THE DEVELOPING WORLD

Autumn 2005

by Nicole Gnesotto

America wants to promote freedom through its aid, while Europe seeks to eradicate poverty. Nicole Gnesotto, Director of the Paris based EU Institute for Security Studies, says that these two different approaches cannot mask the fact that neither is spending enough

The European Union and the United States are the world’s two leading trading powers, the most advanced democracies in the world, and they provide almost 80% of global development assistance. They share a real responsibility in shaping the evolution of the Third World, but do they share the same vision of aid? It seems not.

The available figures are incomplete and debatable, but they are at least an indication of the two respective aid policies. The European Union and its member states are without any doubt the leading international donor, providing 55% of total aid flows –amounting to $60bn dollars a to more than 160 countries, with the bulk going to the EU’s African, Caribbean and Pacific (ACP) partners. Four of the EU’s member states spend more than the 0.7% of their Gross Domestic Product (GDP), the objective agreed by the international community, although the EU average is only around 0.35%. In comparison, the United States could be described as spending “only” 0.15% of its GDP on aid and assistance to third countries, even though it remains in volume the world’s biggest single donor, so that its $16bn accounted in 2003 for 24% of total aid worldwide.

These figures become rather more eloquent when compared with defence spending. The US will in 2006 spend around $450bn or 70% of world defence expenditure in 2003 and 700% of global development assistance. The EU member states together spend around €160bn a year on defence. In other words, the EU outlay on international aid is about 20% of what it spends on defence, and the ratio for the US is much lower with aid amounting to only 3.5% of America’s military spending.

There seems little doubt that these figures reflect the respective natures of the transatlantic partners and their different visions both of the world and of their role in shaping international security. The United States, more than ever under President George W. Bush’s administration, gives unequivocal priority to its national security at home and abroad, looking to maintain its military superiority over all other countries. The EU for its part has no intention of becoming a military superpower: Under the leadership of High Representative Javier Solana, it adopted in December 2003 a European security strategy in which military power is defined as just one of the different and interrelated tools the EU can use to protect its security and promote “a secure Europe in a better world”. This profound political difference between the US and the EU is bound to affect the principles and ways they deal with aid to poor and developing countries.

They certainly share some of the common principles proposed by the 2002 Monterrey international conference on financing for development as well as by various G8 summits: the principle of “ownership” (building on the leadership and commitment of a country and its people); the link between development and security as well as between development, governance and democracy; the principles of accountability, transparency, and the fight against corruption in recipient and donor countries; special attention to failed or failing states; the need to assist countries in the process of transition; the priority to the fight against HIV/AIDS, especially in Africa. These basic tenets feed a number of EU-US collaborative projects: In Afghanistan, where they are two of the four co-chairs of the Reconstruction support group; in Sudan, where together they provide together around $800m; in Iraq, where the EU pledged $1.4bn in assistance back in October 2003, and added a further $250m after the country’s 2005 elections.

But cooperation does not mean similarity. Apart from humanitarian aid, which in principle escapes political constraints, there are important differences in the philosophy and in the ways the US and the EU conduct their aid policies towards third countries. The National Security Strategy of the US (2002) puts forward a strong argument for shaping development policy in accordance with the broad objectives of US foreign and security policy: “We must use our foreign aid to promote freedom and support those who struggle non-violently for it, ensuring that nations moving toward democracy are rewarded for the steps they take”.

In January 2004, Congress established a Millennium Challenge Corporation whose main operating principle when providing aid to selected countries is to “encourage policy reform and reward performance”. As President Bush put it during his visit to Brussels in February 2005: “My nation is increasing our aid to developing nations that govern justly, expand economic freedom, and invest in the education and health of their people”. This politicisation – one could even say instrumentalisation - of public aid is clearly reflected in the forecast 2006 budget of the US Agency for International Development (USAID). Out of a total of $9bn, USAID is going to devote $325m to transition initiatives and the stabilisation of fragile states, $451m to education, $433m to agriculture and natural resource management and more than $3bn “in assistance to countries supporting the economic and foreign policy concerns of the United States. Major recipients of this aid include Egypt, Israel, Jordan, West Bank and Gaza and front line states in the war on terrorism, including Indonesia, Pakistan, Afghanistan and the Philippines. Funding is also requested for Iraq”.

On the EU side, the first priority is to eradicate poverty. EU aid and development policies are, unlike those of the US, neither threat-driven nor primarily security-oriented. Even though the EU can sometimes use its aid assistance as a means of securing foreign policy objectives (in the context of EU enlargement, for example), the EU believes that poverty reduction is an end in itself which deserves continuing effort, regardless of short-term EU interests. The poorest nations and the least advanced developing countries are thus at the top of EU agenda. However, when describing the new international context, the EU Security Strategy begins by stressing the tragic link which exists between poverty, underdevelopment and insecurity: “In much of the developing world, poverty and disease cause untold suffering and give rise to pressing security concerns” … “a world seen as offering justice and opportunity for everyone will be more secure for the EU and its citizens”. Thus, in delivering aid to the Third World, a strong incentive is also given to promoting the rule of law, good governance, respect of human rights and the promotion of democratic rules.

The end purposes of both the US and the EU can be described as almost identical in promoting democracy worldwide and increasing international security. “The best protection for our security is a world of well-governed democratic states”. This sentence is taken from the EU Security Strategy but it has many equivalents in the National Security Strategy of the US. But while America uses democracy and reforms as one of the selection criteria to deliver aid and financial rewards, Europe sees democracy as a long-term objective that cannot be built on the basis of extreme poverty, injustice and despair. And while the US priority is to increase the “national security of the United States”, the purpose of the EU is to build “a better world” which will itself enhance the security of the EU.

Certainly, these differences do not forbid substantial pragmatic cooperation, even complementarity, as is the case for Africa or the Middle East region. But more importantly, these differences cannot mask the fact that both the EU and the US are guilty of not spending enough on aid for the Third World: half of the world population, almost 3 billion people, live on less than two euros a day. Whether for security or moral values, allowing this reality to continue cannot be described as a responsible policy. The UN Millennium Project suggested an increase in official development assistance to 0.7% of GDP to help cut global poverty by half: reaching this goal, especially on the US side, is a favour that rich countries can afford to do for less favoured parts of the world.