How the refugee crisis is hurting foreign aid

By Kristy Siegfried

Migration Editor

Faced with the arrival of record numbers of asylum seekers and shrinking levels of public sympathy, more and more European countries are using their foreign aid budgets to foot the bill of feeding and housing the newcomers.

A number of EU countries have long taken advantage of an OECD directive that allows the use of official development assistance (ODA) budgets to cover the costs of refugees’ basic needs during their first year in a host country. As long as the numbers of new refugees remained fairly low, the proportion of ODA budgets used by countries including Sweden, Norway, the Netherlands and Denmark stayed at around five percent, but Europe’s current refugee crisis has prompted several EU governments to consider diverting significantly larger amounts of aid away from funding projects in developing countries.

For example Sweden, which is expecting as many as 190,000 asylum seekers this year, is considering using up to 60 percent of its foreign aid budget in 2016 to fund refugee reception.

“It would have a huge impact on our work and our partner organisations, actually with no warning at all,” said Gabi Björsson, general secretary of Africa Groups of Sweden, which supports poverty-alleviation programmes in southern Africa.

Her organisation was among more than 20 civil society groups that recently sent an open letter to the Swedish government describing the use of the country’s ODA budget to fund refugee reception as “a short-term solution that might jeopardise democratic development and poverty reduction – with the consequence that more people are forced to flee”.

Norway, which is expecting between 30,000 and 35,000 new asylum applications this year, is proposing to use 20 percent of its ODA budget for refugee reception. If the budget is approved, it will result in funding for civil society activities in developing countries being cut by two thirds by the end of the year, according to Paul Nesse, a senior advisor at the Norwegian Refugee Council. 

“There’s naturally been an uproar among civil society and the NGO community here because it’s such a dramatic shift,” he told IRIN. “We’ve had nothing like the increase [in refugee numbers] they’ve had in Sweden and we have a very strong economy. So we see very little reason to do this.”

The UK has been relatively unaffected by the refugee crisis, experiencing only a slight increase in asylum applications compared to last year. But following Prime Minister David Cameron’s September announcement that the country would take in 20,000 additional Syrian refugees over five years, Chancellor of the Exchequer George Osborne said the cost of hosting the new refugees would be covered by Britain’s foreign aid budget.

UN Secretary-General Ban Ki-moon has warned that diverting development aid to care for refugees and asylum seekers is “counter-productive”.

"Resources for one area should not come at the expense of another," said his spokesman, Stephane Dujarric. "Redirecting critical funding away from development aid at this pivotal time could perpetuate challenges that the global community has committed to address."

Björsson, of Africa Groups of Sweden, said the decisions of governments to use foreign aid budgets rather than to spread the cost of refugee reception over several budgets were political ones aimed at avoiding “a big discussion in society”.  

As right-wing anti-migration parties exert a greater influence all over Europe “the traditional parties are too scared to have this discussion,” she said.

Can trust funds be trusted?

Europe’s refugee crisis is having another less obvious impact on how member states spend their foreign aid budgets. In the past year, the EU has launched two funds with the dual aims of both stimulating development and stemming illegal migration to Europe. 

The EU Regional Trust Fund in Response to the Syrian Crisis launched in December 2014 and the Emergency Trust Fund for Africa, officially launched at the Valletta Migration Summit last week, have been established with significant start-up funding from the EU that member states have pledged to match. Their contributions are likely to be drawn from their national ODA budgets despite a lack of clarity on what proportion of the trust funds will be spent on development versus migration controls. 

The stated aims of the Trust Fund for Africa are: “to address the root causes of destabilisation, forced displacement and irregular migration, by promoting economic and equal opportunities, security and development.”

Critics have already pointed out that the mixed objectives of the trust fund run the risk of shifting foreign aid flows from the poorest countries to the middle-income countries where many migrants come from. 

See: EU-Africa migrant plan raises worrying questions

The EU has drawn on its own development fund to help generate 1.8 billion euros in start-up money for the fund. So far, member states have only pledged 81 million euros between them. The largest contribution of 15 million euros has come from the Netherlands, one of the countries already drawing on nearly 20 percent of its aid budget to fund refugee reception. According to Paul van den Berg, a political advisor with Dutch aid group, Cordaid, the Netherlands’ contribution to the trust fund is money already earmarked for development programmes in sub-Saharan Africa.  

“It’s a nice gesture, but it’s not necessarily a good approach,” said van den Berg, who questioned how exactly the money would be used. “Is it really an agenda that’s helping African countries or is it an EU agenda?” 

The trust fund in response to the Syria crisis, aimed at supporting neighbouring countries hosting the vast majority of refugees, has been less controversial. But the fund is soon likely to be used as the main channel for up to three billion euros in aid to Turkey. 

In recent months, Turkey has become the most important transit country for migrants and refugees attempting to reach Europe. According to a deal with Europe, still to be finalised, Turkey would be expected not only to ease restrictions on Syrians living there but also to crack down on smuggling networks operating between the Turkish and Greek coasts, and to accept irregular migrants returned from Europe.

See: The EU refugee deal with Turkey

So far, member states have only pledged just under 50 million euros in addition to the EU’s 500 million contribution, but David Cameron recently promised 400 million euros over two years – money that will come from the UK’s aid budget.

David Khoudour, who heads the OECD’s Migration and Skills Unit, said that giving development aid to key transit countries for migration to Europe has become a way of “outsourcing border control”.

“We pretend it’s a fund for development, but it’s not really,” he told IRIN. 

It’s an approach that not only diverts aid from where it is most needed, but one that is also counter-productive, according to Khoudour. He pointed out that foreign aid has positive proven impacts on development that are more likely to stimulate than reduce migration. “More aid translates into more development and that may mean that people have more money to migrate. So it’s counter-intuitive, but this is the reality,” he told IRIN.

“Assuming that giving lots of money to countries will help prevent people migrating is wrong.”