OECD DAC agrees to policy tweaks, delays moves on climate, civil society

WASHINGTON/BRUSSELS — The COVID-19 response, climate action, and how the Organisation for Economic Cooperation and Development’s Development Assistance Committee works with civil society all featured at the committee’s biennial high-level meeting last week, though progress on each was incremental.

The backdrop was a new report from OECD, the Global Outlook on Financing for Sustainable Development, which found that the SDG financing gap could increase by 70% to $4.2 trillion as a result of the COVID-19 crisis.

The virtual meeting was convened in part to discuss what exactly “building forward better and greener” should mean and was intended to be a more high-level rather than technical meeting, DAC Chair Susanna Moorehead told Devex. “Given this historic juncture that we’re at, this needed to be a political conversation,” she said.

However, one DAC member source told Devex that even if Moorehead would have liked a “real conversation” with development ministers, that was made difficult by the virtual setting and the fact that “a lot of these people just read their statements ... So in that sense it was not very exciting.”

Moorehead said while it is not reflected in the communique, several DAC members committed to maintaining or increasing their official development assistance in response to COVID-19, though how that will impact overall ODA in the medium term remains to be seen.

In April, with civil society calling for greater developing spending in response to the pandemic, the group of 30 wealthy-country donors instead announced they would “strive to protect” ODA budgets as governments spend big at home.

Some questioned how much last week’s meeting accomplished. Oxfam International expressed concern that DAC had failed to commit to a necessary scale up of funding and was not as ambitious as the crisis calls for.

“It’s not a Big Bang and a big change,” the DAC member source said of the meeting. “Are we really going to do things so much differently before and after?”

Climate 

The language on climate and the environment was among the most closely negotiated sections of the communique.

“We recognise that we need to go further and faster to ensure that development co-operation takes greater account of all relevant environmental risks,” read the final document, which also acknowledged “the determination of those signatories to the Paris Agreement.”

“We will work to ensure that our post-COVID-19 development policies and programmes are consistent with international climate and environment objectives, and will work to integrate them systematically,” the communique said.

It was difficult to get Japan and the United States to agree on the climate wording, the DAC member source said. The Trump administration pulled the U.S. out of the Paris climate agreement and because OECD DAC must make consensus decisions, having a member that is not party to the agreement made it “challenging” to get to the final language, a person close to DAC authorized to speak to the media on condition of anonymity, told Devex.

Still, the meeting does mark some progress on the issue and “it provides an opening for alignment with Paris” next year, the person close to DAC said. The communique includes a requirement for donors to report on their climate and environment activities before COP 26 in November 2021.

With growing public pressure to have a climate dimension to development cooperation, Moorehead said there are many different views within the committee about how to unite the two agendas. Some civil society organizations, for instance, are worried about a “substitution effect” resulting in less ODA for the poor, she said.

Civil society

DAC committed to strengthen its work with civil society organizations more effectively and to develop a new DAC “policy instrument on enabling civil society.”

Most DAC members see the language as paving the way for a recommendation — a non-binding document that nonetheless creates reporting requirements for donors. But some are still hesitant and concerned that the issue is “a bit too complex,” the DAC member source said. There is a split among members, some of whom see CSOs as implementers and others who see them rather as autonomous organizations, the source added.

“There was also a discussion about do we really know well, what we are talking about when we are talking about civic space? And are we really all ready to put together recommendations that would help to support civic space in other countries?” the DAC member source said.

Moorehead reiterated that the debate at DAC was in part about how civil society should be defined and what exactly a policy should address, which is why the communique uses the broad term “policy instrument.” Clarity is critical because DAC recommendations must be defined in a way that can be monitored, she said.

The “DAC doesn’t like the proliferation of DAC principles,” the person close to DAC said, adding that it is only in the past few years that DAC has had a role for CSOs through a formal dialogue.

Responding to COVID-19

Much of the DAC meeting was spent discussing the COVID-19 response and how the efforts to build back better should be defined and included the finalizing of a couple of agreements on ODA rules.

In the wake of the coronavirus, DAC agreed in the communique to defer graduation from ODA eligibility by a year. That means three countries — Antigua and Barbuda, Palau, and Panama — will continue to receive aid through the end of 2021, rather than the end of this year.

Also in the communique was a tweak to the reinstatement mechanism that governs how countries can become ODA recipients again, following a drop in income statues. The normal practice was for countries to be reinstated 18 months after their income status changed, but the time period will now be six months.

The broader takeaways were that as a vaccine and treatments become available, DAC members need to ensure that there is universal access, and define what the long term response to the pandemic should look like, Moorehead said.

There was a recognition at the meeting that non-ODA flows, including remittances and foreign direct investment, to low-income countries are dropping and that there is a collective funding gap to address. That led to a discussion of a variety of financing challenges that need to be addressed — from international tax rules, to how to best leverage private finance — and a discussion about how to make what ODA is available as effective as possible, she said.

“There was a lot of support for [trying] to go to the partner countries and have country dialogues there. On aid effectiveness, one of the most difficult things is ownership, and if you do that it could help to reformulate and review the principles,” the DAC member source said.