By Elena Siniscalco
China might be close to overtaking us on yet one more thing: foreign aid. Or at least this is what David Cameron said over the weekend. The former prime minister warned China is expanding its influence all over the world by lending countries huge amounts of money.
Cameron’s suggested solution is to reform multilateral development banks like the World Bank and the International Monetary Fund. He’s convinced if they made riskier investments they’ll have more money to invest more efficiently in countries that need it.
The influence of the Chinese Belt and Road Initiative on developing countries is well-documented, as well as the presence of major infrastructure projects backed by Chinese money mushrooming all over Africa. According to Cameron, the money lent by Beijing is easier to access because it has fewer conditions attached to it. We – the West – have to provide alternatives that are readily available and appealing.
Cameron’s words are poignant, and don’t come in a vacuum: we’ve been talking about foreign aid for a while, since the Autumn Statement in which Jeremy Hunt announced there wouldn’t be a return to the 0.7 per cent target of spending on foreign aid. The budget is now at 0.5 per cent of GDP. It’s been at this level since Boris Johnson cut it back in 2020 during the pandemic; and given the current state of the economy and of the government’s pockets, it’s unlikely to go back up to 0.7 per cent any time soon.
If this wasn’t problematic enough, at least if you agree with Cameron’s argument, we also have another major problem with our foreign aid: we spend most of it on refugees here in the UK, rather than on humanitarian help for countries overseas.
New figures from the OECD released last week show the UK is spending more of its aid budget housing refugees than most of the other major donors. The only two countries spending more on the same are Germany and the US, but they also have considerably larger aid budgets.
The UK spent 29 per cent, equalling £3.64bn, of its budget on refugees, in 2022. In comparison, Germany spent 12.8 per cent, the US spent 12 per cent and France 9.4 per cent.
The UK is allowed to do so under the OECD rules, but it’s a bit of a pariah in the amount it spends, and was one of the few countries – the only one in the G7 – to fund all the costs related to welcoming Ukrainian refugees under its aid budget.
The more money gets poured into domestic spending, the least is available to alleviate poverty and invest in infrastructure abroad. And this is a problem not only because it opens up a vacuum for countries like China to fill, but also – and arguably, mainly – because people who used to be able to receive life-saving financial aid from the UK aren’t anymore.
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