The claim that development cooperation should serve German interests is not new, but it is becoming louder again. The Federal Development Ministry (BMZ) last week announced a change of coursewhich will place Germany’s economic and geopolitical interests more in the focus of development policy in the future. At the same time, it should become more collaborative.
The Kiel Institute for the World Economy (IfW Kiel) suggests in a current reportto systematize this requirement in bilateral cooperation with countries. Accordingly, only projects that bring real development for the local population and a concrete advantage for Germany should be funded.
“This benefit can be economic or geopolitical, it can be about ‘soft power’ or about stability in the world, for example the prevention of future pandemics through better health systems,” says co-author Rainer Thiele from IfW Kiel.
Thiele also sees the disproportionate cuts in the BMZ budget as a reaction to the population’s declining approval of development cooperation. “People think she doesn’t seem very good.”
Funding only if there is a willingness to reform
In the BMZ’s plans, the development economist misses clear criteria according to which funding will be given in the future, as well as an overarching strategy so that supported countries are no longer dependent on external funds in the long term. “The BMZ is still relying too much on many individual projects, which are usually good in themselves, but do not work under an overall strategy,” criticizes Thiele.
The Kiel economists therefore suggest that in the future only countries that show a willingness to reform should receive funding. The idea: They can voluntarily qualify for deeper cooperation if their own reform agenda is consistent with the principles of German development policy. Domestic reforms should complement, not replace. In return, the partner countries receive reliable, multi-year support.
With the BMZ reform, Federal Development Minister Reem Alabali Radovan wants to use the budget funds to provide greater support to the poorest countries, so-called “least developed countries” (LDCs). “We want that too, but not unconditionally,” replies Thiele. In the Democratic Republic of Congo, for example, there is little apparent willingness on the part of the government to reform. Tropical forest protection could continue to be financed there, because it contributes to reducing CO₂ – that is also in the interest of the donor countries. But: “Large road construction or infrastructure measures would simply waste away in the country. They would then not bring any returns in the donor countries.”
If there is a willingness to reform, the principle of mutual interest follows: “If, for example, we expand a port in Senegal or connect it to the interior of the country with a road, then that is primarily there to enable local development. But we also make it more attractive and cheaper for German companies to invest and trade,” explains Thiele.
Greater transparency of German interests enables better coordination with partner countries. But even a systematized approach cannot escape the pitfalls of the past. The reform ideas of the donor countries or the recipient countries do not always benefit the population, for example when they demand favorable taxes or access to land under the slogan of a better investment climate. Likewise, the added value for the population cannot always be clearly defined. Ultimately, bilateral agreements are negotiated between governments. However, particularly vulnerable groups often lose out here, such as small farmers who cannot compete against export companies, or indigenous people who prefer to see raw materials in the ground.