By Professor Barbara McPake, Director at Nossal Institute for Global Health, University of Melbourne and an elected member of the HSG Board.
Foreign aid budgets support the financing of global public goods. Their sustenance and strengthening are critical to the process of recovery from COVID-19, and future resilience to epidemics, pandemics, and other health challenges in an increasingly globalized world.
Foreign Aid Commitments & Cuts
In July, British Members of parliament voted to lock-in cuts to foreign aid. According to this vote, the UK will abandon its commitment to achieving a 0.7% of national income1 foreign aid spending. This spending had only recently been reaffirmed in the Conservative Party’s 2019 election manifesto. The cuts were announced last November in association with the closure of the UK’s Department for International Development, established under the Blair government in 1997. The official rationale is that the costs of responding to COVID-19 in the UK have limited the budgetary capacity for foreign aid. It will stand for the time being at 0.5%
This action is not unique. In Australia and Canada foreign aid programs, AusAID and CIDA, were amalgamated into their Foreign Affairs Departments, leaving their overseas aid budgets at 0.21% and 0.31% of national income respectively. The USA’s still lower contribution of 0.17% survived attempts from the Trump administration for further reduction.
The commitment to achieving 0.7% of national income foreign aid, first agreed by the UN General Assembly in 1970, is in tatters – in the English-speaking world at least. Over 50 years after the commitment was made, only five countries: Luxembourg, Norway, Denmark, Sweden, and Germany are achieving the agreed level.
Opinion polls such as those conducted in the UK and Australia have suggested high degrees of support for reducing foreign aid. It is clear the attitudes underpinning this support are based on misinformation in key respects, for instance, there is a consistent over-estimation of the level of current aid volumes. Perhaps most critically, the public tends to view aid as charity, and foreign aid as the antithesis of the adage ‘charity begins at home’. This maxim has been widely referenced by the popular press as it campaigned for aid cuts in the UK. While compelling charitable cases can be made for aid, the strongest arguments rest in the recognition that what foreign aid budgets support, is the financing of global public goods.
These public goods are necessary to address critical issues in fragile economies and vulnerable communities, that place them at higher risk of outbreaks, susceptibility to pandemic impacts, and poor management. Our knowledge of social, economic, and environmental determinants of health indicates that pulling aid away will ultimately be counterproductive.
The impacts of poverty and war are increasingly globally, rather than locally, experienced. The costs associated with waves of migration motivated by war and poverty are costly to the countries where migrants aim to enter, whether those countries accommodate or seek to repel migrants. It has been estimated the current cost of accommodating refugees in Germany is around US$16bn per year although that fails to recognise refugees’ contributions to the economy and society. Trump’s wall to prevent South and Central Americans and Mexicans from entry into the USA had cost US$11bn by the beginning of 2020.
The global environmental cost of deforestation, sand mining, and the pursuit of ever more marginal livelihood strategies by those left without alternatives, is another example of the global impact of local actions. Fossil fuels remain the only affordable energy source for most of the world’s poor, and climate change cannot be contained without investing in energy transition in poor countries.
COVID-19 will not be the last global pandemic if wild animal habitats are increasingly encroached upon and species depleted. Novel zoonoses thrive best in those animals such as bats and rodents that increase in numbers as biodiversity decreases. On my rough calculation, the costs of this one pandemic, estimated at $16trillion in less than one year, far outstrip the total of global aid budgets since the end of World War II2.
The current phenomenon of aid hesitancy exemplified by the recent budget cuts in the UK, and underpinned by misinformation, is an even more dangerous phenomenon than the vaccine hesitancy capturing so much global attention. Like vaccine hesitancy in the face of the current pandemic, aid hesitancy may be in decline in the face of news of the real impact of abandoning these investments. UK aid cuts resulted in the canceling of a program to provide education for 360,000 girls in Bangladesh, nutritional support for 12 million infants and family planning services for 14.6 million women and girls in Bangladesh, the closure of the Green Economic Growth for Papua program in Indonesia, preventing deforestation, cancellation of multiple peace-building initiatives across the world and a litany of further acts of destruction. These have not sat well, even with a significant number of Conservative MPs, and there is evidence that attitudes in the UK are changing.
It is important for governments to recognize that foreign aid cuts in the interest of prudent housekeeping measures are short-sighted and a fallacy. Governments, in fact, have a unique capacity to invest in the public interest and borrow to do so at the lowest possible interest rates. Failure to confront insecurity and injustice, and failure to invest in the prevention of future pandemics will cost much more than the aid cut.
1 I use the term ‘national income’ as an approximation of the concepts of Gross National Income, Gross Domestic Product, and other measures of the total earnings or outputs of a country in a year because preferred concepts have shifted over the life of these arguments.
2 Total global aid spending was $130bn in 2015 (at 2014 constant $). It had consistently risen to that level for some time but even if this level had been sustained from 1945 to 2021, a total of approximately $10tn would have been spent on aid over that period.