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A Law, But Still No Changes in ’s International Development and Solidarity Policy

Gautier Centlivre Coordination SUD

Overview A law guiding France’s international development and solidarity policy The French should: • Respect France’s commitments by devoting The year 2014 was marked by the adoption 0.7% of its (GNI) to of a law that provided guidance for France’s ; international development and solidarity policy. • Rebalance the proportion of grants and For the first time in the Fifth Republic, Parliament loans; and civil society contributed to determining the • Double the amount of funds channelled orientation of French development policy. through CSOs; • Strengthen the transparency, accountability Throughout the legislative process, Coordination and efficiency of French aid; and SUD stressed the importance of an ambitious • For private actors who are supported by the approach to development based on support for French Development Agency, strengthen reformed development practices, ensuring the the requirements relating to social, consistency of all public policies, respect for environmental and fiscal responsibility, and human rights, and the regulation of economic human rights. and financial actors.

Introduction By engaging in this legislative process, France has expressed its willingness and ambition to develop In 2014, France made progress by adopting a law a new dynamic for its development cooperation. giving guidance for its international development However, this dynamic is constantly challenged and solidarity policy. Implementing the law, by the budget plan. The Finance Act for 2015 however, is challenging. Funds allocated to aid provides a decrease of 2.78% in ODA allocations have continued to follow a downward trend and a further decrease of 7.31% until 2017 — since 2010, falling sharply in 2013, by 9.8%. seven years of continuous decline of ODA and This decline contradicts the official government especially loans. rhetoric suggesting that aid amounts have stabilised. The decrease was accompanied by We know that the funding requirements for a significant reduction in various budget lines, the achievement of the post-2015 sustainable which represent necessary support for the most development goals (SDGs) will be huge. ODA vulnerable populations. will represent only a small share of this funding.

237 OECD Reports

However, in this context, the continuation of the true partnership. French CSOs have important decline in French public support appears simply programs in the field of international solidarity stunning. and development education, working closely with their partners. In addition, significant effort is still needed to improve transparency in the use of ODA funds in Changing priorities in France’s order to increase accountability. It is also essential budget to review the composition of French assistance in order to give priority to the fight against and inequalities. As such, the importance given by France must adopt a more transparent and the Government to “economic ” can reformed ODA, refocused on development only be a worrying trend that raises the risk of objectives and public interest, and stripped of more . its “old demons.” Indeed, it is clear that ODA has too often been at the service of , geopolitical, cultural and economic influence. Support for CSOs Moreover, French ODA is too often subject to Despite their multiple roles in international budget cuts. The stated prioritisation of social cooperation as humanitarian and development sectors in poor is not reflected in the actors, technical experts, and advocates, French French budget effort. The significant increase of CSOs received only a very modest share (1%) of loans to middle-income emerging countries, with France’s ODA. Non-governmental cooperation meagre concessions, has resulted in a diminution remains the “poor relation” of French cooperation. of grants funded by bilateral aid. The French According to a recent survey published by the Development Agency (AFD) seeks to minimise OECD, the OECD average for the share of ODA the cost of state commitments, and focuses on channelled through CSOs is 13%. lending to creditworthy countries.

It is essential that France significantly improve The following graph shows the evolution of its support for CSOs as development actors, grants and concessional loans in France’s budget creating conditions for cooperation based on plans since 2010.

238 OECD Reports

The poorest countries find themselves de facto that the orientation of DFIs essentially favours excluded from this funding. Sub-Saharan multinational firms is a problem. Between 2006 received only 35% of French bilateral aid in and 2010, 50% of this aid was distributed to 2014. In contrast, France has devoted a growing companies of OECD countries and some even part of its aid to middle-income countries, using domiciled in tax havens. Forty percent of these the leveraging effect of subsidized loans with grants are for very large companies. One must the intention of providing benefits to its own question the relevance of such investments to the companies. actual satisfaction of social needs.

France’s ODA should focus on local and national This orientation for the private sector in donor public policies that contribute to the fight against countries is easily explained if we consider the very poverty and inequalities. Only the consistent low representation of developing countries in the deployment of grant financing in social decision-making committees of these institutions, sectors ensures the relevance of France’s ODA not to mention the absence of consultations with instruments in the fight against inequality in least civil society in investment choices. For Proparco, development countries (LDCs). France’s ODA large French and international groups are even should target countries with the greatest need and directly involved in the capital of the institution. with evidence of improving effectiveness. There are serious shortcomings in terms of “” and the role transparency and the requirements of social, environmental and fiscal responsibility of DFI of private sector in support for the private sector.

A recent report by the European network Moreover, the negative impacts that sometimes result Eurodad, titled, “A Private Affair” (July 2014), from multinational firm activities on development is concerned about the growing power and and the environment cannot be ignored. It is opacity of operation of development financial necessary to supervise and regulate these private institutions (DFIs). This is the case in France, investments in order to ensure a fair tax contribution with respect to Proparco (branch of AFD), and the promotion of human rights. the European Investment Bank (EIB) at the regional level and at the international level, and In France, under the last government, the choice the International Finance Corporation (IFC), a was made to link foreign trade with the Ministry subsidiary of the . of Foreign Affairs. The Foreign Office now puts economic issues at the forefront of its work. In These DFIs have raised capital steadily since its paper “The Foreign Ministry for Business,”1 the early 2000s. According to Eurodad, by 2015 it is noted that diplomatic and political tools these amounts should reach US$100 billion of influence will be mobilized to serve on a global scale, equivalent to two-thirds of business and the attractiveness of investment ODA, with the purpose of funding support in the French territory. This document also for businesses to invest in the South via loans, noted, “development policy will be better guarantees or direct and indirect holdings. articulated with the French economic interests.”

The investments in the private sector are not per By putting the interests of national private actors se incompatible with development, but the fact at the heart of the French international strategy,

239 OECD Reports which involves a “reallocation of resources and For Coordination SUD, it is essential to disconnect means” to certain sectors or areas — primarily aid from other purposes than those designed to in the so-called emerging high-growth countries meet the needs of poor and vulnerable people. The purpose of aid should not be to look for — France takes the risk that this priority will opportunities for French companies, but rather overshadow the financing requirements for to encourage the development of businesses managing the global commons, improved living based in the recipient countries (local small and conditions and human rights of people in the South. medium enterprises rather than local subsidiaries of Western multinationals). How will the Government manage the tension between development policy and “economic Reference diplomacy?” What are the consequences for http://www.diplomatie.gouv.fr/fr/squelettes/liseuse_ LDCs and the most vulnerable populations? pdf/78140/sources/indexPop.htm

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