Opinion: EU ministers must shape overseas aid policy wisely

2015 is a key year in the fight against poverty. This was set in place when the Millennium Development Goals (MDGs) were adopted in New York with an expiry date of 15 years.

Now that time has come. Policies have been implemented, aims and objectives met or frustratingly missed, and one idea built on top of another in the hope that this pivotal year would see a dramatic cut in world poverty, hunger and disease.

But while progress has been made on improving maternal health, getting children into school, filling hungry stomachs, improving slums and making water more accessible, there is still considerably more to do.

The next phase of the war against poverty revolves around three definitive moments within 2015, all of which are interconnected. Any agreements from July’s Financing for Development conference in Addis Ababa, Ethiopia, will have a knock on effect on September’s Sustainable Development Goals (SDGs). Set to replace the MDGs, the SDGs will be decided upon at a summit in New York, just like its predecessor.

Finance decisions in Addis will also influence the climate change deal that’s set to be signed in Paris come December time. It’s a domino effect that will determine how development and climate action is implemented over the next fifteen year cycle.

Progressive taxation

European development ministers, meeting Thursday (12 March) to discuss ideas before the Addis conference, must ensure the dominoes fall in a way that truly benefits the world’s poorest. They can begin with tackling the obvious.

For poverty to truly be eradicated, Europe should support developing countries to raise funds for themselves for their own public services, such as healthcare and education.

The key to this is progressive taxation. Corporate tax dodging and exemptions cost developing countries $100 billion every year, almost enough to get every child into school four times over in that time frame.

Ministers can help countries stem this tide of lost revenue by pushing for the creation of a world tax body in Addis, as there is currently no global forum where developing countries can raise their concerns on international tax issues.

Europe must also ensure that waves created by their own tax decisions do not erode developing countries’ ability to collect tax, by guaranteeing multinational companies are transparent on where they make money, where they pay tax and by whom they are owned.

But increasing tax revenues in developing countries is not enough. EU overseas aid is still needed to improve lives. European donors must meet their promise to allocate 0.7 percent of gross net income to help the world’s poorest. It is concerning that the European Commission wants to make aid conditional on middle-income countries also adding more to the development pot.

Holding the EU’s aid commitments hostage to others ‘doing their fair share’ is both inappropriate and politically challenging. It would stall negotiations on aid and make it harder to reach agreements on other matters. Development ministers need to get this right.

Worryingly, Europe is looking to rope in a perceived ‘cash cow’ in development assistance - the private sector. Trade and business certainly have the power to lift societies out of poverty, but the safeguards ensuring that people come before profit must be in place to avoid harming the communities businesses are claiming, and at times aiming, to help.

As climate change kicks in, the cost of dealing with climate impacts is placing a huge additional burden on poor countries already scraping the barrel for public funding. Without more international public finance flowing their way, countries that otherwise could rise out of poverty will be plunged back into the abyss. And if no action is taken, climate change could cause 25 million more children under 5 to suffer from malnutrition by 2050.

To stop ballooning needs being met with a stagnant pool of overseas aid money, Europe should seize the finance-raising options that are within its grasp, like financial transaction taxes and predictable revenues from the EU's carbon pricing scheme.

European development ministers have a big say in how the house of cards making up overseas aid policy will shape up over the next fifteen years. They must play the hand that creates a solid foundation for the fight against poverty and climate change - not the one that could bring it all tumbling down.

Natalia Alonso is Oxfam’s Deputy Director of Advocacy & Campaigns