Possible impacts of Brexit on EU development and humanitarian policies Iliana Olivié & Aitor Pérez Brussels, 9 June 2017

Key figures and political responses to the impact of Brexit on EU aid Brexit could have a major impact on EU development and humanitarian policies. Although there are still uncertainties about the UK’s new foreign policy approach and its repercussions on aid and the UK, the UK’s leaving would challenge the EU’s role as the world’s leading donor:   Aid managed by the EU Institutions may decrease by up to 15 %. Aid provided by the Union as a whole may decrease between 18% and 20% The EU would lose between 10 % and 13 % of its world aid share (currently in 58%) Its presence, through ODA, in neighbour countries (Eastern Europe and North Africa) could be particularly affected, with a cut of between 1 % and 4 %, depending on the scenarios. Furthermore, under certain scenarios, the Brexit process could end in a decrease of global aid estimated in 3%. The EU can react to Brexit by adopting two distinct approaches to foreign policy and development cooperation: either it limits its role to that of a regional power or it grows to be a global leader. In the first approach, Brexit would have a very mild effect and would lead to very little policy challenges. However, in the second, the EU will need to compensate for the loss of Britain’s contribution to EU aid, both in quantitative and qualitative terms.

Setting the scene Focus OECD definition of ODA Scope humanitarian and development aid - EDF, DCI, ENI, EPI, EIDHR, ISHA Starting point: Member States contributions to the EU aid budgets (net disbursements of 2015 ODA flows in millions of US current dollars) 2011 2012 2013 2014 2015 Germany 2.721,79 2.606,46 2.665,85 2.877,13 2.891,75 France 2.370,32 2.193,83 2.283,55 2.349,38 2.298,39 United Kingdom 2.054,94 1.995,65 2.041,19 1.922,33 2.159,53 Italy 1.901,32 1.598,04 1.618,10 1.661,58 1.695,62 Spain 1.105,30 990,67 1.028,47 1.024,67 1.077,18 Netherlands 677,74 637,88 649,82 647,32 647,69 Belgium 521,26 474,28 498,79 511,26 551,13 … Total 13.974,42 12.922,73 13.269,31 13.663,89 14.132,23

Methodology Assumptions Variables Scenarios Impacts Policy options The UK will leave the EU The EU-28 will keep their financial commitments until 2020 The UK GNI and the GBP remain stable EU GNI, the euro and other EU currencies remain stable Aid of the other 27 MS will not be affected by Brexit Variables 1. UK aid budget 2. British aid allocation (only applying to aid formerly channelled via EU institutions) 3. British willingness to collaborate with the EU in development (only applying to aid formerly channelled via EU institutions) Scenarios 1. Nationalist UK 2. Realist UK 3. Cosmopolitan UK Impacts 1. Financial 2. Political 3. Operational Policy options EU policy options regarding aid volume EU policy options regarding its share of global aid and ODA in the neighbourhood EU policy options regarding its reliance on alternative channels of aid

Three scenarios for post-Brexit UK aid Setting the scene   Scenario 1 Nationalist UK Scenario 2 Realist UK Scenario 3 Cosmopolitan UK 1. UK aid budget - 30 % Same 2. British aid allocation Realist pattern Channel distribution following British pattern of bilateral aid Geographical distribution, accordingly Sector distribution, economic infrastructures only European-like pattern (50 % of aid) Same channel distribution Same geographical distribution Same sector distribution Globalist pattern (50 % of aid) Channel distribution following British pattern of multilateral aid (except EU institutions) Sector distribution, accordingly 3. British willingness to collaborate with the EU in development No collaboration Collaboration (50 % of aid formerly channelled via EU institutions channelled via EU institutions in the post-Brexit phase)

The impact of Brexit on EU aid   Pre-Brexit (USD millions) Post-Brexit 2 (variations - %) Nationalist UK Realist UK Cosmopolitan UK Financial impact EU-managed aid 13 6701 -15 % -7.6 %3 Global aid 160 600 -3% 0% Political impact All-EU share in global aid 58 % -10 % -12 % -11 % All-EU share in the multilateral system 61 % -9 % 12 % All-EU commitment: ODA/GNI % 0.44% -0.01% Aid received by EU neighbour countries 28 606 -4 % -2 % -1 % EU institutions rank in global aid #4 - Operational impact Global bilateral aid 65 359 2 % Global multilateral aid 37 090 Global aid through 58 152 -5 % Net disbursements of 2015 ODA flows in millions of US current dollars Our estimates for each scenario based on 2015 data and assumptions Including UK contributions to the EU aid budgets Source: https://stats.oecd.org (DAC1); last accessed 9 February 2017

EU policy options Post-Brexit scenarios Nationalist UK Realist UK Cosmopolitan UK The EU, as a global leader Increase of EU aid +15% +7.5% Possible reallocation in support of globalist partners (UN, CSOs) The door open to the UK: EU toolkit provides different opprtunities to cannel UK contributions The EU, as a regional power Refocus on the neighborhood Stronger EU integration in development cooperation Political attention and policy development will be oriented to deeper EU donor coordination UK might preserve its commitment regarding aid efforts (scenarios 2 and 3) or reduce its aid levels (scenario 1). According to recently published strategies and political statements, aid could be reshaped in different ways (European-like pattern, following the multilateral review; Realist-type allocation to infrastructures or security…) The EU can cope with this situation by upgrading to a global development player (particularly in the event of British aid cuts) or concentrating on the neigbourghood. From the administrative point of view, in this development field, Brexit does not necessarily means Brexit, (trust funds, NGOs settled in member states…). However, politically, the EU-27 might give UK a hard time (something that will depend to a great extent on the political position of Germany).

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