Aid during the downturn

A few days ago the House of Commons International Development Committee released its latest report (entitled Aid Under Pressure: Support for Development Assistance in an Economic Downturn) and there are a few points which might be of interest to Global Dashboard readers.

As its title would suggest, the report focuses on the impact of the financial crisis on international development efforts. It opens on a grim note with the news that DFID estimates that by the end of next year 90 million more people will be living in extreme poverty as a result of the crisis. Moreover, the WHO believes that up to 400,000 additional children could die as a result. The International Development Committee adds that progress towards the MDGs may have been set back by up to three years.

A major point made in testimony given to the Committee was that initial expectations that the developing world would be insulated from the impact of the crisis have proven false. Whilst the contagion effect of the crisis has only directly harmed western economies, the indirect knock-on effects have applied pressure to transnational business flows worldwide. The World Bank reports that of the 107 counties it categorises as ‘developing’, 40% are ‘highly exposed’ to the downturn.

Unsurprisingly-though quite rightly-the International Development Committee’s response to all this is to insist on the importance of maintaining ongoing aid commitments, as agreed at the G20 summit in July.

Aside from that, the issue of tax havens is highlighted and it would seem that the British government is increasingly committed to making progress in this respect. Gordon Brown in particular has been forthright on this issue, but his government seems somewhat hamstrung at present and we shall have to await developments.

In the wake of the London Summit, institutional reform is back on the agenda. The need to overhaul the IMF and World Bank, particularly in regard to apportionment of votes within those organisations needs to be a priority for the post-crisis politics of global governance. Indeed, reform has been presented as a condition for the boost to IMF funding that the G20 agreed upon earlier this year. Broader questions of operational versatility are also important. In these respects, the Committee’s report is strong on good ideas and analysis, but light on suggestions for how Britain can help bring about the desired changes. For that perhaps we need to wait for the DFID White Paper due later in the summer.

On a seemingly superficial note, the Committee proposes that DFID’s name be changed and puts forward ‘British Aid’ and ‘DFID UK’ as possibilities. The intention, it seems is to increase the ‘visibility’ of UK international development spending. Of course, DFID does a lot more than aid, so I think we can immediately dismiss the first suggestion. As a reserved Brit, the idea of being so brash as to use ‘UK’ on international development work is too reminiscent of the US tendency to splash the Stars and Stripes on aid parcels. It seems… immodest, somehow. But it might be a good idea all the same – US aid is part of its soft power and in the same way, the work of the Department for International Development has the potential to be a significant contributor to British attempts to win ‘hearts and minds’, particularly in countries like Afghanistan. After all, the Committee’s report points out that DFID is the largest donor to the World Bank’s International Development Association. Maybe blowing our national trumpet more boldly isn’t such a bad idea. Though one wonders if there isn’t a snappier name out there somewhere – suggestions welcome, of course.