Eastern European assistance (EEA): Meeting the Challenge in Ukraine, Keeping Our Commitment to the World
A Global Canada Essay
By Robert Greenhill
April 5, 2023
Summary
Vital support for Ukraine, its people, and neighboring countries affected by Russia’s aggression will require massive resources for many years. We are living in an era of deepening polycrisisi , driven not only by the war in Ukraine, but also by poverty, poor governance, climate change, inequality, and conflict. If support for Ukraine is at the expense of assistance for the world’s poorest countries, it risks devastating human, developmental and geo-political costs in other parts of the world
Canada can play a principled leadership role in eliminating this risk, accentuating the twin principles of additionality and transparency, and encourage all its partners to do the same:
1. Additionality: Commit that all support to Ukraine and affected eastern European countries, today and in future years, will be additional to international assistance for other developing nations;
2. Transparency: Create an Eastern European Assistance (EEA) tracker including resources for Ukraine reconstruction, in-donor country support for Ukrainian refugees, and support for other affected eastern European countries like Moldova which would be tracked separately from other Official Development Assistance (ODA). This would be similar to the Official Assistance (OA) designation for support to former Soviet states in the 1990s (see Appendix A for more information on OA);
3. Leadership: Encourage all OECD DAC members to make a similar principled commitment to additionality and transparency.
Global Canada Essays are written with the aim of encouraging debate on how Canada can be more consequential in addressing critical global challenges. Views expressed are those of the author in their individual capacity. They do not represent an institutional view of Global Canada or any other organization.
1.Ukraine is one of the great challenges to the will and values of our generation. It will be expensive. Direct humanitarian and fiscal support to Ukraine and for millions of Ukrainian refugees is currently costing tens of billions of dollars per yearii . Reconstruction is estimated to cost over US$400 M (of public and private funds) and will stretch over a decadeiii . These costs will only rise every month that the war continues.
Beyond Ukraine, significant support to other countries in eastern Europe may be necessary. Moldova is under tremendous economic and fiscal stress.
This need for support comes at a difficult time fiscally for western countries National budgets have been stretched by fighting the COVID pandemic and now by rising interest rates. There is a great temptation for politicians to meet needs for Ukraine by diverting money away from existing international assistance programs. This has already started In the UK, “soaring indonor refugee costs have caused major disruption to the UK aid programme”iv In Canada, where most support for Ukraine in 2022 was additional to the International Assistance Envelope, Budget 2023 noted ominously that the $85 M earmarked for Ukrainian humanitarian and development assistance would “be sourced from existing departmental resources”v
While politically tempting, diverting money from other international assistance priorities would be morally, financially/developmentally, and geopolitically counterproductive:
1. Morally counterproductive: The strong moral arguments in favour of assisting Ukraine lose their value if it increases deep misery elsewhere. Outside Ukraine, the world was already in a global humanitarian crisis. According to the World Food Program, 345 M people are projected to be food insecure in 2023, “more than double the number in 2020”. At the same time, for the first time ever, there are over 100 M forcible displaced people around the worldvi In this fragile situation, cuts due to diverted funds will cause immense hardship and undercut the moral arguments for supporting Ukraine Children in Africa must not die so that Ukraine lives.
2. Financially and developmentally counterproductive: Low-income developing countries are in an extremely fragile situation. According to the World Bank, “the COVID-19 pandemic dealt the biggest setback to global poverty-reduction efforts since 1990, increasing the number of people in extreme poverty by about 70 million, to 719 million people.”vii Ukraine-induced cuts to low income developing countries could have a crippling effect on a stalling Sustainable Development Goals (SDG) agenda. At a time of increased socio-economic and political fragility, cuts now could have major long-term consequences for development and for the fight against climate change. At best, cuts would slow low-income countries’ path to self-reliance, increasing the total cost of support by OECD countries. At worst they could trigger social, political, fiscal and economic crises in a number of some low-income countries.
3. Geo-politically counterproductive: Many low-income countries, particularly in Africa, resented bitterly unequal treatment during the COVID crisis. There will be a significant, negative geo-political impact if, as a result of the Ukraine crisis, tens of billions of dollars of international assistance is shifted away from low-income, primarily African countries to lower-middle income European countries and high-income countries housing Ukrainian refugees.
If not addressed through additionality and transparency, these negative immediate impacts will grow over the years due to the cumulative effect of diverted funding 2.
It is possible both to support Ukraine and to maintain our commitment to other developing countries. The costs are significant, but not massive for western economies. Ongoing support of, say, $50 B a year to Ukraine is roughly 0.1% of G7 economies. Post-conflict, annual assistance requirements may drop to some $20 B a yearviii, roughly 0.04% of G7 economies.
Western leaders in the past have shown that it is possible to both resist aggression and invest in a better future. The Truman administration met the challenge of a new Cold War while launching the Marshall Plan Canada, the US and UK supported the Colombo Plan during the military ramp-up of the Korean war, thereby assisting the development of India, Pakistan and other newly independent south Asian states
The importance of ensuring that critical support for eastern Europe was separate from Official Development Assistance was recognized in the early 1990s, at the end of the cold war and the transformation of the post-Soviet space. G7 and OECD countries agreed to designate as Official Assistance (OA) and track separately from ODA, while acknowledging that several including Ukraine were ODA-eligible countries. By 2005, when a number of countries had graduated and the amounts involved were relatively small, OA was re-integrated within ODA.
Canada can lead on this. Canada played a positive role under the Mulroney government during the original decision to separate assistance to post-Soviet countries from traditional ODA in the 1990s. Canada stepped up in a principled way during the COVID pandemic with significant international support that was additional to ongoing international assistance commitments.
Canada should show principled leadership through the application of additionality and transparency to its Ukraine support. Canada should:
1. Commit to sustaining its fair share of international assistance to developing nations by ensuring that all aid for Ukraine and the rest of Eastern Europe affected by Russian aggression is additional. This includes humanitarian, military, refugee support, and reconstruction.
2. Track and report separately all humanitarian, development, fiscal, and refugee support for Ukraine and other countries affected by Russia’s invasion. While this support may count as Official Development Assistance, it should be tracked separately from all other ODA. This metric should be called “Eastern European Assistance”
3. Encourage, through the OECD DAC, other countries to endorse the twin principles of additionality and transparency using the EEA metric.
In doing so Canada will show principled leadership in sustaining investment in the SDGs, in maintaining support for climate adaptation and mitigation and in responding to critical humanitarian emergencies outside of, as well as within, Ukraine. These positive actions could have a massive impact: saving lives and building futures in least developed countries, restoring momentum in the SDGs, and rebuilding links with the south that were badly frayed by COVID. This is a major opportunity for Canada to lead.
3.Appendix A: Short History of Official Assistance (OA)
(Excerpt from “History of DAC Lists of aid recipient countries”)
The end of the Cold War signaled the emergence of new economic and political realities. In 1993 - with new aid requirements in the transition economies of eastern Europe and reduced aid needs in East Asia due to rapid progress - a new list was devised. It was divided into two parts:
• Part I: Only aid to "traditional" developing countries counted as ODA, for which there is a long-standing United Nations target of 0.7% of donors' national income.
• Part II: Aid to "more advanced" developing and eastern European countries were recorded separately as "official aid".
Data on aid to the following CEEC/NIS countries in transition, first collected for 1990 flows, were recorded against Part II of the list (as “official aid”) until and including 2004: Belarus, Bulgaria, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Slovak Republic, Ukraine. Flows to Moldova were recorded against this category up to and including 1996.
The two-part List of Aid Recipients was reviewed every three years. Countries above the World Bank threshold for high-income countries (per capita annual income around USD 9 000 at the time) for three consecutive years progressed from Part I to Part II of the list at the end of a threeyear notice period.
Other countries could also be transferred to Part II after a notice period if they were above the World Bank lending limit (around USD 5 000 annually) for three consecutive years, following consideration by the DAC of their development and resource status. One country transferred in the opposite direction, from Part II to Part I.
With successive revisions, the two-part list became increasingly complex. At the same time, aid to more advanced developing and transition countries declined as they became more prosperous, with several former Soviet bloc states joining the European Union and becoming donors themselves. In 2005, the DAC therefore reverted to a single List of ODA Recipients, abolishing Part II of the list and ceasing data collection on official aid to those Part II countries.
https://www.oecd.org/dac/financing-sustainable-development/development-financestandards/historyofdaclistsofaidrecipientcountries.htm
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Endnotes
i Jean-Paul Juncker first used “polycrisis” in 2016 to describe a mix of several crises which intersect and create new crises. Thomas Homer-Dixon and the Cascade Institute use the term polycrisis to refer to a “macro-crisis of interconnected, runaway failures”. For the present polycrisis in developing countries, see Tardif and Greenhill, “COVID Scarring Amid a Polycrisis”, December, 2022: https://thecic.org/emcovid-scarring-amid-a-polycrisis/ ii One Campaign estimated in March 2023 that “ in-donor refugee costs alone could exceed an estimated US$34.92 billion in 2022, which would be 19.5% of total ODA spent in 2021, and an estimated US$32.41 billion in 2023, which would be 18.1% of total ODA spent in 2021.”: https://data.one.org/datadives/ukraine-oda-tracker/
iii World Bank Ukraine Rapid Damage and Needs Assessment, March 23, 2023: https://www.worldbank.org/en/news/press-release/2023/03/23/updated-ukraine-recovery-and-reconstructionneeds-assessment
iv Independent Commission for Aid Impact, March 29, 2023, “UK Aid Funding for Refugees in the UK”: https://icai.independent.gov.uk/icai-rapid-review-finds-poor-value-for-money-in-uk-aid-to-refugees-in-the-uk/ v Government of Canada, Budget 2023, p. 169.
vi UNHCR news release, May 23, 2002: https://news.un.org/en/story/2022/05/1118772
vii World Bank, “Measuring Poverty”, November 30, 2022 update, https://www.worldbank.org/en/topic/measuringpoverty
viii Assuming the World Bank estimate of $400 B over 10 years is covered half by international assistance and half by private investments.
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