Bucking the Trend: How Spain Has Stepped Up on Global Development and What It Takes for Lasting Leadership

In February, the Spanish parliament approved a new law, as part of an ambitious reform of the Spanish Development Cooperation system. This law includes a pledge to provide 0.7 percent of the country’s gross national income (GNI) in aid by 2030, which makes Spain one of the few OECD Development Assistance Committee (DAC) countries to legally commit to this spending target. But does this reform make Spain a "new aid champion"? 

Here we examine whether Spain is on track to become a bigger player within global development, and what is needed to ensure the reform has a lasting impact. We look at previous attempts at reform, assess what might be different this time, and conclude by providing suggestions on what policymakers could do to further improve Spanish development cooperation. 

How the 2008 financial crisis derailed Spain's development cooperation system reform

When the Spanish Socialist party took office in 2004, they sought to revitalize a cooperation system that was in decline. At that time, Spanish development cooperation was little more than a tool of Spanish foreign policy: development spending was closely tied to Spain’s financial interests, with little to no focus on poverty reduction, and strained relations with non-governmental organisations. 

Within four years, Spain’s official development assistance (ODA) budget almost tripled (Figure 1), propelling Spain to be amongst the biggest European donors. More emphasis was placed on poverty reduction in low-income countries, and international cooperation became a key component of Spain’s foreign policy, as demonstrated by renaming the Ministry of Foreign Affairs to the Ministry of Foreign Affairs and Cooperation (MAEC). Deeper systemic reforms to the Spanish Agency for Development Cooperation (AECID) were also initiated. For example, in 2007 a new statute for the Spanish Agency for Development Cooperation Agency was introduced, to give increased managerial flexibility and responsibility to the agency.

Figure 1. Spain’s Official Development Assistance Disbursements 2002-2022, in million USD

Source: OECD DAC1, https://stats.oecd.org/Index.aspx?DataSetCode=Table1

But the 2008 financial crisis reversed some of the achievements brought about since 2004 and halted the reforms that were in progress. Firstly, the ODA budget fell sharply from 0.46 percent of GNI in 2009 (6,584 million US dollars) to 0.12 percent in 2015 (or 1,396 million), the biggest drop amongst DAC donors. In addition, the Ministry of Foreign Affairs and Cooperation saw its influence in development policy decrease: in 2015 they remained responsible for only 46 percent of ODA when in 2011 the proportion was inverse (56 percent for the MAEC, 44 percent for other ministries). Secondly, the poverty-focused strategy slipped, with Spain’s bilateral ODA to Least Developed Countries decreasing from 20,8 percent in 2009 to 11 percent in 2015 while bilateral ODA to upper-middle-income countries increased from 21,1 percent to 28,2 percent during the same period of time. Thirdly, the reforms of the Spanish Agency for Development Cooperation fell short; changing the legal status of the organization and making minor technical changes, but failing to go any further. The agency also faced underfunding and staff limitations, including more than €600m slash of its budget and a closure of many offices in partner countries, which made it difficult for any true autonomy to be achieved.

Is the second time the charm?  

Due to a range of factors both inside and outside of Spain, there was a second effort to reform Spain’s development system in 2019. Domestically, Spain’s politics stabilized—after going through three general elections in four years—as PM Pedro Sanchez secured an electoral win in 2019, (with a promise to reform the development system). An increase in the ODA budget, a new law for sustainable development, a reform of AECID and increased multilateral engagement were all on the cards. Internationally, there were increasing pressures on Spain to engage in the multilateral development system due to the COVID-19 pandemic, the increasingly visible consequences of climate change and the lack of funding for the 2030 Agenda. The government proactively sought to meet these global challenges with deeper engagement. On balance, since 2019, Spain’s commitment to international development has improved with the achievement of three key milestones:

Firstly, the new law for "Sustainable Development Cooperation and Global Solidarity", approved last February by the lower house of the Spanish Parliament 25 years after the first development law was passed, aligns Spanish development with the needs of an increasingly complex cooperation landscape. Amongst the most relevant updates, the law includes the commitments of spending 0.7 percent GNI on ODA and 10 percent of ODA on humanitarian assistance; a new proposal to reform the Spanish Agency for Development Cooperation—the full version of which was presented last month—and the creation of a new fund for sustainable development (FEDES), managed by AECID, to improve Spain’s financial cooperation management. This new fund will incorporate new financial instruments such as guarantees, aiming to expand the number of beneficiary countries and improve transparency and accountability of the institution. 

Secondly, annual ODA budgets have slightly increased since 2018. Most importantly, the ODA budget was barely impacted by the COVID-19 pandemic, despite Spain’s GDP contracting by 10.8 percent in 2020. Unlike many other development cooperation providers, Spain has also maintained budgets in the face of strained public finances and the cost-of-living crisis. This stands in stark contrast with how Spain as a development cooperation provider reacted in the aftermath of the 2008 financial crisis, when ODA budgets were cut by almost 80 percent over the following years. The current trend indicates a stronger Spanish commitment to its partner countries compared to the past. 

Thirdly, as part of its prioritization of global health and pandemic preparedness, triggered by the COVID-19 pandemic, Spain has increased its engagement with international institutions working on global health. For instance, the MAEC announced in early March that Spain will host the Gavi mid-term review high-level conference in June. This follows MAEC’s organization of the High-Level Meeting of the Global Action Plan against COVID-19 in Madrid in September 2022. Going beyond global health, Spain has also been one of the first EU member states to fully embrace “Team Europe”, a more unified approach to international development across European development finance institutions, the EU and European countries.

What’s next? Transforming Spain’s development cooperation system for lasting leadership 

While the reforms that have been introduced since 2019 signal Spain returning as a more impactful development cooperation provider, they are not enough to make Spain a new leader in development cooperation. 

Despite stabilization of ODA budgets and the codification of the 0.7 percent GNI/ODA target into law, current development spending levels are far from the government's promise to reach 0.5 percent by the end of their legislature, and a legal obligation is no guarantee for compliance—neither Belgium nor the UK, both of whom committed to the 0.7 percent GNI/ODA by law, are currently meeting their legal requirement. Furthermore, an increase in the quantity of ODA must go hand-in-hand with an increase in quality. CGD’s QuODA framework, which measures quality of ODA across the dimensions of prioritization, ownership, transparency and untying and evaluation reveals there is room for improvement of Spain’s ODA quality. In the case of “prioritization”, which assesses if ODA is spent where it matters most, Spain ranks near the bottom. As the government works to make Spain a development leader, not only do they need to increase the ODA budget but also spend a higher share of ODA in partner countries as well as channel more finance toward the poorest countries. To do so, the government would benefit from developing a roadmap to understand how to build on Spain’s strengths and learnings from the past decade and to set Spain’s ambitions to increase ODA volume and quality over the next decade. 

In addition to full implementation of the new law, more ambitious structural reforms of Spanish development cooperation may be required–while ensuring structures remain flexible and lean. To meet the challenges of the future, enhancing the current capabilities and efficiency of AECID may not be enough. The institutional model may need to be entirely restructured; modernizing, strengthening, and professionalizing the institution, but also reviewing the development agency model, which is currently divided between professional staff members and the diplomatic body. As the details are worked through, Spanish policymakers could learn from others on how to improve the efficiency of their cooperation system. For example, Germany has recently revised their procedures for bilateral and technical cooperation, looking to reduce bureaucracy and give more flexibility to the implementing agencies, while giving the Federal Ministry for Economic Cooperation and Development a clearer steering role. Spain could also learn from other bilateral development cooperation providers on implementing a more rigorous approach on funding innovation and generate more evidence-based policy solutions. Both USAID’s Development Innovation Ventures (DIV) and AFD’s Fund for Innovation in Development (FID) provide interesting examples on how donors can support innovation. 

The new law clarifies the roles of the existing coordination and consultation bodies to help bridge institutional divides across three different groups of development actors, namely non-governmental actors, ministerial bodies and regional providers. However, the most recent DAC peer review of Spain highlights that despite better coordination in theory, in practice unity has not been achieved due to a lack of systemic approach to development policy. In fact, the existence of several bodies risks perpetuating a complex system which is saturated by the intervention of multiple actors. Instead, the government should focus on boosting the influence of MAEC within the development architecture by increasing the proportion of ODA managed by the ministry, so that it can exercise its leadership and promote a more coordinated and comprehensive cooperation. Otherwise, maintaining coherence across a fairly fragmented development system will remain a significant challenge. 

Conclusion 

Despite major domestic economic challenges due to COVID-19 and the cost-of-living crisis, Spain has stepped up and increased ODA in the last few years. The Spanish government has also implemented far reaching reforms of its aid architecture. However, as highlighted in this blog, this reform package in itself is not enough to make Spain a new development cooperation leader. More structural reforms are needed, and a more active role on the international stage must be played to enable profound Spanish leadership on global development. 

Spain’s upcoming presidency of the Council of the European Union, starting in July, and the Africa Cooperation Summit–which will bring together policymakers from the African continent with their Spanish counterparts–will be crucial opportunities for Spanish policymakers to enable long term development cooperation leadership.