Memorandum submitted by Christian Aid
Christian Aid is the official relief and development agency of
40 British and Irish churches, working where the need is greatest
in 60 countries worldwide and helping communities of all religions
and those with none. Christian Aid is also a key member of Action
by Churches Together (ACT), a world alliance of church-based humanitarian
agencies.
Christian Aid wishes
to make the following submission to the Committee.
DIVERSION OF AID and REDUCTION IN SUPPORT
FOR MIDDLE INCOME COUNTRIES (MICS)
1. Diversion of Aid
1.1 In a letter to the British Overseas Aid Group
(BOAG) of 25 April 2003, concerning funding for reconstruction
of Iraq, the Prime Minister stated that: 'the Secretary of State
for International Development has given public commitment that
funds will not be redirected from other emergencies…. nor
from programmes supporting poor people elsewhere. I assure you,
the programmes will continue.'
1.2 At the Iraq Donors' meeting 24th/25th
October 2003, the UK pledged just over £400 million to aid
Iraq's reconstruction. At the same time it became clear that discussions
were taking place on reducing or cutting aid programmes to middle-income
countries (MICs) to find funds for Iraq.
1.3 On the 6th November 2003 DFID announced
changes in funding for low and middle-income countries for 2004-2006.
'Over the next two years, funding for the reconstruction of Iraq
includes £50 million reallocated from planned programmes,
together with DFID contingency funding of £115 million …
Our Public Service Agreement includes the commitment to increase
the share of our bilateral programme going to low-income countries
to 90 per cent by 2005-6. As a consequence of the temporary increase
in funding for Iraq, which we expect to return to middle-income
status soon, we will also need to move a further estimated £50
million from middle-income country programmes to low-income country
programmes. This is in line with our commitment to the 90 per
cent target.'[6]
1.4 This has translated into a reduction in planned
bilateral spending in MICs in 2004/5 and 2005/6 of around £100
million. (see DFID Departmental Report 2004, Box
7k, Reprioritisation of financial resources).
Countries affected by the diversion of funds include South
Africa, Jamaica, and Brazil[7].
This includes the closure of the programme in Honduras, where
44% of the population currently live on less than $2 a day.
1.5 This is being explained by DFID as a simple reallocation
of resources in line with a spending target. Christian Aid, however,
has serious concerns about the way aid has effectively been diverted
from already planned and agreed programmes in MICs to meet foreign
policy objectives in Iraq. As outlined in our recent report The
Politics of Poverty: Aid in the new Cold War, the tendency
to divert aid to support security objectives is on the rise, and
should be resisted, not encouraged, by the UK government. While
we recognise that there are pressing humanitarian and development
needs in Iraq, we believe funds for these ends should not be appropriated
from MIC country budgets, which are already facing reductions.
2. Middle Income Countries
2.1 Middle-income countries
(MICs) are defined by the World Bank as countries where the gross
national income (GNI) per capita is between US $746 and $9205.
These are further subdivided into upper
and lower middle-income countries depending on whether
their GNI per capita is greater or less than $2976.
2.2 The middle-income
classification, however, often masks deep inequalities and high
levels of poverty. MICs account for a third of people living on
less than $1 a day. Latin America, in which the majority of MICs
are located, is the most unequal region in the world.
2.3 Such high levels
of inequality pose a barrier to the attainment of the Millennium
Development Goals, which lie at the heart of DFID's mission.
3. Impact of aid diversion
3.1 Government delays in publishing details on which
specific programmes will be cut prematurely means we continue
to have limited information. The first draft of DFID's Latin America
Regional Assistance Plan for consultation, which details future
funding for Latin America, but does not specify cuts, was released
in May 2004. DFID has continued to say in meetings that the ending
of certain country programmes will not preclude DFID from working
in that country through a new regional strategy. However, despite
the assurances made by the Prime Minister and the Secretary of
State for International Development, the announcement of revised
spending priorities on Nov 6th, shows that DFID is
now reneging on commitments for funding and support in Latin America.
Christian Aid has discovered the following:
- That DFID offices doing crucial work in Peru
and Honduras are unexpectedly to close, something that had not
been planned prior to the decision to divert funds to Iraq. The
Honduras office was officially opened by Patricia Hewitt, Minister
for Trade and Industry, during her visit to the region just two
months before the announcement, in September 2003 (although there
has been a DFID presence since 2001). The DFID office has played
a crucial role in facilitating civil society participation in
the country's Poverty Reduction Strategy Policy (PRSP), work hailed
as a success in the Departmental Report (4.20). This is a process
by which grassroots organisations and NGOs can contribute towards
pro-poor economic development policies. DFID's closure of their
office has serious implications for this long-term work and for
ensuring that DFID investment on this pays dividends.
- That in Peru, DFID had committed to funding a
small projects fund through Oxfam Peru, for grassroots organisations
in the rural Andean departments. DFID had planned to spend £6.5
million over 5 years through the fund, focusing on rights awareness-building
and capacity-building for local communities. In the context of
Peru's new policy of decentralisation, work of this nature tackling
the root causes of marginalisation and disempowerment of rural
communities, and encouraging participation and engagement with
local government, is crucial. However, this programme will now
be terminated just 2.5 years after its inception, with a budget
spend of just £2.1 million.
3.2 Christian Aid is still awaiting clear information
about which other planned activities will be affected by the diversion
of aid.
4. HIV in Middle-Income Countries
4.1 While the emphasis on assistance to the world's
poorest countries is well-warranted, the HIV epidemic in many
MICs is growing and in need of urgent attention.
4.2 Although public perceptions of HIV mark it out
as an epidemic faced by low income countries, predominantly in
Sub-Saharan Africa, it is not exclusively so. In Africa, four
of the ten highest HIV -prevalent countries in the world are middle
income, with one of them, Namibia, also being the most unequal
country in the world. The Caribbean is the region with the second
highest HIV infection rate in the world. HIV prevalence rates
vary widely among MICs, but a large number face high and growing
levels of HIV.
4.3 Recent research commissioned by Christian Aid
reveals not only clear evidence that HIV has a detrimental effect
on growth and poverty-reduction, but that there is also a correlation
between HIV spread and inequality. [8]
Our research indicates, for instance, that the sex trade tends
to grow in areas where large wealth disparities exist, with large
numbers of sex workers drawn from the ranks of the poor. In addition,
poverty tends to increase vulnerability to HIV. Alongside higher
levels of migration and urbanisation, and lower level of social
cohesion, these are some of the characteristics of HIV spread
in MICs.
5. Aid and HIV/AIDS in Middle-Income Countries
5.1 Governments, including those of MICs, often do
not prioritise spending on HIV, for the following reasons:
- Owing to the ten-year time lag between infection
and impact, HIV is initially a silent problem. It is always hard
to prioritise spending on something with a future impact, particularly
when there is little public pressure for action and many competing
present demands.
- HIV is sexually transmitted and often initially
affects groups of people who are stigmatised, such as sex workers
or men who have sex with men, which means there is less political
will to take action.
It is therefore crucial that earmarked donor funds
should be available for HIV programmes for all developing countries.
6. Recommendations:
1. The Prime Minister
gave his assurance that activities and action in Iraq would not
divert funds from other vital development work elsewhere. While
we support DFID's aim to spend 90% of funds on low-income countries,
this should not be achieved by diverting already planned expenditure
to make up for a short-fall on Iraq commitments. The UK should
reinstate the funds already diverted.
2. Information about
where unplanned cuts will fall has been extremely limited, and
Christian Aid has had to undertake its own research to find out
what impact this will have. In the interests of transparency DFID
should be obliged to make such information publicly available
3. DFID should pledge not to divert aid from
current plans or renege on commitments in the future, regardless
of whether Iraq reconstruction requires more money. New sources
of funding should be found for Iraq reconstruction. This is essential
to ensure that development aid stays focused on poverty reduction
and not on fulfilling foreign policy objectives. The UK International
Development Act 2002 insists that development policy operates
on the basis of its own principles, objectives, institutions and
instruments and the UK's commitment to achieving the Millennium
Development Goals (MDGs). Development cooperation and humanitarian
aid must remain focused on the enormous task of reducing global
poverty and injustice, and achieving - at a minimum - the internationally
agreed MDGs.
4. DFID should make
a public commitment to ongoing funding for MICs and acknowledge
that the definition of `middle-income' hides large amounts of
inequality, social exclusion and absolute poverty
5. DFID should ensure that its decision to reduce
funding to MICs doesn't undermine the fight against the HIV epidemic.
Donors should earmark funding for HIV work as additional funding,
and HIV funding decisions should not be based solely on country
income classification.
6. DFID should fund civil society groups working
on HIV in MICs, especially if they are advocating to reduce stigma
for marginalized groups and to increase the political priority
given to HIV.
June 2004
6 Ministerial Statement by Secretary of State for International
Development Hilary Benn 6 November 2003.. Back
7 .Other
countries affected include, China, Sri Lanka, Russia, , Guyana,
Bolivia, Serbia & Montenegro, Bosnia, Albania, Kosovo &
the Caribbean. Programmes are expected to close in Macedonia,
and Peru Back
8
Downward Spiral forthcoming, late 2004 Back
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