UK aid strategy to focus on ‘alternative offer’ to China, says Truss

The United Kingdom’s new international development strategy will focus on helping countries avoid the influence of “malign regimes” and also aims to counter China’s Belt and Road initiative, according to Foreign Secretary Liz Truss.

“What we recognize is there’s increasing activity by authoritarian states, particularly in terms of investment in countries, trade with countries, and economic coercion, as well as security interference,” she told the U.K. Parliament’s International Development Committee in a hearing Wednesday. “Our development strategy is about creating a strong alternative offer.”

She said the strategy, which was released Monday after a long delay, would emphasize bilateral spending and investment as the right tools to do this. Truss said she wanted to persuade other governments from the Group of Seven leading economies to use aid money as a counterpoint to Belt and Road — China’s massive investment in infrastructure along its trade routes around the world.

“Bilateral spend is an important part of our foreign policy because we are able to challenge the activities of malign regimes,” she said. “We’ve seen authoritarian actors increasingly use aid funding and investment as a way of exerting control and coercion over countries.”

“I recognize that the UK alone is not going to counter the impacts of the Belt and Road initiative, but if you look at all of the aid money from all of the G-7 countries, it’s more than what China’s investing,” she added.

China is estimated to spend around $60 billion a year on the Belt and Road initiative, while G-7 ODA was around $130 billion last year, of which 11% was U.K. investment. However, BRI investment is mostly in loans and contracts for infrastructure, while ODA measures grant equivalent finance for development, so the figures are not directly comparable.

The text of the U.K. development strategy does not mention China at all. Still, it is overtly geopolitical, and it promotes trade and investment partnerships.

At Wednesday’s hearing, which was called to scrutinize the strategy, Truss emphasized her view of the political nature of aid.

“I think it’s important to recognize that we need to look at the lens of geopolitics on this,” she said in response to a question about how the Foreign, Commonwealth & Development Office had chosen the countries that would receive investment. “Which countries are particularly under threat from influence from malign regimes? Which countries could potentially be going down a path that leads to increased authoritarianism? Where will our money have most bang for our buck?”

Lingering questions

Committee members questioned Truss on issues such as food, nutrition, climate, and poverty reduction — which are hardly mentioned in the strategy compared with investment and economics. But they received few clear answers.

“What’s really astonishing about this document is that it has only one fleeting reference to the Sustainable Development Goals,” said Chris Law, a member of Parliament for Dundee West who belongs to the Scottish National Party. The strategy was widely criticized as promoting “aid for trade” and for signaling the United Kingdom’s continued retreat from international development, following a roughly £4.6 billion cut from the aid budget.

Truss defended the government’s focus, saying that she wanted to achieve a balance between meeting countries’ long-term development goals and their immediate needs.

She avoided answering questions on the number of lives lost as a result of the U.K. aid cuts.

“I haven’t conducted an analysis of that,” she said. “I’m looking forward.”

Committee members also asked why the new strategy did not include budgets. Truss said budgets had been set for the next three years but will not be made public until the release of FCDO’s annual report and accounts, likely in July.

Truss also confirmed that support to Africa would increase over the three-year budget period.

Multilateral spending

Truss told the committee that the main losers from the new budget would be multilateral institutions. Most affected is the World Bank, which has seen a 54% reduction in its aid funding from the U.K.

In the fiscal year ending April 5, 2023, FCDO will spend £3.7 billion ($4.6 billion) on multilateral funding, Truss said. In the same period in 2025, this is forecast to drop to £2.4 billion.

Kate Osamor, Labour MP for Edmonton, asked if funding for bilaterals was likely to return to its position in 2020. At that point, accounts show, the U.K. spent £9.5 billion on bilateral funding.

The U.K. government will disburse much less each year post cuts, but under the new strategy, more of that funding will go to bilaterals, which will therefore receive a larger slice of a smaller pie.

Pre-cuts bilateral spending in 2020 is equivalent to more than 80% of the post-cuts 2021 budget, but Truss has said that bilateral funding in the new model will reach no higher than 75%.

This means bilateral spending is likely to be lower in real terms. However, Truss and her officials were unable to provide a definitive answer during the hearing.

Pauline Latham, Conservative MP for Mid Derbyshire, warned Truss that multilateral cuts would have a “devastating effect” on the Global Fund to Fight AIDS, Tuberculosis and Malaria, where U.K. funding is supporting programs to tackle epidemic diseases around the world. If funding was cut by a third in line with the overall cut to multilaterals, Latham said, it would put 1.2 million lives at risk.

Slashing bureaucracy

Truss also pledged to cut bureaucracy and transfer more power to heads of missions.

Nick Dyer, director general for humanitarian and development efforts at FCDO, also gave evidence to the committee, saying the U.K. had heard that it placed difficult requirements on partners. He said the plan was to cut bureaucracy, get money out faster, and give local missions more autonomy.

“Heads of mission will take receipt of the budget,” he said. “They’ll be faithful to the broad handrails in this strategy, but we want the heads of mission to look at what’s needed in those countries and make choices about how they can allocate those budgets.”

Committee Chair Sarah Champion also criticized Truss for leaving Oxfam “on the naughty step.” The well-known British NGO had FCDO funding suspended after revelations of sexual misconduct and safeguarding failings. But Champion said Oxfam had worked hard to improve its position and suggested that FCDO’s position was likely to dissuade disclosure of safeguarding issues by other NGOs. Truss pledged to look at the situation again.

Truss said FCDO is currently in discussions with the Treasury about funding for Ukraine amid the Russian invasion. Other countries such as Sweden have confirmed that they will cut spending on other priorities in response to the crisis. Truss said the U.K. had not reached a decision on whether funding for Ukraine will be additional to the 0.5% ODA budget.

“The International Development Strategy is about helping partner countries, in particular low income countries, to build their economies sustainably, including through honest, reliable investment in infrastructure and trade,” FCDO said in a statement to Devex. “This strategy is not about providing ‘tied aid’ or aid in return for trade. The UK wants to offer a clear alternative to malign actors, so low- and middle-income countries are not burdened with unsustainable debt with strings attached.”

Update May 20, 2022: This article has been updated with a statement from FCDO.