Global respon­si­bi­lity on a knife edge

On 20 Janu­ary 2025, Donald Trump with­drew the US from the World Health Orga­niza­tion (WHO) on his inau­gu­ra­tion day – a symbo­lic act with serious conse­quen­ces. The WHO lost its main donor over­night and highly colla­bo­ra­tive projects in crisis regi­ons were pushed to the brink of collapse. It quickly became clear that leaving the WHO was just the begin­ning: over the follo­wing weeks, the conflict between the US govern­ment and the United Nati­ons as a whole began to heat up, with the Trump admi­nis­tra­tion free­zing its contri­bu­ti­ons and threa­tening to with­draw massive amounts of funds. The finan­cial diffi­cul­ties in which the UN alre­ady finds itself are evol­ving into an exis­ten­tial crisis. Is global deve­lo­p­ment coope­ra­tion at a tipping point – and what does the situa­tion mean for Switz­er­land, its role as a donor coun­try and as an econo­mic­ally inter­lin­ked stakeholder?

More refu­gees than ever

Accor­ding to UNHCR, there are curr­ently more than 120 million forci­bly displa­ced people world­wide – more than ever before – around 38 million of whom are refu­gees. Two thirds of all displa­ced people come from just ten count­ries: Afgha­ni­stan, the Demo­cra­tic Repu­blic of the Congo, Yemen, Colom­bia, Pales­tine, Soma­lia, Sudan, Syria, Ukraine and Vene­zuela. Deve­lo­ping count­ries and emer­ging econo­mies, which host 71 percent of all displa­ced people, bear the brunt of this. UNHCR’s annual Global Trends report will be published in June – but preli­mi­nary figu­res alre­ady show that the increase in displa­ced people, which has been ongo­ing for more than 12 years, is conti­nuing in drama­tic style.

Inte­gra­tion requi­res investment

The growing number of refu­gee camps around the world and the simul­ta­neous decline in funding for commu­ni­ties taking in refu­gees pose immense chal­lenges for many host count­ries. But are refu­gees just a burden? ‘Refu­gees can make a valuable contri­bu­tion to their host society’s economy,’ says Anja Klug, Head of the UNHCR Office for Switz­er­land and Lich­ten­stein. Howe­ver, access to educa­tion and the labour market, as well as an effec­tive inte­gra­tion policy, are crucial. ‘In order to unlock this poten­tial, we first need invest­ment. But it’s precis­ely this invest­ment that’s no longer guaran­teed in many areas.’ As a result, inte­gra­tion is stal­ling – and with it, the oppor­tu­nity for refu­gees to make a contri­bu­tion to social and econo­mic life. Program­mes run by local part­ner orga­ni­sa­ti­ons are at brea­king point due to the drastic cuts. ‘If the funds for these struc­tures run out, the entire support network, which is backed by UNHCR and others, will suffer,’ she says. Why? Because projects aimed at stabi­li­sing fragile states, secu­ring basic services or protec­ting parti­cu­larly vulnerable groups would have to be cancel­led or discon­tin­ued. The conse­quen­ces are grave: ‘Without long-term solu­ti­ons, insta­bi­lity will worsen in host count­ries – and with it, the risk of violence, human traf­fi­cking and displa­ce­ment.’ Faced with dim pros­pects, more and more people choose the path to inse­cu­rity – often on life-threa­tening routes.

Cuts come at an inop­por­tune time

‘Russia’s attack on Ukraine has led to a shift in prio­ri­ties in the West in recent years – to the detri­ment of many of the least deve­lo­ped count­ries,’ explains Manfred Elsig, Profes­sor of Inter­na­tio­nal Rela­ti­ons at the Univer­sity of Bern. The cuts to Ameri­can deve­lo­p­ment funds come at a time when right-wing govern­ments in some Euro­pean count­ries have alre­ady deci­ded to drama­ti­cally slash their spen­ding on inter­na­tio­nal deve­lo­p­ment coope­ra­tion, says Andreas Miss­bach, Mana­ging Direc­tor of Alli­ance Sud.

The Swiss parlia­ment has also deci­ded to reduce its outlay by CHF 110 million for 2025 alone. This means that about 3.7 million people will no longer be reached by aid projects, accor­ding to a survey conduc­ted by Alli­ance Sud amongst its members. ‘The diffe­rence between the US cuts and those under­ta­ken by Euro­pean count­ries is their sudden­ness,’ empha­si­ses Miss­bach, adding that ‘for the latter, it was possi­ble to cushion the rami­fi­ca­ti­ons in various ways.’ If projects are discon­tin­ued, this will have a direct impact, espe­ci­ally on the poorest and those who are depen­dent on aid for meeting their basic needs, Elsig points out. He adds: ‘If money from long-term part­ner­ships suddenly disap­pears – accor­ding to current esti­ma­tes, this is around USD 50 billion a year – huma­ni­ta­rian aid will be parti­cu­larly hard hit. Prio­ri­ties suddenly shift, putting addi­tio­nal pres­sure on the entire system. I can’t recall any previous change being this radi­cal.’ There have always been para­digm shifts – but never so abrupt and drastic.

Child­ren sever­ely affected

‘All UNHCR struc­tures are affec­ted by the austerity measu­res,’ says Kluge, but the extent is not yet univer­sally clear. Howe­ver, they could have a fatal effect in all kinds of ways. On 7 May of this year, the aid agency wrote that more than 17.4 million refu­gee child­ren are curr­ently at risk of expe­ri­en­cing violence, abuse, human traf­fi­cking or family sepa­ra­tion. In other words, the cuts effec­tively affect the most vulnerable. The UNHCR esti­ma­tes that one million child­ren – many unac­com­pa­nied – are incre­asingly expo­sed to explo­ita­tion and abuse in East Africa and the Great Lakes region alone. In South Sudan, 75 percent of cont­act points for women and girls have been closed; with imme­diate effect, around 80,000 survi­vors of sexua­li­sed violence will no longer receive assis­tance. In the DRC, more than 85 percent of young refu­gees are at risk of state­l­ess­ness because births are no longer being regis­tered. Child­ren in Jordan, Angola, Malawi and Colom­bia are also losing access to educa­tion, protec­tion and medi­cal care.

Visi­ble impact

Swiss deve­lo­p­ment orga­ni­sa­ti­ons are feeling the effects of the cuts. ‘In a way, they’re victims of their own success: because they’ve done such high-quality work over the years, they’ve recei­ved lots of tende­red manda­tes from inter­na­tio­nal donors such as USAID. Swiss orga­ni­sa­ti­ons enjoy an excel­lent repu­ta­tion,’ says Miss­bach. This is made possi­ble by the colla­bo­ra­tion with the SDC and Seco, which focus on perfor­mance and quality and work with these orga­ni­sa­ti­ons in the form of service contracts. In turn, this has foste­red exper­tise that’s in demand globally today. As an inter­na­tio­nal UN loca­tion, Geneva is heavily affec­ted by the cuts. Deve­lo­p­ment coope­ra­tion is part of the DNA of Swiss foreign policy, Switzerland’s ‘soft power’ along­side human rights policy, as it were, says Elsig. But this soft power is coming under pres­sure: ‘Cuts are being made at inter­na­tio­nal orga­ni­sa­ti­ons, nume­rous public-private part­ner­ships and orga­ni­sa­ti­ons working to combat AIDS, mala­ria and tuber­cu­lo­sis, for exam­ple. But inter­na­tio­nal non-govern­men­tal orga­ni­sa­ti­ons that are invol­ved in projects and do global advo­cacy work are also affec­ted.’ The conse­quen­ces should not be unde­re­sti­ma­ted: ‘Program­mes are being pared back, in some cases substan­ti­ally, and many posi­ti­ons are being termi­na­ted. Exper­tise is also lost and people’s morale at work is affected.’

Taking respon­si­bi­lity

For Miss­bach, one thing is clear: Switz­er­land must not remain silent, and it must not shirk its respon­si­bi­lity. He would ther­e­fore like to see two things from the Fede­ral Coun­cil: ‘First, the Fede­ral Coun­cil should speak up. To date, it hasn’t said anything about the US cuts. We need a clear posi­tion state­ment. Secondly, a supple­men­tary loan from the FDFA in parlia­ment would be needed to reverse the CHF 110 million in cuts in 2025. The Swiss would support these demands, accor­ding to the results of an ETH survey conduc­ted at the end of 2021 (published on 29 June 2022), which indi­ca­ted that 55 percent of people in Switz­er­land are in favour of spen­ding more on deve­lo­p­ment coope­ra­tion. 80 percent signi­fi­cantly overe­sti­mate what this costs: when it is reve­a­led that Switz­er­land spends only CHF 350–400 per capita per year on this, appr­oval rises to 71 percent. There is also broad support for poli­ti­cal measu­res to reduce global inequa­lity, with 90 percent calling for stric­ter rules for compa­nies, 76 percent for an effec­tive climate policy and 74 percent for measu­res to combat tax avoid­ance. Beyond deve­lo­p­ment coope­ra­tion, Alli­ance Sud deals with deve­lo­p­ment finan­cing in a broa­der sense. This includes ques­ti­ons of policy cohe­rence in Switz­er­land – i.e. the connec­tion between dome­stic and foreign policy decis­i­ons – espe­ci­ally where Switzerland’s poli­ti­cal or busi­ness sectors have a nega­tive impact on margi­na­li­sed groups in the Global South. One exam­ple of this is Switzerland’s role as a loca­tion for corpo­rate profits that are gene­ra­ted abroad – but are often not taxed in the coun­try where they are gene­ra­ted. Its posi­tion as a global trading centre for raw mate­ri­als or as the head­quar­ters of inter­na­tio­nally active corpo­ra­ti­ons that don’t adhere to the same social and envi­ron­men­tal stan­dards abroad as in Switz­er­land is also part and parcel of this.

Global inter­de­pen­den­cies

‘Deve­lo­p­ment coope­ra­tion plays a key role in econo­mic deve­lo­p­ment,’ says Elsig from the Univer­sity of Bern. It works on seve­ral levels: firstly through invest­ments in basic services such as health­care, educa­tion, infra­struc­ture and gover­nance, and secondly through trade-rela­ted measu­res such as econo­mic promo­tion and inno­va­tion. For smal­ler econo­mies, in parti­cu­lar, access to regio­nal and inter­na­tio­nal value chains and trade is crucial, explains Elsig. ‘Many deve­lo­ping count­ries need this exter­nal support so they can posi­tion them­sel­ves on a better footing and exploit their export potential.’

For deve­lo­p­ment to be inde­pen­dent, count­ries need to have adequate capi­tal in addi­tion to access, stres­ses the CEO of Alli­ance Sud. That is why the fight against tax evasion is so important: these are funds that should be at the dispo­sal of count­ries within the Global South. He adds: ‘Africa loses twice as much money through capi­tal flight each year as it recei­ves from deve­lo­p­ment cooperation.’

Redi­rec­ting finan­cial flows

‘The vast majo­rity of this is corpo­rate tax avoid­ance,’ says Andreas Miss­bach, ‘largely in connec­tion with the extra­c­tion of raw mate­ri­als – which is why it has long been clear that funda­men­tal reforms are needed in Afri­can count­ries, in parti­cu­lar.’ A UN tax conven­tion is now being nego­tia­ted at the initia­tive of these count­ries, which actually illus­tra­tes how unco­ope­ra­tive the Global North, inclu­ding Switz­er­land, has been so far. This makes it all the more important to take a fresh look at the situa­tion: ‘We simply can’t afford to have the money flowing out of the count­ries in the Global South any longer – it has to stay on the ground and finance what’s happe­ning today through aid.’ The fourth Inter­na­tio­nal Confe­rence on Finan­cing for Deve­lo­p­ment (FfD4) from 30 June to 3 July 2025 in Seville could be a turning point, says Miss­bach: ‘Now would be the moment for Europe – and Switz­er­land – to finally take action.’

Legal pres­sure with an impact

Supply chains are the nervous system of the globa­li­sed economy. A look across the border shows that the German Supply Chain Due Dili­gence Obli­ga­ti­ons Act (Liefer­ket­ten­sorg­falts­pflich­ten­ge­setz, LkSG), which came into force on 1 Janu­ary 2023, obli­ges compa­nies to iden­tify and prevent human rights and envi­ron­men­tal risks in their global supply chains. The aim is to prevent syste­ma­tic viola­ti­ons such as child labour, forced labour or envi­ron­men­tal destruc­tion. The spokesper­son of the German Fede­ral Office for Econo­mic Affairs and Export Control (BAFA) states: ‘Most of the compa­nies subject to this obli­ga­tion are well or very well prepared for the LkSG’s roll-out. The infor­ma­tion provi­ded by BAFA after the audit is to be imple­men­ted by the compa­nies. Compa­nies also take their legal obli­ga­ti­ons very seriously when it comes to inci­dent-rela­ted inspec­tions and possi­ble human rights viola­ti­ons.’ Accor­ding to the 2023 accoun­ta­bi­lity report, initial complaints and risk-based audits led to tangi­ble action.

A second vote

If we want to pursue a coher­ent policy that links deve­lo­p­ment coope­ra­tion, human rights and the economy, are volun­t­ary initia­ti­ves enough – or do we need a binding legal frame­work? Opini­ons differ on this in Switz­er­land. At the end of May, a broad-based Respon­si­ble Busi­ness Initia­tive (RBI) was submit­ted to the Fede­ral Chan­cel­lery for the second time. The initial RBI failed to reach a two-thirds majo­rity of the canto­nal votes on 29 Novem­ber 2020, although it reached a popu­lar majo­rity with 50.7 percent.

Resi­li­ence – or a new form of dependency

‘Many deve­lo­ping count­ries have become signi­fi­cantly more resi­li­ent over the past 20 years,’ says Elsig. This was also evident during the global finan­cial and econo­mic crisis from 2007 to 2009: lots of deve­lo­ping count­ries reco­vered faster than some OECD states. Nevert­hel­ess, the system remains vulnerable: ‘Extreme clima­tic events or geopo­li­ti­cal tensi­ons often hit fragile nati­ons twice as hard,’ says the Bern-based profes­sor. Such shocks foster new depen­den­cies and neces­si­tate long-term, relia­ble support – which requi­res poli­ti­cal perse­ver­ance. The prema­ture with­dra­wal of Western donors has conse­quen­ces: ‘If Europe steps back, it will leave a vacuum that other powers will quickly fill,’ warns Elsig. Indeed, we can see that many count­ries in the Global South are incre­asingly alig­ning them­sel­ves poli­ti­cally towards China, with far-reaching geopo­li­ti­cal conse­quen­ces. Is the Global North ready to assume respon­si­bi­lity – or are count­ries’ retre­ats into their natio­nal shells beco­ming more permanent?