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As the economic crisis pinches national budgets, EU member states’ funds set aside for development are dwindling and increasingly being used instead as channels for public cash for domestic companies and promoting national vested interests rather than poverty reduction in the poorest of countries.

Drying development aid

EU development aid for 2009 amounted to €49 billion, one billion less than in 2008.

In 2005, EU states committed to achieving 0.56 percent of gross national income (GNI) for development by 2010, but the sums committed as of this year amount to 0.42 percent of GNI of national income, and well off course from achieving the 0.7 percent of GNI to be met by 2015.

Together this amounts to an €11 billion shortfall, with some of the bloc’s major economies responsible for much of the drop: Italy (€4.5bn), Germany (€2.6bn) and France (€800m).

Opportunistic changes in the definition of aid

Countries are changing what they mean by development aid and regularly include debt cancellation, spending on student exchanges and refugee costs as spending on aid: €1.4 billion on debt, €1.5 on students and almost a billion on deportation and other refugee expenditure.

In 2008, Greece spent large sums on funding the National Museum of Egyptian Culture in Cairo and training on museum staff in Georgia, including on how to run the gift shop and producing copies of items in the museum.

When these sums are stripped out, the real spending on aid comes to just 0.38 percent of GNI in Europe and a shortfall of €19 billion on prior commitments.

A number of countries, notably France and Italy, have made agreements with developing countries that force them to co-operate on repatriation of migrants before they can access the aid, making development aid into a tool of anti-immigrant policies.

Vested interests and avoiding the least developed countries

Instead of providing money to those countries that most need the cash, EU countries also tend to focus their aid on neighbouring countries, those with key geopolitical interests or where they can best tie aid to employing domestic firms to realise projects.

Countries often use aid to funnel money to domestic companies. Aid to China makes up a large proportion of Polish aid and aims to boost national exports for example. This sort of activity, termed ‘tied aid’ has existed for as long as governments have offered development assistance, but in the last few years, this has taken off as a share of aid.

Very little actually makes its way to the least developed countries – known as ‘LDCs’ in development jargon, such as those in Africa. So far only five EU countries – Luxembourg, Ireland, Denmark, Sweden and the Netherlands have managed to deliver 0.15 percent of GNI to LDCs, and yet this was a commitment made by all western EU states as part of the ‘Brussels Declaration’ in 2001.

Source: EUobserver

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