Policy Updates

On December 2, 2023, during the opening days of COP28, outgoing Dutch Prime Minister Rutte announced a commitment of EUR15 million (US$16 million) to help establish the Loss and Damage Fund.

The EUI pledged US$125 million, Germany and the UAE each pledged US$100 million, the UK pledged GBP60 million (US$78 million), the US pledged US$18 million, and Japan pledged US$10 million. The total funds surpass the US$400 million needed to initiate the establishment and operation of the Loss and Damage Fund.

Dutch NGO ActionAid Netherlands responded by commenting that while the pledge is a fair initial contribution to the fund, it is far from a "fair share" for the Netherlands when based on the country’s emissions levels.

On December 2, 2023, the EU institutions, the EIB, the EBRD, and the Member States that comprise Team Europe pledged EUR20 billion (US$21.8 billion) for clean energy partnerships with African partners.

The funding announcement listeed EUR3.4 billion (US$3.7 billion) in grants and covered the period from 2021-2027. The project, AEGEI, aims to produce over 50 Gigawatts of renewable energy by 2030.

12 EU Member States contributed to the funding. No language regarding specific partner countries was included in the announcement.

On November 30, 2023, German Development Minister Svenja Schulze welcomed COP28's launch of the Loss and Damage Fund and committed US$100 million to the fund.

Countries in attendance agreed to a compromise proposal developed by Germany and other nations to launch the fund. Schulze and the UAE both announced commitments of US$100 million to the fund, securing the minimum funding needed to operationalize the fund, and called on others to follow suit.

Germany and the V20 have pushed for rapid implementation of the fund's objectives, including proposed principles based on experiences from the Global Shield against Climate Risks. The key principles mentioned by Schulze included strengthening country ownership, supporting holistic policies, and investing in solutions to limit climate damages.

On November 15, 2023, the German constitutional court declared the repurposing of EUR60 billion (US$65 billion) in COVID-19 emergency loans for climate and industrial transformation a breach of the German debt brake.

The landmark ruling has wide implications for the future of German budgets, the government's long-term ability to act, and likely ODA spending. Generally, the ruling prohibited the government from circumventing the debt brake by drawing on special funds under the emergency clause and repurposing said emergency loans in the future.

In response, the German government passed a supplementary 2023 budget on November 27, 2023. This implied an effective suspension of the debt brake. The Bundestag is expected to confirm a state of emergency to justify the suspension in December 2023.

German Chancellor Olaf Scholz has postponed negotiations of the 2024 budget, and the coalition parties remain divided in negotiations. The ruling will likely severely restrict the ability of the German government to function in the long term, particularly if the debt brake is not reformed.

Implications for ODA remain uncertain. With the government facing a severe shortfall of funding in 2024, experts view disproportionate cuts of ODA aa increasingly likely. FPD politicians surrounding Finance Minister Christian Lindner called for stringent austerity measures in response to the ruling, which are more likely to impact ODA compared to domestic party political priorities.

On November 10, 2023, the BMZ announced that it will allocate an additional EUR62 million (US$66 million) to Mauritania to support the costs of receiving and integrating refugees from Mali, following a bilateral agreement with Jordan tackling refugee costs on November 6, 2023.

Germany and Mauritania agreed on a set of measures to help receive and integrate refugees, including employment creation, professional training, and renewable energy. German Minister for Economic Cooperation and Development Svenja Schulze travelled to Nouakchott to strengthen cooperation with Mauritania. Following a wave of violence in neighboring Mali, Mauritania received more than 100,000 refugees and has made efforts to rapidly integrate refugees into its social security systems.

Previously, Schulze committed to supporting refugees in Jordan with a pledge of EUR41 million (US$44 million), in addition to a EUR125 million (US$134 million) loan for water security, which is critical in the region. Almost half of the population in Jordan has migratory ties. Schulze acknowledged Jordan's role as a mediator maintaining peace in the region.

The agreements were concluded against a backdrop of increasingly heated debates in Germany on migration and proposals for tighter asylum regulations. Schulze noted that development cooperation institutions are tasked with combating the root causes for migration.

On November, 7, 2023, the BMZ announced that it will release assistance to UNRWA that it had previously suspended following the October 7 attacks by Hamas on Israel.

Minister of Development Svenja Schulze had previously announced a reexamination of German funding commitments to the Palestinian territories. Given the humanitarian crisis and the increasingly unstable situation in neighboring countries, the BMZ had since noted support to UNRWA as a priority.

Schulze released previous commitments of EUR71 million (US$75 million) and pledged a new commitment of EUR20 million (US$21 million). The funds are slated to finance the provision of basic services for displaced persons in Gaza and Jordan.

On October 18, 2023, Concord released its 2023 AidWatch Report and found that EUR20 billion (US$21.2 billion), or 22% of ODA from the EU and its Member States, was allocated to budget lines that do not directly benefit partner countries.

Concord has published AidWatch Reports annually since 2005 in an effort to provide accountability for the EU and its Member States in meeting the goal of providing 0.7% GNI/ODA.

Examining EU and Member State ODA in 2022, the report found that of the ODA that did not directly benefit partner countries, the three largest categories of "double counted" or "inflated" ODA included:

• EUR13.9 billion (US$14.7 billion) went to in-donor refugee costs to for those fleeing the war in Ukraine, allocations which are at times reported as ODA at the Member State level;
• EUR2.8 billion (US$3 billion) supported imputed student costs, or funding for students from partner countries studying in the donor country; and
• EUR1.7 billion resulting from a method of calculating and reporting ODA loans as grants, which distorted the actual value of the support.

Accounting for inflated ODA, the report found that only two Member States, Luxembourg and Sweden, met the 0.7% ODA/GNI ratio, while Germany's ratio fell to near .69%.

The report noted that these observations comprised the continuation of skewed reporting trends in the EU and Member States. It recommended increasing ODA spending to meet the goal of 0.7% ODA/GNI, not counting in-donor refugee costs as ODA, and reforming ODA reporting to ensure assistance achieves maximum impact, among others.

On October, 16, 2023, the BMZ co-hosted the GFF replenishment round as part of WHS 2023 in Berlin and raised a total of US$445 million based on a goal of $800 million, of which Germany pledged EUR25 million (US$26 million).

German Development Minister Svenja Schulze highlighted that the GFF is a key partner in advancing women's rights, MNCH, and SRHR. She committed to continuing the campaign to advocate for sufficient financing for GFF.

The GFF's flagship Deliver the Future initiative had a stated goal to raise US$800 million to improve the health and rights of 250 million women and children. The campaign for additional financing for the GFF started in June 2023, when a post-pandemic funding gap for women's health, MNCH, and SRHR first became apparent. The pledging event fell US$355 million short of its goal, raising concerns about the initiative's ability to meet its support and development targets. Further investment towards the goal is expected in 2024.

Germany's contribution amounted to EUR25 million (US$26 million), in line with previous annual commitments since 2020. Critics from the DSW, Global Citizen, Save the Children Deutschland and World Vision Deutschland previously advocated strongly for a German commitment of EUR100 million (US$106 million) to the GFF, asserting that a small contribution would hurt Germany's reputation as co-host.

On October, 9, 2023, the German government temporarily suspended funding to flows to Palestine while reevaluating current programs in cooperation with Israel.

Development Minister Svenja Schulze, whose ministry is responsible for the majority of projects in Palestine, announced that all funding has been put on hold while programs are comprehensively reexamined. Schulze noted that future developments projects in Palestine will be aligned with Israel.

Germany has allocated an annual volume of EUR340 million (US$360 million) to projects in Palestine, with the BMZ accounting for EUR250 million (US$265 million) in ODA and the AA allocating EUR79 million (US$84 million) for humanitarian assistance. Around EUR125 million (US$133 million) of total ODA is bilateral ODA channelled through GIZ and KfW. The BMZ funds projects targeting water supply, waste disposal, health system, nutrition, and job creation. It does not directly finance the Palestinian Authority.

On October, 9, 2023, the BMZ announced an additional EUR40 million (US$42 million) for social protection for countries in the Sahel region. The additional funding will be channeled via UNICEF and WFP.

The funding will support countries such as Mauritania, which is building up its social protection system, while receiving large numbers of refugees from Mali. Funding is also channeled to the population in Niger via UNICEF and WFP, bypassing the public sector. German Development Minister Svenja Schulze highlighted that social protection is a priority to build resilience and help prevent forthcoming crises.

Total German funding for social protection in the Sahel region amounts to EUR340 million (US$360 million). Alongside UNICEF and WFP, it is also channeled via the World Bank and the UNHCR. Schulze, who has been President of the Sahel Alliance since July 2023, noted priorities including social protection and nutrition, and is set on increasing German support for the region.