The UK Foreign and Development Office and Global Public Goods

The UK is about to merge development and diplomacy in a single department: the Foreign, Commonwealth and Development Office (FCDO). There are plenty of reasons to be concerned about that, but CGD colleagues have pointed out some opportunities, as well. In places where development and diplomacy overlap—protecting rights and civic space, peace and democracy promotion—a joint department could bring advantages. One more area where combining the talents of DFID and Foreign Office staff could be turned into a positive sum is in the area of global public goods.

Global public goods (GPGs) are things like climate stability and pandemic control that every country benefits from, regardless of the contribution they make to sustaining them. GPGs are increasingly important in an interconnected world. Their provision usually costs money (to pay for renewable energy infrastructure or vaccine research, for example) but delivery also takes coordinated action across countries (ensuring all large greenhouse gas emitters take part for climate, collaboration on research, development, and delivery of interventions for infectious disease control).

Take the Carter Center’s fantastic work on close-to-eradicating the threat of Guinea Worm—a parasite that caused pain and incapacity across a band of African and Asian countries but is now present in just five—which had a combined total of 54 cases of the disease in 2019. It took money for health education programs and provision of water filters, but it also takes coordination across countries and, in one case, Jimmy Carter’s personal intervention to negotiate a four month “Guinea Worm Ceasefire” in Southern Sudan to allow the control program to do its work.

The need to combine technical and financial resources with negotiation and coordination suggests a role for both the development and diplomacy skills of the Foreign, Commonwealth and Development Office. Using ODA and diplomacy, the department could take the lead in delivering global public goods that are of particular value to the world’s poorest people. It could build on the UK’s strength in research on tropical disease to develop and finance tools to roll back malaria from a vaccine to gene drive technology for mosquito control, for example, while also helping to coordinate at the regional level on regulatory approaches and the political leadership that will be needed to deliver results. Ian Mitchell has suggested that an early priority for the new FCDO should be creating a directorate for global health that could support these efforts. More broadly, the new department needs a range of tools to most effectively turn finance and diplomacy into results—not least in the area of research and technology.

But for the FCDO to fully embrace a role delivering on global public goods, it will need a wider range of financial tools than just aid. ODA is ill-used for climate mitigation, for example, because the poor countries where it should be focused are a very small part of the emissions problem. It is also these countries that have the greatest need for development and growth to build resiliency (low income countries account for about six percent of annual emissions). ODA is also utterly inadequate to the scale of the problem: a global total of about $160 billion compared to estimated mitigation costs in the trillions. Raiding resources from the urgent humanitarian and development needs of today’s poorest people to fix a problem created by the world’s rich is both immoral and impractical.

But we do need more finance as part of a globally coordinated response to the climate challenge, as well as to help meet other GPG needs in richer developing countries. Giving FCDO non-aid finance to help deliver on GPGs including climate would preserve ODA for poorest countries but help meet UK national security goals in a wider range of countries.

Stefan Dercon and Ranil Dissanayake suggest the new department should create a UK development bank to support sovereign partnerships in the funding of green infrastructure, for example. I would go further and suggest the development bank should be able to make both sovereign loans and private investments in developing countries under the constraint that:

1. the investments make a (risk adjusted) return sufficiently higher than UK borrowing costs to cover overhead costs;

2. they do not endanger (sovereign) debt sustainability; and

3. meaningfully support the delivery of a specific global or regional public good, as determined by an independent evaluation exercise. The combined technical and negotiating talents housed at the FCDO could play a critical role in ensuring partners line up behind effective approaches to be financed by the bank.

The development bank would focus on richer developing countries (the upper end of lower middle income status and above), leaving both ODA and subsidized private investment through the UK’s existing development finance institution (the CDC) for the poorest countries. The bank would need rigorous independent oversight, perhaps provided in part by the Independent Commission on Development Impact proposed by Dercon and Dissanayake –an expanded version of the existing Independent Commission on Aid Impact.

In the longer term, such a development bank should reduce UK debt levels. To reduce any short-term net impact on UK borrowing, the development bank could be capitalized using some of the savings from the UK’s contribution to “neighbourhood” countries under the EU -which will reduce from 2021, as Ian Mitchell has pointed out.

I’ve noted before that global institutions and cooperation matter all the more for a United Kingdom now outside a major regional block, and more reliant on those institutions and cooperation to preserve national security and prosperity. An FCDO that extended Britain’s leadership in the provision of global public goods would be a powerful force for strengthening those institutions.