Dutch government plows ahead with aid cuts

For the first time in years, foreign affairs dominated the troonrede, the Dutch monarchy’s annual speech to parliament, which, among other things, presents the government’s national budget for the coming year. “The summer of 2014 demonstrated the fragility of freedom and security,” King Willem-Alexander stressed in his speech, referring to the downing of Malaysia Airlines Flight 17 over Ukraine, killing all 298 passengers and crew, including 196 Dutch nationals. Given this somber mood, it perhaps came as no surprise that the government allocated an additional 100 million euros ($126.3 million) per year through 2018 to the defense budget. The development cooperation budget, however, did not fare as well. For 2015, the Dutch government plans to spend 3.7 billion euros on development cooperation, down 21 percent from 2014’s 4.68 billion euros allocation. Admittedly, the final 2014 budget is inflated, largely as a result of the 570 million euro Relief Fund and 375 million euros of additional funding to help the Netherlands host asylum seekers — both of which were announced by Minister of Finance Jeroen Dijsselbloem to the parliament on the same day of the king’s speech. Although Dutch nongovernmental organizations welcomed the creation of the Relief Fund, they have warned that structural solutions demand more investments, not cuts. “The government says it is focusing on the big international challenges that our country is facing, but at the same time it is hiding in its shell by cutting down structural and societal support for countries that urgently need our help,” Farah Karimi, executive director of Oxfam Novib, told Devex. The 2015 development cooperation budget is 12 percent lower than the 4.22 billion euros spent in 2013. It’s also a marked decrease from what the government had allocated for 2015 in the 2012 (4.9 billion euros) and 2013 (3.87 billion euros) budgets, but in line with annual cuts to Dutch official development assistance since 2011. And based on the planned 2015 budget, Dutch ODA is expected to fall to 3.59 billion euros by 2017. No longer part of exclusive donors club The Netherlands was one of the first member countries of the Development Assistance Committee of the Organization for Economic Cooperation and Development to meet the ambitious goal of spending at least 0.7 percent of gross national income on ODA. The Netherlands had been meeting that target since 1975 and, for years, was one of only five countries that consistently met or exceeded the goal. Continuous cuts to the aid budget, however, mean the Netherlands has now become the first of those five countries to fall out of the exclusive 0.7 percent club. After reaching a record ODA-to-GNI ratio of 0.8 percent in 2009, the Netherlands went slightly below the target in 2013, at 0.67 percent. With the development cooperation budget expected to be reduced further in the years ahead, this ratio is likely to drop to 0.57 percent in 2015 and further to 0.54 percent by 2017. As part of a 2010 agreement to reduce the development cooperation budget from 0.8 percent to 0.7 percent of GNI by 2012, the Dutch government linked ODA budgets to the performance of the country’s economy. This led to drastic cuts in the budget at the height of the global economic crisis. Following a revised calculation based on new European Union criteria, the Netherlands’ GNI actually improved this year. This should have given the ODA budget a 260 million euro boost, but instead the Dutch government has chosen to continue basing the ODA budget on the old — and lower — GNI calculation. “This was a very unpleasant surprise,” Paul van den Berg, political adviser at Catholic NGO Cordaid, told Devex. “It means that the ODA expenditures follow the GNI when it goes down, but not when it goes up.” OECD-DAC Chair Erik Solheim, meanwhile, urged the Dutch government to reconsider its aid spending. “The Dutch were the first to reach the 0.7 percent norm and now they are the first to go below it,” Solheim told Devex, adding that other governments have managed to keep their aid promises despite difficult economic situations at home. “The U.K. raised its ODA expenditure despite an even more severe economic crisis than in the Netherlands.” Drop in funding for peace, security and stability Global security concerns did not only lead to the defense budget being given a funding boost. For 2015, the international security budget, or BIV, will be moved from the development cooperation account to that of the defense ministry. The Netherlands followed a “triple D” policy — combining defense, diplomacy and development — in its military mission in Afghanistan’s Uruzgan province. The 250 million euro BIV fund was supposed to build on these experiences, under the stewardship of the minister of development cooperation. “But now that the fund is being turned over to the defense ministry, there is a real concern that the development focus will be lost, especially in view of the critical financial situation of the military,” van den Berg said. Further, the budget for peace, security and stability — one of four main priorities of Dutch development cooperation — dropped from 602 million euros in 2013 to 480 million euros in 2015. This sector supports U.N. organizations and bilateral programs to strengthen government capacity, rule of law and conflict prevention. Within the sector, there is a slight decrease in humanitarian aid: from 216 million euros in 2014 to 204 million euros in 2015. But the biggest shock for the NGO community is the cuts to programs to advance peace and rule of law, legitimize democratic institutions, and combat corruption. The budget for these programs has been slashed significantly, dropping from 239 million euros in 2014 to 189.5 million euros in 2015. “This really hurts us,” Cordaid’s van den Berg said. “The Dutch government should come up with a clear strategy on how to deal with fragile areas, including a commitment to spend 0.4 percent of GNI on fragility.” Jan Gruijters of PAX, an NGO that supports peace-building projects in developing countries, also called for more support for civilian groups. “Citizens’ initiatives are crucial for changes from within and for an inclusive policy in countries such as Iraq. We don’t see that sufficiently reflected in the 2015 budget,” the PAX director stressed to Devex. The civil society battle Dutch NGOs are particularly incensed over planned cuts in support for civil society — or, as it is called in the corresponding budget line, “strengthening of the societal midfield.” It is through this budget line that aid NGOs in the Netherlands obtain a large part of their funding for partner organizations in the field. While the budget for 2015 is the same as in the past two years — 452 million euros — it is expected to fall sharply to 219 million euros by 2017, and is expected to stay at the same level in the years following that. “Not only will there be less funds for NGOs, but the nature of the projects will change,” Koos de Bruiijn, advocacy manager of development NGO platform Partos, told Devex. “They will have to be focused on advocacy and influencing, for example [by] starting a campaign to get issues on the political agenda or organizing farmers in a labor union. But it will no longer be about digging wells or building schools. This will have a huge effect on the Dutch development sector. A lot of skills and knowledge acquired over the years may be lost forever.” The government said it wants to encourage NGOs to find other sources of financing. It also noted that NGOs can bid for tenders for projects falling under one of Dutch development cooperation policy’s four priority sectors. “But we can already do that,” de Bruijn said. “[Minister for Foreign Trade and Development Cooperation Lilianne Ploumen] has not made clear how we can compensate losses incurred by these cuts. Perhaps she can reformulate conditions for tenders. Some of them are restricted to commercial enterprises, but they could be opened up to social organizations too who want to apply for a project.” According to government data, 23 percent of the total ODA budget in 2013 went to NGOs, which also received a large portion of Dutch aid channeled to multilateral organizations. Concentrated focus on fragile states For several years, the Netherlands has concentrated aid efforts on a select set of countries. Support is maintained for the first tier of seven “aid countries,” while in eight “transition countries,” the focus will move from aid to trade. In a third group of six “exit countries,” aid will be phased out completely. With the exception of Ghana, aid to all three groups was either reduced or kept at the same level for 2015. South Sudan, the second-largest recipient among aid countries following Rwanda, is notably missing from the list. Because of the recent escalation of conflict in the world’s youngest state, only emergency aid can be delivered. Ploumen also froze all Dutch development programs with the South Sudanese government as a form of protest against the role political leaders played in exacerbating the violent clashes. Juba received 52.8 million euros in 2013 and 44 million euros in 2014. Afghanistan, another aid country, saw development assistance fall rapidly from 39.3 million euros in 2013 to just 20 million euros in 2015. “That’s very surprising,” van den Berg said, “especially since the Afghan program is all about building democratic institutions and the rule of law. It’s too early to drop it all.” But Cordaid’s political adviser is of the opinion that this reflects the Dutch government’s loss of interest in the country, after its military mission in Uruzgan ended in 2010. Among transition countries, the budgets for Bangladesh — which traditionally has been a Dutch donor darling — and Indonesia were cut by a third to 40 million euros and 22.6 million euros, respectively. ODA to Kenya dropped almost a quarter to 20.2 million, while that to Mozambique fell nearly a fifth to 33.7 million euros. Of all the beneficiary countries, only Ghana saw a substantial aid increase — up a third to 32.7 million euros — largely because of a doubling of its WASH program. In the group of exit countries, aid to the Democratic Republic of the Congo, Pakistan and the former Dutch colony of Suriname has practically been phased out. A more concentrated focus on the most fragile states is not necessarily a bad thing, van den Berg noted. “ODA must go back to basics and concentrate on the poorest,” he said. “At the same time, there can also be pockets of poverty in middle-income countries.” Partos’ de Bruijn agrees: “There is growing inequality between, but also within states. I’m a bit worried that the Netherlands are pushing to reduce the number of [ODA recipient countries].” De Bruijn further stressed that while the recipient pool of Dutch development assistance has been growing smaller, the number of countries that can apply for the Dutch Good Growth Fund — a non-ODA instrument to promote investments in and trade with developing countries — is steadily increasing, “as if they’re measuring with double standards.” Check out more insights and analysis provided to hundreds of Executive Members worldwide, and subscribe to the Development Insider to receive the latest news, trends and policies that influence your organization.