The Legal Obligation Of Wealthy Nations To Reach 0

The Legal Obligation of Wealthy Nations to Reach 0.7 percent of GDP as Official Development Assistance

By Vanessa MacDonnell

Introduction

Stephen Lewis calls HIV/AIDS “the ultimate human rights issue.” The rapid spread of the disease across Africa and the slow pace with which the developed world has responded has been the subject of heated debate. In particular, the fight against HIV/AIDS has brought to the fore the repeated commitments of the developed world to increase official development assistance to 0.7 percent of GDP. The pandemic has dramatically heightened the sense of urgency with which these funds are being sought.

Unfortunately, the financial commitments made by the developed world have not been forthcoming. The lack of political will on the part of wealthy nations has led academics to canvass the question of whether there is a legal basis for enforcing these promises. This paper will examine the legal and moral arguments for increased official development assistance, and will provide recommendations for action by states, courts, international organizations, and advocates.

1. Commitments Made by Wealthy Nations

The History of Official Development Assistance (ODA)

In 1969, the Commission on International Development embarked on a landmark study on the post-war record of official development assistance (ODA).[1] In its report to the World Bank, the Commission concluded that foreign aid had successfully generated economic growth in the Third World, and urged wealthy nations to commit one percent of gross domestic product (GDP) to ODA. The report set an interim goal of 0.7 percent, to be reached by 1975.

Unfortunately, the Commission’s recommendations were never implemented, and aid flows persisted at levels far below the interim target. Members of the development community continued to push for increased ODA, and as a result the 0.7 goal re-emerged at the UN Conference on the Human Environment in 1972 and at the Earth Summit in Rio in1992. At Rio, an unprecedented 178 governments adopted Agenda 21, which pledged that,

Developed countries reaffirm their commitments to reach the accepted United Nations target of 0.7 percent of GNP for ODA and, to the extent that they have not yet achieved that target, agree to augment their aid programmes in order to reach that target as soon as possible and to ensure prompt and effective implementation of Agenda 21.[2]

Five years later, however, global aid levels had actually decreased, from 0.35 percent of GDP to 0.27 percent.[3]

In 2000, the General Assembly of the United Nations adopted the Millennium Development Goals. The Goals set an aggressive agenda of poverty reduction to be realized over a period of 15 years. The Goals emphasized the notion of a “global partnership for development,” and stressed that the challenges faced by developing nations would not be solved without increased ODA, debt relief, foreign direct investment, and trade liberalization. [4] The Goals also identified an immediate need for improved primary education, health care, nutrition, clean water, and sanitation.[5]

Despite the commitments articulated at the U.N. Millennium Summit, ODA flows as a proportion of GDP continued to decline. In response, the Third UN Conference on Least Developed Countries issued the Brussels Declaration, which expressed serious concern over dwindling ODA rates. In 2002, the International Conference on Financing for Development was held at Monterrey. In addition to endorsing the 0.7 percent target, wealthy nations pledged to deliver aid more effectively. They endorsed the OECD/DAC recommendation on the untying of aid[6] and acknowledged the importance of local, accountable ownership of development projects. A consensus emerged at Monterrey that aid must be targeted primarily at the promotion of trade and foreign direct investment. Developing countries, for their part, would work to increase the absorptive capacities of their economies in order to make better use of development assistance. [7]

Considerable emphasis was also placed on decreasing the transaction costs of aid. As The Guardian points out,

Attempts by western countries to ensure that aid is spent wisely often puts an onerous burden on poor countries…Missions, co-ordination meetings, aid talks with donors individually or collectively, and the like take up vast amounts of time in countries where the capacity to handle large inflows or assistance is often weak.[8]

The Monterrey Consensus advocated greater harmonization in the negotiation and implementation of development projects. At the 2003 Rome High-Level Forum on Harmonization, representatives from fifty countries issued a declaration supporting an aid coordination strategy.[9] The recently-adopted Paris Declaration builds on the commitments made in Rome, and focuses on the key themes of ownership, alignment, harmonization, and accountability.[10]

In 2002, the Summit on Sustainable Development was held in Johannesburg. The role of development assistance in fighting the spread of HIV/AIDS figured prominently on the Summit agenda. The commitment to increase flows of development assistance to 0.7 percent of GDP was re-affirmed, with the additional requirement that countries establish fixed timelines for compliance. The Summit also examined the role of international economic institutions in entrenching Third World poverty. The Summit’s implementation plan undertakes to,

Strengthen ongoing efforts to reform the existing international financial architecture to foster a transparent, equitable and inclusive system that is able to provide for the effective participation of developing countries in the international economic decision-making processes and institutions.[11]

Contemporary Commitments

Official development flows continue to vary widely across countries. At present, Denmark, Luxembourg, the Netherlands, Norway, and Sweden have reached the 0.7 percent goal. Belgium, Ireland, Finland, and France have, “set firm dates to reach the UN benchmark.”[12] Reports from Spain and Britain suggest that the two countries may meet the 0.7 percent target by 2012 and 2013 respectively.[13]

Furthest behind is the United States. Despite giving 25 percent of the world’s aid, flows from the U.S. amount to only 0.15 percent of the country’s gross domestic product, the lowest proportion of any of the OECD countries.[14] To date, the Millennium Challenge Account, the President’s ambitious initiative to implement the Millennium Development Goals, has released but a small fraction of the more than $1 billion in initial funding announced in January of 2004. The three year, $5 billion increase in foreign assistance pledged at Monterrey has already been cut by $2 billion in response to budgetary constraints, caused no doubt by the burgeoning cost of war in Afghanistan and Iraq .[15]

Many blame the rigorous qualification criteria as the cause of delay in disbursing the funds. The Millennium Challenge Account selects “eligible” recipient states through a comprehensive assessment of a country’s performance in the areas of governance, social spending, and economic liberalization. Once a country is deemed eligible, funding proposals can be submitted for approval. As of the time of writing, only 16 countries were eligible for funding, including eight countries in Sub-Saharan Africa. Of those eight, only Lesotho and Madagascar have double-digit rates of HIV/AIDS infection. Excluding the majority of Sub-Saharan Africa from the President’s foreign aid strategy has serious implications in the fight against HIV/AIDS. There has been heavy criticism mounted that the inadequate American response to the pandemic will no doubt compromise the world’s ability to meet the Millennium Development Goals.

Even more troubling is that despite “endorsing” the Monterrey Consensus, American aid officials, “now say that the President never promised to fulfill the Goals set in Monterrey anytime soon—or ever.”[16] Instead, the U.S. Administration has increased its focus on trade and remittances. Few countries include these amounts in overall aid flows since they cannot be used to “generate education, health care, or infrastructure,” and their inclusion distorts estimates of development assistance.[17]

In Canada, Prime Minister Paul Martin recently announced an overhaul of the foreign aid program. Martin explained that Canada will provide aid to fewer countries, but will focus on areas of special concern, including HIV/AIDS.[18] Canada does not plan to increase official development assistance to 0.7 percent of GDP by 2015, despite the current strength of its economy. In 2003, Canada’s ODA amounted to only 0.26 percent of gross national product, the lowest proportion in Canada in more than 30 years.[19]

Gordon Brown, Chancellor of the Exchequer in Britain, has been vocal in his support for significant increases in development assistance for AIDS-afflicted countries. Brown indicates that the United Kingdom’s ODA levels will reach 0.48 percent of GDP in 2008 and 0.7 percent in 2013.[20] Africa will be the focus of the G8 agenda later this year when Britain hosts the annual leaders’ summit at Gleneagles. The Summit will examine the progress made to date on the Millennium Development Goals, and discuss how to accelerate efforts to alleviate poverty in the developing world. In the words of Gordon Brown,

The Millennium Development Goals were not a casual commitment. Every world leader signed up. Every international body signed up. Almost every single country signed up. The world in unison accepting the challenge and agreeing the changes necessary to fulfill it - rights and responsibilities accepted by rich and poor alike.[21]

Brown has also urged G8 leaders to support the creation of an International Financing Facility (IFF) with the goal of sending twice the current level of aid to Africa in the next ten years. Brown has proposed the sale of bonds in international markets to generate the $100 billion required to meet the Millennium Development Goals. The European countries of the G8 have are in support for this initiative, but the United States and Japan have rejected the proposal.[22] In the words of a U.S. official, “Not only does the IFF not work for the United States, we don’t need the IFF.”[23] The lack of support for the plan outside Europe has led some observers to speculate that the creation of such a facility may move forward as a European initiative.[24]

The UK has also indicated that it will focus on the issue of Africa when it assumes the position of chair of the European Union later this year. The EU announced $7 billion in new development assistance at Monterrey.[25] It has set aside € 351 million to fund projects related to HIV/AIDS between 2003 and 2006. € 84 million of this will be earmarked for the Global Fund.[26] One of the deficiencies of the European development assistance program is the continued decline of the proportion of aid targeted at least developed countries (LDCs). In 1985, 75 percent of foreign aid was allocated to LDCs; in 1997, this number had dwindled to 51 percent.[27] The European Union has identified this weakness its development policy and is attempting to remedy this problem.

The European Union is currently completing public consultations related to its development policy. One development initiative that has been employed successfully is a program pairing Member States with EU accession countries or an emerging economy in Eastern Europe.[28] As official documents explain,

Twinning finances the secondment of civil servants from EU Member States to beneficiary countries. It can be used to implement all institution capacity-building projects. Beneficiary countries select the twin Member State and commit themselves to undertaking and funding reforms, while Member States commit to accompanying the process all along. At the end of the project a new or adapted system must function under the sole responsibility and means of the beneficiary country.[29]

Applying similar principles to an African initiative could present interesting possibilities. By twinning donor and recipient countries, aid harmonization is achieved, and projects foster a sense of ownership on the part of both donor and recipient countries.

The Political Dimension of Aid

Aid commitments are subject to numerous political considerations. This accounts in part for the continued practice of tied aid. It also explains why aid is routinely allocated not on the basis of need, but rather based on strategic considerations. The Canadian aid program has traditionally focused on Commonwealth countries and La Francophonie. In the United States, more than 20 percent of aid is allocated to Egypt, Pakistan, Jordan, and Columbia--countries regarded as strategic in the war on terror.[30] The top recipients of Canadian aid until recently were Egypt and China, two middle income countries. The World Bank reports that aid to middle income countries is not uncommon, given that bilateral aid flows tend to have specific geopolitical objectives.

While aid to middle income countries is objectionable because it tends to divert aid from countries that need it most, it may be justified in the case of recipient countries with high rates of HIV/AIDS infection. A press conference held by African Ministers of Finance, Planning and Economic Development held in 2003 addressed this issue, calling for the Bretton Woods Institutions to,

Consider revising the eligibility criteria for assistance to middle income countries afflicted by the AIDS epidemic, and to find ways of ensuring that countries could expand expenditures on health and social welfare without violating conditionalities that impose limits on public spending.”[31]

Another political obstacle faced by advocates of increased ODA is the reality that development assistance ranks far below domestic spending priorities like health care, education, and defence. USAID representatives have stated unabashedly that Americans are less outward-looking than other nations. As Emmy Simmons, a USAID administrator indicates, “We still see ourselves as a developing country. Some people say, ‘Why, when we have so many needs, should we spend money abroad?’ If we are to maintain our role in the world economy, we need to invest in ourselves’.”[32] The lack of political will to address development issues stems in large part from the fact that development issues are not election issues. Bringing prosperity to Africa is not perceived as being in the strategic interest of the developed world. Realising true development requires the restructuring of international institutions that currently operate to the benefit of wealthy nations. These notions do not appeal to political leaders or to the electorate.

Thankfully, these negative perceptions are beginning to give way to a more critical, nuanced view of development. Donor countries are increasingly alive to the international security implications of poverty and corruption in the Third World. Leaders in developed countries are realizing that HIV/AIDS is a global public health threat that must be addressed in a concerted, international effort.