Development Cooperation: beyond a definition

October 21, 2014 - nr.25
Summary

Recommendations

  1. Reliability, ownership and predictability
    The definition of ODA is a key part of the system of international agreements and cannot be unilaterally abandoned. Any discussion on changing the definition must be in line with the Paris, Accra and Busan Declarations on aid effectiveness, the UN Sustainable Development Goals and the post-2015 development agenda. This is necessary to maintain a basis for trust among development partners, which is vital if development cooperation is to be effective.

    Given the impact of a possible review of the definition of the 0.7% standard on the EU development budget, the EDF and the bilateral development relations of EU member states, the AIV believes that this standard should be upheld as the basis for a new and broader system of international cooperation in which verifiable international agreements are concluded to finance the wider spectrum of IPGs such as the environment, climate and security.

    As part of a follow-up to the declarations on aid effectiveness, a review of OECD/DAC targets would need to be agreed with partner countries, in the spirit of genuine partnership. This is necessary in working towards ownership and aid predictability. In shaping the post-2015 development agenda, too, goals must be linked to clear, quantifiable agreements on financing, implementation and cooperation.
     
  2. Conformity with EU legislation
    The Treaty of Lisbon defines poverty reduction as the primary objective of development cooperation. EU member states are therefore obliged to tie aid to results in reducing poverty, and spending must be relevant to achieving this aim.
     
  3. Stepping up efforts in countries lagging behind in achieving the MDGs
    Analyses of progress in attaining the MDGs show that results in ODA-dependent countries are lagging far behind. Increased efforts are therefore needed to close this gap. In implementing the Busan agenda and the New Deal for fragile states, closer coordination could help provide these countries with more effective support in fighting poverty.
     
  4. Defining innovative financing instruments and private sector contributions
    Innovative financing initiatives cannot be worked out in further detail in this advisory letter, yet it is highly important to point out that a clear definition of such initiatives must be agreed. Accountability of innovative financing and private sector instruments and blending should be closely linked to a commitment to achieve results in reducing poverty and reaching other international cooperation goals. This can only be done if private actors commit to accountability mechanisms that allow the attainment of results to be independently verified. The need to develop transparent accountability mechanisms for innovative financing could increase in response to growing potential demand for such instruments to finance a much wider international cooperation agenda in the future.
     
  5. Overlap and coherence
    The principle of policy coherence can certainly be developed in more detail within the DAC framework. In considering the overlap with adjacent policy areas, the key question must be which efforts are complementary to ODA and which contain an element of ODA. In the first case, these efforts would have to be additional to ODA, while in the second, they would count as ODA efforts. In the light of growing financial flows to fund climate change measures, we must therefore decide what level of additionality we must achieve to finance measures to mitigate climate change over and above the 0.7% target for poverty reduction, and what measures can be ascribed to poverty reduction. Climate-specific financing should be addressed in a supplementary goal which is translated into an additional set of international spending targets for climate. The same applies to spending under the heading of peace and security and migration, which can be linked to international agreements through additional goals. The form such agreements should take will need to be examined closely so that both their formulation and their implementation are realistic and effective. This could ultimately lead to embedding ODA in a broader framework of international public goods which can be used to tackle the new challenges we currently face.
     
  6. Towards a new framework of commitment targets
    The AIV recommends rapid and far-reaching modernisation of the goals and best efforts obligations for international cooperation, based on the actual resources and measures that are likely to be needed to meet the development goals outlined by the UN and the OECD within the foreseeable future. The current 0.7% target was drawn up nearly half a century ago on the basis of a calculation of the financial needs of developing countries, many of which are now in a very different situation. When reviewing the target and redefining the parameters for aid, account must be taken, in addition to finance for emergency aid, above all with the scarcity of capital available for low-income countries. This also calls for a detailed analysis of the global efforts needed to achieve the Millennium Development Goals, the new post-2015 development goals soon to be adopted, and the associated UN global sustainability goals. The opportunities available and responsibilities assigned to the different categories of countries, private enterprises and international and civil society organisations in helping to achieve international development goals must be established as objectively as possible. A comprehensive assessment of this kind is urgently needed. The AIV is naturally willing to contribute to such an assessment by developing in more detail the points it has raised in this advisory letter.
     
Advice request
Government reactions


Professor Jaap de Hoop Scheffer
Chairman of the Advisory Council on International Affairs
Postbus 20061
2500 EB The Hague

Date:  4 June 2014
Re:     Response to the AIV advisory letter ‘Development Cooperation: Beyond a Definition’


Dear Mr Chairman,

I hereby present you with the government’s response to the advisory letter issued by the AIV, ‘Development Cooperation: Beyond a Definition’ (advisory letter no. 25, May 2014), in which you discuss the content of the Interministerial Policy Review ‘Towards a New Definition of Development Cooperation: Considerations on ODA’ and the government’s response to the IPR. A copy of this letter will be sent to the Presidents of the Senate and of the House of Representatives. This response adopts the headings used in the advisory letter (introduction, observations and recommendations).

Introduction

I would like to thank the Advisory Council on International Affairs on behalf of the government for their advisory letter, which makes a positive contribution to the debate on modernising the definition of development cooperation and the future of international cooperation in general.

I am gratified by your observation, ‘The Netherlands has built a good international reputation in development cooperation by providing high quality aid over many years.’ I share your view that this has been a good investment which has added value to our foreign policy and hence served Dutch interests. A Policy and Operations Evaluation Department (IOB) study which is shortly due for publication estimates that each euro of bilateral development cooperation generates EUR 0.70 to 0.90 in additional exports to the Netherlands.

I also value your acknowledgement that a new and wide-ranging approach is required. However, in response to your endorsement of the government’s standpoint that international agreements must be made about what can be expected from whom and how these efforts should be measured, I would add that it is necessary to measure results in addition to input.

Observations on the IPR

Your observations address the key elements of the IPR and of the government response to it. Both documents call for an international review in which Official Development Assistance (ODA) is redefined and situated in a broader framework in order to bring the system more in line with the new international balance of power and new global challenges, while at the same time continuing to tackle the severe ongoing problem of poverty.

I share your view that predictability and ownership, promoted through transparent international registration, are vital. Particularly in the interests of predictability, I wish to adhere to an internationally agreed standard, applicable today to ODA alone but perhaps widened in future to encompass a broader framework of international public goods.

I endorse your view that differentiation between countries must not be allowed to compromise our goal of eradicating extreme poverty by 2030. However, I would point out that poverty can also be tackled using instruments not covered by the definition of ODA. You yourself cite policy coherence for development and instruments relating to climate, security and migration that are not covered by the definition of ODA. To this I would add development through private funding. Precisely because the challenges for the future are great, it will be necessary to mobilise both public and private contributions to the full.

Recommendations

I regard the recommendations in the advisory letter as largely confirming the government’s policy as outlined in the response to the IPR.

In the light of the post-2015 agenda and the transition to a broader system of international cooperation, the Netherlands will continue to uphold the accepted 0.7% international standard, even though it is not itself currently meeting that target.

I agree that a new definition of ODA must take into account the provisions of the Treaty of Lisbon, to which the Netherlands is a signatory. The Treaty explicitly states that poverty reduction is the primary objective of EU development cooperation, but also gives the member states scope to draw up their own complementary policies. I believe this ties in well with the current definition of ODA, the goal of which is economic development and welfare in the widest sense (wellbeing).

In view of the move towards a new, universal global framework for international public goods, I am not in favour of separate input targets for poverty, climate and peace and security and migration, which you recommend. However, I do agree with you that extra efforts are needed to support countries that are lagging behind in the fight against extreme poverty. I will therefore be pressing for agreements that set minimum standards for action to combat extreme poverty in low-income countries.

The use of public funding by private actors must of course be properly accounted for. Where there are public-private partnerships, we will examine whether agreements governing the input and results of the private component have been met. Where results are being achieved solely through private funding, accountability will often be voluntary, although the tax deductibility of donations is also subject to reporting obligations.

I seek to encourage proper, transparent reporting of input and results, both nationally and internationally. The DAC has already announced that it will be doing more to measure and monitor all forms of external development financing. In doing so, it will not only look at the contributions made by the governments of DAC member states (ODA and non-ODA) but also at the degree to which, in the words of the advisory letter, ‘different categories of countries, private enterprises and international and civil society organisations [are] helping to achieve international development goals’.

Measurement is a first step towards a universal, comprehensive system of agreements on the attainment of global goals that I wish to work towards. I am pleased that you support this vision and are prepared to provide more detailed advice to this end.

(Signed)

Lilianne Ploumen
Minister for Foreign Trade and Development Cooperation
 

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