Will rising defense budgets impact aid?

Donor governments have stepped up with significant aid for those affected by Russia’s invasion of Ukraine, and many are also pledging to increase defense budgets in response to the crisis on NATO’s borders. But with aid budgets already stretched, the humanitarian community fears that other critical needs will suffer a loss of funding. “Many NGOs are saying there must be solidarity with Ukraine, [but] that support must not come from other urgent areas,” said Raimund Zühr, project manager at Donor Tracker, an initiative of the Berlin-based consulting group SEEK Development. Total foreign aid has been stagnant for the past few years, while demands have grown. Even before the Ukraine crisis, “there was a lot of pressure to cover pandemic spending,” said Zühr, who added that the need for massive new humanitarian spending “is really not coming at a very good time.” There are already signs that official development assistance may be affected by the response to Russia’s invasion. “[Cutting back on humanitarian programs] may make sense in the short term, but it doesn’t make sense in the long term. … The international system will be asked to pay for those crises later.” --— Angus Urquhart, crisis and humanitarian lead, Development Initiatives The United States, the world's biggest donor, included a $13.6 billion supplemental aid package for Ukraine, including military assistance and humanitarian aid, when it passed its fiscal year 2022 budget earlier this month. At the same time, although it may not have been directly tied to Ukraine, the overall foreign aid budget received a much smaller than expected increase, largely due to a need to balance defense and nondefense spending. In the United Kingdom, there are fears that the crisis will be used to justify cuts to climate change, global health, and conflict prevention programs. Some major donors have indicated that their spending on Ukraine will not come from existing aid budgets. Janez Lenarčič, the European commissioner for crisis management, told members of the European Parliament in Brussels that the €90 million ($99 million) the commission pledged toward the United Nations’ flash appeal for Ukraine was all “fresh funding.” But the strain on budgets will only grow as the war drags on. The Russian invasion may also prompt donor countries in Europe and North America to increase their military budgets. Germany, the world's second-biggest donor, has already made a historic move in that direction. Three days after Russia attacked Ukraine on Feb. 24, German Chancellor Olaf Scholz announced that the country would increase its military spending by a massive €100 billion this year. The U.S. has also increased its defense budget, and similar moves are under consideration elsewhere. “Nearly all European countries are spending less than NATO’s target of 2% of national income,” said Ian Mitchell from the Center for Global Development. “You can expect there’ll be increases in defense spending in the coming months or years.” That money eventually has to come from somewhere, he said and is likely to lead to reductions in aid budgets. At the same time, the indirect effects of the Ukraine crisis are exacerbating humanitarian needs. Ukraine and Russia are two of the world’s biggest grain exporters, and the situation is leading to shortages of cereals and higher prices. “This will drive up food insecurity and the risk of famine” in lower- and middle-income countries, said Angus Urquhart, crisis and humanitarian lead at Development Initiatives. Funding to meet those new needs “will be drawn from longer-term development assistance and we’ll see the impact of that later, down the line.” For example, donors may decide to find needed cash by cutting back programs such as COVID-19 response or post-pandemic economic recovery in lower-income countries, which could cause further problems, such as the emergence of new variants or economic and political instability in areas with a lack of recovery funding. “It may make sense in the short term, but it doesn’t make sense in the long term,” Urquhart said. “The international system will be asked to pay for those crises later.”