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As Western governments struggle to keep their economies afloat, foreign aid in the form of Official Development Assistance is on the decline. China is capitalising on the West’s declining influence through foreign aid and is making it clear that its form of “aid” for “cooperation” is really about taking control of governments, forcefully if necessary.
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Official Development Assistance (“ODA”) is a specific type of aid intended to promote the economic development and welfare of developing countries. It must meet certain criteria set by the Organisation for Economic Cooperation and Development (“OECD”) Development Assistance Committee (“DAC”) to be counted as ODA. It is the OECD that determines which countries are donors and which countries are recipients of the “foreign aid.”
Although the OECD is not a part of the United Nations (“UN”), it maintains a formal relationship with it. It is an official observer of the UN and collaborates with the UN on various global “challenges.” And the OECD’s work aligns with UN goals, particularly in areas such as sustainable development and global policy coordination.
In the UK, overseas development aid, also referred to as ODA, falls under the remit of the Foreign, Commonwealth and Development Office headed by David Lammy. Earlier this year, it was reported that 34% of Britain’s foreign aid consists of contributions to multilateral organisations like the UN and World Bank.
Related: Organisations that make up the UN World Government System
Now onto what has been happening this week with ODA. The following are extracts from recent articles published by various sources, to which we have added some comments (in italics). This collection of articles paints its own picture; not much more needs to be said.
Is This The End of Aid As We Know It?
This Devex article is behind a paywall. The following are the paragraphs visible without a subscription.
Official Development Assistance, or ODA, is falling for the first time in years. It reached a peak of $223.45 billion in 2023, but fell back to $207.6 billion in 2024. The Organisation for Economic Co-operation and Development, or OECD, is predicting a similar or greater drop this year.
The immediate cause is a shifting political situation, most dramatically in the United States – where President Donald Trump has moved to decimate the aid budget since his inauguration in January – but also elsewhere, with cuts taking place across many Western donors.
At the same time, the aid model has increasingly come under fire for perceived inefficiencies and inequitable power dynamics.
UK Long-Term Borrowing Costs Near Highest Level Since 1998
This article demonstrates why “richer” countries are cutting back on ODA. Since the beginning of the year, the UK has been facing significant economic concerns regarding stagflation, a condition characterised by stagnant or negative economic growth combined with high and persistent inflation. Stagflation can lead to severe economic hardship, including reduced purchasing power and increased financial strain on households and businesses.
Additionally, if the UK government’s borrowings rise to levels where it is unable to meet its debt obligations, then the UK is technically bankrupt. However, in reality, the UK will not go bankrupt as it possesses monetary sovereignty as the issuer of the pound sterling, making it operationally impossible for the country to involuntarily default on its financial obligations. In other words, the government can always meet its payment commitments, as it controls the currency and can issue more pounds to settle debts. However, doing so excessively could lead to inflationary pressures.
In short, the UK has no money, not now nor in the near future, to prop up the UN’s “aid” programme.
Long-term UK borrowing costs have neared their highest level this century. In a move that intensifies pressure on Chancellor Rachel Reeves ahead of her Autumn Budget, the yield on 30-year UK government debt rose as high as 5.64 per cent in early trading on Wednesday — its highest point for four months and just below a level last reached in 1998.
Increased debt servicing costs, combined with potential downgrades to growth forecasts by the Office for Budget Responsibility, might force the chancellor to raise as much as £27 billion in her Budget to close the hole in the public finances. A move to increase taxes to improve the public finances would be likely to slow growth further.
Mark Dowding, fixed income chief investment officer at RBC BlueBay Asset Management, said that investors were “concerned with inflation [and] UK policy credibility.” He warned that unless the government made spending cuts and the BoE halted QT, “the black hole will keep growing, and the risk is a market tantrum.”
Related:
- Daily Mail Report: Here’s where the UK’s foreign aid is going
- How much is Bill Gates’ GAVI getting from UK’s foreign aid?
- UK is now paying the price for all the money doled out like Smarties during lockdowns, Northern Ireland MP says
- UK MPs must challenge WHO’s power and money grab, APPG says
- Michael Kelly: The UK does not have the money or resources to achieve “Net Zero”; it risks a financial crash by decade’s end
- Starmer has signed up to the UN’s agreement to raise taxes in the UK
- UK professor of accounting says the government “should stop making a fuss” about an imaginary fiscal “black hole”
- Professor Richard Werner: Banks make money out of nothing!
- Central banker tells his nephew: We control the press and the politicians
- Ed Dowd: The imminent global “deep recession” will be used to usher in CBDCs
From China to the Gulf: The Donors Reshaping Global Development
This Devex article is behind a paywall. The following are the paragraphs visible without a subscription. Ti demonstrates what happens when “poorer” countries become reliant on UN “aid.”
The global landscape of donors and lenders is undergoing a profound shift. With the United States pulling back and Europe prioritising defence spending over Official Development Assistance, or ODA, attention is increasingly turning to nontraditional lenders such as China and the Gulf States. The key questions now: Will these players step up to fill the gaps left behind by the dismantling of the US Agency for International Development and aid cuts across other historically generous donors? And whether they do or not, what does their growing role mean for least developed countries?
As aid from traditional partners declines, monetary flows from other sources are rising. But across the board, these emerging donors are behaving with caution, seeking to spend judiciously and maximise returns on their development outlays. From China to the Gulf, there is a clear turn toward blended finance and more commercially oriented approaches.
The rise of these donors also carries distinct implications for development goals. China’s pragmatic infrastructure emphasis, or the Gulf’s use of financing to advance geopolitical interests, illustrates how strategic priorities shape aid flows. A subtler but important distinction is how they approach localisation. Unlike traditional donors, for whom working with local civil society has become a central priority, emerging partners tend to channel resources through governments and emphasise nationally led agendas. As George Mason University’s Agnieszka Paczyńska noted, their idea of localisation is more about strengthening state capacity than partnering directly with local NGOs. In her study on emerging donors, Paczyńska found that the term “localisation” does not appear in key documents and that aid is framed instead as “south to south” cooperation.
Events Unfolding in Myanmar Demonstrate China’s Form of “Cooperation”
China’s Playbook: Beijing’s Three-Goal Election Blueprint for Myanmar
When Chinese Foreign Minister Wang Yi met with Myanmar junta Foreign Minister Than Swe on Thursday [14 August] in Anning, Yunnan, it was more than a routine diplomatic handshake. Since the 2021 coup, the Lancang-Mekong Cooperation (“LMC”), led by Beijing, has quietly become one of the few regional platforms where Myanmar’s generals can meet neighbouring leaders without facing open criticism.
At this meeting, Wang delivered a carefully crafted message: China’s roadmap for Myanmar’s upcoming regime-crafted general election. The directive was unmistakable – stability, controlled reconciliation and economic recovery matter far more than genuine democratic competition.
In his statement, Wang said China hoped Myanmar would “stay committed to reconciliation and cooperation, maintain openness and inclusiveness, focus on rallying public support, and achieve three goals through the election.” On the surface, this sounds like well-meaning diplomacy. In reality, it is a blueprint for a controlled political process aligned with China’s strategic and economic interests.
Myanmar’s Election Has China’s Fingerprints All Over It
Four years after he plunged the country into chaos with his 2021 coup, Myanmar’s commander in chief, Min Aung Hlaing, handed power over to an interim government -led by himself.
Observers do not expect the cosmetic makeover that Min Aung Hlaing announced on July 31 to result in any substantive policy changes for a military regime that has committed severe repression and human rights atrocities. Instead, the announcement signals that preparations are underway for an election Min Aung Hlaing has been promising to hold ever since he jailed Myanmar’s civilian leader, Aung San Suu Kyi, in February 2021.
Suu Kyi’s National League for Democracy (“NLD”) is barred from competing in the election, which is scheduled for December. That’s enough to render the entire operation a sham.
China, the main backer of Myanmar’s military regime, is also the principal architect of the election. In a recent report, the International Crisis Group said Beijing views the election as a “quid pro quo” for preventing the regime’s collapse.
Why Myanmar’s ‘Election’ is Bad for India, Good for China
Myanmar has been engulfed in violent conflict since its military ousted the democratically elected leader Aung San Suu Kyi’s government in February 2021, citing unproven claims of electoral fraud.
Large parts of the country are now governed by various pro-democracy guerrilla groups and powerful ethnic armed organisations, all of which have vowed to block the elections in their territories.
The civil war has killed thousands, left more than half the nation impoverished, and more than 3.5 million people displaced. India is bearing the brunt of the refugee crisis arising out of the protracted civil war.
Myanmar’s junta is promoting the elections as a path to peace, offering financial incentives to rebel fighters who disarm ahead of the vote. But critics say the process is a smokescreen for entrenching military control.
Critics argue the polls will neither be free nor fair. They believe the election will likely enable junta chief Min Aung Hlaing to retain control – whether as president, military commander, or in a newly created role designed to consolidate his power over any future government.
China sees Myanmar’s military regime as the only actor capable of maintaining a semblance of stability and safeguarding its strategic and economic interests in the country. Despite the junta’s mounting battlefield losses, Beijing has remained a key backer, supplying advanced military hardware – including fighter aircraft and unmanned systems – to bolster its position.
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Categories: Breaking News, World News