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Donor club set to snub Britain on Caribbean "aid"

Sources tell IRIN no immediate deal on aid rules for British overseas territories will be struck at an OECD meeting in Paris

Relief supplies unloaded on Beef Island, British Virgin Islands UK Ministry of Defence
Relief supplies unloaded on Beef Island, British Virgin Islands

A British demand to use aid money to repair hurricane damage to its semi-autonomous territories in the Caribbean looks set to be blocked. Donor countries meeting today in Paris to hammer out new rules on international aid will not agree the proposals, but may consider them later, according to multiple sources.

The British want spending to help Anguilla, the Turks and Caicos Islands, and the British Virgin Islands to come from its aid budget. This could then count towards the 0.7 percent of gross national income target set by UK law. Britain’s International Development Secretary Priti Patel argued that hurricanes Maria and Irma justified a waiver: “this unprecedented event shows the need to consider how the impact of a natural disaster on a territory should lead to a change in how that territory [is] defined in ODA terms.”

Britain needs other major donor countries to agree by consensus any change to what counts as aid, or Official Development Assistance (ODA). Britain uses definitions agreed at the Paris-based Organisation for Economic Cooperation and Development (OECD) and cannot change them unilaterally. Spending in middle- and low-income countries can count as ODA. However, the three Caribbean territories Patel mentioned fall in the high-income category, so any assistance sent to them cannot be accounted for as part of the global $146 billion annual ODA spend. The details get thrashed out in the OECD’s 30-member Development Assistance Committee (DAC), whose annual high-level meeting opened today.

Update 1 November: Communique from the meeting

London faces large bills in repairing damage from the hurricanes and already deployed relief and military clean-up teams. The shock to the islands might in time drive them temporarily into middle-income status, but the statistics will take years to show the change, so the British argue that getting them back on their feet should count as ODA. Some high-income small island states such as Barbados also support an ODA rule change due to their vulnerability.

The measure was never likely to pass immediately, given the slow pace of decision-making at the OECD, and the UK’s failure to pick up support in the key donor club before this week’s meeting, several sources said. DAC members may feel "uncomfortable", and that it's "premature" to "improvise" ODA eligibility rules at such short notice, according to Julie Seghers, OECD advocacy officer with Oxfam. Another analyst, speaking on condition of anonymity, said pressure from the British populist press drove Patel’s ill-judged negotiating strategy.

Observers say the proposal is now likely to be rolled into a broader discussion (and possibly return to the agenda at next year’s meeting) about how disasters and economic shocks can cause setbacks to higher-income countries that are ineligible for aid.

Aid “diluted”

It's a "difficult time” for the defenders of aid, said Seghers, alluding to the pressure donor agencies are under, for example to use aid budgets to meet political priorities about migration and security.

Amy Dodd, director of the lobby group UK Aid Network, told IRIN the DAC has a key role to hold the line on "what you count and how you count it" and to ensure a level playing field amongst donors. The DAC is "fundamentally an accounting exercise", she said, describing it as "inherently political but quite technical".

Overall, there's a "risk of ODA being diluted" away from core poverty reduction and sustainable development, Seghers warned, adding that DAC members ought to be the "custodians" of a principled approach, of keeping "clear boundaries" on what should and should not count as aid.

Even before dealing with the British waiver concept, DAC members were at least "keen to move ahead" with "clearer rules" on other outstanding issues, Seghers said. However, sources told IRIN that despite two years of discussion, agreement is also elusive in two important areas:

In-country refugee costs

Receiving new refugees in a developed economy can get expensive – it takes a range of processing, welfare, and integration programmes. Donors are allowed to count one year of these costs as part of their official aid, even though it’s all spent at home. As IRIN reported earlier this year, this provision has been jumped on by many European donors, some say excessively, and now accounts for $15.4 billion a year – astonishingly, more than the total of emergency aid sent abroad (about $14.4 billion). In Paris this week, these rules will be clarified. IRIN understands from those close to the process that security-related costs (police, border security, deportations, and detention) are out. However, there’s a last sticking point: how to treat the processing of asylum-seekers who don’t qualify as refugees. Should that be allowed, the rule (or loophole, depending on your point of view) will have been significantly widened.

Private sector instruments

If a donor guarantees a loan for a company working in a poor and risky country, or a development bank buys shares in a garment factory in sub-Saharan Africa, which part of that can be called ODA? Oxfam and other NGOs have listed concerns about private sector proposals that "blur the lines on commercial interests", lack human rights and environmental safeguards, and are "way too generous" to donors, according to Seghers. Technical debates on these issue will not conclude this week, sources told IRIN.

The inclusion of two NGO representatives in the DAC talks this week – UK Aid Group’s Dodd and Tony Tujan of Filipino NGO IBON Foundation – is seen as a welcome but modest improvement in transparency. But Seghers called for greater scrutiny still of the DAC’s work: "We need more public debate about what aid is actually meant for.”


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