A Changing Order?

A Changing World Order?

By Lucia Ruiz Vila

Lucia graduated with honours in International Relations from University of Deusto in Spain, having done a year abroad in University of Richmond in the United States. She has recently graduated with a distinction from the MA in Conflict, Security and Development at King’s College London where she researched on transitional justice, peacekeeping, DDR and SSR, and women’s role in international security.

The Politics behind International Development

The health crisis caused by the Covid-19 pandemic has affected governments in all imaginable ways, but perhaps one of the most remarkable has been the urgent need to rearrange national budgets in order to face the job market crisis. Economists have predicted that the job crisis resulting from the pandemic will be ten times worse than the one caused by the global financial crisis of 2008 [1]. Consequently, governments have implemented a number of policies aimed at alleviating this economic turmoil through measures such as furlough schemes. Inevitably, this has called for a great investment which might leave other policy areas facing defunding and a general lack of attention. This article will explore the consequences of international aid becoming one of those unattended policy areas.

In April of 2020, the United Nations warned about the long-lasting effects of donors defunding Official Development Assistance (ODA) urged governments to “reverse the decline” in ODA trends and make sure that Less Developed Countries (LDCs), most of which are in Africa, were not being left behind [2]. This fear was not irrational, as later in the year, the United Kingdom announced that they were cutting their aid spending. In a public statement, the Chancellor of Exchequer defended that in light of the “domes tic fiscal emergency”, the country’s shrinking resources should be allocated to jobs and public services, prioritizing these areas over international aid. This cut will diminish the UK’s capacity to support development programmes it has been supporting to date, causing financing issues for the development sector [3].

ODA is comprised of loans and grants with low interest rates given by the “most well-off countries” to LDCs with the aim of funding development programmes through local partners [4]. The reasons why this type of public-funded aid is important are twofold: firstly, it focuses on neglected sectors that receive little funding from private investors, and secondly, it helps LDCs’ economies grow through the creation of jobs and opportunities in the development sector [5].

Whereas defunding development aid might seem a matter of solidarity - or lack thereof - this decision can have an important political risk, ultimately affecting both the credibility of the West’s humanitarian discourse as well as the present international balance of power.

The Undermining of the West’s Humanitarian Discourse

At the beginning of the pandemic, there was a great concern about the impact that Covid-19 could have on LDCs, especially in an Africa just recovering from Ebola. Nevertheless, while LDCs have been affected by the pandemic,

current statistics show that the most affected region has been the West, namely the United States and Europe [6]. Because of this, 2020 has seen a considerable decrease in development finance investment, with foreign direct investment dropping by forty per cent compared to previous years’ levels.

In light of this, the OECD issued a report defending that ODA should always be a reliable source of aid especially during times of economic uncertainty when private investment declines. The international organisation predicted that if donors are to tie their ODA to their GNI or GDP levels, this could lead to a great loss in many development projects not only in 2021, but also in the years to come [7].

The decision to defund development programmes jeopardises existing partnerships and trust relations between donors and recipients, and makes it impossible to plan in the long-term, a crucial aspect of these programmes [8]. With only a handful of countries meeting the 0.7 GNI target [9] and a severe economic crisis undergoing in the donor countries’ economies, if OECD countries step down from their responsibilities as donors, not only could they undermine the credibility of their humanitarian discourse, but they could also be paving the way for a new actor to fill in the vacuum. The most likely actor to do so? China.

The Rise of China as an International Donor

The case of China’s rise in the international development sector is worthy of study because of its distinctive approach to development. Back in the 1960s, the Chinese government established their eight principles of foreign aid, as they declared that they did not envision aid as “alms” but rather as a mutually benefiting partnership with foreign countries [10]. Today, Chinese aid is categorised as South to South cooperation, this is cooperation between developing countries from the Global South, as opposed to ODA, which is cooperation between wealthier countries and LDCs [11]. Accordingly, China is not part of the Development Assistance Committee (DAC) of the OECD, which is the body in charge of monitoring ODA [12]. In 2020, China created a 283 million USD fund to help other countries face the Covid-19 pandemic, providing aid to various countries including Lebanon, Iran and Tunisia, to name a few [13]. The Head of the Chinese Mission to the EU declared last year that “despite the daunting task of outbreak response at home, China is doing its best to help those countries in need”, thus reinforcing the role of China as an international donor [14].

Chinese aid has not been free from criticism, as many believe that their mutually-economic-beneficial model only masquerades a “debt trap diplomacy” which makes it difficult for recipient countries to differentiate between aid from trade [15].In November of 2020, the United States’ State Department Policy Planning Staff released the report “The Elements of the China Challenge” which also criticised the Asian power to only provide aid to those countries who voted favourably to Chinese demands in the United Nations General Assembly. Additionally, the report aimed at raising awareness about the dangers of the rising power of China in the international arena, as it called on the West to gather forces to counterbalance said growth [16]. In an almost Cold War like narrative of changing world order, the United States is right to signal the rise of the Asian country and its consequences for the global balance of power. Nevertheless, they fail to acknowledge that amid reasonable critics to the Chinese model, there is something to learn from their approach to international development and cooperation.

China’s investment in overseas aid is intended to establish horizontal relations with LDCs, and the diplomatic importance of this gesture of mutual recognition should not be underestimated. For instance, China regularly organises high level meetings with African leaders in order to strengthen its ties to the continent’s politicians, which some authors have pointed out to be a custom the West should learn from [17].

Conclusion

ODA donors should be concerned about the damaging effects of not financing development programmes in LDCs during a time of true need. Defunding international aid is not only a matter of solidarity, but it also questions the credibility of the Western humanitarian discourse. Ultimately, this hampers ODA donors’ relations with receiving countries, which can have a long-lasting effect by creating distrust and a sentiment of abandonment among LDCs. Given the unstoppable rise of China as an international donor, it is likely that if there is to be a void left by Western donors, it will be filled by the Asian power. A step that the West might not be able to take back.

Alleviating the job crisis and economic recession in Western countries is urgent, but reassuring the role of donors in the international arena as reliable actors is important. Decades of humanitarian discourse and the current balance of power is at stake, and the urgent cannot trump the important, much less when it comes to growth and international development.

Sources

[1] “OECD Employment Outlook 2020: Worker Security and the COVID-19 Crisis”, OECD, Accessed 16th December, 2020 https://doi.org/10.1787/1686c758-en [2] United Nations Inter-Agency Task Force on Financing for Development “60 International Agencies Urge Rapid, Coordinated Response As Pandemic Threatens to Destabilise Poor Countries’ Finances Press Release” 9th April, 2020 https://developmentfinance.un.org/fsdr2020 [3] William Worley “Breaking: UK cuts aid budget to 0.5% GNI” Devex November 25th 2020 https://www. devex.com/news/breaking-uk-cuts-aid-budget-to-0-5-of-gni-98640 [4] “Development Aid: What’s it All About?” Agence Française de Développement, Accessed January 18th 2021 https://www.afd.fr/en/development-aid-whats-it-all-about [5] “8 Things to Know About the Official Development Assistance” Agence Française de Développement, Updated April 11th 2019 https://www.afd.fr/en/actualites/8-things-know-about-official-development-assistance [6] “Coronavirus Resource Centre Dashboard”, Johns Hopkins Coronavirus Resource Centre, Last Updated 12nd January 2021 https://coronavirus.jhu.edu/map.html [7] Yasmin Ahmad, Emily Bosch, Eleanor Carey and Ida McDonnell, “Six Decades of ODA: Insights and Outlook in the Covid-19 Crisis” Development Cooperation Profiles, 2020 OECD Publishing, Paris https:// doi.org/10.1787/2dcf1367-en [8] Emily Bosch, Claudio Cerabino and Kerri Elgar, “ODA as a Collective Effort: Latest Trends” in Development Cooperation Profiles, 2020 OECD Publishing, Paris https://doi.org/10.1787/16bc821c-en [9] “Official Development Assistance 2019. Preliminary Data” OECD, Accessed 16th December, 2020 https://public.tableau.com/views/ODA-GNI_15868746590080/ODA2019?:display_count=y&publish=yes&:origin=viz_share_link?&:showVizHome=no#1 [10] Zhou Enlai, “The Chinese Government’s Eight Principles for Economic Aid and Technical Assistance to Other Countries”, Historical and Public Policy Program, Wilson Centre, January 1964 http://digitalarchive. wilsoncenter.org/document/121560 [11] “What is ‘South to South Cooperation’ and Why Does it Matter?” United Nations Department of Economics and Social Affairs, Updated March 20th 2019 https://www.un.org/development/desa/en/news/intergovernmental-coordination/south-south-cooperation-2019.html [12] Leah Lynch, Sharon Andersen and Tianyu Zhu, “China’s Foreign Aid: A Primer for Recipient Countries, Donors, and Aid Providers” Centre for Global Development July 2020 https://www.cgdev.org/sites/default/files/chinas-foreign-aid-primer-recipient-countries-donors-and-aid-providers.pdf [13] “China International Development Cooperation Agency”. 2021. Accessed January 18th 2021 http://subsites.chinadaily.com.cn/cidca/index.html [14] “China to Expand COVID-19 cooperation special fund, says envoy at global pledging event” CIDCA, Updated 6th May 2020 http://en.cidca.gov.cn/2020-05/06/c_484173. htm [15] Cheng Cheng, “The Logic Behind China’s Foreign Aid Agency” Carnegie-Tsinghua Center for Global Policy May 2019 https://carnegieendowment.org/files/09-26-18_ Cheng_China_Development.pdf [16] “Elements of China Challenge” US State Department Policy Planning Staff, Updated November, 2020 https:// www.state.gov/wp-content/uploads/2020/11/20-02832-Elements-of-China-Challenge-508.pdf [17] Lina Benabdallah, “Spite Won’t Beat China in Africa” Foreign Policy January 23rd 2020 https://foreignpolicy. com/2019/01/23/spite-wont-beat-china-in-africa/

Image Credits

https://www.ktpress.rw/2021/01/china-africa-cooperation-prospers-against-covid-19/ https://www.theguardian.com/global-development/2020/ nov/22/mps-from-seven-parties-urge-government-not-tocut-overseas-aid https://www.wsj.com/articles/for-foreign-investment-thewest-is-losing-its-appeal-11560358800