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Reaching the 0.7% target

Par Marc Elvinger

Depuis quelques années, Eurostep et ICVA publient l'annuaire "Reality of Aid" qui donne une intéressante vue d'ensemble de toutes les tendances actuelles dans la coopération au développement. Un livre de référence édité par les ONG et dans lequel le Centre d'Information Tiers Monde de l'ASTM contribue régulièrement avec un article sur la situation au Luxembourg. En voici le plus récent.

Until the middle of the eighties, there was virtually no official aid from Luxembourg. Since 1986, ODA has been growing rather steadily, reaching 0.35% of GNP in 1995 . For 1996, 0.42% of GNP has been set as an intermediate target on the way to the achievement of 0.7% in the year 2000. The latter target, (re)proclaimed at the Rio Summit in 1992, appears in almost every statement on development policy issued by the Ministry of Foreign Affairs as well as by new Prime Minister Jean-Claude Juncker. Encouragingly, the new Prime Minister seems to be showing more concern for development issues than his predecessor, Jacques Santer, now president of the European Commission.

While one may reasonably expect that the 0.7% target will be reached in the year 2000, the main issue is whether the quantitative increase will be alongside a qualitative increased or whether, on the contrary, in order to actually spend the available money, less emphasis will be put on the quality of aid. In an interview given during the spring of 1995 to Brennpunkt Drett Welt, a magazine specializing in developing world issues, the Prime Minister sait that he personnaly viewed 0.7%, not as a final aim, but rather as an intermediary target for a wealthy country such as Luxembourg. Any further increase would be subject to a qualitative evaluation of the efficiency of the aid programmes. It is important to remember that a commitment to the goal of 0.7% was made in the early eighties. At that time, it was expected that it would have been achieved by 1990. The question has also been raised, among others by people from the governing parties, as to whether the famous 0.7% is really an adequate instrument in comparing the aid policy of the different Western countries. They make an exaggerated case, saying that several countries include things in thei ODA assistance which are not included in Luxembourg's.

The character of Luxembourg's aid Luxembourg's ODA consists of 25% to bilateral aid programmes, 14% for cooperation with NGOs, 4% for expatriates. 12% for food aid and humanitarian assistance, 21% for the EDF and 24% funding to international institutions. The grants to NGOs represented 13.68% of total ODA in 1994 (that is, about 25% of bilateral ODA). While the amount has continued to increase in absolute terms, the NGO share of the overall ODA budget has decreased. This has happened primarily becaue, in the cofinancing system, NGOs have to contribute part of the project budget from their own funds raised from private donors. While the ODA budget has increased substantially, NGOs have not succeeded in increasing their fundraising in the same proportion. It is not certain that, without substantially expanding their infrastructures and human resources, NGOs would be able to manage more funding than the amount they are handling now.

In 1995, the fifteen EU member states had to agree the financial protocol for the second five years of the Fourth Lomé Convention - the eighth replenishment of the EFT. A number of European countries were very reluctant to increase, or even maintain, their contributions to the EDF envelope. Luxembourg pleaded for a substantial increase in the EDF and, indeed, increased its own contribution by a quite substantial proportion. This may be seen in two perspectives. First it is testimony to the fact that Luxembourg is a rather strong supporter of the common Lomé policies and mechanisms. Second, with a substantially increased ODA budget, it is quite practicable for Luxembourg to allocate larger amounts to multilateral mechanisms which it need not manage itself. A very low percentage (about 0.02% ot total ODA in 1994) goes to development education and public awareness raising. What is more, these words have to be taken in the broadest sense, covering true development education as well as, for example, the publication of fundraising magazines by NGOs.

All bilateral ODA consists of non-repayable grants. While officially not economically tied, a certain part of aid is spent in a way that brings benefits to Luxembourgish companies. There is also no military aid included in ODA, Luxembourg having nothing to offer in this field. At the time of writing, it was not possible to say whether the participation of Luxembourg in the IFOR forces and in the reconstruction of Bosnia- Herzegovina will be organized under ODA in 1996.

The political framework

The new Prime Minister has shown marked personal interest in development issues in 1995 and may be seen as influencing the policy, for example through the Public Treasury (he is also the Minister of Finance). However, this influence is not always welcomed by other actors. The prime responsibility for ODA is held by the Office of the Junior Minister for Foreign Affaires, External Trade and Cooperation, who administered 90% of Luxembourg's aid in 1994. This office is very clearly understaffed in relation to the amount of ODA which it is supposed to handle. In the short run there seems to be little prospect of improving this situation eventhough everybody laments the current lack of human resources.

Legal framework for ODA

It was changing the legal framework for ODA which probably created most of the political discussion around the development policy in Luxembourg in 1995. A new law was adopted by Parliament in December 1995. It brings only minor changes in the field of official bilateral aid, mostly adapting the rules to the facts. What will change most with the new law is the system of cofinancing NGO projects. NGOs will have access to more public funds (leaving aside the question of NGO capactiy to spend and administer more money) and, eventhough this is not expressly provided for by the law, it may become possible for some NGOs to work as contractors for government projects. this can be seen as part of the gorvernment's erffort to reduce the very large number of countries in which Luxembourg NGos are present - some 50 in 1994 - by trying to get the NGOs to work in the same countries as the government. At the same time, the target countries chosen for bilateral ODA are still changing from year to year, apparently without any clear guidelines. Naturally, the government's effort to influence NGOs to choose or not to choose particular countries is viewed by some as an attempt to get them marching in line.

Public awarneness and development education

The amount of money spent on public awareness raising and development education in Luxembourg remains ridiculously small. This is partly because there is no legislative framework for this kind of work and partly because the number of NGOs really active in this fiels remains small. In discussing the new law, the most controversial issue was precisely this point: while some NGOs, very active in the field, argued in favour of including development education in the law, the government, for reasons which seem neither clear nor well-informed, refused categorically to do so. In the end the law stated that development education may get funding but that the amounts will be determined by ministerial discretion - development education activities will not be included under the formal cofinancing arrangements.


In last year's Reality of Aid we mentioned the role the private agency Lux-Development played in implementing bilateral ODA - a report based on the information available at the end of 1994. Since then, the agency has taken steps towards more transparency and appears to be quite keen on providing information about its work and its operations to anybody asking for it. It may be said that last year's Reality of Aid privided a nudge, helping to open a discussion between Lux-Development and the NGO world! This does not mean that all questions raised last year have been answered. The extent to which LuxDevelopment simply plays the role of an agency implementing projects and the extent to which is also shaping or at least influencing public development policy is still unclear. For example, even before the World Summit on Social Development in Copenhagen, the development policy of Luxembourg favoured social programmes (services sociaux amounted to 48.31% of bilateral ODA in 1994). It is not clear to what extent such choices about sectoral spending are emanating from the government or from Lux- Development. On the other hand, it is not certain whether there is a realtionship based on real trust between the governement and Lux-Development regarding the effectiveness of the latter's project implementation. At the time of writing, in the spring of 1996, Lux-Development was the subject of an audit examination asked for by the Prime Minister. As a result, it is difficult to predict the role the agency will play in the comming years.

Public opinion

It still is rather difficult to know what the general public think about ODA or to assess if there is anthing like public pride in the aid programme. The shift in public interest from financial support of "structural" development activities towards support for the "humanitarian" activities of relief work oriented NGOs, mentioned in last year's Reality of Aid, remains visible in 1995. Some NGOs had feared that this trend would be catasptrophic in terms of public support for their work but it has not continued in a dramatic a way as some may have feared in 1994. This may be because 1995 was lacking in media-exploited disasters like Rwanda or Somalia and the relief oriented NGOs were therefore less in the public eye.

The fact that, in a country with less than 400.000 inhabitants, there are about 70 NGOs working for the South, and almost the same number for Eastern Europe: that new NHOs are still apearing on the scene; and that until now all project activities, may be seen as proof of a public attitude in favour of development aid. That said, some donors may have rather "charitable" views on development which are not shared by all of the NGos nor by the government.

in: The Reality of Aid 1996
An Independent Review of International Aid, edited by ICVA, EUROSTEP, by Earthscan, p149-152

ASTM - Brennpunkt Drëtt Welt, numéro 157, mai 1996

Pour plus d'information, contacter : Action Solidarité Tiers Monde
39, rue du Fort Neipperg - L-2230 Luxembourg
Tél: 00352/ 400 427; Fax: 00352/ 40 58 49 - Email: citim@ci.ong.lu

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