The crisis in Europe took a big bite out of foreign aid

at 12:18 PM ET, 04/04/2012

The European Union is the world’s largest source of foreign aid. So when the E.U.’s hurting, a bunch of poorer countries start hurting, too.

A new report from the OECD finds that the euro debt crisis took its toll. Among wealthy countries, foreign assistance dropped 2.7 percent in 2011.


A food distribution center in Somalia run by the Somali Relief, Rehabilitation and Development Organisation. (Ben Curtis/AP)
Not surprisingly, euro zone countries that have been hit hardest by the euro’s problems have become far more reluctant to donate abroad. Spain’s “official development assistance” dropped 32.7 percent last year. Greece’s plunged 39.3 percent. Belgium’s fell 13.3 percent. Among countries plagued by debt woes, only Italy managed to become more generous to the rest of the world, boosting aid by 33 percent, thanks to a rise in debt-forgiveness grants and “an upsurge in refugee arrivals from North Africa” after the civil war in Libya. (Although see here for a longer look at how Libya’s refugees in Italy have fared — it’s not always an uplifting story).

On the other hand, European countries that weren’t as badly hit by the Euromess upped their contributions. That includes Germany (up 5.9 percent), Sweden (up 10.5 percent) and Switzerland (up 13.2 percent).

The United States, meanwhile, saw its developmental aid drop 0.9 percent last year. But that headline number obscures some shifts, as the country refocuses its resources. U.S. bilateral aid to Africa rose 17.4 percent in 2011, and aid to the least developed countries rose 16.9 percent. (Here’s a more detailed analysis of how the White House wants to rejigger foreign aid programs for fiscal 2013.)

In absolute terms, the United States still provides more development assistance than any other country, at $30.7 billion in 2011. On the other hand, when you look at aid as a percentage of “gross national income,” the most generous countries in the world are still Sweden, Norway, Luxembourg, Denmark and the Netherlands. Here’s a graph showing official development assistance as a percentage of gross national income:


(OECD)
It’s also worth putting last year’s drop in context: Aid from OECD countries has been steadily rising every year since 1997. On the other hand, as OECD Secretary-General Angel Gurría explains, “[This drop is] coming at a time when developing countries have been hit by the knock-on effect of the crisis and need it most. Aid is only a fraction of total flows to low income countries, but these hard economic times also mean lower investment and lower exports.”

 
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