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Oxfam Report Highlights Decreasing Foreign Aid Budgets

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Section: International News Geography: Canada Topics: Canadian Foreign Policy

December 6, 2004

Oxfam Report Highlights Decreasing Foreign Aid Budgets

by Nathan Lepp

In a report released this week, Oxfam claims that levels of foreign aid money set aside for development NGOs by rich countries have fallen by half since the 1960s, despite increasing prosperity among donor nations. Warning that the UN's Millennium Development Goals on poverty reduction are at risk, the development advocacy group called on donor countries to set aside at least $50 billion in new overseas aid and to shore up aid budgets to 0.7 per cent of GDP.

US foreign aid spending in 2003 was 0.14 per cent of GDP, one-tenth of what the country spent on Iraq in the same year. Canada's contribution level was 0.26 per cent, down from 0.45 in 1992. Only five countries - Norway, Denmark, the Netherlands, Luxembourg and Sweden - are above the 0.7 per cent mark, with Norway the highest at 0.92.

The report also challenges donor countries, the World Bank, and the IMF to focus on attaching fewer conditions such as spending caps and fiscal targets to foreign aid contributions. Domestic business interests have also been restrictive, with approximately 30 per cent of aid from G7 countries tied to an obligation to buy goods and services from the donor country.

Italy was named the worst offender in this category, with 92 per cent of aid tied to purchases from Italy or another specified country. The US percentage of tied contributions was cited at 70 per cent, while Canada was at 35 per cent. The report argues that conditional aid "undermines countries' ability to choose their own reform paths, meaning that aid money is less likely to support sustainable reforms, adapted to suit local circumstances."

Oxfam also expresses concern that anti-terrorism is threatening foreign aid budgets, and that security concerns are taking priority over poverty reduction in dictating where foreign aid funds are spent. In the past three years, levels of US aid to Israel, Egypt, Jordan, Iraq, Turkey and Afghanistan have equalled aid to the rest of the world combined.

Recent growth in US contributions to overseas HIV/AIDS victims and to countries that adopt democratic reforms are being highlighted by US officials. Yet there is a concern among development organizations that these widely acclaimed initiatives are in peril due to an expensive war in Iraq and a growing budget deficit. Fears that promised funds will not be delivered have so far been justified, as actual contributions to approved budgets have fallen short of the promised funds. Steven Radelet, senior fellow at the Center for Global Development (CGD), worries that even if budgets are met for these high profile initiatives, it will be at the expense of less prominent programs, including funding for global environment initiatives and multinational development banks.

In Canada, the Liberal government has promoted Canadian foreign aid achievements of recent months, but critics maintain that not enough is being done. Bloc Quebecois Leader Gilles Duceppe criticized Prime Minister Martin in November for talking about helping poor countries after his role in cutting foreign aid during his stint as finance minister. "It's great to make nice speeches," Duceppe said, "but, in reality, it takes money."

» MSN (New Zealand): Developed world morally obliged to boost aid

» Financial Times: Foreign aid threatened by anti-terrorism, says Oxfam

» The Guardian: Bush's foreign aid programs at juncture

» CBC: African children thank Canada for new school

» Global Issues: The US and foreign aid assistance (July)

» Foreign Policy: Ranking the Rich 2004 (May/June)

» The Dominion: Millenium Development Goals Progressing Slowly (November 28)

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