Transparency of Italian ODA

The initial motion had been initially drafted by the small opposition party “Italia dei Valori”. It took note of the poor score Italy recorded on the PWYF transparency assessment and the total lack of evaluation. The motion asked the Italian government to join IATI. When tabled to be voted additional motions on transparency were filed. The 3 motions by the opposition parties all calling on Italy to join IATI, among additional commitments, such as speeding up the time to report back development results to the Parliament. Conversely the ruling coalition has filed its own motion calling on Italy to increase transparency on development cooperation, including an on-line database but not mention of the IATI. The Motion by the ruling coalition has been fully informed and written by the Italian Ministry for Foreign Affairs staff, that does not want to join IATI fearing transaction costs. The ruling coalition motion makes evident the opposition towards the IATI, that is wrongly deemed as a new database too costly to implement with limited use for Italy that is so far behind in transparency. Karin Kristiansen from Publish What You Fund said “IATI is not binding anyway, and it’s up to each donor implementation schedule to set out when they can do what by, with no costs. On the occasion of the vote ONE, the advocacy and campaigning organisation on development issues, issued a statement addressed to the Italian government on the relation between aid and corruption, presenting transparency as the best mean to stop fraud. ONE recalled the Italian government that ONE had launched a petition that had nearly 75,000 people signing a call g on the Italian government, currently the most opaque donor, to make their aid data more transparent. ONE is to deliver all the signatures on April 20th at the Italian Ministry for Foreign Affairs At the very last minute the vote has been postponed till next week proplably April 27th , as the Lower House closes for Eastern time.

Italian ODA in 2011: another cut

This is another bad news for Italian ODA quantity.

The Budget session has officially started, and the 2011 budget proposal from the Governemnt is a further cut to the ODA that is can be still cut ( that is not linked to EC and EDF disbursements). This is mainly the ODA managed by the MFA. In one year, it is to l face a 45% reduction (-140 million euro) to reach the minimal level of 179 million euro. This follows the 56% reduction in 2009. ODA appropriations managed by the MFA is at an historical minimal level. It was not so low even when Italy had to face heavy expenditures reduction to enter the Euro zone in 1996. Italian NGOs are able to channel by far more funds for international development via their private fundraising than the Italian Ministry of Foreign Affairs

Development actors consultation: state of the art in 2010

At the end of June, both the Ministry of Foreign Affairs and the Ministry of Finance invited all Italian stakeholders in international development cooperation ( NGOs, foundations and all ministries) to a round table to discuss the creation of a regular coordination mechanism. The convenors sketched out the two main objects for such coordinating structure: drafting an overarching vision for the Italian development cooperation, as recommended by the DAC, and piloting some multistakeholders development cooperation interventions, involving private and public players, in partners countries. The idea was very welcomed by all participant and the group is going to meet again in September. In early July during the biannual general meeting the Director General for development cooperation hold with the Italian NGOs, NGOs arrears were updated to reach 30 million euro. These are delayed public financial contributions due to NGOs but these have not been disbursed due to red tape and lack of capacity. In order to complete their interventions, NGOs had to frontload resources to fill this financial gap; they have been waiting for a reimbursement over the last 15 years.

2010 International Military Decrees: a 20% reduction in ODA

The Italian Government has approved a emergency decree to fund the Italian participation in the International peace keeping/enforcement operations in the second half of 2010 - July to December. It is usual for the Italian Government to approve two or more decrees a year to fund international military operations. They generally include additional financial allocations to support development cooperation interventions (ODA eligible).
In 2010, these two decrees provided additional financial resources to the Ministry of Foreign Affairs development cooperation budget up to 72 million euro – a 22% increase. However, the 2010 International military decrees approved less resources for international development cooperation interventions than last year - 22 million euro, a 20% reduction. The total financial resources provided by this second military decree are 12% less than those appropriated in the first semester with a 36% reduction for development cooperation activities. Financial resources for Afghanistan faced a 15% reduction while in other areas – Lebanon, Iraq, Sudan, Pakistan. Somalia - funds were cut by 56% in comparison to the first semester appropriations.

Italian G8 commitments on International development

What happened to the Italian G8 commitments on International development? The 2010 G8 accountability report is a good step forward, as it lists all actions delivered by the G8 members, as these are reported by the Governments themselves. This mechanism lacks any independent validation but, at least, it provides a single registry to compare G8 performances.

According to the document, Italy ranks at the bottom in almost each G8 commitments. As for official development assistance and GDP ratio, the Italian 0.16% is the lowest level, among the G8. In the document, Italy explains that such minimal level is also due to the economic crisis but it reaffirms its commitment to reach 0.7% by 2015 and to increase ODA levels when the general budget increases. Unfortunately, between 2008 and 2009, the Italian budget increased by 3,4% but ODA levels shrank by more than 30%.

As for each thematic commitments, Italy is the only G8 member not disbursing to the Global Fund in 2009, to halve its contribution to STOP TB initiative, and to rank last in contributing to the Polio eradication initiative. Last year, the L’Aquila Summit launched an emergency initiative to respond to the global food crisis. Out of 6 billion dollar extraordinary funds, Italy just pledged 180 million dollar, half the contribution of Australia and almost as much as the Netherlands.

Italian financial contribution to the Education for All Initiative

On July 7th, South African Government will also host the Global Summit on Education. The international meeting also aims to have the OECD States pleadge their financial contribution to the Education for All fast track Initiative (FTI). I
taly lists education among its thematic focuses in its international development cooperation initiatives but the Italian financial commitment to the FTI is very limited. It amounted at just 3 million euros per year in 2006-2007, to peak in 2008 with a 10 million euro disboursement.
Th 2008 trippling aimed at meeting the Italian pledges for two years (2008-2009), averaging 5 million euros per year. In 2010, Italy has again allocated only 3 million euro to the "Education for All initiative".

Influence and allocations of the Italian bilateral aid

In 2008, 45% in the Italian bilateral aid was channelled towards Iraq, thanks to the last debt relief instalment. Afghanistan was the second partner country – receiving 6.3% in bilateral aid – Palestine followed with 3.8% and Ethiopia and Lebanon closed the top 5 list – 3.5%. This top 5 partner country list is consistent with the 21 country long list for aid recipients, included in the 3 year planning guidelines for the Italian development cooperation. Despite the Italian aid effort, the influence of Italy- as a donor - in the country – ranking among the top 10 - depends on the financial commitment by the aid community. Among the top five partners countries, in Iraq and Lebanon only, Italy is among the top 10 donors, and in 4 only of the 21 priority countries list. In financial terms , Italy is the most important donor in the small islands of Saint Vincent and Kitts, thanks to 16 million dollars and 21 million dollar worth debt cancellations. Again, debt relief operation allows Italy ranking forth in Sierra Leone and Iraq. Yet, beyond debt relief is in middle income not aid-dependent countries where Italy is among the most important donors (4^th) - Libya, Angola and Argentina - tough investing less than 1 million euro per country. Consistency between investment, political priority and influence in the aid framework is found again in Lebanon (66 million dollars), Albania (32 million dollars), and Tunisia (18 million dollars), whereby Italy is the 6^th most important donor.

EU aid ambitions derailed by Italy

On February 17th, DAC released the 2010 official development aid (ODA) projections for 2010. These data are far from official, as the 2010 data will be available in 2011, but they are the first official estimates assessing whether the 2010 aid targets are likely to be met. Unfortunately, the EU 0.56% ODA/GDP collective target agreed in 2005 is not going to be just a 0.48%, with more than 10 billion US dollar gap from its pledged levels. Italy is the main EU culprit for the de-railing of the EU ambitions - accounting for more than 40% of the financial gap. The financial shortfall could have been bigger if some EU member states, such as Finland, Belgium, Denmark, Sweden, United Kingdom or Ireland had not gone further than the EU agreed targets DAC.

The Italian ODA/GDP is estimated at 0.20% rather than the 2005 promised 0.51%. According to ActionAid own estimates, the DAC projections on Italy are overoptimistic, as a 0.18% is the most likely Italian performance on aid in 2010. These data also include debt relief operations, forecast to be a third in total ODA in 2010. When debt is discounted, Italian aid is estimated to decrease by 19% between 2009 to 2010 ( from 0.16% to 0.13%).

International aid analysts are expecting a contraction in aid levels due to the current economic crisis. Following DAC estimates, the 2010 aid levels are already shrinking from their 2008 peaks. World Banks studies forecast a 20%-25% reduction in aid levels in the next decade following a financial/bank crisis. Yet these estimates are based on previous donors actions. For the time being, the USA administration has increased its 2010 foreign aid allocations by 15%. Moreover, the Italian aid levels are not the results of the economic crisis. Italian ODA has always been around 0.20%, even during moderate economic growth periods. If the Italian performances on aid are assessed against other DAC donors facing the same economic constraints, Italy has always underperformed and in 2010 its ODA/GDP ratio should be still around at 0.27%.

Italian aid in 2009

By analysing the commitments of the development aid activities approved by the Italian development cooperation in 2009, it is possible to estimate sectoral and regional priorities for the Italian development cooperation implemented via the Foreign Affairs budget during the Italian Presidency of the G8. Italy committed more than 500 million euro from the Ministry of Foreign Affairs budget - 25% in loans. Despite the Italian commitment to allocate 50% of the development cooperation budget to the sub-Saharan Africa, 21% was allocated to the Middle east while the Sub-Saharan region received only 8.3%. According to the 2008 DAC statistics, 38% of the bilateral Italian aid, net of debt relief, was tied, while the 2009 value is estimated still on decrease - at 28%. The MFA systems also allows to track the MDG commitments, as well. In 2009 the best funded MDG was MDG 1 (25%), followed by MDG 7 (3.5%) and MDG 4 (2.8%).

Italian aid fragmentation

According to a December DAC study on country aid fragmentation, between 2004 and 2008 donors fragmented initiatives increased. The main purpose of the study is to agree on a measure to label an aid relation as being a “concentrated action”. The criteria used is twofold: 1) being among the top 10 donors in the partner country or 2) allocating a share of aid to the partner country that is more than the average that those to average partner country. These top down and arbitrary criteria are a compromise between small and big donors, while not including partner country perspective to assess when an aid relation can be labelled as “significant”. Following the DAC methodology, fragmentation of Italian aid has slightly increased, and the Italian development cooperation should phase out and re-allocate aid activities in 12 out of 33 priority countries.

Another study by the OECD Development Center assesses the sectoral fragmentation, pointing out to likely sectoral specialization, as measured by the financial investment made. The Italian investment in the production sector are the least fragmented among all aid sector. This result is shared by other small donors such as Portugal as aid initiatives in favour of the economic sector can be big project, being financially oversized for the aid budget of those agencies. When Italian sectoral fragmentation is analyzed for the social sector investment in the detail, the results are especially poor in health, population and water. In these sub-sectors, Italy is supporting the most fragmented initiatives among DAC donors.

The European Commission has released a study trying to assess the financial advantages for the EU donors by fully applying the aid effectiveness criteria. The study sums up different estimates for volatility, uncoordinated donors mission and analysis and eventually it states that the EU could save between 3-6 billion euro a year with a Paris Declaration compliant management. By applying the same methodology to Italy, the annual spending reduction is more limited that at the EU level, at around 160 million euro.

Reviw of Italian development cooperation by the DAC

Yesterday, the Development Assistance Committee (DAC) of the OECD presented in Rome the results of the Italian Peer review . The DAC document noted that Italian Co-operation is facing major challenges. The first is an urgent need to reform official development co-operation, but no political consensus on how to proceed. The second is that Italy will fail to meet its international commitment to increase official development assistance (ODA) to 0.51% of its gross national income (GNI) by 2010 and is unlikely to meet 0.7% by 2015. In 2008 Italy’s ODA/GNI ratio was 0.22%, only 19th amongst the 23 DAC members and 8th in terms of aid volume.

The DAC called upon Italy to demonstrate the strong political leadership needed to reform and fund a reliable and results oriented aid programme.

Despite the challenges remaining, the DAC notes some improvement in Italian aid management since 2008. It welcomes Italy’s intention to focus on 35 priority countries, the greater authority given to Italy’s embassies and technical offices to deliver and to contribute to formulating programmes and deliver aid, and the Steering Committee on Development Co-operation’s high level policy direction.

Italy still needs a strategy for its development co-operation shared by all stakeholders and to ensure that development assistance committee; italian co-operation; DAC; official development assistanceall relevant government departments and regional and local authorities work to common objectives; build systems to promote coherence between development co-operation and other policies; reform human resource management for the core cadre of development experts; and regularly undertake monitoring and independent evaluation. In addition, the limited political debate and public awareness about Italian Co-operation show there is an urgent need for the Italian authorities, together with civil society, to build popular support for development and public pressure for reforming Italian Co-operation.

Out of the 19 reccomandation the DAC Chair pointed out to 4 major priorities for Italian aid : approval of a new legislation for development cooperation; a strategic vision; swif progresses on Policy coherence for developemnt and develop apublic opinion communication strategy.

Official data on Italian aid in 2008

According to the 2008 DAC data, released on December 8th, the Italian ODA/GNI ratio was at 0.22%, with a 15% increase from its 2007 level, still second last among EU donors. By discounting debt relief, ODA/GNI decreases to 0.18% with Italy ranking last in Europe. However Italy increased it total aid disbursement by 468 million dollars ( 234 million, net of debt).

The top 5 countries are Iraq, Afghanistan, Palestine, Ethiopia and Lebanon. Iraq accounts for 45% in the total bilateral share, thanks to debt cancellations.

Italian aid - as share of bilateral aid - to sub-Saharan Africa decreases to the minimal share of 18,7%. The region received only 30% in the absolute bilateral aid increase ( 70 milion dollars, including debt), against 50% EU target. However, Italy has slightly sharpened its aid poverty focus, accounting for 25% of total bilateral aid from 24%, with an increase by 120 million dollars in one year.

As for sectoral investment, Italian support to Basic Social Services increases by 100 million dollars, accounting 7% of the total bilateral ( it was 5.4% in 2007).

Italia tied aid has decreased to 20% of total bilateral from 40% last year. By discounting debt relief, as being untied aid by default, Italian united aid share decreases from 78% to 38%, improving Italian ranking from the last position to the fourth last.

ODA from Italian Regions

According to a recent survey, the 22 Italian regions fund development cooperation interventions worth 45 million euro per year, to be counted within the Italian ODA. The first 4 most generous regions accounts to 74% of the total. Although decentralized cooperation is often featured as one of the postive development in the Italian development cooperation, financially speaking, it is still a limited actor. All regional resources account at 14% of the financial resources available the Italian Ministry for Foreign Affairs and as much as two big NGOs ,such as MSF and Save the Children, annualy raise from private contributions.

Italian debt relief activities since 2001 to 2009

The annual progress report on the implementation of the Italian law on international debt relief (Law n° 209/01) has been published. Since it has been implemented, from 2001 until June 2009, Italian bilateral debt relief activities amounted at 6,47 billion euro, with 61% in Africa and 68% included in the top five countries (Iraq, Nigeria, Congo, Mozambique and Ethiopia). Italian debt relief financially skyrocketed in 2005 (56% of the total amount). Later, each annual share is around 1%, showing the quick and successful implementation of Law 209/01. Moreover, Italian shaky aid quantity performance was yearly boosted by 22%, thanks to the reporting of debt relief operations. In the near future, Italian aid heavy reliance on debt relief operations and the exhaustion of the Italian debt stocks towards developing country is to bring about a significant and stable reduction in Italian aid levels. Eventually, 86% of the whole debt stemmed from the Italian export credit agency initiatives to support Italian firms abroad and not from concessional lending developing countries could not afford to pay back.

Ranking Italian response to Humanitarian emergencies

Last week, the DARA research center published the third edition of the Humanitarian response index, ranking 23 donors countries as for quantity and quality of their responses to Humanitarian crises. In 2009, Italy ranks third last, only followed by Greece and Portugal. In every index dimension, Italy performs consistently far below its peer donors average.

It ranks: 20th as for its response to humanitarian needs and for its generosity, second last in prevention, ability to work with humanitarian partners and evaluation of humanitarian interventions.
Italy’s recorded best scores concern timeliness of funding for onset disasters (ranking 4th best donor) and Italy is among the best 10 performers as for the investments in forgotten crisis.

Looking at the details in the Index dimensions, Italian flaws in responding to emergencies get clearer and clearer. Italy ranks: 4th last as for need assessment capacity; 3rd last at contributing to human rights protection, transparency in funding, ability to save human lives and protect human dignity and it is the worst donor as for funding timeliness to complex emergencies.

In order to increase its index performance Italy should reform her strategic and management response to humanitarian emergency following Norway, Sweden and Ireland examples; all scoring among the top three donors for all index dimensions.

Italian commitment to IFAD and conflict scenarios

During the 7^th IFAD replenishment Conference, Italy pledged 41 million euro to be disbursed by the end of 2009. So far, Italy has disbursed just 36%, ranking last among donors in terms of commitments/disbursement ratio, followed by Belgium (50%) France (67%) and the UK (74%). All IFAD donors, including developing countries, have already fully met their pledges. Last year, at the end of the 8^th replenishment, Italy further increased its financial commitment to IFAD by 56%, ranking as the second “virtual” contributor after the USA. Due to its relevant financial share, the low level in the Italian financial disbursement could financially harm the IFAD planned activities.

At the end of October, the Government issued the third Decree extending Italian military missions abroad till the end of 2009. Although it provides financial resourses for the army, the Decree generally includes a financial envelope to fund development cooperation activities in countries in crisis. This last decree appropriates 6.8 million euro to development cooperation activities with the total level for 2009 up to 82 million euro. In comparison to last year, 2009 ended with a 12 million euro gap for development cooperation initiatives.

Italian scores in the Commitment to Development Index, 2009

The Centre for Global Development has recently published the 2009 Index for Commitment to Global Development - CDI. The Index is supposed to assess the overall policy framework of each OECD country under the global/economic development lenses. The aim is to understand which donors policies should be reviewed or replicated in order to foster global development. The index is built on 7 policy areas - such as development, trade, investment, migration, environment, security and technology - and it allows cross country comparison.

In 2009 Italy ranks fourth last, improving one position from last year. Thanks to the 2008 increase in aid financial quantity and the numbers of unskilled migrants, Italy could raise its overall score in 2009. Since the index inception, the Italian performance has been very low due its technology, development and migration policies. As for the latter, Italy hosts a limited percentage of unskilled migrant workers and refugees fleeing from humanitarian crises. The Italian aid initiatives are financially inadequate, too fragmented and tied to the purchase of national goods and services. Eventually, Italy neither publicly invests nor encourages private investment in R&D, via tax incentives. As for regions, Italy is deemed to achieve the best results in terms of external policies fostering development in North Africa and Middle East while the Far East seems to be harmed the most.

Goverment commits to increase aid allocation before end of December

On October 27, the Government agreed on two bi-partisan parliamentary motion on increasing financial resources to development cooperation before the end of 2010. The minority motion was also accepted when mention to financial increase up to 500 million euro for the Ministry of Foreign Affairs was removed. Now it just engages the government to significantly increase resources for development cooperation

The minority motion also commits the Government to start the Parliamentary debate on aid reform again, taking into account discussions during the last legislature, and eventually to clearly state which aid financial commitments will be met in 2010 due to dearth of financial resources.

The majority requests are more vague than the previous ones, asking the Government to fulfil its commitments towards the Global Fund and international food aid agreements, while also increasing development cooperation staff.

Both texts commits the Government to increase aid allocation from current levels by the end of December. However, it is worth noting that the about to be issued decree on peace keeping missions in 2010 would have provided for an aid in fragile states contexts, in any case, in continuity with the past, with no need of any a Parliamentary activity. The actual fulfilment of this engagement by the government should be measured net of the Peace-keeping Decree.

The Italian and Development Aid

According to the recently released Eurobarometer poll on the EU citizens perception on “commitments towards development cooperation”, despite the financial crisis, 90% of the Italian public support development cooperation as important, with 47% asking to keep the aid financial promises versus 13% supporting a freeze or cut in current aid levels. Italian public is ranks 7^th as for awareness on the MDG, (32%) ,and 9^th for importance give to development cooperation. However, only for a small percentage (20%) consider public development aid as aimed to solidarity only without any self interest. 27% consider aid as an investment to ensure greater stability, 24% to prevent migration flows and 24% to counter terrorist spreading in developing countries

Italy and policy coherence for development in 2009

According to the recently EC report on Policy Coherence for Development (PCD), all 12 priority policy areas listed in 2005 have moved in the right direction, at national and the UE level. The report structure is not transparent and it does not allow to list which Member States are more progressive or at the bottom of the Policy Coherence reforms. According to the report, all PCD areas showed some progress with Italy being indirectly praised for its reform on migration policy ( multy-entry VISA), energy ( support to the Carbon fund) and medical research policies to support developing countries academic institutions. These remarks are quite contradictory with what Italy reported to the Commission when submitting its questionnaire. In its submission, Italy considered “very weak” the whole EU progress on the PCD agenda over the last 2 years. On average, it self-assessed its PCD performance positively, yet acknowledging the lack of any progress in terms of implementing the link between poverty reduction and migration, the support to e-government and lack of implementation for the EC strategy for Energetic needs in developing countries.