Navigating Recessions in Foreign Aid: The Case of the Spanish Development Co-Operation Policy

Abstract

The chapter analyzes the Spanish experience in addressing the financial crisis of 2008–2014, which entailed a drastic reduction in official development assistance (ODA). It questions the coherence of cutting the external aid budget by over 70% while public debt increased by 153% and the public deficit by 13%. Despite the crisis caused by COVID-19 in 2020–2021, Spain has slightly increased its external aid budget. However, as of 2022, public debt levels remain above 110%, and the deficit stands at 4.7%. The chapter examines the modalities, instruments, agents, sectors, and countries targeted by Spanish ODA, identifying changes and regularities. The insights from the analysis of the Spanish case may be applicable to other countries facing reduced support in foreign aid and poverty alleviation policies in countries different from where taxes are collected.

1. Introduction

Spanish development cooperation policy suffered a huge cut after the Great Recession (2008–2014). After this decline, it is trying to recover with legal, budgetary, and institutional changes to increase its stability in an increasingly uncertain and volatile world. Spain has created not only a new International Cooperation Law for Development and Sustainability but also needs to reform its Development Cooperation Agency, and its financial cooperation fund and it should continue learning to cooperate with middle-income countries that still have large incidences and intensity of poverty. Increasing their learning as a result of greater quality and intensity of evaluation of their instruments will be a great challenge for their future. Spain can serve as a case-study to learn how a donor country can be more effective in the fight against inequalities and poverty in recessive economic environments or very slow growth in the long term.

Despite the Spanish government cutting development aid funds by 73.5% between 2008 and 2015 due to the financial crisis, it has not taken the same approach during the COVID-19 pandemic crisis. Instead, it has increased disbursements from 0.19% of Gross National Income (GNI) in 2019 to 0.28% in 2022. Additionally, Spain has recently approved a new Law on International Cooperation for Development and Global Solidarity in February 2023, committing to allocate 0.7% of GNI to official development assistance (ODA) by 2030. This budget increase requires an annual cumulative growth of 14.5% between 2023 and 2030.

Previously, from 2005 to 2010, Spanish Cooperation embarked on the path toward 0.7% of GNI, increasing from 0.24% to 0.46% of GNI. This increase involved annual cumulative growth of 20%, slightly less than the commitment made now but over a longer period.

However, navigating economic uncertainty and managing budget volatility are not sufficient to build resilient international relations that promote sustainable and authentic human development. The management possibilities for foreign aid are extensive, involving bilateral disbursements or through multilateral organizations, providing grants, or making concessional loans that generate debt. Other options include emphasizing instruments like technical cooperation, which transfers knowledge and expertise but does not provide new funds, as is also the case with external debt relief. Actions in emergency situations can be isolated or complemented with long-term development programs and peace-building diplomatic relationships. The aid can be complemented by decentralized actors and NGOs, and a policy can focus on a few partner countries in specific sectors or adopt a more holistic and cross-cutting approach consistent with other public policies.

In the remainder of the chapter, we will analyze all these factors, comparing the pre-strong-growth period (2000–2004) to the period of drastic cuts due to the crisis (2012–2018) and the recovery period (2019–2022) in which Spanish Cooperation still finds itself.

The rest of the chapter is organized as follows. Section 2 describes the consequences of the economic and financial crisis on Spain and its development cooperation system. Section 3 deals with building resilience through aid modalities, analyzing the bilateral and multilateral aid flows, and the use of grants versus loans. Section 4 shows the evolution of some aid instruments such as technical cooperation, humanitarian aid, and debt relief. Section 5 sheds light on the evolution of foreign aid from Spanish non-central governments and NGOs. Section 6 analyzes the geographical and sectoral allocation of aid. Section 7 compares the Spanish experience with other donors that had to deal with the financial recession but their response to the crisis was different from the Spanish one. Section 8 summarizes the conclusions and offers some recommendations.

2. The consequences of the economic and financial crisis on Spanish foreign aid

Since 1993, when Spain experienced a recession with a −1% GDP growth, its growth rates have been somewhat volatile. Figure 1 details the year-on-year variation rates alongside the periods when parties with conservative political orientation (the Partido Popular, PP) or social-democratic orientation (Partido Socialista Obrero Español, PSOE) have been in power.

Figure 1.

Time trend for GDP growth in Spain.

The economic cycle can be classified into the following periods. After José María Aznar’s victory in 1996 (defeating Felipe González of the PSOE, who had been in power since 1982), Spain joined the European Economic and Monetary Union (the “eurozone”) in 1999 as a founding member. The country met the five convergence criteria of Maastricht aimed at achieving macroeconomic stability to approximate the economic conditions of an optimal monetary zone model. Basically, a scenario was sought in which all eurozone member countries would have a monetary policy with low inflation and interest rates that promoted domestic demand growth, a restrictive fiscal policy with low levels of indebtedness, and exchange rates that were already irrevocably fixed to encourage trade. The expected outcome was long periods of stable economic growth.

Following a terrorist attack in Madrid on the eve of the general elections in March 2004, there was a change in government, and the socialist Party, with José Luis Rodríguez Zapatero as president, took over. During an initial period, economic stability and GDP growth continued until the economic-financial crisis began in 2008 — a crisis that the government either did not know or did not want to predict. The crisis, which lasted until 2014, led to the socialists losing power, making way for the conservatives at the end of 2011.

Between 2015 and 2019, there was a period of economic recovery and prosperity. However, this did not reach the poorest segments of the population, with at risk of poverty and social exclusion rates remaining above 20%, regardless of the product growth rate.

In 2018, after significant political tensions, a new socialist government came to power in 2019. They had to face the COVID-19 crisis, which forced population lockdowns and resulted in the sharpest economic downturn in recent Spanish history in 2020 (−10.2%), only surpassing those during the Civil War (1936–1939) [1].

Two years later, in 2022, the GDP recovered what was lost during the pandemic. Predictions from various international organizations anticipate moderate growth rates of around 2% in the coming years. The effects of cyclical crises are reflected in public deficit and public debt indicators. Figure 2 again illustrates the periods of volatility that had to be faced and how public indebtedness has been one of the main resources Spain has turned to in an attempt to increase its economic and social resilience during these turbulent periods.

Figure 2.

Time trends of government deficit, public debt, and GDP (Millions of current euros).

Fiscal instability in relative terms of GDP can be seen in Figure 3.

Figure 3.

Time trends of public debt and government deficit (% of GDP).

How has all this uncertainty affected its foreign policy and, in particular, international cooperation policy for sustainable development? Figure 4 shows the evolution of Spanish ODA, both in volume and as a percentage of GNI.

Figure 4.

Time trends of Spanish ODA: absolute and relative terms.

If we measure the volatility of each variable through the coefficient of variation, that is the quotient between its standard deviation and the average, we obtain these results (Table 1):

	Gov_deficit_%	public_debt_%	ODA_%	DEBT-M€	Deficit_M€	ODA-M€	GDP_M€	gdp_growth
Coef. of variation	−0,94	0,37	0,34	0,57	−1,02	0,49	0,27	1,14

Table 1.

Coefficient of variation. M€ stands for “millions of euros”.

The highest volatility occurs in the rates of change of GDP, followed by the government deficit measured in levels or in percentages of GDP. Public debt and aid have volatilities between 0.34 and 0.57 while the lowest volatility occurs in GDP which is a non-stationary variable (in econometric terms, it lacks a unit root or is I(0)). The public deficit also has a unit root of order 1, while public debt and ODA are stationary or integrated of order I(0).

The correlation between the ratio of ODA to GNI and GDP growth is near zero (Figure 5), which shows that, in Spain, budgetary decisions on ODA are quite independent of the overall performance of the economy. The linear regression of GDP growth on ODA shows a non-significant coefficient (β = −0,02; p-value = 0,906). But the regression of GDP growth on government expenditures on education, health, and ODA, all of them lagged one period, shows negative and non-significant coefficients for education and health, but positive and slightly significant for ODA lagged (β = 0,37; p-value = 0,093; R2 = 0,5791).

Figure 5.

Correlation between ODA and GDP: 1995–2022.

This result leads to the alternative hypothesis that, if it is not economic growth, what can explain aid disbursements are political variables, which some authors summarize with three terms starting with “i”: inertia (path dependence), ideology (political affinity between donor governments and partners), or ignorance (development outcomes are not taken into account). There is a lack of a learning system based on evaluations that show rigorous evidence, and there is a tendency to exercise a more discretionary cooperation policy.

Academic literature tends to confirm this a priori selection bias in aid allocation. Some authors [2] identified three allocation models: donors reinforcing dependence ties through cooperation with their former colonies, as in the case of France and the United Kingdom (for Spain, it would be cooperation with Latin America); countries directing their ODA toward poverty alleviation and prioritizing lower-income countries (like most Scandinavian countries); and countries seeking to promote democratic values through cooperation (EU case) or an “international order” that benefits their status quo or hegemonic ambitions (U.S., the Soviet Union during the Cold War, or Chinese cooperation).

Recent academic work [3] shows, especially for the U.S., U.K., and Norway, a significant relationship between ideology and foreign aid. “Progressivism” (liberalism in the American sense) supports well-being within each country and international redistribution through aid. Still, this redistribution is hindered by “nationalist progressives” who condition aid (and foreign policy) for the benefit of national citizens. In a way, a poverty alleviation model would be managed as “first here - national welfare - and only then there - in other countries.” Spain, after significant cuts in public spending due to the financial crisis, aimed to carry out cooperation similar to this motto. It proposed to “do more (knowledge and human capital transfers) with less (financial resources).”

In the following section, we will attempt to analyze this model. To do so, we will examine: (i) the modalities of Spanish aid (bilateral or multilateral; through donations or loans); (ii) some of its instruments (technical cooperation, humanitarian and food aid, and external debt relief operations); (iii) some of the implementing agents (decentralized public cooperation and NGOs); and (iv) sectoral and geographical concentration or dispersion.

Whenever possible, the analysis covers the 2000–2021 time period, including four subperiods: 2000–2004, which we can call “traditional aid”; the growth period (perhaps irrational [4]) covering 2005–2010; the period of irrelevance and drastic reduction in ODA between 2011–2018; and the slow recovery of funding that began in 2019 and continues to the present. It is interesting to note that in 2023, Spain passed a new Law on International Cooperation for Sustainable Development and Global Solidarity, committing to reach a level of 0.7% of GNI by 2030 and maintain it thereafter. As seen in Figure 4, Spain’s historical maximum was 0.46% in 2009. The reform effort to ensure responsible, efficient management with a developmental impact on the resources to be approved - if the legal promise is fulfilled - will be outstanding, as no other donor has had to increase its ODA resources at an average annual cumulative rate of 14.5%, as Spain will have to deal with.

3. Building resilience through aid modalities: bilateral vs. multilateral and grants vs. loans

As seen in Figure 6, bilateral aid predominates in all periods prior to the economic crisis. However, since 2012, multilateral aid has been higher than bilateral aid, except for the year 2016, which represents an outlier due to a significant debt forgiveness operation for Cuba, as will be detailed later. Two periods can be distinguished. Until 2012, the combination of bilateral-multilateral ODA was 60%–40%, respectively, but these percentages have almost reversed since then, with the average for the period 2019–2022 being 35% bilateral and 65% multilateral.

Figure 6.

Time trends of bilateral vs. multilateral ODA.

One of the main reasons why multilateral ODA withstands the crisis is that European Union (EU) members are obliged to EU cooperation funds. In fact, the EU’s weight within Spanish Cooperation reached almost 70% in 2015 and has remained very high since then. During the period of strong growth in ODA (2005–2010), the EU already accounted for more than half of the multilateral ODA. It then reached 90% in 2012, and since 2019, it has been around 70% (Figure 7, the yellow dotted line).

Figure 7.

Relative importance of Spanish ODA to the European Union and the United Nations.

To sum up, Spain tends to use more bilateral ODA in the absence of conditions of particular economic severity, such as the financial crisis between 2008–2012, because it allows for a more flexible combination of the donor’s own interests with the needs of the recipient country. However, since the crisis, Spain has been compelled to continue providing ODA as a member state of the EU and other development agencies and banks. This has led to a predominance of multilateral aid in recent years. In theory, Multilateral Development Organizations allocate aid based on criteria more focused on the poverty and inequalities of partner countries, but this approach has not been fully supported by empirical evidence.

Regarding the modalities of grants or loans, Figure 8 shows the predominance of grants. While they were at 65% in the period before the strong growth of ODA, they have been increasing since 2005, representing more than 90% from 2012 onwards. Clearly, the choice of grants appears as an instrument independent of the Spanish economic cycle.

Figure 8.

Time trends of the ODA grants and gross loans.

4. Managing uncertainty through some instruments: technical cooperation, humanitarian aid, and external debt relief

Figure 9 shows the percentage time series of three development cooperation instruments. Technical cooperation has remained at a fairly stable proportion during periods of greater aid volatility. An atypical year was 2012 when it reached 38%. It has represented around 17% and only decreased to 7% in the last three years.

Figure 9.

Time trends of some ODA instruments.

Humanitarian action, which includes emergency aid, reconstruction assistance in disasters, and food aid, also exhibits very little volatility. There are international commitments recommending that it represents at least 10% of the total, a target Spain achieved only in 2009 and 2014 but has met in recent years (2020–2021).

Undoubtedly, the most volatile instrument has been external debt relief. As observed in the graph, it exceeded 20% in specific years. The main debt relief operations were as follows: In 2001, there was an operation for Nicaragua (USD 692 million). In 2005, there were three debt relief operations (USD 211 million for Iraq, USD 157 million for Congo, and USD 154 million for Madagascar). In 2006, debt forgiveness to Iraq continued (USD 200 million), and a new operation was added for Guatemala (USD 195 million, followed by two more, USD 173 million in 2017 and USD 160 million in 2018), along with another for Nigeria (USD 145 million). In 2010, there was significant debt forgiveness for the Democratic Republic of Congo (USD 266 million). In 2013, the main operation was for Côte d’Ivoire, amounting to USD 226 million. Finally, the debt relief for Cuba in 2016 stands out (USD 2.434 billion, preceded by another of USD 140 million in 2015), when it accounted for 74% of the total disbursed ODA. Thus, the downward trend in Spanish ODA disbursements continued until 2019, when there was a change in trend and government.

These operations are subject to much uncertainty, as negotiations can take place in both multilateral and bilateral contexts. In general, Spain has participated in almost all multilateral debt relief operations, behaving as a good “policy taker.”

Figure 10 shows that Spain has not been a donor that has used loans to provide assistance to Highly Indebted Poor Countries (HIPCs). In the period 2000–2004, gross loan aid represented between 5% and 9% of aid disbursements, while between 2005 and 2013, it hovered around 2%, and since then, it has not exceeded 0.5%

Figure 10.

Time trends of ODA gross loans and loan repayments from HIPCs.

5. Agents: non-central governments and NGOs

Figure 11 shows the relative contribution of non-central governments (Autonomous Communities and Local Entities or municipalities) to Spanish development cooperation. As seen, until 2006, it remained around 15%, decreasing thereafter to 10% in 2011, not due to lower absolute contributions, but to the significant increase in ODA from the central General State Administration. In absolute terms, decentralized ODA also followed the economic cycle with significant cuts during the crisis period (2008–2014), and it was not until 2017 that it began to recover.

Figure 11.

Time trends of decentralized ODA contributions and ODA channeling through NGOs.

Regarding non-governmental development organizations (NGOs), they have accounted for between 14% and 23% of net ODA, with Spain being one of the donors that channels a significant portion of aid through these entities.

6. Geographical and sectoral allocation

As shown in Table 2, the geographical concentration of ODA has also remained stable and independent of the economic cycle. Both in regional and geographical distribution, there is consistency in the proportions of allocated ODA. America has consistently been the region receiving the most aid, especially Central America and the Andean region, whose countries almost always appear among the top 15 recipients.

		2002–2004	%		2005–2010	%		2013–2020 without 2016	%
	Developing countries, Total	5.474,18	100,0	Developing countries, Total	21.641,09	100,0	Developing countries, Total	7.336,66	100,0
	America, Total	2.224,65	40,6	America, Total	7.623,24	35,2	America, Total	2.499,50	34,1
	Africa, Total	1.219,16	22,3	Africa, Total	6.296,66	29,1	Africa, Total	1.751,33	23,9
	Asia, Total	930,34	17,0	Asia, Total	3.101,39	14,3	Asia, Total	744,12	10,1
	Europe, Total	445,08	8,1	Europe, Total	785,99	3,6	Europe, Total	339,34	4,6
	Oceania, Total	0,48	0,01	Oceania, Total	6,91	0,03	Oceania, Total	0,87	0,01
	Developing countries, unspecified	654,49	12,0	Developing countries, unspecified	3.826,894	17,7	Developing countries, unspecified	2.001,504	27,3
1	Nicaragua	392,44	7,2	Guatemala	948,52	4,4	Côte d’Ivoire	381,17	5,2
2	China (People’s Republic of)	232,58	4,2	Morocco	683,30	3,2	Colombia	309,83	4,2
3	Bolivia	200,55	3,7	Nicaragua	613,07	2,8	Morocco	252,69	3,4
4	Honduras	195,54	3,6	Honduras	597,93	2,8	Venezuela	248,13	3,4
5	Morocco	178,74	3,3	Iraq	586,03	2,7	El Salvador	240,04	3,3
6	Peru	169,20	3,1	Peru	553,95	2,6	Peru	207,93	2,8
7	Ecuador	140,37	2,6	Bolivia	497,33	2,3	Türkiye	198,31	2,7
8	Türkiye	137,65	2,5	Türkiye	476,96	2,2	Cuba	195,93	2,7
9	Dominican Republic	137,15	2,5	Colombia	461,84	2,1	Syrian Arab Republic	186,22	2,5
10	Iraq	132,67	2,4	West Bank and Gaza Strip	434,05	2,0	West Bank and Gaza Strip	179,25	2,4
11	Mozambique	125,19	2,3	El Salvador	428,59	2,0	Guatemala	159,14	2,2
12	El Salvador	121,66	2,2	Democratic Republic of the Congo	414,48	1,9	Bolivia	149,69	2,0
13	Argentina	121,22	2,2	China	406,44	1,9	Nicaragua	125,73	1,7
14	Bosnia and Herzegovina	117,97	2,2	Senegal	372,31	1,9	Honduras	123,41	1,7
15	Algeria	112,45	2,1	Ecuador	367,98	1,7	Senegal	122,46	1,7

Table 2.

Geographical allocation of Spanish ODA: regions and main recipient countries.

Source: Author’s elaboration with data from OECD-Creditor Reporting System.

Regional allocations are in bold at the beginning of the Table, followed by the top-15 countries.

Africa follows, with Morocco as a priority partner in all periods. Some countries have received substantial aid in certain years for reasons unrelated to poverty reduction. This is the case for countries that were granted significant debt relief (Iraq, Congo, D.R. Congo, or Côte d’Ivoire). In other cases, such as Algeria in the first period, it is explained by the aid Spain provides to Sahrawi refugees in camps located in that country. Aid to Syria is due to the Civil War, and aid to Venezuela is due to its humanitarian crisis.

Overall, Spain demonstrates a very stable geographical allocation. In fact, the cumulative sum of the percentages for the fifteen countries shown in the table is 46% during 2002–2004, 36.5% in 2005–2010, and 42% in the last period.

Table 3 shows the sectoral distribution of ODA over three periods. Some stylized facts to highlight include the following.

	2002–2004 (%)	2005–2010 (%)	2013–2020 (%)	2013–2020 without 2016 (%)	dif 2002–2004/2005–2010 (%)	dif 2005–2010/2013–2020 without 2016 (%)
1000: Total All Sectors	100,0	100,0	100,0	100,0
450: Total Sector Allocable	56,4	65,9	39,4	50,5	9,5	−15,4
100: I. Social Infrastructure and Services, Total	34,5	39,9	24,8	31,9	5,3	−7,9
110: I.1. Education, Total	9,7	9,1	4,5	5,7	−0,5	−3,5
120: I.2. Health, Total	5,8	5,0	3,8	4,8	−0,8	−0,1
130: I.3. Population Policies/Programs and Reproductive Health, Total	0,9	1,8	1,0	1,3	0,9	−0,5
140: I.4. Water Supply and Sanitation, Total	3,7	7,2	3,0	3,9	3,5	−3,3
150: I.5. Government and Civil Society, Total	7,1	10,2	10,1	13,0	3,1	2,9
160: I.6. Other Social Infrastructure and Services, Total	7,4	6,6	2,5	3,2	−0,8	−3,4
200: II. Economic Infrastructure and Services, Total	9,4	11,5	2,3	3,0	2,1	−8,5
300: III. Production Sectors, Total	7,0	6,9	5,0	6,3	−0,1	−0,6
400: IV. Multi-Sector / Cross-Cutting, Total	5,5	7,6	7,3	9,2	2,1	1,6
500: VI. Commodity Aid / General Program Assistance, Total	2,5	3,0	0,7	0,9	0,6	−2,2
510: VI.1. General Budget Support, Total	0,0	0,6	0,2	0,2	0,6	−0,4
520: VI.2. Development Food Assistance, Total	0,8	1,9	0,5	0,6	1,1	−1,3
530: VI.3. Other Commodity Assistance, Total	1,7	0,5	0,1	0,1	−1,2	−0,4
600: VII. Action Relating to Debt, Total	10,8	12,9	27,8	7,1	2,1	−5,9
700: VIII. Humanitarian Aid, Total	4,7	7,3	5,5	7,1	2,6	−0,3
910: Administrative Costs of Donors, Total	5,6	4,0	9,1	11,4	−1,6	7,4
930: Refugees in Donor Countries, Total	1,4	0,9	11,7	15,6	−0,5	14,8
998: IX. Unallocated/Unspecified, Total	18,6	5,9	5,8	7,5	−12,7	1,6

Table 3.

Sectoral distribution over three periods.

The main sectors are in bold. The 100% is the sum of sector 100 to 700, plus 910, 930 and 998. Sector 100 is subclassified in italicized sectors. Subsectors 510, 520 and 530 are highlighted for special interest within sector 500.

Infrastructure and social services constitute the largest sector, and their components remain fairly stable over time if analyzed without the debt relief operation for Cuba in 2016. However, the subsectors of education and health have been losing relative importance since 2013 due to budget cuts.

Infrastructure and economic services have also decreased in importance, going from 9.5% at the beginning of the 21st century to an average of 3% in 2013–2020. Productive sectors have remained around 6%.

There is significant growth in the multi-sector, encompassing contributions to the environment and the fight against climate change, increasing from 5% to 9%.

General programs, especially budget support—both general and sectoral—have never had much weight within Spanish Cooperation, despite the commitment made within the EU to this modality since 2005.

Actions related to debt have already been discussed and will not be emphasized further regarding their importance in aid volatility, but they significantly influence the sectoral structure.

Humanitarian aid has increased its relative weight in the period 2013–2020, surpassing 10% in the years 2014, 2020, and 2021. However, overall, it has remained around 6–7% in most years.

Administrative costs have continued to grow and nearly doubled from the 2002–2004 period to the 2013–2020 period.

The same applies to ODA allocated to refugee assistance, which averaged 15% between 2013 and 2020 compared to 1.3% in 2002. The refugee crisis is reflected in the rise of this sector, which represented only 3% in 2016, increasing to 20% the following year and maintaining similar levels in recent years: 25% in 2018, 28% in 2019, 19% in 2020, and 15% in 2021.

7. Comparative analysis

The Spanish case is not unique, although it has stood out for its decision to reduce aid much more sharply than other donors. For example, Greece, Portugal, and Ireland had to be rescued by the European Central Bank during the crisis, but they did not cut aid as much as Spain did. Between 2008 and 2015, Greece reduced its foreign aid by −66,1%, Portugal by −50,3%, Ireland by −45,9%, and Italy by −17,6%, whereas Spain reduced its aid flows by −79,7% in current terms. Figure 12 shows the evolution of these donors making data of the year 2008 equals to 100.

Figure 12.

Aid index from some donors: 2008=100.

Let’s take the example of Italy, as it was a country that faced a very delicate financial situation, without being intervened by the European Central Bank, similar to the Spanish situation in 2008. Italy reduced its foreign aid in the first two years after the financial crisis, but in 2016 it had already regained the levels of aid compared to 2008. In comparison with other donors (DAC and G-7), Italian foreign aid has been characterized by a persistently lower aid/GDP ratio, greater recourse to multilateral channels (as Spain), a higher percentage of “tied” flows, and relatively greater recourse to debt relief [5]. Some authors have stated that regarding the resilience of the foreign policy, the Italian case is more a containment rather than resilience [6]. The OECD-DAC peer reviews for Italy and Spain, recommend strengthening its human resources [7, 8].

In the case of Greece, the country had to face a financial crisis of enormous proportions, leading it to reform its aid system in 2011. The main challenges it faced included coordinating numerous stakeholders, transforming a five-year plan into a whole-of-government strategy, and being more selective with its contributions to multinational organizations [9]. Of course, Greece has had to convince its public opinion that aid is necessary, especially to address the refugee crisis arriving in the country [10].

Ireland was another country that had to be rescued, yet it did not reduce its aid as much as Spain, reaching in 2022 the levels of assistance it provided in 2008. Ireland stands out as a donor in advocating for the sustainability of development in international forums, maintaining a high level of mutual trust with civil society, implementing a flexible and reliable co-financing system with NGOs, and demonstrating a strong approach and support for fragile states. Ireland effectively combines diplomacy and its humanitarian aid system [11, 12].

Similar to Spain with Latin America, Portugal’s development cooperation is heavily concentrated in its former colonies: Angola, Cape Verde, Guinea Bissau, Mozambique, Sao Tome and Principe, and Timor-Leste. Five of these countries are least developed countries, and four of them are fragile states. The latest OECD-DAC report for Portugal encourages increasing aid amounts while maintaining quality and leveraging the spillovers provided by its decentralized cooperation system [13].

As can be seen, the response to the 2008 financial crisis in terms of development aid has not been uniform. Spain has been the country that, by far, has cut aid the most. Italy, on the other hand, managed to maintain the amounts somewhat better and already surpassed the 2008 level in 2016. It shares with Spain significant contributions to multilateral organizations, although both countries need to be more selective and strategic in these allocations. Some debt relief operations helped Italy to keep its aid amounts afloat. Ireland is the country that best managed to recover from the crisis, thanks to a highly attractive tax system for foreign direct investments. It shares with Spain a generous system of public funding for NGOs. Both Greece, Portugal, and Spain have undertaken reforms to their development cooperation systems since the financial crisis to make them more resilient and effective. All three countries are on the European Union’s border and must deal with the massive arrival of refugees and migrants. This has significantly increased the ODA allocated to this purpose, representing funds spent within the country rather than in developing nations.

8. Conclusions

Like many European countries, Spain has suffered the consequences of the financial crisis between 2008–2014 and the pandemic in 2020–2021. These external circumstances marked the end of an expansive cycle of Spanish ODA that began in 2008 and ended in 2011. Between 2012 and 2018, Spanish Cooperation had to drastically reduce its foreign aid budget. It attempted to create a model of “doing more with less” in the sense of contributing more knowledge and technical capacity than financial funds. It was also justified by prioritizing addressing internal poverty and inequalities, arguing that expanding foreign aid spending when a country is heavily indebted above 100% of its GDP, made no sense. This situation still lingers in the symbolic imagery of a portion of the population and some political parties.

Spain had to build resilience in its own international development cooperation policy, as it was deemed irrelevant by some NGOs and analysts. As foreign policy is relatively unknown among citizens, a significant budget reduction could be implemented almost unnoticed by the majority of the population.

However, the approach of “domestic policies first and then foreign aid” (or “Charity ends at home”) is fallacious because it assumes a global dualism that is not supported by evidence. There is no “Global North” that can disassociate itself from a “Global South.” What exists is a single interconnected world, not only among nation-states but also between the present generation and future generations [14]. Building true sustainable human development, based on global solidarity and justice, as encouraged by the United Nations’ 2030 Agenda, is the path to dealing with the uncertainty inherent in a dying era and a yet-to-be-born one. During this interregnum, inclusive, resilient development policies that leave no one behind can be constructed. The Spanish experience can serve as a learning opportunity for things done well, such as the continuity of donations versus loans that generate debt, especially in already highly indebted countries; compliance with the commitment to mandatory financial contributions to the European Union and other Multilateral Development Organizations (such as Italy); and the commitment to helping people in poverty in middle-income countries, as exemplified by Spain’s leadership in EU-delegated cooperation in various Latin American countries [15].

There are also areas where Spanish Cooperation can improve [8, 16], such as bureaucratic simplification of programs and projects co-managed with NGOs; increasing their capabilities and human resources for better management of aid instruments, including decentralized ones (as Greece and Portugal have also had to do); the lack of effective feedback from evaluation recommendations that is challenging to translate into short-term improvement plans and practices; the agility and quick response in humanitarian interventions that must be coordinated internationally and guided by a “triple” nexus between emergency aid, development, and peace, with the necessary emphasis on domestic prevention and resilience, not just on timely intervention that saves lives in the face of a natural disaster but with policy coherence for development and solidarity that is truly cross-cutting. Ireland can serve as a case of a donor to look to for implementing this recommendation.

Spain has approved in 2023 a new Law on Cooperation for Development and Global Solidarity, which is to be complemented by several pending reforms: the statute of cooperating individuals; the reform of AECID (Spanish Agency for International Development Cooperation); a new financial cooperation instead of the current Development Promotion Fund; a new Cooperation Council to be renamed the Superior Council for Sustainable Development and Global Solidarity; and a renewed Spanish Cooperation Evaluation Office. These reforms will be carried out in the context of the triple transition that, in a cross-cutting manner, will govern the Spanish development cooperation policy: the digital, socio-economic, and climate transition

In summary, the case of Spanish international development cooperation, which had to deal with significant economic crises and volatility in its foreign aid budget, can serve as an example of building a foreign policy that overcomes the inertia, ideology, and ignorance with which uncertainty has been navigated in other instances in an increasingly complex and interconnected world.

Conflict of interest

The author declares no conflict of interest.