EU aid stuck in Brexit limbo

By Molly Anders 22 June 2016

U.K. Prime Minister David Cameron (right) meets with President of the European Council Donald Tusk (left) and President of the European Commission Jean-Claude Juncker (center). Photo by: European Union

Aid projects are on hold, careers are in limbo, and new contracts are on the line as Britain votes on June 23 whether to leave or remain within the European Union. The so-called Brexit referendum will have an enormous impact on European aid priorities. And from there, the impacts will ripple across the development industry hitting individuals, firms, agencies and NGOs alike, stakeholders say.

The impact of a Brexit on aid has figured marginally in the mainstream debate, but Britain’s possible exit from the EU could rewrite European development spending and redirect billions of dollars in aid. Experts point to Britain’s potential loss of influence over the priorities of the EU, which is the world’s largest aid donor, contributing $62.5 billion, or nearly half of the global aid spend.

Advocates of a Brexit, on the other hand, point to the more than $1.5 billion given to the EU annually to be spent by the European Commission on foreign aid, which would be returned to the U.K. and redistributed according to U.K. priorities alone. Others view this as a potential downside.

“The EU will have different budget priorities if the U.K. leaves,” said one UN official, who asked to remain anonymous because of close working ties with the European Commission, the EU’s implementing agency. He said priorities would likely pivot to a greater presence in Asia and Latin America, for example, at a time when donors such as the U.K. are pushing the EU to enhance its presence in conflict and post-conflict areas.

“England’s interests would no longer be at the top of the agenda.”

Priorities in question

The Brexit referendum has already put some projects on hold, according to one non-British civil servant at the European Commission who asked to remain anonymous to preserve working relationships.

He said that the uncertainty has “hugely” affected the commission’s projects, and that many EU priorities have taken a backseat until the referendum is over.

“It’s sort of at a standstill,” he said. Most projects, unless they are close to the end or the beginning of their fixed term, he added, will have to rethink staffing and timelines and cope with any delays.

“If you stop the ball from rolling, it really hinders the whole process. And this has been happening for some months now,” he said.

In terms of long-term impact on aid spending, a Brexit could complicate multilateral efforts to tackle migration in origin and transit countries, and ironically, backfire on pro-Brexit campaigners’ promises on reduced migration.

“The Brexit campaign … has whipped up a toxic narrative around immigration and refugees,” Diane Abbott, a member of U.K. parliament and shadow secretary of state for international development, told Devex.

“This has made it politically possible for the government to ignore the refugee crisis and do considerably less than its fair share for refugees fleeing war and certainly other desperate people fleeing climate change and poverty,” she said.

The U.K. would also likely miss the opportunity to help shape the world’s largest donor of aid at a time of reform, Simon Maxwell, executive chair of the Climate and Development Knowledge Network, wrote in an opinion piece for Devex.

“The EU itself is committed to a series of reviews that will inevitably change the way it approaches international development,” he said, citing next year’s review of EU financing instruments and the new European Consensus on Development Policy. Maxwell also added that the U.K. would miss out on influencing the EU’s renegotiations of several key agendas, including the 2000 Cotonou Agreement, up for renewal in 2020.

Aid practitioners in the crossfire

The future is equally in doubt for U.K.-national aid practitioners within the EU. “Everyone is freaking out,” the commission civil servant said. This is true “especially at the mid-level,” where workers have less protection from political winds. High level officials are less concerned, he said, “but at the mid-level, all the way to [European Union Delegations] and people in contracting finance, the whole agenda is hampered,” he said.

While the referendum itself holds no legal weight and will require Parliament to vote on the arrangements following the vote in the event of a Brexit, the civil servant said U.K. employees — which total almost 250, just under 5 percent of total staff at the commission’s headquarters in Brussels — are nervous about whether they will be allowed to stay, given special diplomatic visas, or lose their jobs.

“Many people have bought homes, have families based here. We might not know for a couple of years what will happen, and that has caused a lot of psychological tension,” he said.

Contracts in question

Brexit would also have implications for U.K.-based organizations partnering with, or hoping to partner with the EU, Karim Megarbane, manager of Adam Smith International’s one-year-old EU Team, told Devex.

“We would no longer be able to bid on EU projects,” Megarbane said, pointing to regulations that require organizations to be based in EU or EU-candidate countries in order to bid on projects.

ASI, a for-profit British development company, mostly depends on contracts from the U.K. Department for International Development and the U.S. Agency for International Development for its work in Africa and the Middle East. While a Brexit wouldn’t greatly impact ASI’s current portfolio, a “very small” portion of which consists of EU projects, it would derail the company’s hope to expand into the EU’s large market. A Brexit would also hamper the EU’s desire to draw new players to its supplier market, Megarbane said.

“We’ve heard very clearly from the EU that they want to open up the market to competition,” Megarbane told Devex, explaining that the bloc has a “very strong presence on the ground” in some important locations, namely North Africa.

“Our idea was to use the experience we’ve gathered from other donors, like from DfID, which is a bit more oriented to private sector development, utility management, infrastructure privatization and investment, and link that to what the EU is doing, because we know the EU is interested in taking on some of those models,” Megarbane said.

Separation and cooperation

Advocates for remaining in the EU say a Brexit would see Britain — the fourth largest aid donor globally — alienated at a time when compacts such as the Paris Agreement, the Sustainable Development Goals and the Lisbon Treaty call for collective action.

“By isolating ourselves in this way we lose the opportunity to pool finance and expertise multilaterally to tackle common international challenges,” Abbott told Devex.

“In the case of aid this means climate change and international development. As the world becomes more globalised we need more cooperation between states, not less,” she said.

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About the author

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Molly Andersmollyanders_dev

Molly is a global development reporter for Devex. Based in London, she covers U.K. foreign aid and trends in international development. She draws on her experience covering aid legislation and the USAID implementer community in Washington, D.C., as well as her time as a Fulbright Fellow and development practitioner in the Middle East to develop stories with insider analysis.


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