What should count as aid? Jonathan Pickering PhD candidate, Centre for Moral, Social and Political Theory Australian National University Australasian Aid and Development Workshop Australian National University 13 February 2014

Outline 1.Why revisit aid eligibility? 2.The OECD definition and the question of development intention 3.Current exclusions 4.Proposed exclusions 5.Recommendations and conclusion 2

1. Why revisit aid eligibility? Changing geography of poverty Broader flows of financing for development Post-2015 goals Policy contention in Australia over refugee costs, climate finance 3

2. OECD work on measures of development finance Develop new measure of Total Official Support for Development (TOSD) Investigate whether to revise definition of Official Development Assistance (ODA) 4

ODA: the current definition Donors: governments of OECD countries Recipients: on the DAC list of developing countries Concessionality: grants or low-interest loans Development intention: “administered with the promotion of the economic development and welfare of developing countries as its main objective” 5

Criteria for a definition of aid Integrity / credibility –Maximise development-oriented funding –Filter out incompatible interests (the “that’s not aid!” test) Adaptiveness –To changing development needs –To understandings of good development practice 6

3. Current exclusions: rationales and examples Primary benefit to donor –Counter-terrorism –Carbon offsets Non-developmental benefits to recipient –Military aid –Peacekeeping –Social and cultural programs 7 + risk of adverse impacts

4. Proposed exclusions: in-donor costs Reasons for exclusion: –Primary benefit to donor / uncertain benefit to recipient country (scholarships) –Risk of adverse impacts (refugee costs) Reasons for inclusion: –Budgetary effort for donors 8

Proposed exclusions: climate finance Reasons for exclusion: –Diversion of funds from existing development priorities –Remedying harm (entitlement not aid) –Global public good Reasons for inclusion: –Adaptation and development closely linked –Safe climate a precondition for development 9

Climate finance: the problem of diversion 10 Source: Tomasi (2014).

5. Recommendations In-donor costs: cut down on problematic cases Include climate finance but safeguard against diversion through: –Eligibility caps –Innovative financing sources 11

DAC scenarios for redefining ODA 12 Concessionality Dev’t intention Current ODA (Net disbursement) $127 bn Source: OECD 2014 (using 2012 ODA data). ‘Focused’ ODA (Budgetary expenditure) $114 bn ‘New’ ODA (Budgetary effort) $129 bn ‘Updated’ ODA (Gross disbursement) $138 bn Narrow Broad

Total Official Support for Development Interactions between ODA and total support: a scenario 13 Concessionality Dev’t intention Current ODA Revised ODA Broad Narrow