Development & Aid, Economy & Trade, Europe, Headlines, Poverty & SDGs

SPAIN: New Socialist Gov’t to Revamp Development Aid

Alicia Fraerman

MADRID, Apr 23 2004 (IPS) - Spain’s new socialist government plans to increase official development aid from 0.25 to 0.5 percent of Gross Domestic Product (GDP) over the next four years, and remove the strings attached.

The new government of José Luis Rodríguez Zapatero, who became prime minister on Apr. 17, will dedicate more funds to official development aid (ODA) than that of his predecessor, the centre-right José María Aznar (1996-2004).

At the start of his term, Aznar had pledged to raise ODA to 0.35 percent of GDP. But it actually shrank in 2003, from 0.26 to 0.25 percent, according to figures released this week by the Organisation for Economic Cooperation and Development (OECD) Development Assistance Committee.

The proportion of GDP allocated to ODA will gradually increase until reaching 0.5 percent by the end of the current legislative term, in March 2008 – ”and there is no turning back,” Foreign Minister Miguel Angel Moratinos told IPS.

In the following legislative period (2008-2012), it could rise to 0.7 percent, the level to which industrialised nations committed themselves in the United Nations, but which few have met.

The OECD reported that Denmark, Luxembourg, the Netherlands, Norway and Sweden are the only countries fulfilling the 0.7 percent target, while three others have set a firm date to reach it: Belgium by 2010; Ireland by 2007; and France by 2012 (0.5 percent by 2007).

Antonio Vereda del Abril, the director of the non-governmental Fundación Iberoamericana para el Desarrollo (FIDE – IberoAmerican Foundation for Development), told IPS that he was ”completely convinced that the socialist government will live up to its pledge.”

That impression, he said, is based on a ”significant” development: the new government’s reform of the Ministry of Foreign Affairs, which will include the creation of a State Secretariat of Cooperation.

The idea is to reorient ODA, so that it is distributed according to political rather than commercial criteria. Up to now, most of the development aid funds have gone to developing countries in the form of trade credits for the purchase of Spanish goods or services.

Vereda del Abril said the new Spanish Socialist Workers’ Party (PSOE) government had also eagerly accepted a proposal to modify the system of micro-credits, in order to grant small loans more directly to small and medium-sized companies in developing countries, without passing through banks that charge high interest rates.

After Ignasi Carreras, the director of the Spanish branch of the international relief agency Oxfam, met with Moratinos, he praised ”the philosophy, enthusiasm and determination of the minister and the new secretary of cooperation, Leire Pajín.”

Carreras argues that foreign debt management and Spain’s representation in multilateral agencies like the World Bank and the International Monetary Fund should be handled by the Ministry of Foreign Affairs and Cooperation, rather than the Economy Ministry.

Civil society groups also want Zapatero to write off poor countries’ debt to Spain, on the condition that the funds go towards development and poverty reduction programmes – a policy that non-governmental organisations (NGOs) describe as conversion of debt into aid. Compliance would be overseen by the Spanish state, the countries involved, and NGOs.

Under the Aznar government, the categories of ”ODA and humanitarian aid disguised” financing that went to other purposes, said Carrera.

”In October 2003, Spain allocated around 64 million euros (77 million dollars) to Iraq, while the previous year the combined ODA to the eight sub-Saharan African countries to which this country provides official assistance ran to just 51 million euros (61 million dollars),” said the activist.

The funds earmarked for Iraq as ”humanitarian aid” went mainly to financing the deployment of Spanish troops as part of the U.S.-led invasion and occupation of that country.

But the 1,300 Spanish troops forming part of the coalition in Iraq will be totally withdrawn over the next six weeks, Zapatero said the day after he was sworn in.

The communist-led United Left coalition (IU), which backed the PSOE leader’s designation as prime minister, presented a bill last week aimed at strengthening international development aid.

The proposal involves the adoption of the ”Tobin Tax”, a tax on foreign exchange transactions suggested by 1981 Nobel Laureate in Economics James Tobin (1918-2002). A tiny amount (less than 0.5 percent) would be levied on all foreign currency exchange transactions to deter speculation on currency fluctuations.

Civil society organisations around the world advocate the Tobin Tax to generate funds for development and poverty reduction initiatives in the developing South.

According to the IU, more than 100 billion dollars a year could be collected through the Tobin Tax. If the law is approved, Madrid would commit itself to bringing the matter up in the United Nations and other multilateral bodies, and to drumming up support from other countries.

Although IU sources acknowledge that the process will not be easy, they say that involvement by Spain would help generate a realistic international debate on the mechanism.

The draft law presented by the IU states that ”the richest 20 percent of humanity possesses 86 percent of the global income.”

It also points out that foreign exchange transactions ”amount to truly exorbitant figures, far exceeding the value of trade in goods and services.

”Today, 1.8 trillion dollars move from one country to another, less than five percent of which represents commercial transactions.”

If the financial flows respected laws on the protection of human, labour, social and environmental rights, ”they could contribute to development aid, especially for the least developed countries,” says the draft law.

But foreign exchange transactions aggravate ”social inequality and instability and economic insecurity,” according to the IU.