Increasing donor involvement — driven by both the recognition of the Pacific’s development needs and by intensifying geopolitical competition — has led to an ever more crowded development landscape. Photo: Screengrab / Lowy Institute / Pacific Aid Map
Despite the United States pulling the plug on foreign aid, the likelihood of other countries following this path, the impact of Covid-19, and the zest for a military build-up in the West, an academic says assistance from the wealthier countries to the poorer ones will still continue.
Robin Davies, an honorary professor at the Australian National University's Crawford School of Public Policy, has also worked with the Department of Foreign Affairs and for AusAid (Australian Agency for International Development).
He says the OECD (Organisation for Economic Co-operation and Development) consensus on aid has broken down, more than 60 years after it was developed by the US.
However, Davies told RNZ Pacific that he remains confident that overseas development assistance (ODA) will continue.
(The transcript has been edited for brevity and clarity.)
Don Wiseman: Is this the end of foreign aid?
Robin Davies: No, but it's going to put a massive dent in it. It's definitely a big shift in the balance between the traditional OECD donor grouping and the rest of the world. The sort of emerging donors, obviously China, but also United Arab Emirates (UAE) and a lot of the other Arab states, and smaller countries that are beginning to build up their aid programmes.
But there's always going to be some level of overseas aid for a range of reasons. A little bit moral reasons, humanitarian reasons, but also there will always be diplomatic imperatives to continue providing certain forms of aid, especially bilateral aid, to the neighbours of more developed countries to less developed countries.
I think what we're looking at is a massive adjustment, probably the biggest adjustment since aid began back in the '60s. But not exactly the end of it. We've seen a lot of headlines announcing the end of aid, and that's happened many times over the years. But it'll never completely end.
DW: What makes you so certain that there'll still be bilateral aid and support for neighbours?
RD: Well, if you look at the components of overseas aid at the moment, there's a number of layers. At the very heart, there's always humanitarian assistance, whether it's disaster relief or assistance to countries that are experiencing instability or outright conflict. That's always going to continue for...
DW: That's not going to come from the US.
RD: I wouldn't assume that at all. USAID (United States Agency for International Development) is gone. It hasn't actually been abolished yet, but there's almost no question that it will be. But the US has always provided humanitarian assistance, not through USAID, but through the State Department, and whatever happens next, it looks likely that some small proportion of USAID staff and functions will be merged into the State Department.
The State Department already owns what is called the Office of Foreign Disaster Assistance, which has always provided humanitarian aid in response to disasters and conflicts. It's very unlikely that that will not continue.
Likewise, the US and other countries have always found it convenient to provide economic assistance to countries where they want those countries to remain stable and friendly. In the US case, that has flowed through a range of agencies, whether it's through the Treasury, USAID, State [Depatment], or even sometimes the Department of Agriculture and others. That sort of stuff is always going to continue where it serves the interests of donor countries, whether it's the US or any other country.
Then there's another layer where a lot of donor countries have very active NGO communities. Those communities raise a lot of money from the public in donor countries. There has always been a practice, a tradition, of donor governments in some way matching those contributions from the public, whether it's providing tax deductibility or actively matching those contributions.
I think you're going to see that sort of thing continue. The question is, how much of global aid is in those categories? It's a minority, it's always going to be you wouldn't want to put a figure on it, but I'd say if you had to take a wild guess, at most, it would be around a third of the amount of aid that is flowing currently.
DW: I know that NGOs in New Zealand, over the last few years have really been struggling to raise money, that there's been, they sense, a whole switch in terms of what the general public is prepared to do, and they're not giving the money to NGOs.
RD: Correct, and the pandemic. It's not totally clear why, but the pandemic certainly led to a reduction in public support for international NGOs. People were feeling the pinch, the cost of living, and people were being, perhaps more inclined to donate to domestic charities. Who knows what the reasons are, but we've certainly seen a reduction in Australia as well as New Zealand, in public support for NGOs.
It's hard to predict what will happen there, though, because if people who are charitably-minded, or committed to international development, if they see that there are really huge reductions across the world in government aid, it may change their view. It might incline them to increase their contributions to non government organisations as a way of filling the gap and also registering against what they might perceive as a new stinginess in official aid policy.
DW: What do you think the impact will be on the Pacific nations?
RD: The Pacific is a little unusual in that it has a strong umbrella of protection from Australia in terms of aid, and it is not very reliant on assistance from other countries, including the US.
Pacific Island countries do not receive significant amounts of funding from the US. Their major donor, by far, is Australia. New Zealand is important, particularly in the realm countries. Then other donors are doing bits and pieces, often through regional institutions.
DW: They are looking, and they have been looking for the last several years for a significant step up so that they can combat climate change. That money hasn't been forthcoming. They're looking, I guess, to the US and to Europe for much of that, and that's not going to come at all now is it?
RD: Correct. So the US, as you would know that the Biden administration had in fact, announced a significant step up of American assistance to the region for things like the regulation of fisheries and a range of other things, and for climate change related programmes. But then the Biden administration lost office before any of that even began to be implemented.
So compared to the trajectory that had been mapped out by the Biden administration, certainly, these changes in the US mark a big difference, but compared to the amount of money that's currently actually flowing, it's not going to have a massive impact on the Pacific.
I guess it disappoints the hopes of Pacific leaders, based on what they had heard from the previous administration. But it's not like there's a whole lot of money flowing from the US that has suddenly gone missing now.
DW: There's been a prediction, a number of predictions, I suppose, that this lessening of aid will be opening up the region to welcome in a lot more assistance from China.
RD: Yeah, and we don't know what's going to happen there. But it's not automatically the case that China will expand its assistance to fill the space left by the US.
You can look at it another way. The space has shrunk, and China automatically occupies a bigger proportion of that space, and they might be quite content with that situation. They might be happy to wave goodbye to the US and the region without necessarily expanding their own aid.
We have to see how China plays that but certainly it's likely that Pacific leaders will be more inclined to look toward China and ask the question, and we have to see what the answer will be.
