Bridging Development and Trade: Analyzing the Netherlands' New Development Strategy
On June 24, 2022, the Netherlands released its new development cooperation strategy, ‘Doing what the Netherlands is good at.’ The strategy centers on the intersection between trade and development priorities, putting US$90 million, or roughly 8%, of the increased 2023 ODA budget (US$1.1 billion in total) toward the nexus of these two areas. The strategy’s self-proclaimed keyword is ‘focus,’ which covers both a geographic focus of 25 priority countries, and a thematic focus of traditional policy areas of expertise, including water, agriculture, and sexual and reproductive health and rights (SRHR). Digitalization and sustainability appear as cross-cutting themes throughout the strategy. Dutch civil society has criticized the further shift towards trade, the lack of detail outlined in the strategy, and its donor-centered perspective.
The new strategy, ‘Doing what the Netherlands is good at,’ elaborates on the development policy priorities of the Rutte IV cabinet, which entered office on January 10, 2022. Under the coalition between the liberal-centrist People’s Party for Freedom and Democracy (VVD), the progressive liberal-democratic party Democrats 66, the Christian Democratic Appeal (CDA), and the Christian Union (ChristinUnie), the position of the Minister of Foreign Trade and Development Cooperation is held by Liesje Schreinemacher (VVD), who oversees implementation of the strategy.
The strategy describes its policy priorities as follows:
- Trade: Dutch trade policy with developing countries will concentrate on a smaller number of markets, focusing on strengthening Dutch earning capacity and, together with trade partners, strengthening sustainability, digitalization, economic resilience, and the protection of entrepreneurs against unfair competition. Within the EU, the Netherlands aims to maintain its position as a driver for international corporate social responsibility (ICRSR) legislation.
- Development cooperation: Tackling the root causes of poverty, terrorism, irregular migration, and climate change, as well as reaching the United Nations’ sustainable development goals (SDGs) remain the focus areas of Dutch development cooperation. Additional investment is dedicated to strengthening global health systems, particularly in the wake of the COVID-19 pandemic. Traditionally strong areas of thematic expertise for the Netherlands, including water, agriculture, and sexual and reproductive health and rights (SRHR), also remain of high importance.
- Strengthening the link between trade and development cooperation: Dutch businesses are set to become much more involved in achieving SDGs in 14 emerging economies. The core of this effort is increased investment in sustainability and digitalization, as well as a stronger connection between Dutch organizations and local partners. Public-private partnerships (PPP) focused on export and innovation policy are particularly important.
Civil society has noted that ever since the Dutch government started to combine trade and development policy, the priority has increasingly shifted towards trade over development. Minister Schreinemacher is said to have put an even greater focus on trade than her predecessors, notably promoting opportunities for what’s known as ‘tied aid,’: meaning that recipient countries may be obliged to purchase goods and services from the Netherlands as a condition to receiving development assistance. As the strategy fails to cite evidence that combining trade and development leads to a ‘win-win’ situation, the focus on trade symbolizes a continued effort to appeal to a broader constituency who are more concerned about domestic fiscal growth than development.
25 priority countries selected
In the coming years, Dutch development and trade policy will focus its activities on 25 priority countries. As laid out in the strategy, the rationale behind reducing the number of countries is to achieve more with the same number of resources. These focus countries are split across policy priorities: activities in 22 countries are focusing on development, while 14 countries are focusing on combining trade and development. The Netherlands will keep its geographic focus on the Sahel, the Horn of Africa, and the Middle East and North Africa (MENA), and will continue to thematically focus on its areas of traditional expertise such as water, agriculture, and sexual and reproductive health and rights (SRHR).
Progress in achieving the 0.7% ODA/GNI goal by 2025
If the Dutch economy continues its current path to recovery from the COVID-19 pandemic, then the ODA budget is expected to increase relative to GNI. Additionally, the cabinet is increasing the ODA budget by US$324 million (or €300 million) from 2022-2024, and by $540 million (or €500 million) per year from 2025 onwards.
With the additional ODA, the Netherlands wants to achieve the following goals:
- Secure access to renewable energy for 100 million people by 2030;
- Ensure an additional 4 million people have improved access to nutrition;
- Mobilize US$1.9 billion for public and private climate financing, including 50% of public climate financing dedicated to climate adaptation;
- Restore progress on achieving the SDGs due to the COVID-19 pandemic and climate change, partly through digitization and innovative financing; and
- Address the root causes of irregular migration through migration partnerships and sustainable asylum for refugees and displaced people in the region from which they are migrating.
Civil society criticizes further shift toward trade
The new strategy was developed following online consultation with civil society organizations (CSOs), the business community, academia, subject matter experts, and young people. The results of this consultation are published here (in English).
Following the official launch of the strategy, civil society and the scientific community criticized its large focus on trade, lack of detail, and supply-oriented thinking, which underlines a donor-centered perspective. ActionAid (in Dutch) pointed out that the Netherlands’ current approach to trade can contribute to inequality, the violation of human rights, climate and environmental issues, and food scarcity in the ‘global South’. To add, the Netherlands has a notably negative impact on the capacity of other countries to achieve the SDGs, ranking 160th out of 163 countries in terms of SDG spillover rankings in the latest SDG Index report (in English). Another critique is that the strategy often cites passed motions from members of parliament instead of external, rigorous research for its policy choices, and that it is still unclear what the strategy means by a ‘green, sustainable’ and ‘digitization’ transition. The strategy is also missing core information, with several supplementary strategies still to be shared: the international climate strategy, an Africa strategy, a feminist foreign policy strategy, a global health strategy, a commodities strategy, and a multilateralism and human rights policy. Despite these criticisms, Dutch CSOs were encouraged by the increase in climate finance and the continuation of support for traditional Dutch development priorities, like SRHR. The strategy’s emphasis on these ongoing priorities shows a commitment to long-term engagement that is needed to achieve lasting impact.
As the Dutch government begins to implement the new development strategy and releases its supplementary strategies, we are looking to see how the Netherlands’ approach to development will shift in the coming years. For now, the strategy lays out the following trajectory for Dutch development:
- The strategy shows a further shift toward trade and the increased role of the Dutch private sector in development cooperation, with a particular focus on leveraging their expertise in innovation and sustainability;
- In terms of thematic areas, the Dutch government continues to focus on their traditional development cooperation priorities, including water, agriculture, and SRHR. Its geographic priorities will continue to be the Sahel, the Horn of Africa, and MENA regions;
- Overall, ODA is set to increase, bringing the target of a 0.7% ODA/GNI ratio back in sight;
- A significant share of this ODA increase is dedicated to climate finance, with 50% of overall public climate finance going to climate adaptation; and
- Additional strategies to be published in the second half of 2022 or early 2023 include, an Africa strategy, Global Health strategy, International Climate Strategy, Commodities strategy, and a multilateral and human rights policy memorandum. These publications will provide more specific details on Dutch development policy and potentially alleviate concerns that the new development strategy is too vague.