The Nauru government says that the OECD's eligibility criteria does not reflect their dire need of aid. Photo: AFP /Torsten Blackwood
Nauru has celebrated a decision by the Organisation for Economic Cooperation and Development (OECD) that may have saved it from losing tens of millions in aid.
In a statement, the Nauru government thanked Australia and New Zealand for a proposal that stop the OECD from removing their eligibility for overseas development assistance (ODA).
The OECD obliges its member states to make an annual ODA contribution for the sake of their membership, but any aid given to a country outside of the list would not count.
"Only countries and territories included in the DAC list of ODA recipients are eligible to receive this assistance. These consist of all low- and middle-income countries as defined by the World Bank," OECD rules state.
Per the rules, a country is removed from the list - or graduates - after being classified as high-income for three consecutive years. Nauru would have been set to "graduate" in January 2026.
Development expert Dr Terence Wood told RNZ Pacific that if that were to happen, it would incentivise donor countries to exclude Nauru entirely.
"It will very likely mean that multilateral donors such as the Asian Development Bank stop giving it ODA. It will probably mean that some bilateral donors such as Japan and New Zealand will cease giving it ODA too." he said.
According to the Lowy Institute Pacific Aid Map, cumulative ODA grants to Nauru has plateaued since 2020, offset slightly by an increase in loans, clocking out at US$38.4 million in 2023.
Australia has historically made up the bulk of that contribution. In 2023 it was 57 percent, or around $22 million.
Japan threw in around $11m, New Zealand $1.9m, and Taiwan $1.1m.
Multilateral organisations, like the Asian Development Bank, have been occasionally generous - in 2022 they contributed $11m.
Based on 2023 figures, if those three countries alone were to follow the OECD's advice, Nauru would lose more than a third of it's overall aid for the year.
Dr Wood told RNZ Pacific this would be highly likely.
"I strongly suspect that Australia and China will keep giving Nauru money even though it won't be eligible to be counted as ODA. In Australia's case, it has geostrategic and domestic political reasons for wanting to keep giving assistance to Nauru."
He said that China, having just won Nauru's allegience from Taiwan, would be well-placed to fill an aid vacuum.
"They will view this as a useful geostrategic win of their own and they are unlikely to jeopardise this by ceasing funding. All the more so because they don't report on ODA to the OECD as it is."
NZ supportive but noncommittal
OECD member states have to align their policies with OECD standards, in a general sense. This includes their ODA, where several of Nauru's donor nations have voluntarily commitments to donate around 0.7 percent of their income.
A member state's progress on are raised when a country's membership is under review. The OECD say that though there is nothing legally binding, a member country would not receive credit for any non-ODA contributions.
Nevertheless, a spokesperson for the Ministry of Foreign Affairs and Trade (MFAT) told RNZ Pacific that Aotearoa are free to give aid to whomever they like.
"We can provide development cooperation to all Pacific Island countries, including those that have graduated from the OECD's ODA eligibility list."
"This is because New Zealand considers that Pacific Island countries continue to face economic and environmental vulnerabilities regardless of their income status."
"New Zealand aligns its development cooperation to the OECD Development Assistance Committee's eligibility rules for ODA. New Zealand does not provide development cooperation to countries outside of the Pacific that have graduated."
The Nauru government says that the OECD's eligibility criteria does not reflect their dire need of aid.
"The UN's new Multi-Dimensional Vulnerability Index (MVI) ranks Nauru as the fifth most vulnerable nation globally and the most vulnerable in the Pacific." the statement read.
"Gross National Income (GNI) and Gross Domestic Product (GDP) fail to reflect the realities faced by Small Island Developing States and reinforces Nauru's need for continued development assistance to safeguard essential services, infrastructure, and long-term stability."
A proposal drafted by Australia, New Zealand and Austria was adopted by the OECD meant that Nauru's "graduation" will be postponed until January 2027.
