What would a Brexit mean for EU development assistance?

What are the implications of the United Kingdom's referendum on EU membership for international development? Kevin Watkins, executive director of the Overseas Development Institute, addresses that question in a two-part contribution to Devex. Today, we publish Part I, which looks at development assistance. The battle lines in the United Kingdom’s long-drawn out referendum debate have become wearyingly familiar. Advocates for Brexit raise concerns over sovereignty, the dead hand of Brussels, and the place of Europe in Britain’s foreign policy. The “Remain” camp responds with a relentless tide of economic forecasts warning of lost opportunities for economic growth and jobs, and highlighting, with varying degrees of enthusiasm, the importance of EU membership for global influence. In a debate that has taken in Hitler, regulations on bananas, house prices, pensions and terrorist threats, one issue has received scant attention. International development has barely figured in the salvos of either side. That omission is unfortunate. The outcome of the referendum will have a direct bearing on Britain’s ability to play a leadership role in global efforts to achieve the Sustainable Development Goals, which range from ending extreme poverty and avoidable child deaths, to the expansion of opportunity in education, reduction in inequality, and cooperation to combat climate change. As Prime Minister David Cameron has argued in defending the U.K.’s commitment to spend 0.7 percent of gross national income on aid, these are moral imperatives reinforced by national self interest in security, shared prosperity and economic growth. So could Britain play a global leadership role in international development outside of the EU? As in other areas of the referendum debate, some exaggerated claims have been made on all sides. The underlying issues are enormously complex and go well beyond development assistance. But the short answer is that Brexit would over time erode Britain’s role as a global leader on development. A seat at the table Consider first the case of aid. Contrary to the claims of some skeptics, development assistance will continue to play a vital role in supporting progress towards the SDGs in the poorest countries, and among populations affected by conflict, state fragility and climate change. Today, the 28 member states of the EU constitute the world’s biggest donor group, providing over half of international aid. Membership of the EU gives the U.K. a seat at the table. The 2 billion euros ($2.27 billion) in British aid transferred to the EU contributes to a pooled fund channeled through European institutions. That fund is the world’s largest source of multilateral aid. Commitments average 16.4 billion euros over the past three years — more than double the funds channeled through the World Bank’s International Development Association facility. Given the hype generated by the referendum debate, a large section of the British public might assume that transfers for EU aid disappear into a vast black hole located near the European Commission’s Berlaymont headquarters in Brussels. In fact, the transfers represent a good investment. For one thing, aid delivered through EU institutions greatly extends the geographic reach of U.K. aid. European institutions deliver aid under the EU’s neighborhood policy to countries such as Turkey and Morocco (the largest recipients), as well as India and Brazil (where the U.K. has a limited and diminishing aid presence). The EU is also the largest single source of humanitarian aid for the Syria crisis response, providing support to groups in Syria and the neighboring states. In some areas EU aid directly addresses U.K. and wider European security concerns. Today, the EU operates 16 civilian and military missions under the Common Security and Defence Policy. In Mali and Niger, combined European civilian and military missions are protecting civilians, and building national security capabilities in the face of threats from Islamic extremism. An EU mission — NAVFOR — has contributed to a dramatic reduction in piracy off the Horn of Africa, depriving al-Shabab of a major source of finance: Only two attacks were reported in 2014, with no ships and just 30 hostages held by pirates, compared to 176 attacks in 2011, with 32 ships held and 730 hostages. The marine mission is headquartered in the U.K. Meanwhile, EUCAP Nestor, an EU civilian mission, is training regional forces to counter piracy. Punching below its weight Aid through EU institutions is just one part of the package. Collectively, the EU’s 28 member states spent some 56 billion euros in 2014, or 0.4 percent of their GNI. In terms of quality standards for transparency, efficiency and institutional development, the EU is roughly on a par with the U.K. Recent effort to improve coordination have seen joint planning by EU donors in 40 countries (and joint programming in 16) — a move that could greatly enhance efficiency. Recognizing that trade is a far more powerful vehicle for inclusive growth and poverty reduction than aid, the EU is by far the world’s largest provider of aid-for-trade, providing 11 billion euros in 2013. Despite the size of the aid budget and the strong mandate on poverty reduction enshrined in the Lisbon Treaty, the EU still punches well below its weight class on development assistance. Major economies such as Germany and France have failed to match the U.K.’s achievement of the 0.7 percent aid-to-GNI target. In fact, only five member states, including the U.K., met the target in 2015. To make matters worse, the share of EU aid going to sub-Saharan Africa and the least developed countries has been shrinking from an inadequate base. Another concern is that the EU is failing to champion what might be thought of as SDG breakthrough strategies. On current trends, there will still be over 3 million child deaths in 2030 and, despite the SDG commitment to universal secondary schooling, out-of-school numbers in primary education are rising. While the world will get close to eliminating extreme poverty, sub-Saharan Africa will not. Collective action by the EU could change this picture. For example, Europe could lead a global drive to support the development of health systems that deliver universal coverage. It could develop initiatives that tackle the killer scourges of pneumonia and diarrhea that claim the lives of so many children. Europe could put child labor and early marriage, two of the greatest barriers to education, at the center of its development strategy. Better coordinated action across Europe’s aid agencies and development finance institutions could also help to unlock affordable public and private finance for infrastructure — a major bottleneck for economic growth. In all of these areas the U.K. is in an unrivaled position to exercise leadership. Having been there and done it on the 0.7 percent aid target, it is well placed to call on others to follow suit. The Department for International Development has a well-developed agenda for combating poverty and gender inequality, and for supporting growth. Viewed through the other end of the telescope, leveraging EU aid would dramatically enhance DfID’s objectives. The idea that any of this could be achieved in the event of Brexit is a fiction. If Britain wants to leverage the assets of the EU development club it needs to retain club membership. For more U.K. news, views and analysis visit the Future of DfID series page, follow @devex on Twitter and tweet using the hashtag #FutureofDfID.