1.1.1 – What is official development assistance?

6 The term “official development assistance” covers different aspects:

• ODA policies at various levels: global, national, and the level of major multilateral and bilateral institutions;
• the ODA instrument of financial transfers from the North to the South: the tool for these policies.

7 The ODA financial instrument is clearly defined by precise, common rules. ODA policies constitute a much more diffuse approach, but their characteristics – objectives, strategies, determinants and norms – nonetheless make it possible to define a specific identity. At an international level, this ODA policy can be described as a hybrid global public policy in the sense that its characteristics seem to stem from agreements reached within the “Club” of donor countries constituting the OECD, and more broadly from consensus and practices developed within the international community as a whole.

1.1.2 – A financial instrument with stable rules since 1960

8 In 1969, the Development Assistance Committee (DAC) of the OECD (created in 1961) formalized the concept of “official development assistance”. The aim was to promote financial transfers from the North countries to support the development of the South countries, and to begin by defining and measuring them.

9 The definition is based on four criteria still in use today. ODA must:

• emanate from public bodies (states, local authorities, or bodies acting on behalf of public authorities) of DAC member states;
• be intended for developing countries or territories as identified in a regularly reviewed DAC list of ODA recipients;
• be offered in the form of targeted public spending, financial transfers on favorable financial terms, or debt relief;
• aim to “foster economic development and improve living standards in recipient countries” (according to Focus 2030, 2021).

10 At the same time, the DAC defined precise calculation rules (scope, level of concessionality) for the accounting of ODA and advocated a target level of 0.7% of the gross national income (GNI) of donor countries, which was endorsed by the United Nations General Assembly in 1970.

11 Over the past 50 years, the concept of ODA has changed little in terms of its scope, its method of calculation, its lists of donor and recipient countries, and its 0.7% target. Donor country practice has led to the gradual eligibility of expenditure not initially foreseen, such as debt cancellation, tuition fees for foreign students from eligible countries, or costs concerning asylum seekers. The lists of donor and recipient countries have constantly adapted to global developments, and have evolved without being disrupted (see box 1). The target of 0.7% of GNI is still regularly mentioned, including in the Law, by many donor countries.

12 The eligibility rules for ODA, including the degree of concessionality, have been clarified several times, and most importantly underwent a major recent revision implemented in 2018. From then on, concessional flows were no longer counted as net transfers (disbursements minus repayments) but as grant equivalents with reference to a parametric market interest rate, except for flows to the private sector. This major reform, however, has produced only modest changes in terms of assessing overall ODA levels, since in 2020 the new grant equivalent eligibility differed by only 0.09% from what was obtained with the previous measurement. [2] Overall, the definition of and eligibility for ODA appear to have been extremely stable for over 50 years.

1.1.3 – A public policy based on objectives and norms

13 ODA objectives have changed over the years: closing the economic gap, structural reforms, the fight against poverty, sustainable development, Millennium Development Goals and, since 2015, Sustainable Development Goals.

14 To help achieve these goals, ODA has never been either the only North-South financial flow or the only international policy. However, it has been the financial instrument of an autonomous public policy in the countries of the North, with specific norms, institutional architecture and management. This is why Severino and Ray (2010) have qualified it as a kind of “global public policy”:

15

“International development assistance forms a kind of global public policy dealing with North/ South relations, which has come to incorporate three different subsets of objectives: the economic convergence of developing nations, the provision of basic services to all human beings and the protection of global public goods.”

16 What underlay this public policy was a shared agreement on these different categories of objectives, and a set of norms defining the means to help achieve them, focused particularly on:

• transparency, with the implementation of detailed accounting rules subject to regular reporting by DAC member countries;
• “burden sharing”, by promoting a target contribution from developed countries based on their GNI;
• coordination in various forms, including alignment on common strategies, joint management of debt issues and the adoption of shared principles;
• exchanges of best practices, notably through peer reviews but also through working groups in various fields: action in fragile countries, social and environmental norms, management of corruption, etc.;
• the collective search for efficiency via a specific process that gave rise to the principles of the Paris Declaration (OECD 2005);
• and even emphasizing solidarity and the moderation of “national interest” policies, including channeling tied aid, regulating concessionality and excluding certain sectors such as military or security spending.

17 The ODA financial instrument and the ODA public policy, which have the same objectives, differ in that the former is defined by rules and the latter by norms. Using Ostrom’s (2009) definition, [3] common rules define in a strict, enforced way what is required, eligible and non-compliant, while norms qualify what is considered, in a shared way, as recommended or appropriate. This distinction is important. The overall ODA policy is never binding, only incentive-based, notably through peer pressure. Thus, it is a well-known fact often criticized by aid-receiving countries that the target of 0.7% of GNI for aid has rarely been reached, and by only a few countries. [4] On the other hand, while ODA policy remains voluntary, and therefore non-constraining, it is nevertheless based on a financial instrument that complies with binding rules of definition and accounting.

1.1.4 – An (ambiguous?) policy of reciprocity

18 Beyond these norms and objectives, the determinants of ODA policy undoubtedly make it a specific policy different from other major international policies.

19 The fact underlying this policy is the existence of two blocs of countries and populations (the North and the South) with distinct levels of development and/or poverty, thus constituting the rational and ethical justification of public transfers, essentially investments, from the North to the South.

20 Consequently, three main categories of principles or determinants seem to have motivated development aid policies on the part of donor countries.

21 The first of these principles is that of mutual benefit. This principle is implicitly but also explicitly (see box, among many statements by policymakers) established as one of the foundations of ODA.

22 It should be understood as being broader than a simple search for an advantage. It is not a question of simple commutativity (the principle of market exchange), for which the benefits exchanged are equivalent and simultaneous, but of reciprocity (the principle of cooperation or that of gift and counter-gift), where a positive cooperative attitude responds to an equivalent attitude (Fehr and Gächter 2000), based on what each has to offer. In this respect, the counterparts of the financial advantages granted as aid may be deferred and not commensurable with the ODA itself; they may be global as well as bilateral, and may be in the economic, political, diplomatic, security and cultural spheres, etc.

23 The second determinant of ODA policies is the promotion of models and/or values, which can also be called influence in a broad sense, and be considered as part of the reciprocity principle, although in a less explicit and more ambiguous form. In the 1960s, the basis of aid (and “development”: see Rostow 1960) as the promotion of alternative models to Communism was clearly assumed. The promotion of liberal market economy through structural adjustment programs was also asserted in the 1980s. Since then, we might think we have moved on from the promotion of economic and social “models” to the promotion of diversified values, reflected notably in the SDGs, concerning law (human rights, minority rights), equality (fight against major inequalities, gender equality), the management of shared environmental issues, and so on.

24 However, this is more of a shift than a rupture. The ambiguity of this determinant of ODA influence is that it is largely constructed both by and within the ODA community, with a predominant contribution from the “club” of donor countries, [5] even if it is subsequently legitimized by broad international consensus. [6] While the excesses of coercion that characterized structural adjustment programs can be considered as part of a bygone era, the ambiguities between the promotion of universal values and that of Western models constitute a source of deep and persistent misunderstanding, often unspoken, between donors and recipients of aid. [7]

25 The third principle is a principle of humanity or solidarity. The moral duty to do something to relieve or remedy other people’s situations of distress or deprivation in a universalist vision of a minimum of goods and services accessible to all, is an extremely widespread human principle, whose constant demonstrations can be cited (Opeskin 1996, Chauvier 2006). The role of the public sector (the States) in addition to the private sector (charities, historically religious movements) in the expression of this principle of humanity is also one of the foundations of ODA. It would be unrealistic to ignore this principle of humanity as a determinant of ODA, emanating from Western societies that claim the universalism of the human rights principle.

26 These principles combine to make ODA a special international policy, governed by its own rationale. They can be summarized by the principle of “justice as fair reciprocity” taken from Page (2007), incorporating the reciprocity of mutual benefits, including the adoption of values or models, combined with special ethical consideration for the most disadvantaged, who have little to offer in order to enter the reciprocal exchange of benefits. It is this principle of fair (or humanistic) reciprocity that underlies the concessional public transfer nature of ODA.

27 But the combination of these very different principles is also a source of ambiguity and tension. The coexistence of “self-interested” and “disinterested” purposes has always fueled strong criticism of double talk or hidden agendas for ODA, particularly from analysts in the Global South. [8]

1.1.5 – A hybrid global policy

28 The ODA policy, with its financial instrument defined by stable rules and involving almost the entire planet, seems sufficiently specific, with its objectives, norms, good practices and principles, to constitute a “global public policy”. But it is also by nature an hybrid policy due to the diversity of objectives, encompassed under the flexible concept of development, and even more the tangle of highly diverse foundations.

29 This hybrid character should be emphasized particularly in its international aspect. ODA policy seems like both the policy of a group of countries – the OECD countries – and a global policy. As we have seen, ODA policy is first and foremost a voluntary policy, based on principles and norms largely developed within the OECD DAC “Club”. Transfer is not a matter of right for the recipient countries, or of obligation for the donor countries. In other words, ODA has never acquired a true character of justice on a global scale, whether corrective or distributive (Naudet et al. 2007).

30 Nevertheless, the global nature of ODA policy is also undeniable, if only because of the global and consensual ambition of its objectives – nowadays the SDGs, but in the past economic catch-up or the eradication of poverty – and the necessarily cooperative and partnership-based nature of its arrangements (Pacquement 2009).

31 The institutional architecture of aid, made up of both bilateral structures and multilateral institutions with multiple levels of governance – from United Nations organizations to global or regional development banks and all sorts of thematic funds, not to mention the growth of the bi-multi – is a concrete illustration of the global and “Western” character of ODA policy, which we propose to describe here as a hybrid global public policy.

1.2.1 – Historic levels in recent years

32 The ODA financial instrument reached a new historic level of $179 billion in 2021, up 4.4% in real terms from the previous year, which was already a record year despite being the world’s worst for economic growth since World War II, due to the COVID crisis.

33 The continuity of the accounting rules makes it possible to trace ODA’s evolution over the long term. Overall, ODA shows a pattern of continuous increase in constant dollars at an average rate of 2.7% per year over 50 years, with the exception of the 1990s (more precisely, ODA fell in real terms between 1992 and 1998), often described as a period of “aid fatigue” following the fall of the Berlin Wall. As a proportion of the GNI of donor countries, the level in 2020 is close to that of 1970 at around 0.3%: a long way from the target of 0.7%, with a pronounced decline in the 1990s followed by a clear recovery from 2001 on.

Figure 1

ODA in constant $ (blue) and as % of GNI (orange) for DAC countries

ODA in constant $ (blue) and as % of GNI (orange) for DAC countries

1.2.2 – Broad public support in the North

34 ODA remains a strongly supported policy in donor countries because of the extent of global inequalities between countries, and the associated security threats and humanitarian challenges. It is widely endorsed by public opinion and is often the subject of cross-party consensus among political representations (Cazotte 2019).

Figure 2

European public support for development aid

European public support for development aid

35 The details of opinion polls show that public opinion is primarily attached to the fight against poverty in poor countries as an objective of ODA. They also show that the principles that determine aid seem to be endorsed by public opinion. Thus, the Eurobarometer survey reveals that over ¾ of the European populations questioned consider that fighting poverty in the South is also in the interest of the European Union. Similarly, 70% of respondents consider ODA a good channel of influence.

1.2.3 – ODA as a central instrument in crises

36 One of ODA’s legitimacy lies in its capacity to be mobilized rapidly throughout the world during crises, whether natural disasters, conflicts, humanitarian crises or any other form of acute need.

37 For example, the increase in ODA in 2020 and 2021 was entirely due to the international response to the COVID crisis in the South, which in both 2020 and 2021 amounted to about 10% of total ODA. [9]

Figure 3

COVID mobilization and ODA progress

COVID mobilization and ODA progress

38 In international crisis management, ODA is often one of the central instruments of international cooperation. In particular, it is the combined forces of institutions, instruments, networks and practices built around ODA policy whose mobilization is proving valuable, as the OECD has once again shown as regards the COVID crisis.

39

The pandemic put development cooperation to the test in unique ways. It has shaken up working practices, partnerships and business models and put unprecedented strain on public finances. Against this backdrop, development co-operation agencies showed impressive agility in responding to the health and humanitarian aspects of the pandemic while also ensuring program continuity. They also displayed creativity in reallocating budgeted funds and raised new resources. Initial estimates in this report suggest that Development Assistance Committee (DAC) members mobilized USD 12 billion for COVID-19 support to developing countries.

40 Other examples as well as the COVID-19 pandemic could be given. Thus, aid to refugees, counted as ODA, has tripled over the past decade (from $3.4 billion in 2010 to $10 billion in 2019), particularly because of the Syrian situation.

41 Today, ODA is called upon in the context of the Ukrainian crisis through various channels: direct financing of Ukrainian development in a show of solidarity in the face of Russian aggression, financing of the reception of Ukrainian refugees, and management of the indirect consequences of the war on many countries, particularly in terms of food markets.

1.2.4 – Established but fragile evidence of effectiveness

42 But public support and its use in crises are not enough to establish the legitimacy of ODA. The latter has always been essentially a substantive policy, i.e. aimed at specific goals. ODA transfers are not justified in themselves as a fair procedure (as a redistributive or insurance mechanism might be), but by their consequences with respect to the purpose pursued, which is consistent with the investment character often given to aid (Jacquet and Naudet, 2006). The considerable importance given to the issue of aid effectiveness, and its evaluation, is a direct result of this substantive approach to ODA. [10]

43 Global ODA policy has been the subject of significant evaluation activity, particularly at the micro level of projects, which achieves a very high success rate on average (Tarp 2006, Riddell 2007; Howarth 2017), in the range of 70% to 85%. In addition to this corpus of evaluations, there are field studies and/or analyses from the qualitative sciences, but they are too numerous and diverse to summarize. However, these studies highlight the possibility that aid will have undesirable effects in certain contexts, particularly with the institutions of recipient countries (Brautigam and Knack 2004, Easterly 2006) and frequently point to negative effects linked with the non-developmental objectives of aid (Moyo 2009), lack of appropriation (Moss et al. 2006), as well as coordination problems partly due to the fragmentation of ODA (Knack and Rahman 2007; Djikstra 2018) and its volatility (Riddell 2007). The hypothesis of a “micro-macro paradox” arose from this co-existence of positive micro effects and potentially undesirable macro effects (Mosley 1986).

44 To address this question, a large number of econometric analyses testing the macro effectiveness of aid have been carried out since the 1990s (see Amprou and Chauvet 2004 and box 2).

45 This debate, which has continued over several decades, shows that the question of effectiveness has been central to the legitimacy of ODA policy. While studies seem generally to have confirmed this effectiveness, it could simultaneously be conditioned by:

• the nature of the contexts, in particular the vulnerability and quality of institutions, and also the level of human security;
• the characteristics of the aid itself: firstly its developmental nature (as opposed to more geopolitical or economic motivations), and secondly its level (ODA has decreasing marginal effectiveness [14]), fragmentation or predictability;
• the quality of the dialogue between partners and in particular the appropriation of aid and its alignment with local strategies.

46 Econometric and qualitative analyses seem to agree on one point. Aid is less effective in contexts where large amounts are involved, institutions are weak and there is a “misalignment” between donors and recipients, i.e. frequently in the context of poor and fragile countries, as summarized by Caselli and Presbitero (2020) after a broad synthesis of studies:

“Overall, our reading of the literature and the evidence on aid effectiveness in fragile states suggest that the growth dividend of aid flows could be limited by a number of factors (e.g. high aid dependency coupled with limited absorptive capacity, limited propensity to act as a shock absorber, rising donor fragmentation), which are common to several recipients, but often more prevalent in fragile states.”

3.1.1 – Expand ODA?

94 The ruptures of the 21^st century have eroded the foundations of ODA and challenged its nature as a global public policy for the SDGs. All aspects of ODA are now being questioned: its principles, calculation method, amounts, institutional architecture, effectiveness, procedures, Western-centrism, hypocrisy in the face of commercial or geopolitical interests, etc. Even its name, “official development assistance”, is difficult to evoke today in many forums, as it seems to reflect the world of the past century. There seems to be a consensus that ODA is inadequate for meeting the challenges of the 21^st century, as developed in the extensive literature on “beyond aid [22].”

95 This literature above all emphasizes the need to broaden the ODA objectives in line with the SDGs, develop and diversify the mobilization and change the scale of financing to meet the challenges: in short, to move from billions to trillions. Several concepts have been proposed to define these “beyond aid” international financial transfers for the international financing of the SDGs: Global Policy Finance (Severino and Ray 2009), Global Public Investment (Glennie 2020), International Development Contributions (Kharas and Rogerson 2016), Sustainable Development Investment (Rioux 2019), New Development Assistance (Jing et al. 2021), etc.

96 What these concepts have in common is that they attempt to decompartmentalize the current concessional public transfers characteristic of ODA:

• in terms of stakeholders by including, often in broad coalitions, all those likely to contribute to the international financing of SDGs: emerging countries, multilateral players, development banks, companies, financial players, philanthropic foundations, non-governmental players, etc.;
• in terms of financial instruments and modes of action by including non-concessional flows, but also part of private flows, by diversifying the financial instruments employed (sometimes including monetary policies [23]) and by moving from direct financing to leverage (guarantee, risk mitigation, incentives).

97 In this context, and following the Busan High Level Forum (2011) and the Addis Ababa Conference on Financing for Development in 2015, a new development financing measure was proposed to the international community – Total Official Support for Sustainable Development (TOSSD). This new aggregate was initiated and is calculated by the DAC, but is supported by a task force bringing together developed and developing countries and multilateral institutions alike.

98 The TOSSD was measured from 2016 and carried forward a double amount of ODA in 2019, close to $300 billion. It aggregates three components: international public funding of developing countries, including non-concessional financing and in sectors not included in ODA (peace and security financing, export credit), public financing of GPGs in reporting countries when the benefits are intended for recipient countries (e.g. malaria vaccine research), and private flows mobilized by the public towards recipient countries (for example, private financing mobilized through a public guarantee system).

99 The TOSSD, like the other concepts mentioned above, has a primary function of measuring the extent of collective mobilization for the SDGs. However, it is struggling to be recognized and endorsed by the various stakeholders.

100 The addition of private flows, investments in GPGs, and public development funding, i.e. flows of a different nature and with different objectives, raises a real question of the meaning of the aggregate thus obtained, as the US representative within the DAC pointed out, for example, with regard to the inclusion of export credits in the aggregate.

101

The U.S. has concerns about including export credits under TOSSD. The inclusion of US export credits under TOSSD would mischaracterize the underlying purpose and use of US export credit financing, which are to promote the exports of, and create jobs in, the United States.

102 One of the main goals of TOSSD was to integrate South-South cooperation, which is absent from ODA accounting, into the counting of international development flows. But most of the major emerging countries (China, India and South Africa, in particular) have so far been unwilling to join the process by reporting their flows.

103 Another goal was to integrate development financing and contributions to GPGs into a single aggregate. Thus, any country, including developed countries, can register as a recipient of TOSSD flows, provided that these flows, invested domestically, have effects in developing countries. However, the global nature of the climate issue is such that any investment in the world that has the effect of mitigating GHG emissions could be eligible for the TOSSD. Such an open field will likely lead to both the underreporting of actual climate-related flows and the dilution of other flows.

104 Instead of clarifying a new mapping of development funding, the result at this stage is a blurring of the meaning of the aggregate, statistical transparency, and the geographical categorization of stakeholders alike.

105 If we compare ODA and TOSSD, we see that the latter lacks all the aspects that give the former a global public policy character: precise accounting rules, burden-sharing norms and good practices, specific determinants, legibility and public support, etc. The same could be said for all the other “beyond aid” aggregates mentioned above.

3.1.2 – Climate finance that is more visible than normative

106 At the Copenhagen COP in 2009, the Northern countries made a commitment [24] to mobilize 100 billion in climate finance for the benefit of the Southern countries [25] from 2020. This commitment, confirmed at COP 15 in Paris, was part of the “quid pro quo” for moving from a binding system of emission reductions for Northern countries alone – the basis of the Kyoto Agreement – to a voluntary, cooperative and global system based on national emission reduction strategies: NDCs (Nationally Determined Contributions).

107 The progress of this financial commitment is monitored by the OECD, which has developed the calculation method, based on the declarations of ODA donor countries, in conjunction with the UNFCCC.

Figure 12

Climate finance provided and mobilized ($ billions)

Climate finance provided and mobilized ($ billions)

108 The 100 billion committed were not reached in 2020, as the above graph suggests, even though it should be the case in 2023. The graph shows the four main types of flows recorded in this aggregate of climate finance: gross concessional and non-concessional public climate finance reported by donor countries and multilateral agencies to the OECD, export credits with a climate benefit, and private climate capital mobilized by public capital (in the form of blending, guarantees, equity, technical assistance, etc.).

109 This climate finance and its target of 100 billion are monitored and mentioned at each climate negotiation, and are highly visible in the public debate. It forms a potentially more coherent aggregate than TOSSD because of its more focused purpose. Nevertheless, it raises the same kinds of questions about what it means to add disparate flows, including grants and market flows. Moreover, the non-harmonization and imprecision of its calculation methods contrast with the media impact given to this target of 100 billion, and even with the importance that this financing seems to have acquired in negotiations.

110 These accounting issues are mentioned to underline the hitherto insufficient work in building collective rules around this climate finance, and the contrast with ODA, whose accounting, despite the criticism it attracts, results from several decades of collective construction of rules and harmonization of practices.

111 Climate finance remains an imprecise aggregate with few norms, resulting from non-harmonized reports. Its disparate nature makes it difficult to move towards good practices. Its $100 billion target is entirely aggregated without being broken down into either a target effort per donor country or a target ratio for the most vulnerable countries. This financing no longer seems like the instrument of a global public policy underpinning climate mobilization in favor of developing countries. It has not even been given a real name! [26]

3.1.3 – From fusion to confusion [27]

112 The preceding paragraphs can be seen as describing a dilution of existing collective norms in terms of international capital flows as the goals are broadened (towards the SDGs) and more means of action are incorporated (market finance).

113 The working process around the effectiveness principles of aid provides an example of this dilution process. The principles of the Paris Declaration (2005), confirmed in the Accra Agenda (2008) on aid effectiveness, could be contested (e.g. Severino and Ray 2010) but they were nonetheless operative norms of behavior. The ambition to go beyond ODA and broaden the consensus at the Busan high-level forum in 2011, by including emerging countries in particular, led to a shift from the concept of aid effectiveness to that of development effectiveness: a fuzzy concept that has so far not been much more than a buzzword (Eyben 2012), and has contributed to dissolving the collective work on aid effectiveness. [28]

114 This dilution is the flip side of a mainstreaming approach to all international issues in the existing ODA instrument.

115 But the transition from hybrid norms, largely defined within the traditional ODA donor club, to collective norms at global level necessary for the SDGs or the climate, is leading, beyond their dilution, to a phenomenon where these norms are contested (Chatuverdi et al. 2021).

116 The large emerging countries, and also other groups of countries such as the G77 or the Alliance of Small Island States (AOSIS), do not want to enter into rules already established by the countries of the North, but want to be stakeholders in constructing new norms. This is how the non-adherence of large countries like China and India to the DAC reporting rules or their abandonment of the GPDEC can be interpreted (see note 28). Nor have these same countries ratified the procedures for calculating climate finance (Dwyer et al. 2020). In particular, developing countries emphasize the commitment to climate finance additionality with ODA, which has been lost in the current calculation (see box 4). This is also how we can interpret the hardening of negotiations on international financing around new concepts such as climate change-related loss and damage.

117 Of course, there are power and negotiation issues at stake in this challenge to norms. The OECD’s role is central to the development of international financing norms because of its experience and data reporting system, but it can also complicate progress toward consensus, even though in all recent initiatives the OECD has joined forces with UN organizations to propose new rules.

118 There are also value issues at stake in these conflicts over norms. Emerging countries are putting forward new principles that would govern South-South cooperation such as horizontality, prioritizing the economy, non-interference and co-benefits. More broadly, these value conflicts can be summarized in terms of differing conceptions of international development finance: fair reciprocity for Northern countries; mutually profitable investment for newly emerging donors, and justice and accountability for LDCs and the countries most vulnerable to climate change (Fukuda-Parr and Shiga 2016).

119 ODA thus appears to be a global policy that is resilient, as shown in the first section, but hampered in its attempts to evolve in response to the challenges of the 21^st century. Its hybrid nature, in terms of both global and Northern politics, means that every effort at enlargement is met with dilution and/or the contestation of the associated norms.

120 The result is a development financing situation that Silva et al. (2021) call “multiplexity.” This neologism reflects, under the effect of no shared norms, the twofold phenomenon of fragmented players and proliferating instruments, i.e. multiplicity, and the diversification of objects, narratives, modes of governance and systems of accountability, i.e. complexity.

3.2.1 – From the development regime to the climate regime

121 The preceding developments can be summarized in two salient points:

• ODA remains resilient, despite its many limitations, and is still the only instrument that truly underpins a global public policy for development financing;
• on the other hand, its attempts to expand towards much broader objectives (SDGs, GPGs) seem to lead inevitably to confusion and a lack of shared rules, principles and norms.

122 The outcome of such an equation might be not to seek to expand ODA (beyond aid), but to focus it on narrower objectives and at the same time to found new instruments for financing GPGs and SDGs on organizing principles other than those on which ODA is based. In other words, a global policy would be the result of an “international regime” within Krasner’s meaning (1983).

123

“The term regime refers to the political arrangements, treaties, norms, and international organizations created to regulate a specific sphere of international relations”.

124 The “development regime”, which is the basis of ODA, played a major role in the second half of the 20th century in international relations, i.e. all spheres – commercial, diplomatic and cultural – were also treated according to development issues, especially when they concerned the players of different continents simultaneously. This development regime has weakened in the 21^st century without another regime becoming established in its place, which explains the current intermediate period of confusion.

125 Today, only the climate issue, and the prospect of a collective catastrophe, is establishing a new regime through which all international issues are viewed. While climate finance must be redefined by 2025 new regime calls for specific financial instruments whose foundations, mapping and norms will need to be different from those of the development regime.

126 In 1992, the United Nations Framework Convention on Climate Change (UNFCCC), adopted at the first Earth Summit in Rio, set out a number of key principles, including common but differentiated responsibilities and respective capabilities, providing a sustainable framework for financing the fight against climate change. [29] The UNFCCC thus invited all States to play their part in mitigation, while it was up to the so-called “developed” countries listed in Annex II of the UNFCCC to take responsibility for the effects of climate change, in proportions that remained largely to be determined.

127 The Paris Agreement [30] follows this line, maintaining the dichotomy between developed and developing countries, while recognizing the specificity of the least developed countries and small island developing states. It also refers to the Warsaw International Mechanism on Loss and Damage due to Climate Change Impacts.

128 International financing for the fight against climate change is thus part of the legacy of the official development assistance framework, but with several important differences in the pillars of this financing, which can only gradually move towards ruptures.

129 The first of these ruptures concerns the ethical principles that are central to firstly ODA, and secondly the handling of the climate issue. The low-carbon transition could be presented as a pure problem of distributive justice, dividing the remaining emissions according to past emissions. However, this approach, which was the one used in Kyoto, led to a dead end due to the refusal of the major industrialized countries to enter into a binding process on their own, and given the difficulty of objectively defining emission rights according to past responsibilities [31]. The success of the Paris Agreement can be interpreted as a change in logic, moving away from a distributive approach to a non-binding approach based on a voluntary and coordinated balance of efforts reflected in the NDCs (Gemenne 2021), i.e. a form of collective reciprocity approach based on responsibility. But, on the other hand, it will never be coherent to deal with the consequences of climate change, including adaptation and the handling of loss and damage, inside a rationale of voluntary reciprocity. It can only be part of a negociated corrective justice approach, based on duties as regards the emitting countries and rights as regards the affected countries (Grasso 2009, Khan et al. 2020), and from this point of view breaks with the very principles of ODA. International climate action relies on treaties or international agreement (such as the Paris agreement) -which create a mutual accountability- while ODA remains mostly unilateral.

130 The second rupture concerns the geographies delineated by development and climate regimes respectively. Since human-induced climate change is linked with historical CO2 emissions, this is the criterion that should be used when determining the lists of source or recipient countries for international financing, not income per capita. This mapping will also be increasingly different from the one dividing the world into developed and developing countries, since China, India, Russia, Iran, Indonesia, Mexico, Brazil, South Africa and Turkey emit more CO2 than France, Italy or the United Kingdom. In terms of historical emissions, even if a country like Russia, for example, has emitted three times more CO2 than France since the beginning of the industrial era, the hierarchy is closer to that of income per capita, but certainly not by dividing the world into two blocs as illustrated in the graph below. For example, the absence of the most-industrialized country and first carbon-emitter, namely China, in the list of industrialized countries in climate-agreements is obviously outdated.

131 Similarly, the fundamental notion of vulnerability also paves the way to new geographic categorizations. Small island states, despite the relative wealth of some, can thus claim greater access to funding, given the specific damage and risks to which they are exposed. In the same way that the OECD Development Assistance Committee admits new members and regularly updates the categories of countries eligible for ODA, a regular update of “climate geographies” (in terms of emissions and vulnerability) would be necessary for the gradual normalization of a climate regime.

132 In this hypothesis involving the temporary coexistence between a regressing development regime and a progressing climate regime (to which other regimes could be added, such as that of biodiversity), several distinct global public policies and international financial mechanisms – if we define them as ODA policy, i.e. as a linked set of objectives, norms and determining principles – would be set up. The global management of vulnerabilities, emanating from structural and climate fragilities, calls a policy of International Development Investment (IDI) composed by two financial instrument: an ODA reformed and refocused on the fight against poverty in the least developed countries (LDCs) and fragile countries and a global insurance mechanism to deal with climate consequences. The common transition towards decarbonation needs a transfer policy of Sustainable Development Investment (SDI) based on the leverage and mobilization effects of public actions. These different financial mechanisms are only sketched out below, mainly to highlight their specific features and the distinct challenges they would face.

Figure 13

Total GHG emissions 1990-2019 by income groups (eq million metric tons of Co2)

Total GHG emissions 1990-2019 by income groups (eq million metric tons of Co2)

3.2.2 – Refocused assistance: financing poor and fragile countries

133 The first of these global mechanisms could be seen as an ODA refocused on poverty, i.e., where the issues of financing global public goods and financing middle-income economies were progressively removed.

134 This refocused ODA, which would avoid the current thinly spread allocations, would be entirely focused on fragile and low-income countries: broadly overlapping categories that represented only 35% and 30% of total ODA respectively in 2020. These countries, which are becoming fewer (Figure 14) in line with the decline of the development paradigm mentioned above, already account for a very large proportion of extreme poverty on a global level, and will exceed 80% in the current decade.

Figure 14

Number of low-income countries (LICs) and high-income countries (HICs): 1987-2015

Number of low-income countries (LICs) and high-income countries (HICs): 1987-2015

135 We should not necessarily have a conservative view of this poverty-focused ODA in countries in difficulty. We have seen above that criticisms of effectiveness and domination called the procedures of this ODA into question, and that in some cases lifting the hypothesis of alignment has led to a complex standpoint. For this ODA refocused on poverty, a considerable challenge certainly lies in the renewal of approaches, methods and instruments.

3.2.3 – Climate justice: a global insurance scheme

136 Another global public issue deserves special attention, as it has not been treated as such until now: that of dealing with the consequences of climate change, encompassing the current areas of prevention, minimization and compensation. In fact, the separation between adaptation and compensation is already somewhat outdated. The IPCC 2022 report confirms that we have already passed the prevention phase and are now in the age of consequences in many areas.

137 Currently, from the point of view of institutional and financial architecture, adaptation issues are often grouped with mitigation issues and dealt with through development aid, while the issue of loss and damage, although formally opened since the Warsaw COP in 2013, has not yet led to an agreement and even less to effective norms and transfers.

138 A mechanism for managing the consequences of change would be based on the same type of financial tools as ODA (public transfers with priority given to grants and a large role for multilateral aid), but it would break with the latter on the principle of justice at stake. It should not be based on a principle of reciprocity, but rather on rights and duties in proportion to responsibility, vulnerability and damage, i.e. a principle of corrective justice.

139 The issue of managing the consequences of climate change is also fundamentally different from that of financing low-carbon transitions, particularly in the nature of the financial tools and players mobilized by the latter.

140 It would also be specific in that it is non-substantive in nature, i.e., aimed not at clearly identifiable and measurable objectives like reducing emissions or global poverty, but at prevention, minimization and compensation. In other words, managing the consequences of climate change calls for procedural justice based on mutually agreed mechanisms.

141 Finally, it would present a specific mapping concerning climatic vulnerabilities, close to but nonetheless different from that of ODA, notably because of the specific case of small island countries.

142 To sum up, this mechanism should be based on an insurance-type financial instrument with contributions based on responsibilities and premiums based on vulnerabilities.

143 An insurance mechanism of this kind represents a break with the historical foundations of ODA (Pacquement 2015), yet similar actions can fall under both the mandate of an ODA refocused on poor countries and the management of the consequences of climate change in these same countries. In this case, the separation of the public policies concerned should simply be based on a clear principle of additionality (see box 4).

3.2.4 – Broad coalitions for low-carbon transitions

144 However, the policy that poses the greatest challenge and calls for the greatest mobilization is that of international support for low-carbon transitions. It is already underway with the Paris Agreement and its updated versions.

145 This policy breaks with the founding principles and ambitions of ODA policy, and can only marginally draw on existing aid. It is not primarily a policy of international financial transfers, and even less of international public transfers. It is first and foremost a policy that involves changing the trajectory and reorienting production and consumption patterns, and thus investments and incentives.

Figure 15

Contribution to 2019 emissions by global income groups

Contribution to 2019 emissions by global income groups

146 It is based on an evolving mapping that is progressively moving away from the one delineated by ODA, as seen above, but which also requires doing away with national borders to consider issues of internal inequalities and lifestyles, as shown in the graph below.

147 However, the global policy for financing transitions includes an international financial transfer component, with three main challenges:

• the consolidation and development of current climate financing (the 100 billion) by increasing amounts, consolidating norms, moving towards targets per donor and probably expanding donor countries.
• the mobilization of various coalitions of financial players (development banks, central banks, local authorities, etc.) moving towards common principles that involve both incentives and dissuasion;
• an increase in the number of innovative instruments (carbon market, climate vouchers, treasury issues, taxation, risk sharing, etc.), enabling a change in scale.

148 Overall, it is the financial instruments mentioned in the “beyond aid” debate that constitute the components of this transition financing policy. But, as shown by attempts to expand ODA, it is probably futile to try to directly develop public international norms making it possible to organize all of this financial mobilization. The founding principles and norms of this global challenge could be developed far more within groups of similar players (States, development banks, central banks, local authorities, large companies, etc.), as witness the growing role of coalitions of players at the various COPs.

149 As an example of this gradual construction of collective norms between players of the same kind, the IDFC development banking club publishes its annual climate finance mapping [32] in conjunction with the CPI think-tank, which lists financing from the South and for the South. The Finance in Common initiative works to unite over 500 national and international development banks around the world in a common dynamic based on issues like pooled knowledge and shared practices.

150 The challenge of mobilizing the financial sector around low-carbon transitions must go beyond building an inter-state financial instrument, as is the case with ODA. However, the role of the States remains fundamental, to both lead these transition policies and give the signal of a global commitment regarding climate change. From this point of view, the response to the growing call for climate justice mentioned in the previous point could be seen as the keystone of a real regime change.