Estonia should not follow Finland’s cuts in development aid

Finland has been counted to reliable development partners and active contributors to global development processes within UN, World Bank and other international fora. Even if the levels of aid are not comparable to those of the other Nordic countries, Finland has been perceived as a part of that family.

There is a dramatic change going on, and it has not gone unnoticed abroad. The new Finnish government is cutting Finland’s development aid by 330 million euros a year. This means around 40 per cent less support for the world’s poorest. The actual cut is even bigger than this as 70-100 million euros of revenues from the EU emission trading schemes are no longer directed to international development and climate financing. This is a defeat especially because it was presented as a model for so-called innovative development financing.

This historic change makes Finnish support to fighting poverty and climate change collapse from 0.6 per cent of GNI to 0.35 per cent. It all happens during the year in which donors, such as Finland, should have already reached the famous 0.7 target and when the new UN sustainable development goals and their financing will be agreed. More funding is needed, not less.

Finland has prioritised aid to the poorest and most fragile countries. The long-term work in protecting human rights, reducing inequality and fighting climate change is severely jeopardised.

By redirecting funds from development NGOs to companies, the ministry for foreign affairs breaks important partnerships. Scandalously 42 percent of the funding of development civil society organisations is cut immediately from the beginning of 2016. At the same time, the annual funding for concessional loans for businesses operating in developing countries will be 13 times higher than previously.

There is certainly a need to increase support to private sector in developing countries, but the Finnish way to do it looks more like a strategy of Finnish business to grab again taxpayers’ money. The important role of civil society in creating a better business environment seems to be forgotten.

Finland raises eyebrows in the development world. The financial, and consequent policy changes are inevitably going to damage its international image. I would like to encourage Estonia to take a different path and to increase its international aid and presence.

Published in Estonian in Mondo 2/2015 Eesti ei tohiks Soomest arenguabi vähendamise osas eeskuju võtta