The End of an Aid Superpower? What to Make of Sweden’s New Development Policy

Earlier this month, new Swedish Prime Minister (PM) Ulf Kristersson presented his center-right government, made up of his Moderate Party, the Christian Democrats and the Liberals. Their coalition agreement was negotiated with the right-wing Swedish Democrats (SD), the second largest party after September’s general election. The SD were shut out of government but will provide the support Kristersson needs in parliament to see his policies through. Some of the early policies which have been announced are a cut to the aid budget—to around 0.88 percent of Gross National Income (GNI); a more restrictive migration policy including a proposed conditionality between aid and readmission of asylum seekers, and a “more long term and transparent” development policy. In this blog, we explore what some of these changes could mean and analyze the good, the bad and the unknown elements of the new Swedish development policy.

The new Swedish development policy: the good elements

Swedish Official Development Assistance (ODA) will no longer be tied to a GNI-based spending target, which was set by previous governments at around one percent of GNI and had been met since 2008. Instead, Swedish ODA will be decoupled from a specific funding target and set at a fixed amount for three years to make spending more predictable and allow the Ministry of Foreign Affairs (MFA) and the Swedish International Development Cooperation Agency (Sida) to reliably plan spending over the medium-term. While the planned decline in ODA is regrettable, this decoupling could lead to improved planning by removing the challenge of aligning spending with in-year GNI figures and reducing the perverse incentives that sometimes arise from benchmarking ODA to GNI. Yet this decoupling also comes with the real risk that without the GNI target, the overall ODA budget could face declines beyond those currently planned.

Early indications from the government suggest a commitment to retain focus on poverty reduction as a key objective of Sweden’s development policy, as well as a continued commitment to transparency. Indications that the government intends to keep poverty reduction at the center of its development policy—at least rhetorically—is welcomed and perhaps signals an intention to build on Sweden’s reputation as a champion of the pledge to leave no one behind. Indeed, the latest peer review of Sweden’s development programme praised Sweden for focusing 63 percent of its bilateral ODA in least developed countries, well above the 39 percent average across DAC members (2017 data), and for Sida’s implementation of a multidimensional poverty approach and Toolbox to help staff target and address poverty in all its forms. While there are questions about how the commitment to poverty reduction will materialize, it could be good news if it results in a strong commitment to poverty reduction as the guiding principle of the coalition’s ODA.

The new Swedish development policy: the bad elements

Across the globe, we are currently experiencing a perfect storm of challenges: from the war in Ukraine with its humanitarian and geopolitical implications across the European continent; to the related, higher food prices which impact millions globally; more violent conflicts; and the severe impacts of climate change. It’s regrettable to see one of the “humanitarian superpowers” cutting back its budget in such challenging times.

The decision to make parts of aid conditional on the willingness of partner countries to cooperate on return and readmission of failed asylum seekers, undoubtedly strongly influenced by the SD, is extremely disappointing. Development Minister Forssell acknowledges that conditionality won’t be a panacea in increasing returns to partner countries but nevertheless, it will be part of the toolbox. Such policy proposals tend to ignore the fact that asylum seekers’ countries of origin and the countries which are main recipients of aid don’t always overlap. The coalition agreement calls for aid to be used to tackle the root causes of migration and limiting visas to citizens of partner countries which do not cooperate on return and readmissions. However, as evidence demonstrates, using aid to address the root causes of migration does not work. Also, current issues with low voluntary and forced return rates need to be addressed on a European level through a reformed and harmonized approach (one of the main drivers behind the EU Migration Pact which is stuck in the negotiating stage). (Mis)using aid for such a carrot-and-stick tactic won’t convince partner countries to cooperate on returns. Instead, the migration system as a whole needs to be revised to make legal migration pathways and returns go hand in hand. In addition, threatening to withhold aid for countries which remain uncooperative on return and readmission risks undermining Sweden’s other goals, such as an increased focus on the most in need. Instead, Sweden could deal with issues arising from its declining workforce by better harnessing the benefits of migration. The government should also make the negotiations on the Migration Pact a priority of its 2023 Presidency of the Council of the EU.

Another aim of the new government is to reduce financial support for the multilateral system, in particular the UN, and instead prioritize collaboration with civil society. This undermines what Sweden has done so well in the past (as confirmed by the OECD DAC Peer Review): working to improve the effectiveness of multilaterals. While it remains a priority of the governing Moderate party to reform the UN, reduced financial support might undermine this goal. In addition, the increased focus on supporting civil society organizations due to a “lower risk of corruption” might be a well-intended goal, but risks undermining the often fragile public institutions in partner countries. Indeed, the 2019 OECD Peer Review of Sweden noted that it could improve its effectiveness by working more directly with and through the systems of partner country governments.  

The new Swedish development policy: the unknown elements

One of the first announcements by Foreign Minister Tobias Billström was that Sweden would no longer pursue a “feminist foreign policy”, a term first pioneered by former Foreign Minister Margot Wallström in 2014 and widely used since. The minister did confirm, though, that Sweden remained committed to gender equality. Former Ambassador Diana Janse who has since been appointed State Secretary to International Development Minister Johan Forssell gave her views on the issue, explaining how the roll-out and establishment of Sweden’s feminist foreign policy had both been costly and time-consuming, with little to show in the way of results. However, implementation costs of the feminist foreign policy are likely to be low after nearly a decade, and with the policy now also implemented by several other countries (Germany being one of the latest to follow) the move away from this seems mainly symbolic.

A key unanswered question is where the proposed spending cuts will fall. So far, what we know is that the “reformed” agenda will “focus on a long-term, transparency and efficiency”, yet what this means in practice is unclear. Some have noted comments made by Ebba Busch, leader of the Christian Democrats, which alluded to plans to “clean up” the list of bilateral development partners, suggesting that some bilateral partners could see their spending cut. Yet, there is little indication of how this list will be reformed (beyond potentially prioritizing migrant-sending countries) and what criteria will be used to define and measure “efficient” spending. In the months ahead, the new government will need to consider how it plans to balance efficient spending—i.e. doing the right things—with principles of development effectiveness—i.e. providing cooperation the right way. Indeed, with Sweden scheduled to become co-Chair of the Global Partnership for Effective Development Cooperation (GPEDC), taking over from Switzerland in 2023, there is an opportunity for the new government to lead by example, combining its focus on efficient and effective spending with international leadership on development effectiveness.

Lastly, the messaging on how this government will prioritize climate action—both within its development policy and more broadly—is mixed. While early indications from the government suggest plans to “expand and streamline climate aid”, these plans stand in contrast against the announced closure of Sweden’s Ministry of Environment. The climate portfolio is now expected to be held within the Ministry of Enterprise and Innovation, under the watch of a minister who is expected to sit under the Minister of Energy, Business and Industry. Such changes could be merely administrative, bringing about little policy change. But this could also indicate a declining prioritization of climate action. For development, there are two main challenges. The first is that with a fixed and limited development budget, scaling-up climate spending could come at the expense of other development programmes. Second, even if climate aid increases, decline in Sweden’s focus on climate and environmental issues at home has the potential to outstrip benefits derived from international climate finance—i.e. the interconnectivity of climate means that actions at home reverberate globally, so advancing climate and environmental protection needs coherence across domestic and international action to meaningfully coherence to advance the UN’s Sustainable Development Goals. Sweden has long been seen as a global leader in supporting sustainable development, with a recent survey of partner country leaders ranking Sweden as the 9th most influential development actors (out of 69 bilateral and multilateral providers) on environmental issues. Whether this reputation is maintained under the current government remains to be seen.

Conclusion

Sweden has long held an international reputation as an exemplary development actor—a champion of effectiveness, poverty reduction, and sustainable development—which is surely a source of its soft power. As the new government finalizes its plans, how far will it stray from the key principles that have made Sweden a global development leader?

Policy change in development can be good, especially if it leads to better outcomes for the poor, but the risk for this government is that some changes could break down, the international clout Sweden gains from its development leadership.

As we wait to see how this government’s plan unfolds, we hope that it will strengthen Sweden’s position as a global development champion through deeper partnerships and engagement, rather than weaken its global standing through retreat from international norms and spaces.