, ECHO might lose a big chunk of funding.

Uncertainty, mergers, and alliances

Concrete details of what the UK-EU aid relationship will look like will not emerge until the Withdrawal Agreement is in place, leaving a lot of uncertainty for UK humanitarian organisations.

Some have seen February’s decision to revoke Swiss eligibility for ECHO funds as a sign of how difficult it will be for UK NGOs outside of the EU.

Agencies have activated contingency plans where possible, with some bulking up continental offices to take over bidding for ECHO funds and implementation of projects from established UK organisations.

Relief International, which has two sister organisations in London and Washington DC, has accelerated existing plans to bring a French NGO, Medical Refresher Courses Afghanistan (which will now be called MRCA-RI), under its umbrella.

Jamie Hall, senior vice president of strategy and risk at Relief International, stressed that there was clear motivation for the move aside from Brexit but acknowledged that the timing was related.

Hall said he didn’t know whether there would be fewer staff based in London in the future, but he said the Paris and Lyon offices would be significant. “Clearly, over time, there will be re-organisation of roles and responsibilities,” he said. “Certainly, our commitment is to staff up and strengthen management capability in France.”

A European office alone does not guarantee access to ECHO funding.

The current stipulations for an FPA require that an agency has had a headquarters in a member state for more than three years.

And many federated NGOs with EU offices that are in a good position to apply for a new FPA currently manage projects from London, which may prove problematic as it is unclear if funding will be able to be channelled to London from EU offices, and under what circumstances.

This is the case for Islamic Relief, which, like other aid agencies, is still waiting for the new requirements to be issued. It is hoping that its German office will be able to apply for ECHO funding, passing funding to London as what is termed an “implementing partner” – an associate or member organisation that carries out the project.

But it is not clear if this will be allowed.

“While we have European offices, the premise of our structure is that all implementation is done centrally in London,” explained Khaleel Desai, head of governance at Islamic Relief. “We are finding the FPA negotiations, and what may constitute an implementing partner, worrying.”

For some organisations, major restructures might be possible, but also expensive and time-consuming.

One source from a large international NGO with EU offices, who asked not be identified, said her organisation is concerned they could lose their ECHO funding. “We are really very worried,” she said. “We have done all we can, but we are just waiting to see what the terms of the FPA will be.”

And for organisations without offices in Europe, there are few options except to wait and see. “For organisations like ours, things are very difficult,” said Anne Street, head of humanitarian policy at Catholic NGO CAFOD.

No-deal planning

UK aid agencies are currently running projects with funding from the EU that could end after Britain leaves the EU. This funding might suddenly stop, throwing life-saving services into an uncertain future.

Before last month’s announcement that the UK government would underwrite all British NGOs’ ongoing projects, the most pressing worry in the sector had been that money from ECHO – only available to organisations in EU member states – would be abruptly cut off in the event of no deal, jeopardising urgent support to crisis-affected people all over the world, including Syria, Yemen, Somalia, and South Sudan.

The mechanism for the complex task of transferring contracts from the EU to DFID in the event of no deal has been designed by CARE international, under contract from DFID.

Victoria Wickenden, head of programmes at CARE, is responsible for the project. She says they are up and running and prepared for a range of scenarios, from simply reimbursing ECHO with DFID funds, to an acrimonious Brexit where the EU will no longer manage British projects at all – in which case CARE International will take over.

A no-deal scenario, however, remains a frightening prospect to most in the sector that The New Humanitarian spoke to. The most commonly cited risks: the pound and the euro losing value, instantly shrinking budgets; and confusion caused by dropping out of the EU sanctions regime.

Global Britain?

Britain is one of the largest humanitarian donors in the world, with a reputation as a thought-leader in the sector. It is also one of the few major donors to have consistently achieved the globally agreed aid spending target of 0.7 percent.

"Influence on ECHO will be lost, without a doubt.”

Only 36 percent of the UK’s ODA spending, or Official Development Assistance, goes through multilateral channels. The rest goes on bilateral aid. The EU is only one of several multilateral aid partners for the UK. Others include the World Bank and the UN.

Nonetheless, the reach of UK foreign aid is threatened by Brexit – particularly in countries in Latin America and the Sahel where it has less of a presence: ECHO currently funds projects in 91 countries, whereas the UK only operates in 44.

As Gavas, from the Centre for Global Development, said in a submission to the House of Lords, the UN and its agencies have the global political authority, but not the capacity to disburse on the scale or with the variety of instruments available to the EU. The World Bank and the other multilateral development banks have the financial resources, but not the role in foreign policy that the EU does.

The UK risks losing its influence over ECHO policy and, as the third largest humanitarian donor, that is significant – for British and EU aid as well as the humanitarian sector as a whole.

London and Brussels have worked together closely at a policy level on issues including humanitarian reform over the years – on initiatives like the Grand Bargain, which was designed to improve aid efficiency.

DFID has said it would like to maintain a close relationship with the EU, while ECHO told The New Humanitarian: “Our cooperation with DFID, as with the other major international donors, is very solid. We have been working together for many years and value our close cooperation. As with other major donors and partners, we are always willing to cooperate closely, and it is no different with DFID.”

NGOs, however, are less optimistic. “That influence on ECHO will be lost, without a doubt,” said Street, from Cafod. “It really is very sad.”

Humanitarian principles

Post-Brexit, the UK will be left with extra earmarked aid money.

In theory, this could be channelled back into British humanitarian organisations. But most DFID aid is ‘untied’, meaning it cannot be designated for UK organisations, and must instead be open to international competition, in line with recommendations by the OECD’s Development Assistance Committee.

Although there have been fears this commitment might not hold up after Brexit, the government has said they will “continue to ensure that the primary objective of all ODA spend is the promotion of the economic development and welfare of developing countries, as required by the ODA criteria of the OECD-DAC.”

More worrying for many interviewees was that leaving the EU – and the orbit of ECHO – might undermine Britain’s commitment to humanitarian principles.

These principles – of humanity, neutrality, impartiality, and independence – demand a clear division between meeting needs and any political, security, or economic objectives in allocations of emergency aid.

“Without strong policy frameworks like the European Consensus on Humanitarian Aid, British humanitarian aid policy could be watered down and become an instrument of British government foreign policy,” Street said.

Dr. Stuart Gordon, associate professorial lecturer in managing humanitarianism at the London School of Economics, pointed to already worrying trends in this regard.

“We are seeing a greater proportion of aid budgets being aligned with those objectives in ways that are damaging for principle-based humanitarianism. It's a global phenomenon,” he said. “But it really is rather marked in the UK at the moment in a way that I haven’t seen for a very long time.”


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