Austria’s “declaration of bankruptcy” in development cooperation

Austria's engagement in the world (c) www.entwicklung.at

Austria has done it again, just another time. The budget for development cooperation was cut by 20% for the year 2015. Although heads of states and government, including Austria, agreed in 2000 that the so-called developed countries will provide 0.7% of their Gross National Income (GNI) for development, quite some countries have consistently ignored this pledge. Although Austria is one of the richest countries in the world (second richest country in the EU in 2013), it spent only 0.28% for aid in 2013; even worse, this percentage will now further decline in 2015.

The facts

Austria’s Finance Minister announced on Tuesday that next to cuts in the budget in all areas, also the budget for development cooperation will decrease drastically by €17m to just €64.3m in 2015. This happened in a time where it was hard to believe that the aid budget could be cut down further. Thus, the cuts were a “declaration of bankruptcy” according to many aid organizations like CARE or Caritas.

Even worse, the money that flows directly into projects is even reduced by 25% down to €51m a year. By that, these cuts are much more drastic than in other countries like France where the aid budget was cut by 7.7% or Greece that cut the aid budget by 10%. It is indeed hard to understand why Greece, with all its economic problems and austerity measures, reduces its development budget on a lesser scale than Austria.

Also the budget on UN peace missions (the money for the hybrid peacekeeping mission in Darfur UNAMID will be cut down by €5m; other UN missions are diminished by a third) is reduced significantly and so is the money for international aid organizations (the money for UNICEF is cut down by half). Overall, the money for international organizations and peace operations will be reduced by some 25% from €105.7m down to €80.3m.

The international development

In contrast to Austria, the UK for the first time met the 0.7% target with their aid budget – a rise of almost 28% in comparison to 2012. Britain was able to raise the financial assistance despite austerity measures and joined other European countries like Denmark, Luxembourg, Norway and Sweden in meeting the UN benchmark of 0.7%. However, the Netherlands fell below the 0.7% benchmark for the first time since 1974.

In total, the countries that are united in working for development, the overall amount is just 0.3% according to the OECD, the average effort of the countries are 0.4% (mainly due to the extremely low aid budget of the US with just 0.19%!). Overall, bilateral aid to sub-Saharan Africa stood at $26.2bn, a decrease of 4% in real terms from 2012.

Ironies and wrong promises

Austria’s Foreign Minister Sebastian Kurz, just 25-years old promised that he would not cut the aid budget. Indeed he was able to prevent cuts for the year 2014; however in 2015 an enormous cut will be made by some 20%. Since years, Austria is very far away to a commitment to the MDGs. The new Austrian government described on half a page of their 112 pages-long program that they would like to raise the aid money step by step. Just four months afterwards, everything is different. Although Austria is one of the EU countries with the lowest aid budget, it further falls behind.

The irony is as well that the European Parliament declared 2015 as the European Year of Development Cooperation – and Austria has nothing better to do than cutting a budget that is anyway already one of the lowest in Europe. Many governments in the past have promised to their best to reach the MDG target of 0.7% – but failed. The same happened with this government and development cooperation might fall to a historic low (the lowest amount during the last years was given in 2003 with 0.2%).

The reason behind the debacle: bailing out a bank

In 2005, the Austrian aid budget jumped up to 0.52% and it suddenly seemed realistic that the 0.7% benchmark would be reached. On a closer look this was not the case though because it were debts to developing countries that were waived. The latest report on development cooperation covers the year 2011 (published in August 2013). Reading this document, it is quite impressive what Austria has done. However, not a single word is spared about the reduction in aid.

An even bigger irony of the saving is the disaster with Austria’s banks, particularly the Hypo Alpe Adria disaster where Austria’s tax payers already had to pay €4.8bn, and overall some €13-19bn will be necessary. While solidarity is pledged to the financial system, international solidarity with the poor in the world is hardly existent. What would be needed, as NGOs in Austria demand, is that the disaster funds for international crisis is risen to €20m as originally promised by the government, a gradual raise of the overall development budget and more emphasis on educational policy that would allow for young people to go abroad and work in development.

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