UK proposal on aid for overseas territories withdrawn at DAC, but sparks debate

PARIS — The United Kingdom was forced to withdraw its last-minute proposal on changes to the aid rules that would have allowed for spending on wealthier but climate-vulnerable island states after failing to secure a consensus at the Development Assistance Committee’s high-level meeting in the French capital this week.

However, sources say the proposal sparked a key debate over ODA eligibility and “reclassification” of countries after a crisis during the meeting at the Organisation for Economic Co-operation and Development’s headquarters in Paris.

The DAC sets the rules on ODA spending for the 30 richest donor countries, and gathers every two years for a high-level meeting, which took place on Monday and Tuesday this week.

At the start of the meeting on Monday morning, the U.K. Secretary of State for International Development Priti Patel proposed a change to the aid rules that was not on the official agenda: a “three year waiver” for rich countries struck by disasters to temporarily qualify for ODA.

The proposal came after the U.K. government was criticized for its response to Hurricane Irma in the Caribbean. Several of the country’s overseas territories — including the British Virgin Islands and Anguilla — were badly damaged by the storm, but the U.K. was not able to draw on its aid budget for the recovery because the islands are too wealthy to qualify under the current rules.

Sources present at the high-level meeting told Devex the U.K. withdrew the proposal later in the day, after it “became clear there wasn’t consensus,” according to Winnie Byanyima, executive director of Oxfam International. Changes to the aid rules must be agreed unanimously by the committee.

However on Tuesday, U.K. minister of international development Lord Michael Bates — apparently unaware of the government’s withdrawal the previous day — told the International Development Committee in the U.K. House of Commons that the proposal was still in play at the DAC meetings. He said the secretary of state was “making the case as we speak.”

Controversial proposal

Byanyima, who sat in on the DAC meetings, told Devex: “The British government wanted to count the money to spend in its own territories; I think that is really absurd. I must put it that way.”

“This is now diverting money that should go to the poorest countries — people living in crisis in Africa [for example], people on the verge of famine like in Somalia and Nigeria — and to give it to your rich islands when you have other money to use to solve the problems of your territories? For me that’s taking from the poor to give to the rich and it’s not right,” she said.

The U.K. government was criticized in the media and by politicians from the opposition Labour Party for being too slow to respond after Hurricane Irma ripped through the Caribbean in September. The Times newspaper’s diplomatic correspondent Catherine Philp told the IDC that reporters had received complaints from people in the area who said they felt angry and neglected after seeing neighboring islands receive faster assistance from the French and Dutch governments.

The IDC also heard from representatives of the territories who spoke of huge losses. Blondel Cluff, Anguilla’s representative to the U.K. and EU, said nearly all of the country’s key infrastructure was annihilated, including its schools, by the storm. Cluff said that U.K. assistance arrived within a day but that historically the country has been neglected.

“We are the Cinderella of the overseas territories … we have been overlooked time and again and this is because we have not been commercially attractive,” she said.

Reigniting debate

While the U.K.’s proposal to make an exception for its crises-struck territories was withdrawn, Byanyima and DAC chair Charlotte Petri Gornitzka said the proposal reignited a debate that had fallen on the backburner over how to account for wealthier countries that fall out of the rich-country category after a crisis.

According to the current rules, countries’ GNI must fall below a certain level to qualify for aid, but no mechanism currently exists for countries that graduate from ODA eligibility and then, due to unforeseen crises, fall back into it.

At the meetings, Byanyima said she “could sympathize with the issue of states falling back” into ODA eligibility due to humanitarian crises, such as war or natural disasters.

“Development isn’t so linear, a country can progress and can regress, I know this for sure. My own country, Uganda, went through a brutal dictatorship and civil war, went into negative growth and slid back, our economy shrunk — so it can happen. It’s not common but it can happen, so it would be good to have a process to tackle that,” she told Devex.

Petri Gornitzka told Devex that the U.K.’s proposal helped revive the important debate around ODA eligibility and “reclassification.”

“During the meeting we have been discussing what happens when you graduate and something [like a natural disaster] hits, what happens to small islands? And when you discuss this you realize this can happen not only to small islands, so the issue of crisis that can hit even rich countries and middle-income countries has been discussed. In the DAC that means that yes, the U.K. proposal was one trigger, but also the discussion on graduation,” she said.

Petri Gornitzka said the DAC has committed, in part due to the U.K.’s failed proposal, to “continue to collect data and analysis about what happens when you graduate on one hand, and examine this more immediate issue of crises.”

More research needed

The DAC communique that came out of the high-level meeting states: “We will review and reflect on the evidence base that documents the consequences of different graduation processes on access to development finance from all sources, and will continue to conduct policy analysis on the patterns of cooperation, including financing, channels, and objectives in countries in transition, in coordination with other relevant actors.”

Still, it is unclear whether future change to the rules would impact the eligibility of the British overseas territories. Richard Montgomery, director of the Asia, Caribbean, and overseas territories division at the U.K. Department for International Development, said that even another hurricane would be unlikely to render the islands in question poor enough to meet the ODA threshold.

"I think given the size of the economy and the GDP estimates that we have, it's actually quite unlikely these hurricanes would shock them back to a level of GDP which is below the ODA threshold,” Montgomery told the IDC on Tuesday, adding that Anguilla might be the nearest to the line.

However, the DAC did also express an interest in possibly reconsidering the GDP-bound criteria for aid eligibility. The communique issued Tuesday night acknowledges the current debate around “new measures and metrics of development progress beyond per capita income,” suggesting the fundamental income-based metric for aid eligibility might up for discussion in the future.

Update, Nov. 2: This article was amended to clarify that the DAC sets the rules on ODA spending for the 30 richest donor countries, and that British Overseas Territories including including the British Virgin Islands and Anguilla were affected by Hurricane Irma

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