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The politics of Foreign Aid for a post-2015 Development Agenda: political parties and public opinion

Bina Fernandez - 26th July 2013
The politics of Foreign Aid for a post-2015 Development Agenda: political partie

Bina Fernandez argues that in a climate of aid scepticism, building deeper political support for foreign aid by donor countries will be important for the success of the post-2015 Millennium Development Goals.

Predictably, heated debate followed the release in May 2013 of the High level Panel report on the Post-2015 Development Agenda. The report has been lauded for its zero targets – such as no people living in poverty, and zero violence against women and girls, as well as for its intellectual coherence and commitment to environmentally sustainable development. A significant gap in the report was the absence of measurable targets and increased political traction on an improved Millennium Development Goal (MDG) on Global Partnerships. A key element of this Goal calls for donor countries to meet the longstanding UN mandated target of 0.7% of gross national income (GNI) dedicated to Official Development Assistance (ODA – a.k.a aid) for the least developed countries.

While alternate sources of finance for development (remittances, revenues from proposed Financial Transaction Tax, carbon trading or bunker fuel taxes, and investment especially from middle-income countries and non-traditional donors) will play an increasingly important role in the achievement of a post 2015 Development Agenda, arguably, ODA will also continue to be important, particularly for the least developed countries. The track record so far is bleak: in 2011, OECD donor countries delivered a total ODA of $133.5 billion (equivalent to 0.31% of combined GNI), which reflected a large shortfall of 166.8 billion from their commitment of $300 billion ODA (equivalent to 0.7% of combined GNI).

With the exception of a handful of European countries, most OECD countries have persistently failed to achieve the 0.7% target, despite repeated commitments by their leaders in global fora. This failure is an outcome of the domestic political process in these countries, arising from classic principal-agent problems: citizens in donor countries (whose taxes pay for ODA) have inadequate knowledge of poverty or aid programmes in poor countries; citizens in beneficiary countries have no political leverage over donor countries; and politicians in both donor and recipient countries are widely acknowledged to use aid to serve a combination of interests beyond humanitarian or developmental.

The generation of stronger global political support for ODA to finance a post-MDG agenda requires prior analysis of the role of political parties and public opinion in donor countries. This is particularly important given the tough budgetary constraints and aid scepticism in the aftermath of the global financial crisis (GFC) that have led to an overall decline in aid allocations by OECD donors for the second consecutive year.

Aid performance and Political Parties

To what extent do political parties influence foreign aid policy? While there is acknowledgement that foreign aid is used by all political parties to serve a combination of humanitarian, national security, strategic and economic interests (see here and here), there is also often an assumption that social democratic or labour governments are ideologically more likely to support higher levels of foreign aid commitments. Recent trends in the UK and the US appear to challenge this assumption.

In the US, there is little to choose between the foreign aid policies of Democrats and Republicans, and indeed, aid and development policies appear to have stagnated on the agenda of Obama’s administration. Research finds that it is not party political ideology, but adversarial politics in the US that determines aid decision making. The relationship between the president and Congress is what matters: when both are controlled by the same party, aid is higher. When different parties control the executive and legislative branch, aid is lower – both in terms of absolute flows and as a percentage of the total - regardless of whether the Democrats or the Republicans are in power. Thus, in contrast to commonly held assumptions, when Republicans control both the Congress and the executive, they are likely to support higher aid budgets.

In the UK, the current Coalition government appears to also contradict the assumption that Conservative governments are less likely to support foreign aid. Despite the prevailing austere fiscal outlook, in March 2013, the UK became the first G-8 country to achieve the UN mandated 0.7% aid target. The Coalition government’s commitment to ring fence aid surprised the world and angered some of its own party members. Observers of the Conservative party in the UK suggest that David Cameron and George Osborne’s determination to ring fence the UK’s foreign aid commitment against budget cuts can be explained by four factors: the need to neutralize the party’s image as the ‘nasty party’, the personal commitment of party leaders, the institutional strength of the Department for International Development (DfID) and security driven foreign policy goals in a post-9/11 world.

In both the UK and the US, we need to remember a significant proportion of the increased aid allocations of conservative governments can be accounted for by the War on Terror and the securitisation of aid. The Bush administration increases in overall aid also coincided with a steady decrease in the weight given to the poorest aid recipients.

Compared to the UK’s upward trend, the Australian aid trajectory showed a long-term decline until 2006. Since 2007 Australian aid has gradually increased in volume and percentage, from 0.27% in 2007–08 to a record 0.37% in 2013, which at $5.7 billion is Australia’s largest ever aid budget. This recent improved performance must be assessed relative to Australia’s capacity to do better, given its more robust economic position post-GFC, as well as its commitment to achieving a self-defined target of 0.5% to aid by 2015. This relatively modest aid target of 0.5% was driven by a bipartisan commitment of all three major political parties, but even this stands in grave danger of dilution, as the ruling Labour Party has now twice deferred the deadline for achievement of this target, now re-scheduled for 2017.

With the Labour party backing off from aid, in Australia too, the degree of commitment to ODA appears to vary only slightly by political party ideology (see here). ODA is completely marginal to the election agenda of the opposition – the Coalition Party election manifesto contains a single, dismal reference to aid, and party pressure means Tony Abbott and Coalition leaders are refraining from committing to a timeline for the fulfilment of the 0.5% target. In contrast to Labour and Coalition deferrals on the bipartisan commitment to the 0.5% aid target, the Green Party offers a more robust defence of aid, as the Greens introduced a private member’s bill in June 2013 to ring-fence the Australian aid budget from further cuts.
Public Opinion

Broadly consistently across donor countries, public attitudes to foreign aid are characterised by first, a low level of knowledge of the quantum of aid. The 2011 Lowy Institute poll indicates that Australians dramatically overestimate the foreign aid budget, guessing that between 16 – 20% of the budget is spent on aid. A poll in the US shows higher overestimates: the median estimate in 2010 of how much of the federal budget goes to foreign aid is 25%, with those who identified as Republican somewhat lower in their estimates than Democrats. The view from the street in the UK about aid reflects similar public misconceptions.

Second, notwithstanding the lack of knowledge about aid, public attitudes are also characterised by a relatively high level of support for aid to poor countries. In Australia, people polled by the Lowy Institute said that on average 12% of the Federal budget should be spent on foreign aid; in the US, poll respondents considered 10% of the budget an ‘appropriate’ percentage for aid. Post GFC, polls in the UK found apparently contradictory results on public support for aid. A public opinion survey conducted by Chatham House in 2011 indicates that 57% of the British public believe that British aid should be reduced, suggesting declining support post-GFC. In contrast, research at the Institute for Development Studies in 2012 indicates there is strong public support for foreign aid that stems from the moral imperative to help reduce poverty in developing countries. This support exists despite a widespread perception that aid is not particularly effective, but its importance is weighted relative to the prioritisation of government efforts to tackle poverty and inequality in the UK. This finding is similar to an earlier cross-country European study that found public support for foreign aid tends to be higher when domestic redistribution is a less pressing public concern, notably in countries like Denmark with strong social democratic governments and an effective welfare state.

To conclude, domestic inequality is clearly an important driver of public support for aid, which may be co-related with the domestic policies of political parties. However, as the discussion on political parties and aid performance showed, party ideology itself may not be the strongest factor determining what they do with aid; rather, depending on the context, adversarial politics and the multiple uses of aid to meet security, geostrategic and economic interests may dominate.

We must not forget however, that the moral imperative is also a significant driver of public support, and can be more effectively mobilized. To do this successfully, the public’s information deficit on aid must be addressed. Greater aid transparency is one way of addressing this information deficit, through initiatives such as Publish What You Fund. While important, such initiatives can potentially also result in information overload, and must be complemented by the creation of a more robust public discourse on aid. For over a decade now, aid analysts have argued that NGOs have a vital role to play in educating the public about aid, but other actors such as academics and the media can make important contributions to the effort.

Bina Fernandez is a Lecturer in Development Studies at the University of Melbourne and the author of Transformative Policy for Poor Women: a New Feminist Framework (Ashgate, 2012).