2 September 2015
Finnish development cooperation is facing the steepest cuts in its history. In comparison with other sectors, they are also proportionally the most substantial ones. The cuts in grant aid by the Finnish Government will total EUR 330 million. Furthermore, the revenue from emissions trading, which amounted to EUR 69 million last year, will no longer be channelled to development cooperation.
In contrast to Finland’s international commitments, even climate financing will now be covered by the shrinking development cooperation appropriations. EUR 130 million will be converted from grant aid to loan and capital investments with the goal of supporting the role of the private sector in developing countries. At the same time, however, the new Government Programme places increased emphasis on the effectiveness of development cooperation.
The cuts will be effected in full already in early 2016. Such a front-loaded schedule will knock the bottom out of the results called for in the Government Programme, for the envisaged cuts leave no room for rational decision-making. Moreover, the cuts policy does not correlate with the expected results, for we are faced with a purely political decision.
“Many partnerships and many positive processes for change will be disrupted because of the cuts. We are not only going to lose the financial and mental capital invested over a long period, but also the trust of our partners,” observes Chairman of the Development Policy Committee (DPC), Member of Parliament Jouko Jääskeläinen (Christian Democrats of Finland).
The increased support for the private sector apart, these cuts that target civil society actors, international organisations and cooperation at the country and regional level alike will spare no development cooperation sector. NGOs must be prepared for cuts exceeding 40 per cent. This will terminate the work of a number of them in Finland’s partnership countries in fields such as improving the position of women and girls, strengthening democracy and supporting sustainable development –some of the key themes set for development cooperation in the Government Programme.
At the same time, however, the official goal of the Finnish Government is to raise the effectiveness and impact of development cooperation in these same fields. Finnish aid to UN agencies will also shrink by nearly 60 per cent overall – while this very year, Finland is closely involved in the UN negotiations on new targets for sustainable development. Cuts in country- and region-specific cooperation, in turn, make the operating conditions for businesses more challenging in the host countries, even though strengthening these conditions is a key objective for the new government.
Contrary to its foreign policy interest, Finland is now reducing the amount of its humanitarian aid, although there is a growing demand for international support. The elimination of a number of expert positions will weaken Finland’s development policy expertise. Results cannot be achieved without expertise.
The Finnish Government’s longer-term goal – raising, in accordance with the UN goals, the level of Finland’s development cooperation contribution to 0.7 per cent of gross national income – will become increasingly difficult to reach. As a result of the cuts, Finland will fall further behind the other Nordic countries. Sweden and Norway still spend over EUR 5 billion on development cooperation, while Denmark commits EUR 2.5 billion. The announced cuts will also tarnish Finland’s image abroad.
“Finland’s international image is among the key factors affecting our competitiveness,” notes Vice-Chairperson of the Development Policy Committee, Member of Parliament Gunvor Kronman (the Swedish People’s Party of Finland).
The Development Policy Committee proposes that, for the sake of effectiveness, the planned schedule for the cuts and their extent be reconsidered. Furthermore, the revenue from emissions trading in 2015 must be channelled to development cooperation in an effort to salvage continuity[1]. In the current circumstances, climate financing should not be covered by development cooperation funds. Ensuring an increase in development cooperation appropriations is essential in order to reach the target of 0.7 per cent GNI and to honour Finland’s international commitments.
Further information: Jouko Jääskeläinen, Chairman of the Development Policy Committee, tel. 050 512 0782, jouko.jaaskelainen@kd.fi
Marikki Stocchetti, Secretary General of the Development Policy Committee, tel. 050 525 864 marikki.stocchetti@formin.fi
Appointed by the Government for its four-year term of office, the Development Policy Committee is the only body monitoring and evaluating Finnish development cooperation and policy on a systematic and broad basis. Its members include representatives of all parliamentary parties and government ministries, as well as NGOs, research centres and interest groups.
[1] Of the DPC’s members, the Confederation of Finnish Industries (EK) does not support allocating emissions trading revenue to fund development, but in their opinion the money should be used to develop emission-reducing technologies (R&D) and to compensate the additional costs of energy-intensive carbon leakage sectors for reasons of international competitiveness.