[00:00:00] Mikaela Gavas: Welcome to this event on Rewriting the Case for Aid. My name is Mikaela Gavas. I'm the managing director of CGD Europe. I'm also a Senior Fellow here.
A little over a year ago, a group of senior development leaders identified what they considered one of the most pressing problems facing the future of development cooperation, the absence of a coherent vision for what official development assistance is for.
At the center of this diagnosis was the question of why governments should spend taxpayers' money on development abroad. It was clear that the development community lacked a sufficiently rigorous or politically durable answer that could withstand public scrutiny, guide difficult allocation decisions, or that could make a compelling case to those increasingly questioning the value of international spending.
So that shared diagnosis was the starting point for this work.
Over the following year, so senior officials from NORAD, Agence Francaise de Développement, Spain's AECID, the Belgian Ministry of Foreign Affairs, the UK FCDO, and the Gates Foundation, alongside researchers both from the global North and the global South, worked together with CGD to construct what we thought was a more coherent response.
The result is the paper that I'm going to present today. It is called A Clear Vision for Official Development Assistance: purpose, principles, and priorities.
Its central argument is this: At a time of constrained resources and growing political scrutiny, the development community cannot afford ambiguity about what it is trying to achieve. Clarity of purpose is both a political and operational necessity.
So we identify three motivations for why governments invest public money internationally, and they remain as valid today as they have ever been.
The first is human solidarity, the expression of a shared commitment to human dignity that motivates citizens and governments to respond to poverty, disaster, and suffering beyond their borders, not because they've calculated the strategic benefit, because it's the right thing to do. This is the rationale behind maternal health programs in fragile states, girls' education in low-income countries, access to clean water in underserved communities. Its justification is primarily moral. Every person deserves the opportunity to live with dignity and governments acting on behalf of their citizens have a responsibility to help where they can do so effectively. But for this rationale to remain politically sustainable, public support must be maintained through transparent, accountable use of resources. Taxpayers need to be able to see clearly what their money achieves.
The second is the management of shared global challenges, climate change, pandemic disease, biodiversity loss, forced displacement. These are genuinely transboundary problems that no single country can resolve unilaterally. In these cases, international investment is not altruism. It is rational collective action. Investing in pandemic preparedness in lower income countries is far less costly than managing the consequences of an uncontrolled outbreak. Protecting tropical forests delivers climate benefits at a cost-effectiveness that often outperforms domestic alternatives in high-income countries. The logic here is strategic and based on a cost-benefit analysis.
The third is mutual benefit, the alignment of development investments with broader foreign policy, trade, or security objectives. The paper takes a clear-eyed view here: Such investments can be valuable, and where interests genuinely converge, they may generate real development outcomes. However, the paper draws a firm line between investments that serve partner country development agendas and those that primarily advance provider country interests while claiming development credentials. Being clear about motivation matters, because we have, over the past decade, allowed the boundaries of what counts as ODA to become progressively blurred.
As provider governments have faced growing pressure to finance an expanding range of international priorities within constrained budgets, they've responded by broadening the definition of what qualifies as ODA. The result is that spending on development programs has fallen in real terms.
This dilutes resources, reaching the poorest countries. It makes it harder to track what development assistance is actually achieving, and it undermines public trust. When citizens or parliamentarians investigate what development aid includes and find in-donor refugee processing costs, the credibility of the entire framework suffers. So the paper's conclusion is direct. Inflating the numbers while hollowing out the substance is not a sustainable strategy. It damages the case for development cooperation precisely when that case most needs to be made.
So what should we do differently?
The paper proposes a more transparent and operationally coherent architecture, one that distinguishes three distinct purposes of international public finance, each of which is legitimate and necessary, but each of which requires its own justification, financing, and accountability framework.
The first purpose is core development investment: reducing poverty, supporting economic transformation, building human capital in partner countries with a particular focus on the least developed countries and the most fragile. This, we believe, should remain the defining purpose of ODA. This is what it was originally designed to do. This is what gives it its distinctive mandate.
Second, humanitarian support and crisis response: saving lives, protecting human dignity in situations of conflict, disaster, and acute need. But this should be financed through a dedicated budget line separately from official development assistance. At present, emergencies frequently crowd out longer-term development investment. Separating the two would protect both.
Third, financing global public goods, climate, pandemics, biodiversity, and so on. This demands funding at a scale that far exceeds what ODA can or should provide. The paper here is explicit. Attempting to address these challenges by redirecting concessional development resources is neither sufficient nor appropriate. It leaves an enormous financing gap for global challenges, while simultaneously starving poverty focused programs of the resources they need. Dedicated additional financing mechanisms are required. This is not an argument for doing less internationally. It is an argument for doing each thing better with the right resources and the right instruments.
So, within this framework, how should ODA specifically itself be allocated?
The guiding principle is clear. Direct concessional finance to where it generates the greatest development impact. In practice, this means a strong priority for least developed countries and fragile and conflict-affected states, where poverty is deepest, vulnerability is greatest, and access to alternative sources of finance is most limited. In these contexts, ODA remains genuinely significant.
As my colleague Charles Kenny has demonstrated, it represents around 62% of fixed capital formation in the lowest-income countries. In middle-income countries, by contrast, it accounts for less than a quarter of national income. On financing instruments, the paper argues for discipline over formula. Grants should be deployed where they are needed in conditions of deep poverty, fragility, and limited debt-carrying capacity. Concessional loans may be appropriate where investments can generate sustainable returns. But the paper is candid about blended finance.
The evidence that using concessional finance to mobilize private investment delivers meaningful development additionality in low-income settings is, at best, mixed. Using scarce ODA resources to chase leverage ratios rather than development outcomes is a misallocation of limited resources.
More broadly, the paper calls for a disciplined, problem-driven approach to every deployment of ODA. Is this addressing a genuine development challenge that markets will not finance? Will external support make a meaningful difference? What financing terms best fit the country’s context? And how will results be monitored and assessed? Now, these are not purely technical questions. They involve political judgment about priorities and trade-offs. Making that judgment explicit strengthens accountability and public trust.
The timing of this paper is deliberate. We are in a period in which the political case for international development cooperation is under active challenge. Budgets are being cut, skepticism is rising. And in some quarters, there is a temptation to respond by making ODA appear to do more by stretching the definition to encompass an ever-wider range of international spending. But we argue that this approach is counterproductive. A framework that claims to serve every objective ends up being accountable for none of them. And when the gap between claimed and actual development impact becomes visible, as it inevitably does, the political damage is significant. The alternative, our alternative, is simpler in the short term and more durable in the long term. Be precise about what ODA is for, honest about what it is not, transparent about how it is used and rigorous about whether it is working. The evidence base for effective development assistance is strong. What is needed now is an institutional and political framework that allows that evidence to be applied with integrity.
Thank you very much. I am now going to hand over to Masood and the panelists for a discussion.
[00:24:38] Masood Ahmed: That was super. You gave us a very nice overview of what's in the paper and the arguments that underpin it. Now we go from that presentation to a discussion with practitioners, policymakers, and analysts who are looking at this set of issues. And I'm going to try and get their reactions to the ideas that are in the paper, the approach that is set out, and also what is the feasibility of moving forward with some of these ideas? What's the political context within which we move forward. We have a terrific panel with us for this conversation. So let me just quickly introduce them, although I'm sure by now everybody knows who's sitting on this panel. I've got Gunn Jorid Roset sitting next to me. She's Director General for NORAD. And as you know, with NORAD has been one of our partners in this work over many years in trying to think through and in Norway itself, you have been doing a lot of work in rethinking the case for aid. Next to Gunn-Jorid is Bright Simons. Bright has been part of the process of rethinking not just the development assistance agenda, but how we think about development cooperation more broadly. And so very much looking forward to your perspectives. Carsten Staur is the chair of DAC. Of course, DAC is the center in which the donor community is trying to think through these issues, but also to try and see how to build consensus so you can get all of the members of that group to move forward in lockstep, or at least together rather than individually. And then finally, Rémy Rioux, no stranger to the CGD stage, has been here on many occasions, head of AFD in France, but also of the Finance in Commons initiative, which has grown so much under your leadership.
So we have four great panelists. I'm going to start by asking each of you for a quick response to the same question, which is, you heard Mikaela’s presentation. It's about trying to make sure that we move from a generalized concept of ODA being used for a variety of things to being clear about what it is that we're trying to achieve, recognizing that there are multiple reasons why governments want to spend money for global public goods, for development, for humanitarian, but not trying to mix them all up and say that they're the same. We think that this will lead to a more sustainable, durable formula for support. And I want to get a bit, your reaction, you heard that, you've all read the paper itself, and incidentally, for those of you who haven't, but have picked up this, if you go to the back of it, there's a QR code, which if you take a picture of, you will go immediately to the paper. So, Gunn Jorid, let’s start with you. But which points resonated with you, how do you think that that will help us to make the case for aid?
[00:28:26] Gunn Jorid: I think what really stood out when I read it again on my way here is I think that it's striking to see that so many of us, maybe if I think of the sort of traditional providers group find ourself in a situation where we really need to be either internally or because of what is going on also in the domestic political discourse and discussions in our respective country to focus on the why that we provide aid and the overall purpose. I think just one word on the Norwegian context. We have a government that have said that in this period, we have fixed parliamentarian periods in Norway, the ODA will remain at 1%, that is at least the plan and the ambition. But they will write a white paper and present it to parliament and have a public discussion about it next year. So I can't preempt what the political, the government will decide. But I think this discussion will also serve as a very good base of advice into that process, because one of the things that we have to look into is maybe this more honest discussion as to why we do what and where. And I think if we look, and I took also a look back at how the Norwegian budget has been sort of developing over the last maybe 10 years. So a lot of these things that Mikaela also alluded to and that we have discussed in what has then ended up in this document is, I think we need to be more honest about what we do where, and that the budget structures could reflect that more clearly. So I think that's also a joint challenge that we have seen. So 1% of Norwegian ODA is, of course, still a significant amount, but it will not solve all the problems. So then we have to be really smart about what we do. And I think we also, decision makers in Norway and also the public deserve that we are also very, very clear on then what and why and where, yeah.
[00:30:35] Masood Ahmed: Great. Bright, what, listening to Mikaela, what resonated?
[00:30:39] Bright Simons: Yeah, I mean, first of all, I would like to say that the degree of brevity, you know, that you managed to achieve in making a very sophisticated argument was very impressive. And at the same time, you know, for someone that has been working on this for a while now, as you mentioned, the World Economic Forum's Global Future Council has a program on this. I was impressed that some of the statistics have evolved beyond my own recognition. So recognizing, for instance, that it turns out when it comes to ODA allocated to core functions of development, poverty reduction, long-term economic growth it's actually just 20%. I thought it was slightly higher. So that was very important information. I was also impressed to learn, even though I think that was more conceptual than empirical, the argument that solidarity-based aid appears to be more durable just by looking at the data. The causalities, of course, complicated, but certainly that was very insightful. And then the third thing that I found interesting in the paper was the extent to which you acknowledge that the definitional problems, and solving the definitional problems won't solve everything, but at some level it's core to this agenda of being honest with ourselves. So the integrity issue, the ODA integrity issue was well defined.
Where I had a little bit of a challenge, or as I said, a slight divergence of opinion, is the political economy side of the paper. The degree to which we grapple with the issue of development itself whenever we go to development aid or development assistance. I think we take off from development assistance with an assumption implicit though that development as a category, conceptual category, is somewhat stable. But I think that's actually where some of the greatest contestations are. What really is development these days? I think the established notions of disciplinary praxis, you know, a certain notion of how you develop a country has been heavily assailed by developments. And the paper, obviously, because of brevity, we're not going into depth on that question of what development is and whether or not, therefore, we can use international public finance in any format to address development.
[00:33:08] Masood Ahmed: Thank you. And thank you for raising that point. As you say, we don't deal with it at all in this paper, but the question, which is not just what is development, but what drives progress in the world in which we are today is one that I think a lot of people are beginning and are thinking about, but which has obvious implications for the way in which you support that progress. Carsten, you're immersed in this conversation every day. So how did you react to this?
[00:33:40] Carsten Staur: I will come back to that question. Just make, I want to make two commercials. Right. That's the price of having me here. The first one is on the new ODA trends and figures, which we launched last year, a 23% drop in ODA from 24 to 25. We're looking for a further 6% drop this year. So that's a somber background, a very bleak background for our discussion, and I think we want to acknowledge that and encourage you to go into deeper, more details on the things that we put out that. The second one is that I also want to make a bit of a commercial on the DAC Review, which we initiated last year. We have now launched a public consultation phase, so we'll also be able to engage more with other stakeholders in that DAC Review. That being said, going back to the report, I think it's a really good report in many ways, and I think it puts the right questions, and a lot of good attempts to provide the right answers. I think the problem is politics.
How is it anchored in the political realities of today? And there, so if we were to design the system all again, brilliant way of starting that, but I don't think we are at that point in time. So let me give maybe three or four comments on that. First of all, it's amazing to read a report on development cooperation on ODA today that has in front and center the Russian aggression against Ukraine and the Trump administration. Basically, three quarters of all the drop that we saw in ODA last year was due to the US. And it has some consequences on the whole systemic structures. The second one on Russia and Ukraine, go back to 21. All ODA to Ukraine was less than $1 billion. Last year, it was $45 billion, including a lot, $20 billion, as the EU loan to Ukraine. But there has been a total reconfiguration of ODA after that Russian aggression. And to put it bluntly, it has also taken out a lot of the financial strength that we had to deal with other problems before that.
So we are in a totally different world. And our political leaders, and our parliaments, and our public are in a different place than they were four or five years ago. Now, I think that the purposes that are sketched out in the report are brilliant. I think they're really good. I would put more emphasis on global threats rather than global challenges. I think we need to drill out basically what are all the dangers that we are facing because I think that's what the global temperature is like that we, if we are to put a positive case for aid, you also need to provide it as a medicine to address some future diseases and we need really to put an emphasis on that. And I think it's a little bit obfuscating, a little bit too weak on that point.
But on the issue of subdividing ODA, creating new substructures, new categories, that's not the message that I get when I talk to DAC members or political leaders all around. I think that we have what we have, we work from where we are. I think we can greatly appreciate that ODA is more than a metric. It's a commitment, it's a political commitment to provide aid and also to provide transparency, accountability, evidence, and I think we have a real gem in that old system around ODA that we would lose completely if we tried to change it. And that's also the reason that the definition is what it is.
You can have a lot of thinking about indoor refugee costs, but it's part of the definition. It's been there since 1988, and it's not going to change from one year to the next. ODA can only change if all 34 members of the DAC agree for that change, and that looks not that promising. So we work from where we are. ODA definition is not part of the DAC review exactly for that reason. Now I think that, and I fully agree with the paper on the importance of effectiveness and impact, evidence, and I think that more highlighting, more light on that, more discussion on evidence as an impact of different kinds of intervention would create, gradually, a kind of soft coordination among members of the DAC, and I think that is a core role for the DAC and for the development of unity as such that I think is important, that putting out the evidence in itself is a way to create more and better discipline.
And I think that's something that I really think that we need to focus on. And then, on the final point, I think we need to align development cooperation and ODA much more with foreign and security policy. We've already seen it as an instrument in foreign and security policy, but we need to see it more than an instrument. It's part of the core, it's part of the objective, it's part of the formulation of foreign and security policy. And it is necessary for foreign and security policy to deal with those global threats that we incorporate development cooperation and development instruments in that. And I think that's something that we can do much, much more of, and create much better public understanding, political understanding, on the value of ODA and of development cooperation.
[00:39:13] Masood Ahmed: Great, thank you. And I think the number on Ukraine, which you reminded us of, really is striking, because if you take that $45 billion out of the total, you can see the impact that has on what is available for countries that were more traditionally the recipients of it. Rémy, can I come to you please and sort of get your sense on this idea of having clearer definition of purpose and accountability.
[00:39:46] Rémy Rioux: Thank you Masood. We were right, I think it was two years ago in Chantilly with Norad, with many colleagues to start this work about the clearer case for ODA. May 2024 we were not in the situation we're in right now and so I want to first to share with Carsten, with Gunn Jorid, Bright and with you, the sense of gravity of the situation that I think is nicely reflected in the papers. Yes, we had a fantastic decade, we have to recognize, from 2015 on, and we reached 2023, if I'm right Carsten, peak ODA ever. And then something happened and yes, in 2022, accelerating 2024-2025, depending on the national context, of course, we see that in the figures, the DAC figures last week, that we have to fully understand and answer.
In France, from the French perspective, so we were viciously attacked by the far right, myself personally twice last year, in AFD and international cooperation, so really the paper is sober, we have to face that. My second remark is I really like the three interests, the way it's phrased in the paper, maybe to make it even more plain, I think there's always been in the development policy, cooperation policy, of course the interests of the others, that's what, that's solidarity and it comes first, of course, but of course we also have national interests within, forever, and then there's, if we succeed in combining the two, there's a mutual interest. And I think the development policy needs these three elements. They can change overtime, the balance between the three, but if there's one missing, we have a problem, basically.And we have to admit that, make it explicit, and maybe recombine in a new, there were several paradigms in them, and DAC has always been the place where this agreement was set. So, I think the way you, Mikaela, you phrased it, I think it's helpful to find the new combination.
Third, I fully agree with the idea, Gunn and Carsten, we overburdened ODA, clearly. And we have lost, for the last 15 years, part of its integrity, probably. And then the question mark is should we, Let's say ringfence ODA, protect ODA, of course, we need to, or should we at the same time reposition ODA as part of, let's say, the other flows, public and private, so that we better protect and clarify what ODA is about. I think that's also on paper.
And if I may, my last point, maybe more from a practitioner position, I would slightly maybe disagree with the paper, I feel its tone is still a bit defensive, maybe even in the way it's phrased a bit negative, so a bit downplaying what we are all doing. Maybe at a time, okay, we have to be modest, we do not have to overpromise, but we also need a bit of enthusiasm, a bit of momentum, a bit of optimism, which is maybe not exactly in paper these days. Because ODA is a political will, it's a measurement, but it's also an incentive. guidance for so many institutions implementing, delivering development finance. And on this, as you know it, we're a bit lost between frameworks. So, I just give you, sorry, four figures from AFD.
So AFD delivers 4 billion ODA. We are delivering 8 billion climate finance. total financing last year was 14. And when you take the mobilization factor with other public and private flows, it's 25. So, my question to you all is what's the measure of AFD performance? Is it 4? Is it 8? Is it 14? Is it 25? And I'm really certified that we are very serious. We have quality filters; we avoid debt distress for our clients. So, all the projects, all the flows through AFD are of the same level of quality. So probably four frameworks are a bit too much for an institution for guidance. ODA alone, again which we have to protect, which is the lowest figure, is not exactly a way to explain what we are already doing. So, my guess, and that's where I slightly differ also, there's a bit of a still, between development and climate, there's still a bit of awkwardness in the paper. I think we need at least two referential so that we ease the discussion a little bit and reflect what we are doing.
[00:46:09] Masood Ahmed: Thank you. So, we've got four sets of comments. Could Gunn let me come back to you and say one of the things that came out of what Carsten said, what Rémy said also, even if we say, all right, we're going to focus ODA, however, whether we keep it separate or apart, but we're going to focus it on development challenges, but development challenges are in many places. How do you think about the prioritization agenda? Part of it is driven by exogenous events. I mean, Ukraine, 45 billion didn't come about from some objective assessment pre the war, right, in Ukraine. Some people would say put all the money behind the reformers. Take the money and support them. And others would say, go to where the need is greatest. Go to the poorest countries. How do you think about that? How do you make trade-offs?
[00:47:08] Gunn Jorid: On the priorities between the challenges in a way, yeah. And I think if we had the answer to that, probably we wouldn't need the paper. But it's, I think if we look at it sort of theoretically on paper, these motivations might differ. But I think when we come to it in reality, they are quiet, and maybe increasingly so, converging. And I guess some of it, I think, as Carsten was saying, is really also a clear political choice that has to be made that you either do one or the others. And of course, you can, as Rémy was saying also, based on being a practitioner, come up with an advice on doing A, B, or C. And I think in reality, though, we will have a decision made maybe on the political level, and we will try to guide the sort of practicality of that and how we do it. And I think maybe then I come back to what I was also touching upon initially, that, and again, using sort of Norway as my laboratory to see at our budget that we have overarching objectives that are really focusing on, you know, poverty eradication, the sustainable development goals. But in that budget, we also do all the other things like climate and more sort of public goods challenges, these things.
So I think then working more and also like the practicality on how we direct and how we organize our budget structures is actually one of the things that I was thinking about a lot when I read the paper also, how would our assistance fit into this? And as we know, when the resources are scarce and scarcer, to put it like that, we need to be more focused. So, one thing that could be helpful, I think, is to, when issues and motivations may be conversing, that the real challenge becomes how to avoid a sort of mixture of motivations, dilutes effectiveness of the investments we make. So, again, to be clear on the why and where and when, yeah. So, working on also then the clear and focused objective, to make it easier to design the interventions and measure results.
[00:49:45] Masood Ahmed: Good. So, you see a feedback loop, actually, from being clearer about purpose, helping you to then explain whatever the political priorities are and apply that more effectively.
[00:49:58] Gunn Jorid: Yes, and I think for us also then maybe to deep dive into what we are already doing and maybe help the decision makers a bit with the research and the methodological work that we do to present this is A and this is B and there are different objectives to it. And then of course there's a choice to be made on where the investments are made. Or you can do both but then maybe with clearer objectives to get a return on investments for either the countries or...
[00:50:38] Masood Ahmed: Bright, can I turn to you? So there's a lot of discussion of mutual interest, you know, as Rémy said, you could always be part of this. Win-win is now something you hear all the time, as you know, we should have win-win projects. From where you sit, you look at the way this is playing out, playing out. How much do you think there is a scope for win-win in practice, or do you see this is consistent with the move towards more integrity, more honesty, more transparency, or is it just a buzzword that helps to then explain away projects which are more win-win on one side rather than the other?
[00:51:28] Bright Simons: I mean, I guess this is where we get to the heart of the political economy question, because when you think of compositional coherence in the way that you spend time trying to unpack that, it goes obviously to operational effectiveness and operational clarity. However, when it comes to the ultimate justification for these things, the conceptual level, the philosophical level, whether these things are fair and whether or not they actually lead to development and all of that. Most people don't assess these things from that level of operational clarity. They assess it from a much broader, more political economy, changed lens. And they look at something like domestic versus global and sovereignty and agency and things like that in defining these mutual interests. I'll give you an example, and this may look, may sound a little bit irrelevant, but it's actually quite integral to the discussion. The other time I was looking at Noblemaire principle.
So Noblemaire principle is this principle around how you pay a lot of the international civil service, which is extremely dominant in the aid architecture. So a lot of the aid architecture is really very much the multilateral system and the likes of it. And I was surprised to learn that the Noblemaire system actually predates the UN. So it dates to the League of Nations 1921, when this decision was made that international civil servants, essentially the WHO, the UN, all of these people, should be paid at the level of the richest country civil service. And in those days, it was the British civil service. So to pay for somebody in the UN, you look at the British civil service, and you tried and pegged salaries.
And over time, the view was very clear that this was to attract quality talent. But now it's led to a situation that Norway, sitting to my right, actually pays top civil servants at a level of roughly 25% what the equivalent in the UN earns. Now, Norway has, within its national identity, a solidaristic approach to aid, and may not worry. But for certain people in the United States, they see that as waste. Now, when they start to couch it in those terms, at that conceptual, philosophical level, that this whole machine is a waste of time, it is very difficult to force them to look at these things in operational clarity terms, and compositional coherence, and whether or not poverty reduction, which is the Bretton Woods strategy, and makes more sense, and you could put more money there. To them, that is playing around in the weeds, digging in the weeds. It's more fundamental about whether or not the system is set up, it's actually efficient, and the way that they see that efficiency is not just only on the outcome side of things, but in comparatively in terms of what do you do.
So going back to mutual interest, I think there are two levels there. There is a level at which, to me, to my mind, When I look at the most extreme of those proponents, like the United States, and I look at the America First set of strategies, including the ones in health that we are looking at, at the rhetorical level, it's extremely clear what win-win looks like to them. But at an operational level, coming back to operational level, it's quite surprising how the results have actually differed. So, when you look at individual projects and the way they've been scoped out, there is more actually, in some respects, going to intermediaries now, in the current arrangement, than going to locals.
So even though at the rhetorical level, it looked as if this was really money back to the grassroots, this was money back to those on the front line. In practice, what has happened is that intermediaries have won. And the reason is very simple. At the political level, things are simple, they aggregate. At the policy level, they disaggregate, and trade-offs win. So, if you want speed, and you want clarity, and you want to narrow things down, you are forced to actually speed things up, and then you have to go to the incumbents and intermediaries. not the old, sorry, not the forward-looking localization objectives. So my point is simple. The mutual interest point is not easy to tease out. So the level to which it can be done on an integrity basis is very restrained because of all this complexity at the level of actual deployments.
[00:55:34] Masood Ahmed: Right, right. So I mean, but I think that the point that you've raised about the difference between thinking about these things is an abstract conceptual as opposed to implementation with all the messiness. And local versus global. And local versus global. That's where you have to get into it to try and see how things are working. But Carsten, come to you. So, you know, as Bright was just saying, look, the people who have concerns about, or who are not convinced or skeptical about development, the system, development cooperation, they're not getting into whether you're doing it this way or that way, their skepticism comes from a broader sense of, is this whole machinery worthwhile supporting? Is it a waste? Is it delivering? Now, your members, all of them, are in the business of, in their own countries, they have to explain this, make the case. From where you sit, how do you think one responds best to that kind of skepticism?
[00:56:39] Carsten Staur: I think, first of all, that we are faced with a crisis that comes from two sides. The one is that we are looking to a changing paradigm. I think the present time can basically be compared by the 90s, where you saw, after the end of the Cold War, a remarkable drop of all of it. It had to reinvent itself, it reinvented itself in the context of globalization. Now that globalization, at least the hyper-globalization, is also a challenge. So somehow the whole meta-story around where the world is moving has to find another way of playing out. So that affects the development cooperation and the ODA level. That is also then combined with the huge budgetary pressures that countries are in. There are normal budgetary pressures that some countries are facing more than others, but there is across Europe the whole issue of the defense spending. from 2% to 5% of GNI in defense spending over a limited amount of time is a huge challenge to member states. And that makes that it becomes very, very difficult to find the funding that's necessary for development.
If you then combine that with an increasing number of people that are skeptical towards it, mainly from certain political quarters that are looking toward more inward, more nationalistic, mercantilistic, populistic, all the things that you can put together there that basically try to shield ourselves from the outside world, not engaging in zero-sum games and all of that, that political forces, those political forces are also increasing across Europe and of course also in this country. So there are a lot of problems that makes it very, very difficult for development ministers, for foreign ministers, for governments to argue what's the actual added benefit That means that we should increase our ODA allocations.
And again, I would say that it, the whole question there is one of perspective. If you keep looking at what's right in front of you, I talk about political myopia. You can only see what's right in front of you. You can't see what's down there. You can't see what's to the side. So you look at very close to home, regional, national issues, immediate, short term. Then the issue of ODA, apart from humanitarian, is diluted. But if you can pull that agenda up to be long-term and global, it makes a lot of sense. I have five grandchildren. They will all, statistically, be living at 2100. For me, that's very, very far away. But basically, very close to home, small kids that I really love, they will be facing what is the end game in many of our climate change discussions about 1.5 or 2.5 or three or four degrees by 2100. We need to make that perspective real and that the future is now, that we cannot be satisfied just dealing with today and tomorrow. We need to look at the day after tomorrow. And that's where development, that's where the climate issues, that's where the global threats, all the things that we can invest in at reasonable price now but where the investment 10 or 20 years from now would be horrendous. So I think that kind of argument, to get that into the political discourse and make sure that political leaders and parties actually looking at sound investment, how do we invest taxpayer money in dealing both with the current problems and with the problems to come? And I think that's where, and that for me is very much right now to link it also to security, but it's wider than that. And climate change is the best possible example of investments here that will have a big payoff while investments in 10 or 20 years time will have much, much less payoff. So I think that is the key point in all our countries as donors that we need to turn around that political discussion to get into that issue, the longer term, the broader game, the more global issues.
[01:00:56] Masood Ahmed: Rémy, how do you react to what Carsten just said? And can I just also ask you, though, I think that argument, Carsten, works very well for the climate change kind of issue, right? Because you can say, look, it's gonna come back. Maybe it works quite well for conflict. And I'm not so sure it works as well for saying let's invest in improving economic prospects. In markets, global markets. So that's my question. How well does the global markets argument work when you, any reasonable projection, 20, 50 years from now, that seems to be where we have more difficulty, but.
[01:01:37] Carsten Staur: Masood, we need growth. If we take the whole global product right now and divide it between eight billion people, that's $12,000 for each of us. So if those that are below $12,000 have to get up to that and beyond that, and if we're not going to suffer a cutback in our $12,000, we need growth. It has to be green, it has to be sustainable. But we need growth, and that's the point, and that's why we need markets, that's why we need the 500 million people that live in extreme poverty in Sub-Saharan Africa to go out of that and into being consumers at the global market.
[01:02:12] Masood Ahmed: All right, I think that's the case. Now, Rémy, do you think in France, how well is that case?
[01:02:17] Rémy Rioux: I like the passion and the long-term perspective raised by Carsten. I always remind, I mean, we created the World Bank summer 1944, I mean, imagine. We were all bankrupt, at least in Europe, which is not the case, if I may. If you look at the Carsten figures, now two-thirds of ODA comes from Europe, which is historic. say Europe, European Union, plus Norway, plus Switzerland, plus UK. But it has to be made strategic, especially for European colleagues and their partners. There's a moment now for Europe. And I think the Commission, the ambition from European institutions is there in the next multi-financial framework to be discussed in the next few months. So we created the World Bank in summer 1994, and all the, remember, all the UN agencies, I mean, they were born at the peak, at the heart of the Cold War. And yes, the DAC clarified the narrative, the incentives after the fall of the Berlin Wall, because there was, as you said, this massive drop in ODA.
So we are probably in a moment of this kind and the good news, very good news, you're many in this room, is that the discussion, I think, has really started. We don't have the answers, we have papers, but there are many places where the discussion is happening. The DAC reform is, of course, again, one of them. CGDev, of course, played for so long a very important role. Alexia Latortue, this commission is important. There's a London meeting mid-May as well. And you know France as the chair of the G7. So we discuss global imbalances, but the second pillar of the French presidency is about international cooperation and development finance. So, and when we will soon publish an opinion poll in the G7 countries, there's a lot of expectations from our people. I totally refuse that we don't want international cooperation, that's plain wrong. The issue is political, so let's have a serious, take the time for the political debate, vote, and then we'll find a way, and we need a good framework. So again, probably this framework has two components, One, keep the best from ODA. Finance what nobody's financing, of course. Give a guarantee to partners that there will be never less than X. And then, please, allocate part of the concessional finance for maximum leverage on private and other flows for global commons. Could they threat or could they opportunity? And last, I come back to institutions and there will be also a fixed meeting end of April in Paris on the sidelines of the development ministers gathering. Set the right architecture, please. And embark national institutions with their legitimacy, national public development banks, country platform in the way we think all this, which was not totally the case for a moment.
[01:06:09] Masood Ahmed: I've got 10 minutes to bring in three comments or questions, but Bright, you had a double-hander, you wanted to cover it.
[01:06:15] Bright Simons: Yeah, just two quick points. I think we have to remember, though, that we've had moments like this before the end of the Cold War era. We had the Pearson Commission in the 70s. We've had a couple of these things. But the problem is that in each of those cycles, these legitimacy crisis cycles, we just added more layers to it, more monitoring, more enforcement. So it became very additive rather than at some point becoming subtractive and starting to compress. And that has been one of the problems with reform in this sector. The last point is we've been so far talking a lot about the global north perspective, but there are also equally aggressive and radical reformers popping up from the global south. People that actually feel that this whole system should be bent down because actually it's not helping them at all. And if it wasn't there, it would be better. And I think we have to organize that as well. It's not just right-wingers in Hungary that we have to worry about. There are people also in Africa, in Asia, who think this system is rigged and should be bent down. And the bulk of finance in common is in the Global South.
[01:07:15] Rémy Rioux: True. So many public banks doing their work.
[01:07:18] Masood Ahmed: Let me see if I can get three comments in before we close. I got a lot more hands coming out here. I had this lady up first, then I think I saw that hand over there. I'll come to you first. Please introduce yourself, and we don't have a lot of time, so if you can be.
[01:07:36] Audience 1 (Maju): Hi, my name's Maju, and yesterday at the IMF meetings, one of the frameworks that they discussed for domestic subsidies was a 3T approach, targeted, temporary, and transparent. A lot of it kind of resonates with the paper on ODA, but now that we brought up long term investments, I'm wondering how you see this temporary element applying to ODA, especially in the balance of long-term investments versus development of national autonomy.
[01:08:08] Masood Ahmed: Got it. Okay, the gentleman over there.
[01:08:13] Audience 2 (James): Hello, James from United for Global Mental Health. I do wonder, Carsten, if your grandchildren's children will, so your grandchildren will be explaining to their perplexed children that there used to be things called global goals. And they'll say, what on earth are you talking about? And that worries me. But my question is thinking about in the short-term future, so six, eight years time, do you think we'll look back at this period and say, do you remember when we thought that aid was being phased out, made great side events? Or will we say, do you remember that MDG period when aid was just a different thing, and now we've return to what it always was going to be, which is sort of real politic, when it comes to how high-income countries support or invest in low- and middle-income countries.
[01:09:07] Masood Ahmed: All right, so was that period a sort of aberration, if you like, or different at any rate? That gentleman right over there, and then I'll let you.
[01:09:17] Audience 3 (Arednt Kovner): Thank you very much. I'm Arendt Kovner. I'm a macroeconomic advisor in the Ministry of Finance of Rwanda. Thank you very much. I think the discussion in the paper has made very clearly the case for a more focused aid. But this is a challenge to convince policy makers and the public at large. I wonder, maybe it's in the paper but you didn't talk about it, what should aid-receiving countries do differently in order to help make the case? And the colleague was mentioning transparency, targeting, maybe temporariness. What can countries do themselves to make the case better? Thank you.
[01:09:57] Audience 4 (Amanda Entrekin): Hello. My name is Amanda Entrekin. I'm with Habitat for Humanity International, a nonprofit organization focused on housing in 60 countries. We've had the pleasure of engaging with the DAC on purpose code reform specifically, and I understand your comment on subcategories and working with member states on not getting too creative. is an overlooked component of foreign assistance, and yet it is a transnational issue. So in the spirit of Mr. Rioux positivity, how can we leverage innovative yet overlooked interventions for development, for poverty reduction in this context of shrinking aid and need for reform?
[01:10:42] Masood Ahmed: Okay, so we have four questions. I don't think we have time for more because I want to get reactions. Who would like to lead off? Could you, Gunn Jorid, if you're ready, to come in and respond to some of that?
[01:10:55] Gunn Jorid: I can try, at least. Very good questions. But maybe also bringing in some of the things that I think we touched upon also, I think, and it applies to some of the questions that came in. And I think that we haven't really talked about some of the things and of course, historically, and the things that we have managed to agree on. And it's like the SDGs, we still have that in common and still have a commitment. And it's still something that we have really, we worked hard to agree on and that we are working still, we haven't given up on them. And it should still guide us in the discussions. And I think also on the normative basis for a lot of the things that we do, the conventions that guide us that is sort of been a bit absent from the discussions. And of course, the paper is more on the guidance and how, but these things are also very important starting point at least for, and it's been very clearly expressed also by the Norwegian government that will guide us also for the next period and the next, yeah, the paper that we are writing on currently, and I think I agree with you also that it's both to showcase what's in it for countries and how can they present, you know, an interest in this partnership on creating development at country level, and I think also to acknowledge, I think one of the sort of best news of the coming out of the world towards the end of last year was the replenishment of the African Development Fund where, you know, so many African countries came in. Although we are always sort of focusing on all the challenges and the crisis, but there are, there's a lot of investments and partnership that we need to also celebrate and encourage, so I think that's something that we can build on because, and see how we can take that also going further. And I think on what can countries do, then I think that's also where we can have a maybe more strategic and honest discussion, but what in the toolbox that we have been discussing here today is necessary and applicable and wanted and what would apply and what would actually create results so that we don't treat all countries with the same medicine. And that might seem sort of obvious and naive, but that's, I think, must be taken in and actually sort of said.
And I think the last point that I wanted to make, which sort of, I think, brings forward some of the questions that were taken, it's that it's not only what we are doing here as separate donor countries, but it's also the larger reform agenda, always a deal for the DAC, it's of course, very important, the World Bank, the UN, so that we also bring with us the same, some of this knowledge, the research, what we do and what we know and into the discussions and are responsible also both as donors and as member states in taking that forward, because as Carsten said, the future is now. So we all have a responsibility to make those organizations fit for purpose and to be, you know, challenging and working on the results and the knowledge base and bringing that into and the domestic discussions in our countries as well. But for us to succeed in what we have discussed in these papers, we really, really need the efficient multilateral system because, especially since the bilateral ODA is diminishing, or shrinking.
[01:14:59] Bright Simons: I think we have to be extremely candid with ourselves about the scale of the need. If Ghana was to grow, or rather the average African country was to grow at Chinese rates, 10% a year, all the way to 2050, the continent will still be only as rich as Mexico because of the population growth, because of the massive infrastructural need, a huge continent. If all of ODA were just confined to poverty reduction and to long-term economic growth, it will still not cover just the infrastructure deficit in Africa alone. So, the scale of the need is unbelievable, regardless of how we tinker around the edges on the technocratic level. What that means, therefore, is you need a convergence, which was the old dream of the Global North and the Global South, by having huge amounts of money moving like it did in East Asia. We can compare the difference between the post-Soviet experience in Central Asia and the post-Soviet experience in Eastern Europe. And what is the difference? The European Union spent huge amount of money in Poland, in all of these countries, at a level that is unbelievable. And it worked. And we often don't talk about it, and it worked.
Yes.
So the point is very simple. ODA is only useful if it catalyzes trust between Global South and Global North, so we do more business together, more technology flows, and all of these things work. Any attempt to confine it, I agree with Mikaela that 62% fixed capital formation, these are impressive numbers for the poorest of the poorest, but that's because they spend all their money on recurring expenditure.
[01:16:49] Masood Ahmed: Yep. Thank you for reminding us of those numbers. And I think it is quite sobering to think about the fact that if you go fast forward 25 years and Chinese growth rates are not what is projected for most countries over the next 25 years, we're going to end up with per capita incomes that are going to be half of Mexico.
[01:17:11] Carsten Staur: I think that the question of course is this, I think it's a slump right now. I think we are confused. We need to reinvent the rationale, the purposes, the whole understanding of how we actually invest money wisely. So, I think that's part of it. I think we will come back because I think solidarity, that notion of the haves or providing funding for the half nod is very inclined in the way that human personalities are constructed and the way that we interact as human beings, so I'm not worried about that. I am worried about, in the short term, very much on some of the problems or challenges we see in the way that we use aid right now, the fragmentation, the dispersion of aid on a number of persons, the projectization rather than the programmatic character, the way we're basically sub-delivering on the potential of using those funds in the optimal way possible. I think that one of the key elements here is coming back to partner country ownership. We see more and more aid being delivered off-budget, off-priorities, off-strategies, basically more than a reflection maybe of donor agreement with sub-constituencies in countries rather than with national plans and development structures. So, there are many ways where we could get more bangs for the buck if we invested wisely. And I think that evidence on that, transparency in that, discussions on how we can actually improve quality and impact results, I think that would be a huge part, not the only part, but it would be a huge part our discourse moving forward. Rémy?
[01:19:04] Rémy Rioux: I would strongly oppose the idea that international cooperation has to stop or is temporary. I don't think so. If we reposition ODA in geopolitics and of course we have to continue. Maybe at the time there are fewer subsidies and other flows, but as long as countries want to cooperate, we should continue. At least that's our perspective, and it explains the different figures I was referring to initially. Of course, for that you need a bit of financial engineering. You need to talk about graduation, but again, it's not to downplay the role of ODA, but it's it goes in a wider financial world. And my second answer is to come back on Rwanda. So, I, well you know the story between Rwanda and France, so I remember seeing President Kagame in June 2019, so he explained me, reminding me, Claire Short and the others, the way you are working in Rwanda, which was fine for AFD and for me. And I'm just saying that because in Belem, Rwanda, they presented their country platform. You have this, I call them the green ladies of Kigali. So, for instance, the stock exchange, the pension fund, what they are doing to green their financial system, which is absolutely exemplary and so the in the new framework we are setting. Of course, we need to be clear on what comes from donor countries, that's what ODA is about, but we also need to add the recipient side and country platforms often with the National Public Development Bank at the heart of their operationalization is the place for this dialogue to happen. It's also a place probably that's part of the TOSSD exercise where we should also measure what use the countries are doing with ODA. I mean it's a political decision in the end to finance social sectors without leverage on public finance or to turn to job creation and wait for a second on health and education because the urgency is about job creation. And so I see in the combination between the DAC, the international transfers, and country platforms happening in many countries, also a way to reposition ODA in a wider framework. And Rwanda is in this perspective, a very, very interesting place.
[01:22:11] Masood Ahmed: Thank you very much Rémy. We've run out of time.
And I know some of you have to go to other commitments. I know there's a lot of people in this room who still have questions they would like to raise. And I've just been given a list of questions online. And I'm afraid they're all going to remain unanswered because I know you have to, some of the panelists have to leave. So let me take this moment to thank the panelists for participating. And thank you all for coming in, and Mikaela, once again, thank you for that initial presentation.
