An Obscure Debate in the UK Over What Counts as “Foreign Aid” Has Big Global Implications Joanne Lu November 9, 2017 By: Joanne Lu on November 09, 2017 An arcane debate in the United Kingdom about what properly qualifies as “foreign aid” could have a big impact on how anti-poverty development assistance is spent around the world. At issue is how the United Kingdom gets to count the aid it is spending on hurricane relief in some of its overseas territories. When Hurricanes Irma and Maria tore through the Caribbean in September, the U.K. government came under sharp criticism for contributing “such little aid” to the recovery of its overseas territories, including the British Virgin Islands, Anguilla and Turks and Caicos. But, according to the Department for International Development (DFID), the problem was that, under international rules, those islands were too wealthy to be eligible for official development assistance (ODA). It’s true. And to understand why, you need to know a little bit about how the international community coordinates foreign aid from donor countries. Rules set by the Development Assistance Committee (DAC) of the Organization for Economic Co-operation and Development (OECD) determine how the 30 richest donor countries can spend official development assistance. (The OECD is an international body that includes the world’s wealthier countries. It is a forum where they can coordinate foreign aid spending) According to OECD rules, the gross national incomes of the affected islands are too high to qualify for official development assistance, which is supposed to go to countries with a GNI per capita below $12,235. But last Monday in Paris, when the DAC gathered for its biennial high-level meeting, the U.K. proposed an “emergency waiver” that would allow small island states to gain (or regain) ODA eligibility for 36 months. Currently, no reinstatement process exists. “This unprecedented event [Hurricane Irma] shows the need to consider how the impact of a natural disaster on a territory should lead to a change in how that territory [is] defined in ODA terms,” Britain’s (now former) Minister for International Development Priti Patel said in a press release. Even those opposed to the emergency waiver agree that perhaps GNI, which is calculated before a disaster, is not the best indicator of development progress or need. The last thing the development community wants to see is a country that graduated from ODA eligibility slide back into poverty. However, a clear distinction needs to be made: The DAC was not stopping the U.K. from spending money on relief efforts in its overseas territories. Rather, the DAC rules prohibit the U.K. from counting that spending as ODA. In other words, the 30 richest donor countries, who make up the DAC, have an agreed-upon target to spend 0.7 percent of their respective GNIs on ODA. The U.K. is one of the few countries to consistently meet that target, and it wanted the money it spent in their overseas territories to count toward that target. But allowing that change could mean the U.K. would spend that much less on the intended recipients of ODA–that is poorer countries in need of development assistance. “This is now diverting money that should go to the poorest countries – people living in crisis in Africa [for example], people on the verge of famine like in Somalia and Nigeria – and to give it to your rich islands when you have other money to use to solve the problems of your territories? For me, that’s taking from the poor to give to the rich, and it’s not right,” Winnie Byanyima, executive director of Oxfam International, told Devex. The emergency waiver proposal isn’t too surprising coming from Patel, whose conservative trade-focused approach has worried members of the aid and development community since her appointment last year. But at the DAC meeting, it soon “became clear there wasn’t consensus,” Byanyima said, and the U.K. delegation withdrew the proposal. “Instead the 30 member countries backed a different plan to use official aid in temporary emergencies but on the crucial condition that no ODA is diverted from existing recipients in the process,” the BBC reported. “The DAC also agreed to establish a new mechanism for middle-income countries to be reinstated on to the list of ODA-eligible recipients if they suffer a long-term economic decline.” In short, the DAC – much to the relief of development advocates – made no promises until further research has been done. That means for now, the U.K., and the other 29 major donor countries, do not have a green light to count emergency spending in their own high-income territories toward their ODA targets, especially if it diverts funding from existing beneficiaries. But this topic clearly hasn’t been closed – nor should it be. There is room for a more holistic approach to measuring development progress, and there should be more avenues to finance resilience and recovery in the face of climate change. But if the goal is inclusive development, the poor will have to be a central part of the conversation to ensure they’re not left behind.