The case for 0.7

Why the UK should have increased development spending levels in the wake of USAID’s dismantling?

On the 25th of February, Keir Starmer stood before the House of Commons and announced, for the second time in 5 years, a cut in the international development budget. Official Development Assistance (ODA), he stated, would be brought down from 0.5% to 0.3% of GNI, marking a 25-year low in the UK’s development funding.

While the cause of the cut- to fund an increased defence budget as a response to the perceived deterioration of global security- was widely viewed by most as a necessity, Labour’s decision to take the funds from the aid budget reflects a shift in the development paradigm that could prove fatal for Britain’s- and the West’s- global relevance.

Since the ending of the Cold War and the disintegration of their Empire, Britain has found itself embroiled in somewhat of an identity crisis, struggling to find its position in the world order that reflects the ‘British exceptionalism’ attitudes still held by Britons today. But in this post-Brexit, Trumpian world, where Britain is no longer part of the wider political European bloc and ideologically severed from Trump’s USA, it felt as though the one ideal it could still staunchly defend was its unwavering commitment to the rules-based liberal world order.

But the cutting of the development funding and all that it signifies in ameliorating the livelihoods of the world’s most impoverished not only abandons those very people but opens up a vacuum, previously inhabited by the UK and US, that threatens the collapse of the current development model so closely aligned with that world order Britain stands to defend.

As the US recedes into protectionism, terminating billions of dollars of development contracts, and the UK meekly follows suit, reducing development spending by over £6bn from its 2019 peak, their departure as the predominant aid donors has widespread ramifications on the fundamental way aid is delivered. Inherent to the Western model of aid-giving, from which the UK stood to benefit, were principles that multilateral institutions, such as the World Bank and the IMF, allocated the aid primarily for large-scale health, humanitarian and climate initiatives that were apolitical in nature, and that there were imposed certain conditionalities on the recipient to ensure the money was being used sensibly. 

These conditionalities were usually two-pronged; the economic conditionalities- referred to as Structural Adjustment Programs (SAPs)- required large-scale macroeconomic reform of economies that included reducing public expenditure, employing strict fiscal discipline and adopting market liberalization measures often described as ‘neoliberal shock therapy’-  and governance conditionalities, where recipient nations pledged commitments to democracy and human rights laws. As well as the obvious advantages to the international system that comes with stable economies and a broader respect for human rights, the multilateral architecture historically provided Britain with privileged influencing power and a role in the global agenda-setting.

But as Britain fades from the development scene, non-Western alternatives surge to replace the once-hegemonic liberal development paradigm, the most predominant of which being China. China’s foreign investment policy centres around a strategic-oriented approach that often sidelines development and takes the form of loans, rather than grants, which builds a network of dependency-based relationships and ‘debt-trap diplomacy’, which, if cannot be repaid, is used as leverage to hand management of strategic infrastructure to state-owned Chinese companies. It also uses these positions to amplify sentiment, across the Global South, that regard the international existing order as unjust, corrode trust in multilateral institutions and encouraging nations to transition to a post-Dollar international trading system, all of which coming to the detriment of the UK and Western allies. 

But other states, also once seen as ‘developing’ are also stepping up to fill the shoes of the US and the UK, such as India, Russia, and the Gulf states, whose aid programs often exceed the UN’s target 0.7% of GNI. A commonality between these nations is they favour bilateral aid, meaning they do not have to adhere to neutrality and rather use their development funds to achieve a strategic end.

They are often also unconditional, thus not requiring affirmation to SAPs or human-rights initiatives which makes them appealing to autocratic regimes and in turn weakens the liberal global order. Nations like Russia and Iran, who thrive on global instability as a tool for undermining Western hegemony, are rapidly becoming some of the largest aid providers in the world, and along with China, are becoming acknowledged as the de facto bank for many developing states. 

Britain’s reduction in development spending, which followed Trump’s dismantling of USAID, symbolises a rupture from the post-War ‘Washington Consensus’ era characterised by SAPs and multilateral institutions that ensured Britain’s seat at the table. But why it is so salient that Britain does not give up the fight is because there is not only so much to lose from fading into international irrelevancy, but also so much to gain from having a strong presence in the development scene.

A healthy UK aid budget not only ensures access to water for the thirstiest and financial help for the poorest, as good as that is; it is proven to be a long-term strategy for peace-building, transparency and predictability in the global order. This would mitigate the very need for an increased defence budget and decelerate the emergence of a multipolar world system that subjugates Britain to the shadow of an increasingly uninfluential America. 

It is not, however, only about increasing development spending- Starmer must also work to build a narrative that illustrates the downstream benefits that a large aid-giving presence has on migration influxes and global stability. At a time where popular support for development is low as domestic austerity measures fuel the perception aid is provided at the expense of those at home and where Reform, now seen as Labour’s most prominent opponent preach protectionist and anti-aid rhetoric, much can be remembered from ex-President John F. Kennedy, who emphasises development spending not only as a moral obligation but also as a vital component of national security and global economic growth.