The saying goes that “you can write anything on paper and it won’t blush” but people are not like that. Economics – and the part of development science that subscribes to economic development – claims to be an “exact science”, but neither was it able to predict financial crises and the failure of the market, nor reduce the poverty, personal insecurity, migration, conflicts or fragility caused by this.

The market comes first and humans come second – the economization of development

How are the two related? Peace, the rule of law and inclusion are central parts of Sustainable Development Goal 16 in the 2030 Agenda as is the call to focus first on helping the most disadvantaged. Habermas once postulated the balance of “freedom, equality and brotherhood” as the greatest promise of liberalism.  Following on from this, the promise of our era of deregulated neoliberalism is surely to “Leave no one behind” (LNOB). The dogma underpinning the achievement of this goal is that development should above all be economic in nature and this, as well as peace, require financial resources above all else. However, this “economization” of development and peace work has resulted in the actors involved shunning their most important tools – namely their ability to work towards social, cultural and political development – and, in turn, they are losing focus on what matters: people.

Reporting processes and the use of funds are becoming more important than the analysis of and intervention in systems and the need to reflect the complexity of the situation by testing different interventions. Banerjee & Duflo’s theories[1] on “trial and error”, for which the pair were awarded the Nobel Prize in Economics, often fall victim to an understanding of opportunity and risks that has been restricted in order to avoid risks or to the necessity to show “quick development results.”

The results are often an understanding of peace limited to the absence of physical violence, and an understanding of development limited to economic development. As a result, in order to fulfill the objective of the 2030 Agenda and above all goal 16 and the “LNOB” initiative, we firstly need to not simply focus on pure economics and secondly, we need policy coherence which generates resources where they are available.

Freedom, equality and peace – what is the money going towards?

According to Freedom House, “freedom” as a form of expression in democracy has been on the decline for 13 years. 61% of the world’s population, or 4.6 billion people, live in authoritarian and only partly free countries.[2] A similar picture is emerging for “equality”, which is perpetuated through factual inequality. The richest 1% of the world’s population own a good 20% of global wealth[3], while the poorest 50% only own less than 10%.  If you equate brotherhood with solidarity, an equally tragic picture is depicted. The official development assistance (ODA) provided by OECD countries amounted to 147.2 billion USD in 2017, which equates to approximately 0.31% of the GDP of donor countries.[4] Of this, approximately 45% (68 billion) went to fragile countries affected by war and conflict.[5]

Profiting from debt – one man’s curse is another man’s blessing

Why are these numbers alarming? Firstly, the money for peace work is lacking. At over 72.2%, ODA is the main resource used to fund peace and development in these countries.[6] Secondly, it is not peace but rather military weapons that are taking priority. While ODA stood at less than 150 billion USD in 2017, 1.8 sextillion USD or 2.1% of global GDP was attributed to military spending in 2018.[7] Thirdly, as a result of deregulation, legal loopholes and a lack of statehood, so-called “legal tax avoidance” is leading to losses of revenue amounting to as much as 7.8 sextillion USD (10.4% of global GDP).[8] Another 3.6 sextillion USD lost through corruption and bribery could also be added to this.[9]

This chronic underfunding of peace and development work is estimated at 2.5-3 quintillion USD per year[10], a sum which could be raised through rule of law and global tax justice. Yet instead of backing regulations, people continue to hedge their bets on the market. The fact that you can earn money from debt has been proven to us time and time again since the 2008 financial crisis. What were considered bad loans at that time are now micro loans for the poorest. While “micro loans” are already controversial enough, today they are being repackaged as euphemistically named “social impact bonds”[11] that are being used to promise investors in “the west” profits of up to 20% as well as to provide loan loss guarantees for national development cooperation.

The solutions

We are almost reaching the half-way point in realizing the 2030 Agenda and yet we still have the feeling of either not quite being at the starting line or of failing entirely. At the same time, good approaches towards creating a development policy capable of contributing to peace are known. Firstly, we must take the context as a starting point when considering how to define the added value of Swiss peace and development work. We don’t need any ready-made solutions, but rather flexible and people-centric work. Secondly, we must replace the culture of risk avoidance with a culture of learning that recognizes the complexity of the systems and the irrationality of people. In doing so, it will thirdly also be possible to recognize that peace and sustainable development are only feasible if this is part of a goal of global policy coherence.

This article reflects the experiences of Nils Rosemann and does not represent the official position of the SDC. The opinions expressed are exclusively those of the author and reflect neither the official standpoint of the FDFA or the Swiss Federal Administration.

[1] Banerjee, Abhijit V., Duflo, Esther: Good Economics for Hard Times, 2019

[2] Freedom House: Democracy in Retreat: https://freedomhouse.org/report/freedom-world/freedom-world-2019/democracy-in-retreat

[3] World Inequality Report: https://wir2018.wid.world/files/download/wir2018-summary-english.pdf

[4] OECD Report 2019

[5] OECD State of Fragility Report 2019

[6] OECD State of Fragility Report 2019

[7] International Peace Research Institute SIPRI in Stockholm in November 2018

[8] TAXATION PAPERS Taxation and Customs Union WORKING PAPER No. 76 – 2019 Estimating International Tax Evasion by Individuals

[9] United Nations Secretary-General António Guterres: https://news.un.org/en/story/2018/12/1027971

[10] United Nations: Roadmap for Financing the 2030 Agenda: https://www.un.org/sustainabledevelopment/sg-finance-strategy/

[11] „Finanzflüsse wie ein Wasserfall? Die Finanzialisierung der Entwicklungspolitik“ https://www.weltwirtschaft-und-entwicklung.org/wearchiv/042ae6a9f609a1c02/042ae6aa4b0d90c01.php