Interview on cuts plans: “Development policy is an important instrument”

German development aid is under scrutiny. Expert Klingebiel believes the current debate is wrong. Development policy is a very important instrument for helping to shape international agendas.

tagesschau.de: There is currently a lot of discussion about Germany’s development aid. The construction of bicycle paths and the expansion of local public transport in Peru are particularly causing an uproar. How useful is such a project from your point of view?

Stephan Klingebiel: In that case, I would follow the argument of the Federal Ministry for Economic Cooperation and Development (BMZ). The projects focus on the question of how CO2 emissions can be reduced. The expansion of sustainable urban transport in other countries is a very important topic. And in this case the whole thing will be largely financed through a credit mechanism, which means a large part of the funds will flow back to the federal budget.

tagesschau.de: You mean the development and promotional loans from the Kreditanstalt für Wiederaufbau (KfW). How exactly does this work?

Klingebiel: KfW uses development and promotional loans to address the issue of sustainable urban transport in Peru. Development loans come from the federal budget and have to be repaid by the partner countries – although the conditions are heavily discounted. With KfW’s promotional loans, market funds are raised and passed on to other countries. The advantage is that KfW can borrow money on international capital markets at very favorable conditions. And these funds are then passed on to partners for development purposes with these relatively good conditions.

There are no federal budget funds in this. That means it costs the German taxpayer nothing.

tagesschau.de: According to the government’s plans, development payments are to be cut by several hundred million euros – even more far-reaching savings measures are being discussed. What do you think of it?

Klingebiel: Development policy is a very important instrument for helping to shape international agendas. Germany is an internationally important country and if you want to shape things, even in your own interest, development cooperation is essential.

Think of geopolitical issues such as Ukraine or, ultimately, competition on the African continent, where China and Russia are very active. This means that we have international competition, and that is where we ultimately use our development cooperation to benefit us.

This also applies to climate change. We have a great interest in ensuring that the energy produced in South Africa, India or elsewhere is as sustainable as possible.

Not least through Corona, we have seen the dangers of a pandemic. We have an interest in ensuring that a functioning health system exists in West African countries, for example, so that a disease like Ebola does not spread worldwide. And development cooperation is absolutely central to this.

“Benefits for refugees are taken into account”

tagesschau.de: The BMZ had a good twelve billion euros available from the federal budget last year. Overall, however, Germany’s public development contributions are significantly higher – they were in 2022 a good 33 billion euros. How does this number come about?

Klingebiel: On the one hand, there are two major items in the federal budget whose funds can be counted as development work. These are the approximately twelve billion euros from the BMZ that you mentioned and the other big pot is humanitarian aid, which is located at the Federal Foreign Office (In 2023 it was 3.3 billion euros, editor’s note). There are also smaller pots at the other ministries, but they don’t play such a big role.

Another big factor are the KfW development loans mentioned, which can also be counted as development services, but do not use federal budget funds.

In addition, Germany can cover the costs for refugees who come from countries that are counted as developing countries by the Organization for Economic Co-operation and Development (OECD), billed as development services based on certain criteria – this also includes Ukraine. For 2022, this accounted for 13.6 percent of the total reading credited as development services.

tagesschau.de: Are there any other larger items that can be declared as development services without explicitly being a BMZ issue?

Klingebiel: In addition to the benefits for refugees, funds for students who come from developing countries and study in Germany can also be billed at a flat rate. This means that if someone from Peru studies at a German university, the federal states will report this per person. However, an additional university building is not built for these students or a professor is hired, but rather this is calculated on a pro rata basis, so to speak.

This means that these achievements are then recognized and are included in the 30 billion euros in development work. These are largely achievements that can be achieved through this OECD reporting can be appreciated, but where funds from the federal budget are not necessarily mobilized or the motivation is completely different than providing development aid. When it comes to civil aid for Ukraine, for example, our own security is also important to us; this is not just a motive for development aid.

“Climate policy plays a role”

tagesschau.de: You already mentioned the OECD. What role does it play in the recognition of development achievements?

Klingebiel: The Development Assistance Committee (DAC) of the OECD annually determines the balance sheets of the 32 development cooperation donor countries. The DAC sets the criteria for what can be counted as development performance and which countries count as developing countries. For 2022, the DAC Germany has certified a total of 33.3 billion euros in development contributions.

tagesschau.de: These benefits are then compared with gross national income (GNI). The agreed goal is to spend at least 0.7 percent of GNI on development services. Germany has not achieved this goal for decades, for the first time in 2016 under then Development Minister Gerd Müller (CSU). How did that happen?

Klingebiel: On the one hand, there was a political desire to achieve this international target. Then there were all the special factors such as refugee-related costs that could be taken into account.

Climate policy also plays a role: a large chunk of what Germany does in terms of development cooperation is a contribution to international climate financing. This means that development cooperation is also what Germany promises internationally in order to fulfill the corresponding obligations in the international climate negotiations. This share is increasing and is part of German development policy achievements.

“Credit criteria “closer”

tagesschau.de: However, there is also criticism of the 0.7 percent target. When the number was determined decades ago, the initial situation was completely different. Many countries are much further ahead today: China, for example, was still significantly less developed back then, but today the country itself gives a lot of loans to developing countries. How do you feel about this?

Klingebiel: I think a lot of it can be criticized because it’s of course arbitrary in a way that it’s 0.7 percent and not 0.6 or 0.8. The number of developing countries is also changing. There is a lot that can be questioned about such numbers.

But I would say that it is simply a basis for calculation that allows you to see, over long periods of time, how countries that are doing relatively well relate to their international obligations. Especially in Great Britain, where these numbers are currently falling, the populism of the governments is partly reflected because benefits are being cut back sharply.

tagesschau.de: So would you rather bury the 0.7 percent target?

Klingebiel: No. Although it has many technical and political weaknesses, it is at least something that shows how strongly countries stand by their commitments.

I could imagine making the recognition criteria for development achievements more narrow. The countries’ balance sheets could not be balanced using resources that are not primarily related to development cooperation.

The interview was conducted by Pascal Siggelkow, tagesschau.de.