Development aid shackled by budget constraints

Swiss development aid helps finance small business projects in countries such as Peru Keystone Archive

Switzerland’s top aid official has reacted to criticism that the Swiss government spends too little on development assistance and spreads it too thinly.

Walter Fust told swissinfo that a peer review carried out by the Organisation for Economic Cooperation and Development did not take into account Swiss budget constraints.

Fust, director of the Swiss Agency for Development and Cooperation (SDC), was given the results of the review on Thursday in Paris. The last evaluation was carried out in 2000.

The review, made by experts from Norway and New Zealand, said Switzerland should increase its development aid and cut the number of recipients.

swissinfo: Do you feel Switzerland has been treated harshly by the OECD peer review?

Walter Fust: The review is harsh in regard to the volume of our funding, but not the quality of our work. It refers to the benchmark for volume – 0.7 per cent of Gross National Product (GNP) by 2015 – as set out in the United Nations Millennium Development Goals. We cannot ignore that.

Switzerland’s development spending puts it in the middle of national rankings. Whether the criticism is fair or not, the facts remains that our volume of aid is only 0.41 per cent of GNP. But I think it is unrealistic to set ourselves a target of 0.7 per cent in a few years time given the state of the federal finances.

swissinfo: There has been criticism that the 0.41 per cent volume of aid was artificially reached by adding assistance to asylum seekers from developing countries in Switzerland…

W.F.: We decided to supply these figures for the first time to the OECD because ten other countries were already doing it. On three separate occasions we tried to get the OECD to define a unified position, but all efforts were abandoned by the organisation after European Union members could not come up with a common stance. There was also a policy decision to add assistance to asylum seekers to development aid figures. So we are just doing the same as many other countries.

swissinfo: The fact remains development aid spending is stagnating.

W.F.: That’s true. There has been no increase between 2003 and 2004.

swissinfo: There seems to be some reluctance to reach the 0.7 per cent target. Other countries, such as Sweden, are aiming for one per cent. Why is it so unrealistic for a rich country like Switzerland?

W.F.: One major reason is the Swiss voted a constitutional amendment forcing the government and parliament to keep the federal budget balanced. As long as the state’s finances are in trouble, we cannot expect the aid budget to be increased by 15 per cent every year until 2015 to meet the target.

We are already fortunate to have been allowed to increase funding by eight per cent until 2008. It won’t be until after that date that the government will reconsider its position. If the federal finances pick up, the authorities might increase their contribution.

For developing countries, this answer may seem unsatisfactory, but this is the government’s position. Personally, like all those participating in development aid, I would like to see more financial means forthcoming.

swissinfo: Another criticism made during the peer review was that Switzerland was spreading its development funding to too many countries. Is that a policy decision?

W.F.: The list is long because of the way we deliver aid. We have 17 priority countries in the South, plus another 11 in Eastern Europe and seven special programmes for nations in transition or post-conflict situations.

The State Secretariat for Economic Affairs, which handles 14 per cent of the development aid funds, works in 27 countries. We are present together in 20 nations.

We admit the list is long, but because we are neutral and still committed to the principle of universality, we cannot concentrate on just a few countries. And in our work abroad, we are concentrating on gaining influence, because we are not in a position to twist arms.

swissinfo: Would it be possible to restrict aid to some countries, mainly for political reasons?

W.F.: For development cooperation, we take into account the political situation in a country. It’s only humanitarian aid that is not bound to political criteria.

You could question though, for example, whether it is reasonable to run special programmes in post-conflict situations or should we concentrate on a few countries only to maximise marginal benefits and lower costs. We could make a selection, but it would be very one-sided and would not be accepted by our partners in the international community.

swissinfo: The government decided recently to put a new focus on relations with countries such as the United States. Do you think this could affect development policy?

W.F.: It’s true that a new accent is being put on countries such as the US, Russia, China, India, Brazil and South Africa. In those where we are already active, development aid will be a part of the revised policy.

For the rest, we are only following the guidelines set out in Swiss law. That legislation says we should concentrate on the least-developed nations, and guides us on how and where we should give aid without stating names.

swissinfo-interview: Scott Capper

Key facts

Swiss official development assistance:
2003: SFr1.748 billion (0.37% of GNP)
2004: SFr1.920 billion (0.41% of GNP)
The increase between 2003 and 2004 was largely due to the addition of costs related to the assistance of refugees in Switzerland.

In brief

Swiss development policy gives priority to the fight against poverty.

As an important component of Swiss foreign policy, it aligns itself with the foreign policy goals set out by the government.

The SDC concentrates its long-term development cooperation efforts on a limited number of countries and areas of activity.

Humanitarian aid and disaster relief are undertaken wherever emergency situations arise.