Tags

Policy coherence for development or development for policy coherence?

06 October 2010
Policy coherence for development or development for policy coherence?

A development scorecard for the Dutch coalition agreement.

In Britain, it took 5 days to write 36 pages. The Dutch took 111 days to write 46 pages, although the Belgians might not even have an agreement by the end of the year.

The Dutch have just finalized their draft coalition agreement – entitled Freedom and Responsibility – between the two main parties, Volkspartij voor Vrijheid en Democratie (VVD) and Christen-Democratisch Appèl (CDA). Because these two parties together do not command a parliamentary majority, a broader agreement between the PVV (Partij voor de Vrijheid), VVD and CDA repeats a selected number of key policies (immigration, security, care for the elderly, budget) already outlined in the coalition agreement which the extreme party PVV 'tolerates', and can then form the basis for government. What this means for the future of other policies, including the wider development agenda, remains to be seen.

The agreement ushers in a reduction in aid (as measured by Official Development Assistance) from 2012, while existing ODA will be used for financing global public goods which were traditionally funded by other funds. This is bad news for spending on traditional development areas.

The agreement is innovative in that it aims to promote more policy coherence in development policy (e.g. consistency with broader foreign policy goals such as climate, migration and security-related issues). But if this is not complemented by making non-aid policies (e.g. promoting imports from, and investment and climate finance to, poor countries), more policy coherent for development, and backed up by a full-time minister devoted to development (at best, there are now plans for a state secretary for development), then this new coalition agreement can be regarded as more 'development for policy coherence' than 'policy coherence for development'. This is as much the result of the peculiarities in current Dutch politics as it is to do with the new context in which development policy takes place (see the ODI working paper that my colleague Isabella Massa is currently taking forward).

Previously we scored the development dimension of the UK coalition agreement. Here, we examine the Dutch equivalent.

Aid volume

The previous coalition agreements had long enshrined Dutch aid at 0.8% of GNP (effectively 0.7% of GNP to development, but included debt relief and an additional 0.1% of GNP to the environment). Dutch aid will now be reduced to an average of 0.7% of GNP for the duration of the government. As a result, an estimated €750 million will need to be found (there will be a 15% cut in the €5 billion total aid envelope over 2011–12) from non-ODA resources, otherwise traditional aid will be sacrificed.

Verdict: aid is at a commendably high level internationally, however, the precedent that this decrease in aid might set for other countries is particularly troublesome at this time.

Aid for global public goods

The Dutch aid concept risks pollution. The agreement states explicitly that the government will argue for changes in the DAC (Development Assistance Committee) criteria for ODA – so that more peacekeeping operations in developing countries will count as ODA, although in practice the OECD is likely to resist this.

Should the costs of combating international piracy along the coast of Somalia count as development spending? How about peacekeeping operations in Afghanistan? The Dutch mission in Afghanistan cost nearly €1 billion from 2002–08, which would have been around 10% of annual bilateral aid (bilateral aid is a third of total aid). Generally, nearly half a billion Euros of non-ODA (complemented by half a billion of ODA) is scheduled to be spent on security, stability, humanitarian aid and good governance in 2011, which is equivalent to 10% of total aid. Will this now count as aid? And if so, given that the total level of aid is fixed as a percentage of GNP, which other aid spending categories will be cut?

Verdict: negative. Aid financing which provides global public goods can help development (moreover, some regard global public goods and development as synonymous), however, if such an argument is used to lower traditional aid, while not compensated by increased beyond-aid flows to help developing countries, there is a net negative development effect. There is also very little discussion of multilateralism, an area traditionally favoured by the Dutch and important for global public goods.

Major themes in development policy

Implementation of development policy will follow last year’s influential WRR report, which made a distinction between aid for poverty relief, economic development and global public goods. According to the report, there was not enough attention on the last two items.

The coalition agreement suggests a move towards aid as an investment, aiming to achieve self-sustainability in development. It will focus on policy coherence, economic development and trade, helping fewer sectors in fewer countries, and will be stricter in providing budget support, e.g. only when there is good governance. There will be greater space for the private sector in development policy. And finally, Dutch aid will focus on themes it thinks it is good at, such as water management, agriculture and development of civil society.

Score: positive. Recognizing the long-term nature of development and policy coherence is useful. More concentrated aid based on comparative advantages is also good, though it might risk compromising the interests of developing countries.

Climate change and transition to low carbon development

The Dutch aim to promote a transformation towards a low carbon environment by:

  • promoting the sustainable trade initiative using funds from the development budget, and extension to carbon dioxide-intensive sectors
  • developing guidelines on carbon dioxide at the EU level
  • giving attention to trade in carbon emission permits, such as those related to the Clean Development Mechanism.

Verdict: uncertain, and possibly negative. The Dutch have good environmental credentials, but it is not clear whether and where additional resources can be found. Moreover, the Dutch tend to lead Europe on sustainable development, whereas this agreement suggests it is now more likely to follow.

Trade

The World Trade Organization is seen as providing a level playing field for producers and consumers, but after nine years of failed negotiations, this coalition agreement is no longer pushing for an end to the Doha Round.

There is also more emphasis on stimulating innovation and competitiveness as the bedrock of exports, rather than export promotion itself (see a recent debate we organized on export credits at the European Parliament).

Verdict: realistic.

Agriculture

There will be a new Ministry for Economics, Agriculture and Innovation, aiming to promote high-growth sectors in the Dutch context, such as water, food, horticulture, high-tech, life sciences, chemical products, energy and logistics.

The agreement argues that the European agricultural policy is important for food security, the environment and the economy. While it refers to the EU financial perspectives, and it would like to keep the €1 billion cut in EU contributions, there is no mention of the need to save taxpayers’ money on CAP (Common Agricultural Policy) subsidies or the effects of the current European policy on third countries.

Verdict: no change, still negative.

Migration

The agreement states that the Dutch asylum and immigration policy is already strict but that lower immigration is urgently required, given the 'social problems'. The government will examine whether further restrictions are desirable, although it says it will ensure that promotion of the knowledge economy is not compromised.

Policy is also aimed at sending back unwanted immigrants. It is argued that funds from the development budget be used to facilitate this process to promote local housing in developing countries. Around €60 million will be reclassified as aid, further polluting the aid concept and potentially cutting other aid (given that aid is fixed as a percentage of GNP).

Verdict: negative. The Dutch immigration policy is already regarded as strict and, as such, it restricts development opportunities. In addition, it now aims to lower immigration further by introducing questionable tests and using development aid to reach domestic objectives.

Dirk Willem Te Velde is head of programme for the ODI’s International Economic Development Group and author of the G20 Development Charter. He produces the ODI’s G20 Charter for Development, which is established as required reading for G2O policymakers.