Germany, foreign aid, and the elusive 0.7%

Eritrean migrants at a registration camp in Erding near Munich, Germany. Photo by: REUTERS / Michael Dalder

BERLIN — In 2016, Germany became the world’s second-largest aid donor by volume — but as the country grapples with its new role as a development leader, the debate over the future of its aid budget is far from settled.

Earlier this summer, the German cabinet proposed bumping the development ministry’s 2020 budget to €10.37 billion ($11.63 billion) — €127.5 million above this year's allocation. It is difficult to calculate a total figure for German development spending in advance, because only a portion of the funds are channeled through the development ministry, or BMZ, but the development ministry’s budget remains the best barometer of overall spending.

Development Minister Gerd Müller — who has not shied away from criticizing previous budget decisions — issued a press release praising the move. He said next year's total would allow the ministry and its partners "to carry on with the important work we are doing in crisis and refugee regions and continue our long-term development projects."

Civil society organizations complained, however, that next year's numbers still fall far short of the U.N. goal of spending 0.7% of gross national income on aid. The Association for Development Policy and Humanitarian Aid, known as VENRO, said an additional €2 billion was needed to hit that target in 2020.

“The open question is what happens when Merkel's gone … What needs to be done is to institutionalize what has so far been more individual leadership on global development.”

— Raimund Zühr, project manager, SEEK Development

They are calling on those funds to be included in the final budget, which will be approved by the German parliament later this year. While observers said it is possible the parliament would increase the amount, it would not introduce a hike that large.

Germany is likely to remain the second-largest contributor of official development assistance — behind the United States and ahead of the United Kingdom — a point the finance ministry likes to tout. But civil society groups said the small budget increase for 2020 and the failure to commit to the 0.7% spending target undercuts the country’s claim to prioritize development.

"Worldwide, inequalities have become increasingly profound and climate change increasingly threatens the poorest, in particular," Jana Rosenboom, who heads VENRO's department on strengthening civil society, told Devex in an email. "Against this backdrop, the planned increase is inadequate."

And that is before considering the three years of planned cuts the finance ministry has slated for BMZ. Set to begin in 2021, if implemented they would see its budget cut back to €9.3 billion by 2023.

A reversing trend

Thus far, Germany’s commitment to development has been on an upward trajectory — something the government is eager to be recognized for. Net official development assistance rose dramatically from $18.76 billion in 2015 to $24.7 billion in 2016, leading it to hit the 0.7% funding target for the first time — although one-quarter of that was spent domestically on newly arrived immigrants and refugees.

From 15th place in the Center for Global Development's Commitment to Development Index in 2016 — which ranks countries on seven policy areas, including aid, that affect lower-income countries — it made a huge jump to third place last year, on the back of its efforts to help refugees and migrants, and its growing aid budget.

Ian Mitchell, who co-directs CGD’s development cooperation program in Europe, said that although there is room for improvement, particularly around its environmental policies, overall "it's a positive story in Germany. It's great to see German leadership on this."

Domestically, however, there are concerns that Germany is beginning to slip. It has failed to hit the 0.7% target again, falling to 0.66% in 2017, and to 0.61% in 2018.

Nor has development spending kept anywhere near track with the defense budget, which was promised as part of the coalition agreement reached in early 2018 that pulled together Chancellor Angela Merkel's Christian Democrats with the center-left Social Democrats.

More broadly, there is a sense that the development sector's current support rests on the patronage of a few actors, including Merkel, but that it does not necessarily have broad backing and could easily disappear.

"The open question is what happens when Merkel's gone, which will be the case sometime soon," said Raimund Zühr, a project manager at SEEK Development, a Berlin-based consulting group. "That's what a lot of people here in political [circles] are thinking. What needs to be done is to institutionalize what has so far been more individual leadership on global development."

That means building up a broader network of policy experts within the government, but also cultivating champions in parliament. By drawing connections between development and the issues that already dominate the political agenda — including migration and climate change — the sector might be able to convince more politicians to pay attention and to take steps to enshrine guaranteed spending levels in the budget.

But in pushing for Germany to increase its investment, Zühr cautioned, it's important to consider how far the country has already come. He noted that it is significant that the finance ministry feels pressured to highlight ODA when releasing information on the budget. "In a press release from the ministry of finance on general budget spending, this is an extraordinary success that it's being talked about so much," he said.

The government’s desire to be seen as a leader in global development will likely end up blocking the finance ministry’s planned 2021-23 budget cuts to the development ministry. The fact that the cuts are laid out at all, however, even if they will never happen, still hobbles ministry planning — a point Müller hit on in his statement following the cabinet approval.

"That is something that cannot, will not and ought not to happen, because we can't be sending the development budget on a roller coaster ride," he said. "We need to have continuation in the funding for long-term projects."

His statement underscores the sense in Germany that the government commitment to development is there — but no one knows if it will last.

About the author

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    Andrew Green

    Andrew Green is a Devex Correspondent based in Berlin. His coverage focuses primarily on health and human rights and he has previously worked as Voice of America's South Sudan bureau chief and the Center for Public Integrity's web editor.