Sarkozy, Hollande and the direction for French foreign aid

On Sunday, French voters return to the polls for the second round of presidential elections. In the first round, Socialist challenger Francois Hollande narrowly edged out center-right incumbent Nicolas Sarkozy. Both candidates move on to the runoff where polls point to yet another defeat for Sarkozy, already the first sitting president to lose the first round of voting. If the polls are correct and Hollande wins, he would serve as president until 2017, the first from the Socialist ranks to ascend to the Élysée Palace in over three decades.

Economic issues have dominated the bitterly contested campaign. Running on a message of growth over austerity, Hollande has pledged to renegotiate a controversial EU-wide budget discipline pact, spearheaded by Sarkozy and German Chancellor Angela Merkel, aimed at stabilizing the eurozone. Coming on the heels of the collapse of the Dutch government over budget cuts, analysts say that a Hollande victory may signal that the EU’s march towards austerity – which has prompted governments to reassess their foreign assistance programs – could be curtailed in favor of higher spending.

Leading voices in the French development community lament that the future of the country’s aid program has been mostly ignored by both candidates.

“The situation of Africa and development has been largely overlooked in the election campaign, but it should be an essential part because what France will do or will not do in the next five years can have a tremendous influence in the world for good or for bad,” Guillaume Grosso, head of the French affiliate of advocacy group ONE, recently told the Inter Press Service.

France is no foreign aid lightweight and the victor of Sunday’s runoff will be in a prime position to influence the global development agenda. Frequently placed among the aid community’s top bilateral donors, the Organization for Economic Cooperation and Development reports that France was the world’s fourth largest aid donor in 2011, disbursing nearly $13 billion in official development assistance last year.

The majority of this money went to sub-Saharan Africa, a region where France enjoys longstanding cultural and linguistic ties with its former colonies and also wields considerable influence at the African Development Bank. France also continues to be a leading source of funding for multilateral aid organizations including the Global Fund to Fight AIDS, Tuberculosis and Malaria and the specialized agencies of the United Nations.

As the two contenders make their closing arguments in this final week of campaigning, Devex provides some insight into where each of these candidates might take French foreign aid if elected.

Under Sarkozy, French aid levels exceed expectations

Sarkozy can rightfully claim some global development accomplishments during his time in office and in a recent statement to ONE, Sarkozy stressed that he is “proud to have helped advance our country to achieve its goals in official development assistance.” He also promised to build on his record should he win a second term.

Back in 2005, then French President Jacques Chirac joined fellow European leaders in pledging that France would spend 0.51% of its gross national income on official development assistance by 2010. But in 2007, just as Sarkozy entered office, French ODA fell by seven percent year-on-year to $9.9 billion, representing the first decrease in ODA spending since 2000. A 2008 OECD peer review of France’s aid program warned that the “[ODA] level reached in 2007 showed that even the interim objective of 0.51% in 2010 will be difficult to achieve.”

From 2008 to 2011, on Sarkozy’s watch, French ODA grew by an average of seven percent per year. In 2009, even as the country’s economy contracted by three percent, France claimed the position of the second largest aid donor for the first time since 1995. Exceeding the OECD’s expectations, French ODA hit 0.5 percent of the country’s GNI in 2010, just barely missing the 0.51 percent target before falling back to 0.46 percent in 2011.

Addressing the U.N. General Assembly in September 2010, Sarkozy made clear that in spite of the global economic downturn, France was determined not to renege on its aid commitments.

“During the past two years, the world has experienced an unprecedented economic crisis. That raises the question: Will we use the crisis as a pretext to do less, or, on the contrary, will we give ourselves a necessary jump-start, will we fulfill our promises? France has decided to mobilize,” declared Sarkozy.

After just narrowly missing the target of an ODA to GNI ratio of 0.51 percent in 2010, Sarkozy has pledged that should he be re-elected, his administration would achieve the 0.7 percent ODA to GNI ratio by 2015, a commitment shared by 14 other countries in the European Union.

Sarkozy’s persistence and commitment have attracted some praise. “It is inspiring to see that despite the economic situation, the French continued to give priority to the needs of the poorest,” Bill & Melinda Gates Foundation co-founder Melinda Gates told an audience in Paris earlier this month.

In a 2010 Devex interview, Dov Zerah, the head of Agence Française de Développement, pledged a “more aggressive” French aid agency. Based on Devex data, there is some indication that Zerah has lived up to his words. On the back of France’s ODA growth in the last four years, business opportunities with AFD have increased substantially. In 2011, AFD issued nearly 300 tenders – over five times the number the agency issued in 2007. In 2009, at the height of France’s economic woes, the number of tenders issued by AFD actually jumped by 74 percent from the previous year.

Click here to view image in large size

Interestingly, the French have been particularly committed to water and sanitation programs. In the last week alone, AFD has announced tenders for water and sanitation consulting engagements in both Burkina Faso and Mauritius. Though water and sanitation is only one among a host of thematic priorities outlined in France’s 2011 framework for development cooperation, the sector crosscuts other French aid priorities such as health, education, environment, and urban development.

France under Sarkozy has also been pioneering shifts toward more innovative development financing models. For example, during the France-hosted G-20 gathering of the world’s major economies in 2011, innovative financing found its way on the official agenda, providing an ideal opportunity for Sarkozy to promote his proposal to tax financial transactions and direct the proceeds to international development activities. According to a report from the Bill & Melinda Gates Foundation prepared for the Cannes G-20 summit at Sarkozy’s request, even a small financial transaction tax implemented by European countries could raise $9 billion to support global development.

In turn, by February, the French National Assembly passed a financial transaction tax and Sarkozy has pledged to allocate a share of the revenues to ODA. He has also called for the rest of Europe to emulate the model. Furthermore, Sarkozy has maintained France’s standing as a leading contributor to UNITAID as well as the International Finance Facility for Immunisation, two innovative financing mechanisms for global health.

In a Hollande administration, an emphasis on more transparent aid

In a statement to ONE in March, presidential challenger Hollande committed to stay the course on the 0.7 percent ODA to GNI target, but did not set a firm deadline for reaching that milestone.

“French cooperation suffers from a widening gap between its ambitions and the means at its disposal,” argued the Socialist Party candidate, while reminding voters that his rival Sarkozy had already moved the goalposts once before by postponing the 0.7 percent target from 2012 to 2015 at the onset of the global financial crisis.

Some believe that Sarkozy is being too optimistic and Hollande’s cautious aid spending forecasts are simply more realistic in today’s budget environment. Coordination SUD, the umbrella association for French development groups, says that France is already far off target from reaching the 0.7 percent goal. OECD’s recent pronouncement that French ODA to GNI ratio dropped to 0.46 percent in 2011 from 0.50 percent in 2010 also seems to support Hollande’s more conservative approach and estimations.

Echoing concerns in the French aid community, Hollande has also made the case that much expenditure included as development assistance is either subject to substantial overestimation or should not be included at all. He cites tuition fees for foreign students and the costs of hosting refugees – which together accounted for 11 percent of French ODA in 2010 – among other expenditures.

Though short on specifics, Hollande has pledged a major drive towards transparency in French aid “so that that the actual volume of aid is known in France as in other donor countries.” In the 2011 Brookings Institution and Center for Global Development Quality of Official Development Assistance assessment, France ranked 28 out of 31 donors in transparency and learning.

Perhaps unsurprising for a candidate who launched his campaign by calling global finance his “true enemy,” Hollande has joined Sarkozy in championing financial transaction taxes to support global development. Like Sarkozy, in his statement to ONE, Hollande called for the adoption of a financial transaction tax across the European Union, a proposal which has made some headway in Brussels even amidst the specter of a British veto. French support for innovative financing mechanisms for global health such as UNITAID – which enjoy broad political backing – are likely to remain intact in a Hollande administration.

Alexandre Cabaret contributed to this report.