EU’s aid considered inflated amid spiking refugee costs

By Daniil Filipenco

EU’s aid considered inflated amid spiking refugee costs

One-fifth of the Official Development Assistance disbursements reported by the European Union member states in 2022 was overstated and failed to meet the minimum requirements to qualify as development assistance, concludes a yearly analysis by an influential group of NGOs.

The authors of the AidWatch 2023 report published on October 18 by the European Confederation of non-governmental organizations, CONCORD, outlined their concerns regarding “more than 84 billion EURO ODA” whereby 22.1% of this “is not meeting the most basic criteria to be qualified as such” due to a spike in refugee costs, overcounting ODA loans, the calculation of the costs for students from partner countries, debt relief and, to a certain extent, private sector instrument reporting. At the same time, the authors believe that aid allocations are still influenced by the Union’s domestic and geopolitical interests.

In reply, a European Commission spokesperson suggested that the EU has long maintained that, within predetermined parameters and boundaries, in-donor refugee costs constitute a fundamental component of ODA.


ODA inflation and its causes

The European Union is one of the largest ODA donors in the world, with its aid being essential to lowering inequality within and between nations. However, according to AidWatch research, rather than advancing the objectives of partner nations, ODA disbursements still mostly cater to local and geopolitical concerns.

As Tanya Cox, CONCORD Director, states: “It [AidWatch 2023 report] advocates for ODA allocations that prioritize partner countries’ needs and objectives, rather than responding to donor countries’ geopolitical or economic interests.”

With record-breaking ODA numbers in 2022, AidWatch’s investigation data reveals that 22.1% of all the latest ODA reported by EU member states does not meet the minimal requirements* to be classified as such — a significant increase compared to the previous year (15.4%).

* These feature in-country refugee costs, the overestimating of loans, the calculation of student costs from partnering nations, and debt relief that led to aid inflation.

Fig.1. EU ODA analysis for the years 2019 to 2022

Source: AidWatch 2023

In-donor refugee costs as the major reason behind ODA inflation

Based on the report’s findings, a large proportion of European ODA can be seen to be primarily directed towards a select group of affluent member states. The major reason for this is the rise in in-donor refugee costs.

The crisis in Ukraine has caused a dramatic spike in in-donor refugee costs (IDRC) in 27 EU member nations, amounting to approximately EUR 13.9 billion which largely explains this spike. The funds were employed to pay for housing Ukrainian refugees among other IDRC.

Fig.2. EU member states in-donor refugee costs from 2019 to 2022

Source: AidWatch 2023

Estonia, the Czech Republic, Bulgaria, Ireland, and Poland are listed as the nations where in-donor refugee costs surpassed half of the reported ODA, while in Malta this figure exceeded 80%, according to the report.

At the same time, some EU countries do not include the cost of in-donor refugees in their calculations of ODA including Luxemburg, Slovakia, Hungary, and Belgium.

Salvatore Nocerino, CONCORD’s policy advisor, considers that refugee costs should be calculated separately from ODA:

“Of course, it’s necessary to pay support to asylum seekers and refugees, but this is just not the same thing as official development assistance. They need to be two separate things”.

CONCORD hopes that the Organization for Economic Cooperation and Development (OECD), which calculates ODA volumes, will ultimately help to support welfare and economic growth together with a reduction in inequality. However, just 40% of the 2021 EU ODA reached the poorest 40% of nations, and €20 billion — more than one euro for every 5 euros — is misleadingly declared as aid that never finds its way to the targeted populations, mainly in low and middle-income nations and regions according to the OECD.

In response, a European Commission spokesperson explained that there was no reporting of in-donor refugee costs by EU Institutions. Nevertheless, the EU has long maintained that, within predetermined parameters and boundaries, in-donor refugee costs constitute a fundamental component of ODA.

The report also offers a number of recommendations that can potentially lower ODA inflation, including:

  • Raise ODA levels quickly to ensure the provision of at least 0.7% of GNI/ODA by 2030
  • Revise the existing ODA framework to ensure that each euro matters
  • Cease reporting in-donor refugee costs as ODA even if qualified under the existing regulations and take IDRC off the list of funding that qualifies as ODA

What is CONCORD?

CONCORD is the European Confederation of 58 non-governmental organizations, the goal of which is to pursue worldwide collaboration and sustainable development. These organizations serve as representatives of more than 2,600 NGOs, assisted by millions of people throughout Europe.

What is the AidWatch 2023 report?

From 2005 onwards, the EU and its member states funding has been observed and evaluated by CONCORD via the AidWatch reports.

These reports monitor the assistance that EU member states provide to other nations to determine whether the help is truly accomplishing its goals.

The report was developed with the goal of ensuring that the 27 members of the European Union fulfill their obligations to finance development aid and set aside 0.7% of their GNI for this.

Final word

The AidWatch reports track the amount and caliber of European ODA which is an important resource to mitigate inequality and improve the lives of people affected by incidents occurring around the world. Sadly, according to AidWatch’s research, rather than helping partner nations, current ODA disbursements mostly cater to local and geopolitical interests. To deal with this issue, CONCORD – the organization responsible for the report – has provided several recommendations, one of which is to exclude in-donor refugee costs as a feature that qualifies as ODA.