Subject: [cwj 39] British NGOs Ask Donor Countries To Untie Aid
From: Corporate Watch in Japanese <>
Date: Mon, 19 Jun 2000 16:31:38 -0700
Seq: 39

"The NGO singled out Japan and France and said they were resisting
efforts to remove the conditions attached to official aid to the
world's 48 least-developed countries whose Gross Domestic Product
per head is less than 699 US dollars."

Check out Action Aid's website for the
full briefing.  

British NGOs Ask Donor Countries To Untie Aid

By Jaya Ramachandran

LONDON, Jun 16 (IPS) - British non governmental organisations
(NGOs) have asked industrial countries to stop using aid as an
instrument for promoting their commercial interests in some of the
world's poorest countries.

The appeal came ahead of a crucial meeting next Tuesday of the
Development Assistance Committee (DAC) of the industrialised
countries' Organisation for Economic Co-operation and Development
(OECD) in Paris.

In a statement obtained by IPS, the British NGO, Action Aid, said:
"Donor countries are placing commercial interests over their
commitment to help the world's poor by providing aid only on the
condition that they buy goods and services from companies in donor

The NGO singled out Japan and France and said they were resisting
efforts to remove the conditions attached to official aid to the
world's 48 least-developed countries whose Gross Domestic Product
per head is less than 699 US dollars.

Backed by Oxfam and the Catholic Agency for Overseas Development,
Action Aid pointed out that after more than two years of
negotiations, development co-operation ministers had failed to
reach a consensus on untying aid in May.

Summing up the results of the last high-level meeting of the
Development Assistance Committee, its chairman Jean-Claude Faure
said in press statement May 12: "Members considered a draft
Recommendation on the Untying of ODA (official development
assistance) to LLDCs (least developed countries), developed
through intensive consultations over recent months."

Faure added: "This text sets out basic objectives and
implementation provisions in a manner which is widely acceptable.
A DAC meeting on 20 June will consider whether full agreement can
be reached."

Action Aid said Tuesday's meeting was "the last chance for donor
countries to show their real commitment to poverty reduction in an
era of declining overseas aid and escalating poverty."

The British NGO fears that refusal to untie aid could dash reform
hopes yet again, preventing companies in poor countries from
competing for aid-funded contracts.

In a joint letter to the DAC chairman, Oxfam, Action Aid and the
Catholic Agency for Overseas Development said the draft
recommendation was flawed in its scope and coverage. However, it
offered the best opportunity for the world's aid donors to
demonstrate that they were genuinely committed to enhancing the
effectiveness of ODA rather than using it as a commercial subsidy.

"Rich donor countries must not let the chance pass now. If they
do, not only can they be justifiably open to the charge of
hypocrisy in placing commercial interests above poverty reduction,
the consensus approach to untying will break down irretrievably
allowing some countries to re-tie their aid programmes," the NGOs

They added: "A failure to reach agreement will damage the
credibility both of the donor community and the DAC."

A background paper forwarded to IPS by Action Aid points out that
tied aid increases costs by up to 25 percent. The annual global
overseas development aid budget is around 55 billion US dollars,
of which half is tied.

This means that untying aid would effectively increase the total
value of aid by around 7 billion US dollars. This is almost
equivalent to the total aid to sub-Saharan Africa which amounted
to 8.6 billion US dollars in 1998.

The paper adds: "Despite the global implications of this practice,
negotiations around it have largely taken place away from
democratic scrutiny, within the confines of donor club meetings
and without a single voice or representative from those who stand
to lose the most - the recipient countries."

Untied aid would also reduce the dependency of developing
countries on developed countries' technologies, their advice and
spare parts. This, in turn, would help to increase "Southern
ownership" over the development process.

Explaining this, the paper says: "Since May 1999, the redrafted
(DAC) Recommendation has been strengthened in regards to promoting
the greater use of developing country-based companies in aid
procurement and contracting."

It adds: "However, while some donors were arguing for targets to
be agreed in regard to aid untying to LLDCs, the suggestion that a
target for the proportion of contracts awarded to local firms has
not received adequate attention reflecting both the motivations of
donors and the absence of developing country partners in the

Action Aid believes that alongside agreeing to the recommendation,
donor countries should also promote a work programme to put into
action the commitment to use aid procurement and contracting as a
development instrument.

"This work would provide guidelines and best practice for donors
to help build the capacities of Southern firms using procurement
as a demand-side policy lever alongside more traditional forms of
aid-funded support for private sector development."

The work programme should examine ways to involve poor communities
themselves in the provision of goods and in the procurement
process, says the paper.

Emphasising another aspect, Action Aid's policy adviser Jeff
Chinnock said: "For years rich nations have failed to end the
corrupt practice of linking aid to their own commercial benefits.
It is unbelievable, given the international community's rhetoric
of halving world poverty by 2015, that some aid donors are
unwilling to agree to take this small step because they want to
unfairly support their own industry." (END/IPS/DV/jrc/da/00)


       [c] 2000, InterPress Third World News Agency (IPS)
                     All rights reserved
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