EU aid figures are 'inflated' by controversial costs, says NGO group

Flags of the members of the European Union outside the European Parliament in Strasbourg. Photo by: © European Union 2014 - European Parliament / CC BY-NC-ND

BRUSSELS — EU countries’ aid budgets are growing but too often the money is being spent on nontraditional aid areas, according to a report published Tuesday, as controversies around the use of aid for politically contentious issues such as migration continue.

AidWatch 2017, a report issued by NGO confederation CONCORD, found that 23 of the 28 EU member states increased their aid budgets last year. Overall official development assistance from EU countries and institutions went up 27 percent between 2015 and 2016, to 75.46 billion euros ($89.07 billion).

However, CONCORD labeled 20 percent of aid spending reported by EU members in 2016 as “inflated aid,” going to “areas that do not contribute new or additional aid to benefit developing countries,” such as in-donor costs for refugees and tuition fees for foreign students, and debt relief. Such spending increased by 43 percent on the previous year, according to the report.

Graph by CONCORD

However, a spokesperson for the EU disputed the idea that these costs “inflate” the aid figures.

Amy Dodd, director of the UK Aid Network, and one of the authors of the report, said some countries had counted more “tied aid” (typically involving procurement requirements designed to favor companies from the donor country) in their ODA costs, as well as security assistance.

“Security for women and girls is clearly an important issue … but that doesn’t necessarily mean arming police forces better,” Dodd said.

She also criticized the practice of counting in-donor refugee costs as part of ODA, something that has increased in recent years after the arrival of high numbers of refugees and migrants in Europe. The practice is allowed under some circumstances according to internationally agreed aid rules, but many NGOs say it diverts money from overseas spending.

For example, Dodd praised Germany for accepting a large number of refugees in 2015 but pointed out that one-quarter of its aid budget was spent within the country on costs to support them.

The CONCORD report calls on countries to avoid using aid to cover the cost of receiving refugees, “and, ultimately, phase out entirely the reporting of in-donor refugee costs as ODA.”

Dodd also drew attention to donors receiving interest payments on loans to developing countries. “If donors are going to get credit for giving the loan there should be some equal discredit,” she said. “We should think about taking off the interest payments that they are getting as well, because that’s money that they’re getting back, in addition to the body of the loan.”

Graph by CONCORD

Aid targets

Of the EU’s 28 countries, five are currently meeting the United Nations-set target of spending 0.7 percent of gross national income on aid, according to the latest figures. Those countries are Denmark, Luxembourg, Sweden, the United Kingdom and Germany.

However, the report indicates that once “inflated aid” is removed from the figures, EU member states as a whole will not reach the target until the year 2052, if progressing at current rates.

A spokesperson for the European Commission said the EU is not inflating its ODA reporting and follows the “very strict methodologies” agreed by the OECD’s Development Assistance Committee (OECD-DAC).

“In 2016, when faced with tremendous challenges, the EU and its member states have still been able to increase both their support to refugees, as well as their development assistance to developing countries,” the spokesperson said. “And what essentially matters is not ‘number-crunching’: every single euro that the EU and its member states report as ODA has a clear developmental impact, and is fully in line with the OECD-DAC reporting methodology.”

Graph by CONCORD

Least developed countries

Another area of concern identified by the report is the falling level of spending on the least developed countries.

According to CONCORD, bilateral aid from EU states to LDCs fell 2.5 percent between 2012 and 2015, to 8.8 billion euros ($10.39 billion), although the European Commission, accounting for multilateral contributions, puts EU ODA contributions to LDCs at 15.8 billion euros ($18.66 billion).

Dodd said diminishing support for LDCs extends beyond the EU, adding that these are often the places most in need of concessional aid.

“We’ve got the very poorest countries getting proportionally less and less of our aid budget,” she said. “It feels a little backwards to me.”

However, she acknowledged that the report’s findings are mixed. “We do recognize that EU aid is going up. That’s a positive thing … and part of that has been good aid,” she said.

She pointed to joint programming as one area where the EU has added value.

“It sounds like a technical agenda but making sure donors are better coordinated and more coherent and aligned behind what developing countries want to do ... is really important. It doesn’t show up in the figures in the same way, but it’s a really important bit of work.”

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About the author

  • Vince Chadwick

    Vince Chadwick is the Brussels Correspondent for Devex. He covers the EU institutions, member states, and European civil society. A law graduate from Melbourne, Australia, he was social affairs reporter for The Age newspaper, before moving to Europe in 2013. He covered breaking news, the arts and public policy across the continent, including as a reporter and editor at POLITICO Europe.