Remember how Donald Trump wound up the USAID (US Agency for International Development) last month, claiming American taxpayer money was being spent on projects in third world countries that could be better spent at home.
France, although not a big spender on development in third countries, is known to prioritise funding for certain projects, such as climate change, renewable energy, waste-water treatment, urban mobility, clean air and so on.
In India, French spending has largely focused on urban mobility solutions, such as metro networks. Funding is done through the French Development Agency (AFD), a bank wholly owned by the French government.
AFD’s budget for this year is nine billion euro ($10.5 billion), given mostly as loans that carry higher rates of interest compared to those lent by the World Bank or the Asian Development Bank. Nevertheless, it has many takers. Grants are also given.
But politics is casting a shadow over its lending. As parliament swings more to the right, the sentiment against spending money overseas is hardening.
France has a national debt totalling over 3.3 trillion Euro and bitter wrangling over how to resolve that has seen the departure of two prime ministers, Michel Barnier last December and Francois Bayrou a few days back.
“The fiscal situation in France is a challenge,” admitted Philippe Orliange, Executive Director of Operations at the AFD (French Development Agency).
He was briefing journalists from India, Bangladesh, Sri Lanka and some southeast Asian countries in Paris on Monday, on the challenges relating to development funding.
The debate on such funding “is harsh because of the fiscal situation,” he said.
There’s also growing pressure from France’s partners in the European Union (EU). The suggestion is that AFD fund projects that involve participation by French or European companies.
The argument is that since Indian and Chinese Exim banks tie their lending to projects involving firms from those countries, why not AFD do the same.
Add to that pressure from the EU to focus on projects closer to home, in Europe for instance. Ukraine is an obvious example. Moldova is another.
For now, AFD is holding its course. In fact, President Macron of France recently reopened three offices in the Indo-Pacific, including those in Fiji and Papua New Guinea.
It helps that the public at large does not appear to share the sentiment in parliament against overseas funding. But for how long that will remain is not clear.
“It is not that the far right is against it,” said Orliange, pointing to Italy. “The far-right government of Giorgia Meloni has increased overseas spending since becoming prime minister in 2022.”
But you can never tell with politics. If public opinion does turn against overseas spending, expect FDA budgets to go down. For that matter, the dice may have already been cast given the EU push for funding to be directed more within Europe.
Thirty eight years in journalism, widely travelled, history buff with a preference for Old Monk Rum. Current interest/focus spans China, Technology and Trade. Recent reads: Steven Colls Directorate S and Alexander Frater's Chasing the Monsoon. Netflix/Prime video junkie. Loves animal videos on Facebook. Reluctant tweeter.
