Posted 12/11/2015 by Marty Harris
Origins
Australia has been providing development assistance to the Palestinians through the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA), since the 1950s.* This marks the beginning of Australia’s aid commitment to the Middle East, and it has maintained its voluntary funding to UNRWA up to the present day.
From the 1950s to the 1980s, Australia’s aid program was overwhelmingly focussed on its immediate region. While this regional focus continues today, it was even more evident in the early years. Australian development assistance flowed largely to the territory of Papua New Guinea, administered by Australia until its independence in 1975. Indeed, between 1946 and 1983, Papua New Guinea received 64 per cent of the bilateral aid given by the Australian Government. Colombo Plan countries received some funding from 1950, significant aid to Indonesia ensued after the downfall of President Sukarno in 1965, and multilateral funding to the World Bank and UN agencies also began in the 1950s.
Noteworthy official development assistance (ODA) to the Middle East began in the late 1970s. Egypt was the most significant early recipient, and more than $300 million (current prices) has been provided to Egypt in the decades since. Until the 1990s, most ODA to Egypt was in the form of ‘food aid’, defined as ‘the international sourcing of concessional resources in the form of or for the provision of food’.
In the 1990s, the focus of Australia’s ‘aid’ program to Egypt shifted from food aid to debt relief. In 1991, in part as a response to the role Egypt played in the 1990–91 Gulf War, the Paris Club of debtor nations agreed to reschedule 50 per cent of the debt owed to them by Egypt. For Australia, this resulted in some rescheduling of debts incurred in the 1980s when Egypt had failed to pay for wheat purchases. Debt rescheduling, where a ‘debt service reduction’ occurs, is classified as ODA under Organisation for Economic Co-operation and Development (OECD) guidelines, and is hence included as ‘aid’ here.
The graph and table below illustrate Australian ODA to the Middle East and North Africa from the early 1980s up until 2000, adjusted for inflation.
Graph 1: Australian ODA to the Middle East and North Africa (1985–86 to 1999–2000; constant 2014 Australian dollars)
Sources: Australian Development Assistance Bureau (ADAB)/AusAID, Statistical summaries, various years, Department of Foreign Affairs and Trade (DFAT), Canberra. Inflation adjustments calculated using the Australian Bureau of Statistics’ Consumer Price Index Inflation Calculator.
Recent trends
Following the US-led invasion in 2003, Iraq became, for a while, the largest Australian aid recipient in the Middle East. ODA to Iraq since 2003 has been a mixture of humanitarian/development assistance ($335 million) and, more substantially, debt relief ($987 million).
At the time of the ouster of Saddam Hussein’s regime, Iraq’s external debt was estimated at US$130 billion, or about four times the size of Iraq’s GDP in 2004. In November of that year, the Paris Club, which accounted for US$37 billion of Iraq’s external debt, agreed to a three-phased ‘debt treatment’ leading to an 80 per cent reduction in Iraq’s Paris Club and commercial debt.
For Australia, this resulted in three debt write-offs to ‘support Iraq’s transition to a stable and democratic nation’: $328 million in 2005–06, $363 million in 2006–07 and $297 million in 2008–09 (current prices). Approximately 95 per cent of the debt forgiven by Australia related to Saddam-era wheat purchases from the Australian Wheat Board.
More recently, the Palestinian territories have become the largest single Middle Eastern recipient of Australian ODA. Between 2006–07 and 2014–15 aid to the Palestinians more than tripled in real terms. By June 2011, Foreign Minister Kevin Rudd was able to declare that Australia was among the top ten global contributors of development assistance to the Palestinian Authority. This aid has focussed broadly on assisting the Palestinian Authority to ‘lay strong foundations for a future Palestinian state and build its infrastructure and economy’. Under the current Australian Government, the aid program to the Palestinian territories is organised around two objectives:
Graph 2: Australian ODA to the Middle East and North Africa (2000–01 to 2013–14; Iraq debt relief removed; constant 2014 Australian dollars)
Sources: AusAID, Statistical summaries, various years, DFAT, Canberra; DFAT, 2015–16 Development assistance budget summary, DFAT, Canberra, 2015; DFAT, Annual report 2014–2015, DFAT, Canberra, 2015.
The graph above appears to show inconsistency in the 2014–15 figures: the amount of aid reportedly given to the Palestinian territories, Iraq and Syria equates to more than the total for Middle East and North Africa.
DFAT’s 2015–16 Development Assistance Budget Summary states that in 2014–15, total ODA to the Middle East and North Africa equalled $112.2 million. DFAT’s Annual Report 2014–2015 (pp. 69–70), however, states that in 2014–15, a total of $69.2 million was provided to the Palestinians and $25 million to people affected by the crisis in Syria. The annual report also notes that Australia had provided $30 million in ODA to Iraq since ‘June 2014’, meaning that ODA to these three areas of the Middle East in 2014–15 equalled $124 million.
The 2015–16 Budget
Graph 2 also indicates that Middle East programs have not been immune from the Coalition Government’s successive rounds of aid cuts. While the ODA allocations to the Palestinian territories continued their upward trajectory in 2014–15, reaching $69.2 million, the 2015–16 Budget indicated that in the current financial year ODA to the Palestinian territories would decrease to $42.8 million, a reduction of almost 40 per cent.
When the 2015–16 Budget was released, the Government stated that it would be reducing total ODA to the Middle East and North Africa to $46.3 million, the lowest level in real terms since 2001–02. In September 2015, however, the Government announced that it was providing an extra $44 million to ‘provide humanitarian support to more than 240,000 Syrian and Iraqi people who have been forced to flee their homes or seek refuge in neighbouring countries’. This announcement is reflected in more recent budget documentation, which indicates Australia’s total ODA spend on the Middle East and North Africa in 2015–16 will be about $90 million (the lowest level in real terms since 2007–08).
* Between 1945–46 and 1982–83 a total of $9.7 million (current prices) was provided by Australia to UNRWA; Australian Development Assistance Bureau (ADAB), Statistical summary: Australian official development assistance to developing countries: 1982–83, Department of Foreign Affairs, Canberra, November 1983, Table 8.