Donor Interest, Policy Coherence, and the Institutional Structure of Public Aid

On September 16, the Swiss daily newspaper “Tagesanzeiger” reported that Amnesty International (AI) is disappointed about Swiss development aid. Representatives of AI as well as of the Swiss NGO network “Alliance Sud” deplore the limited aid budget (with political difficulties to agree to an increase up to 0.5 of the Swiss GNI in 2015), as well as the lack of a clear strategy and policy incoherence.

According to estimates by Alliance Sud, Swiss Bank accounts hold illicit money from developing countries in the order of 360 billion CHF (1 CHF≈1 USD). If they were properly taxed, year by year, developing countries could benefit from an extra financial inflow of about 6 billion CHF which is an amount more than twice as important as current public Swiss development assistance. The article further complains about political concessions to the pharmaceutical industry and to agriculture, again to the detriment of developing countries.

In the other major Swiss newspaper “Neue Zürcher Zeitung” (NZZ) we read today that part of the future aid budget will be used to meet the pledges made in the Copenhagen agreement on international climate policy. Interesting, the attentive reader will say – since the agreement itself considers that these funds should be additional (to aid funds, nota bene!). As we could read in NZZ four days ago, the head of the Swiss aid agency DEZA is well aware of this fact, but argues that this part, of course, will not be taken from existing funds, but only from the projected increase in development aid, i.e., the increase the Swiss Parliament is yet to decide about. Can this be considered as additional if the overall amount, even optimistically projected, still falls short considerably of the internationally agreed objective of 0.7%?

But I do not intend to dwell on numbers which, anyway, say pretty little about what has been actually achieved in development cooperation. Rather, I would like to stress that this type of development policy making is not specific for Switzerland in any way (apart, maybe, from the issue of the banks). Almost all donors promise aid amounts, over and over again, of which they know that they will never get them through parliament. Almost all will try to double count whatever they spend, against both climate and development objectives (and many of them even count a substantial amount of their aid projects as climate relevant, although there is no link to climate change issues at all – see our recent CIS Working paper on over-coding.

More generally, the scientific literature on donor interest considerations in the allocation of development aid started in the early 1970s and has produced hundreds (if not thousands) of articles on various bilateral and multilateral donors. In recent years, policy coherence specifically, has become a relevant area of research at the OECD Development Center which produced several studies on the issue. Courses on these issues were taught last year to our B.A. students in political science.

While all donor countries show a dominance of national priorities over development priorities in some areas (or, should we say, a dominance of certain lobby interests over both, national interests and development interests?), clearly, different countries show different propensities to overrule development objectives. It would be interesting to examine to what extent institutional governance structures in the donor countries themselves are correlated with these difference.

The institutional structure of public aid is a frequently debated topic in Switzerland. In fact, the above mentioned article from Tagesanzeiger also puts part of the blame on the recent merger of some departments of the Swiss aid agency DEZA with departments of the Foreign Ministry (EDA). NGOs argue that this will reduce the power of DEZA in the fight for a higher weight of development objectives in Swiss policy making and aggravate the coherence problem.

The debate about who should best be responsible for which parts of international cooperation is also a constant phenomenon in neighboring country Germany. Each change of government induces some change in this respect. The most recent decision is a merger of the internationally well known German Technical Cooperation (GTZ) with its smaller sisters InWent and DED. The equation is gtz + InWent + DED = giz, i.e., clearly, GTZ dominates in the process.

More importantly, however, virtually before all elections, there is a debate about the abolition of the German Ministry of International Cooperation and Development (the formal head of all the sub-agencies), and an integration of its responsibilities into the Foreign Ministry. The current minister was a strong proponent of this move until he was himself (very unexpectedly) appointed to the office.

The debate in Germany thus seems to parallel the Swiss debate about the role of DEZA. Ever since its foundation in 1961, for the simple reason to offer a position to the junior partner in the (then) new German government coalition, NGOs and researchers in the area of development policy have supported the existence of this separate ministry for reasons of a supposedly stronger weight of development objectives in overall government decision making.

Nevertheless, and despite the large number of aid allocation studies mentioned above, I am not aware of any large N empirical cross-country study examining the effect of separate (and relatively independent) aid structures on the balance between donor interest and recipient need motivations for government aid. This may be worthwhile examining in the future.

2 thoughts on “Donor Interest, Policy Coherence, and the Institutional Structure of Public Aid

  1. Dear Katia

    I assume that it would be quite difficult to operationalize “degree of independence of aid structure” in a reliable way. Even more so “balance between donor and recipient need”. But maybe this is not necessary at all.

    Switzerland’s development cooperation policy has a very good reputation when it comes to the issues of instrumentalisation for other – strategic – foreign policy goals. But when I come to think of it: I’d say that this is by virtue of being a small country without the same strategic interests as, say, the US or other former colonial powers. If France subordinates its international development cooperation policy to its, say, security policy, then it is not BECAUSE it has an “UNindependent aid structure”. It is possibly the other way round: The fact that France has other strategic interests is the reason a) for its aid structure not being independent and b) for its development cooperation policy being skewed towards non-developmental strategic interests. But i’m just brainstorming here…
    Best

    David Weiss

  2. David, thanks for your comment. You might be interested in looking at Jean-Claude Berthelemy’s article in the “Review of Development Economics” 10(2), May 2006. He does not compare institutional structures, but he does compare the donor interest orientation in a large N setting. With respect to trade where his results are most explicit, results are very positive for Switzerland, indeed. In fact, Switzerland turns out to be the ONLY DAC donor for whom trade interests do not significantly influence aid allocation policies.
    Katja

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