Aid hesitancy: a Global Scourge

This week British Members of parliament voted to lock-in cuts to foreign aid.  According to this vote, the UK will abandon its commitment to achieving a 0.7% of national income¹ foreign aid spending. This spending had only recently been reaffirmed in the Conservative Party’s 2019 election manifesto. These cuts were announced last November in association with the closure of the UK’s Department for International Development, established under the Blair government in 1997. The official rationale is that the costs of responding to COVID-19 in the UK have limited the budgetary capacity for foreign aid. It will stand for the time being at 0.5%

This action is not unique. In Australia and Canada foreign aid programs, AusAID and CIDA,  were amalgamated into their Foreign Affairs Departments, and left their overseas aid budgets at 0.21% and 0.31% of national income respectively. The USA’s still lower contribution of 0.17% survived attempts of the Trump administration to further reduce it. The commitment to achieving 0.7% of national income foreign aid, first agreed by the UN General Assembly in 1970, is in tatters - in the English speaking world at least. Over 50 years after the commitment was made, only five countries: Luxembourg, Norway, Denmark, Sweden and Germany are achieving the agreed level.

Opinion polls such as those conducted in the UK and Australia have suggested high degrees of support for reducing foreign aid.   It is clear the attitudes underpinning this support are based on misinformation in key respects, for-instance there is a consistent over estimation of the level of current aid volumes. Perhaps most critically, the public tends to view aid as charity, and foreign aid as the antithesis of the adage ‘charity begins at home’. This maxim has been widely referenced by the popular press as it campaigned for the aid cuts in the UK. While compelling charitable cases can be made for aid, the strongest arguments rest in the recognition that what foreign aid budgets support, is the financing of global public goods.

The impacts of poverty and war are increasingly globally, rather than locally, experienced. The costs associated with waves of migration motivated by war and poverty, are costly to the countries where migrants aim to enter, whether those countries accommodate or seek to repel migrants. It has been estimated the current cost of accommodating refugees in Germany is around US$16bn per year although that fails to recognise refugees’ contributions to economy and society.  Trump’s wall to prevent South and Central Americans and Mexicans entry into the USA had cost US$11bn by the beginning of 2020.

The global environmental cost of deforestation, sand mining and the pursuit of ever more marginal livelihood strategies by those left without alternatives, is another example of global impact of local actions. Fossil fuels remain the only affordable energy source for most of the world’s poor, climate change cannot be contained without investing in energy transition in poor countries.

COVID-19 will not be the last global pandemic if wild animal habitats are increasingly encroached and species depleted. Novel zoonoses thrive best in those animals such as bats and rodents that increase in numbers as biodiversity decreases. On my rough calculation, the costs of this one pandemic, estimated at $16trillion in less than one year, far outstrips the total of global aid budgets since the end of World War II².

The current phenomenon of aid hesitancy exemplified by the recent budget cuts in the UK, and underpinned by misinformation, is an even more dangerous phenomenon than the vaccine hesitancy capturing so much global attention. Like vaccine hesitancy in the face of the current pandemic, aid hesitancy may be in decline in the face of news of the real impact of abandoning these investments. UK aid cuts resulted in the cancelling of a program to provide education for 360,000 girls in Bangladesh, nutritional support for 12 million infants and family planning services for 14.6 million women and girls in Bangladesh, the closure of the Green Economic Growth for Papua program in Indonesia, preventing deforestation, cancellation of multiple peace-building initiatives across the world and a litany of further acts of destruction. These have not sat well, even with a significant number of Conservative MPs, and there is evidence that attitudes in the UK are changing.

Boris Johnson, Jacob Rees Mogg and their allies in the Westminster parliament argue that the foreign aid cuts are a prudent housekeeping measure “Does this House wish to see the public finances kept under reasonable control? Does it recognise there are limits to what we can do?” Rees Mogg, the Leader of the House is quoted as saying in announcing the vote. The parallels with Margaret Thatcher’s reduction of economics to the ‘wisdom of housewives’ are clear, and like Thatcher, Rees Mogg ignores the unique capacity of government to invest in the public interest and borrow to do so at the lowest possible interest rates.

Failure to confront insecurity and injustice, and failure to invest in the prevention of future pandemics will cost much more than the aid cut.

¹ I use the term ‘national income’ as an approximation of the concepts of Gross National Income, Gross Domestic Product and other measures of the total earnings or outputs of a country in a year because preferred concepts have shifted over the life of these arguments.

² Total global aid spending was $130bn in 2015 (at 2014 constant $). It had consistently risen to that level for some time but even if this level had been sustained from 1945 to 2021, a total of approximately $10tn would have been spent on aid over that period.