Agencies and policies : The performance of bilateral donors in fighting corruption [1 ed.] 9783836611916, 9783836661911

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Christoph Seidler

Agencies and policies

Copyright © 2008. Diplomica Verlag. All rights reserved.

The performance of bilateral donors in fighting corruption

Diplom.de

Christoph Seidler Agencies and policies The performance of bilateral donors in fighting corruption ISBN: 978-3-8366-1191-6 Druck: Diplomica® Verlag GmbH, Hamburg, 2008

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Dieses Werk ist urheberrechtlich geschützt. Die dadurch begründeten Rechte, insbesondere die der Übersetzung, des Nachdrucks, des Vortrags, der Entnahme von Abbildungen und Tabellen, der Funksendung, der Mikroverfilmung oder der Vervielfältigung auf anderen Wegen und der Speicherung in Datenverarbeitungsanlagen, bleiben, auch bei nur auszugsweiser Verwertung, vorbehalten. Eine Vervielfältigung dieses Werkes oder von Teilen dieses Werkes ist auch im Einzelfall nur in den Grenzen der gesetzlichen Bestimmungen des Urheberrechtsgesetzes der Bundesrepublik Deutschland in der jeweils geltenden Fassung zulässig. Sie ist grundsätzlich vergütungspflichtig. Zuwiderhandlungen unterliegen den Strafbestimmungen des Urheberrechtes. Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in diesem Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme, dass solche Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei zu betrachten wären und daher von jedermann benutzt werden dürften. Die Informationen in diesem Werk wurden mit Sorgfalt erarbeitet. Dennoch können Fehler nicht vollständig ausgeschlossen werden und der Verlag, die Autoren oder Übersetzer übernehmen keine juristische Verantwortung oder irgendeine Haftung für evtl. verbliebene fehlerhafte Angaben und deren Folgen. © Diplomica Verlag GmbH http://www.diplomica.de, Hamburg 2008 Printed in Germany

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To my parents

Kareen and

Hannes

Contents 1. Introduction ............................................................................................................................... 3 1. Introduction ............................................................................................................................... 3 2. Paving the way: Some facts on corruption and development ................................................... 7 2.1. Defining corruption............................................................................................................. 7 2.2. Measuring corruption ......................................................................................................... 9 2.3. Corruption and development .............................................................................................10 2.4. The role of donors in fighting corruption..........................................................................13 3. Towards an AC regime in bilateral DC ....................................................................................17 3.1. A few words on regimes .....................................................................................................17 3.2. What could the regime look like? ......................................................................................19 3.3. Principles, rules, norms, procedures ................................................................................ 22 3.3.1. Principles ............................................................................................................................................22 3.3.2. Rules and Norms...............................................................................................................................22 3.3.2.1. Complexity and timing..............................................................................................................23 3.3.2.2. Mainstreaming AC efforts in donor agencies........................................................................23 3.3.2.3. Supply-side issues, domestic advocacy ...................................................................................24 3.3.2.4. Knowledge management, evaluation ......................................................................................25 3.3.2.5. Country specificity of AC actions ...........................................................................................26 3.3.2.6. Coalition building ......................................................................................................................27 3.3.2.7. Entry Points, sectoral approaches...........................................................................................28 3.3.2.8. Strengthening Civil Society.......................................................................................................29 3.3.2.9. Support decentralization and local participation...................................................................30 3.3.2.10. Political issues...........................................................................................................................31 3.3.3. Decision making procedures ...........................................................................................................32

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4. The normative level: Three AC policy papers examined ........................................................ 33 4.1. USAID ............................................................................................................................... 34 4.1.1. Complexity and timing .....................................................................................................................35 4.1.2. Mainstreaming AC efforts in donor agencies................................................................................36 4.1.3. Supply-side issues, domestic advocacy...........................................................................................37 4.1.4. Knowledge Management, Evaluation ............................................................................................37 4.1.5. Country specificity of AC actions ...................................................................................................38 4.1.6. Coalition building ..............................................................................................................................38 4.1.7. Entry points, sectoral approaches...................................................................................................38 4.1.8. Strengthening Civil Society ..............................................................................................................39 4.1.9. Support decentralization and local participation ..........................................................................39 4.1.10. Political issues ..................................................................................................................................40 4.1.11. Summary for USAID......................................................................................................................40 4.2. DFID ..................................................................................................................................41 4.2.1. Complexity and timing .....................................................................................................................42 4.2.2. Mainstreaming AC efforts in donor agencies................................................................................43 4.2.3. Supply-side issues, domestic advocacy...........................................................................................43 4.2.4. Knowledge Management, Evaluation ............................................................................................44 1

4.2.5. Country specificity of AC actions ...................................................................................................44 4.2.6. Coalition building ..............................................................................................................................44 4.2.7. Entry points, sectoral approaches...................................................................................................45 4.2.8. Strengthening Civil Society ..............................................................................................................45 4.2.9. Support decentralization and local participation ..........................................................................46 4.2.10. Political issues ..................................................................................................................................46 4.2.11. Summary for DFID ........................................................................................................................46 4.3. Sida.................................................................................................................................... 47 4.3.1. Complexity and timing .....................................................................................................................49 4.3.2. Mainstreaming AC efforts in donor agencies................................................................................49 4.3.3. Supply-side issues, domestic advocacy...........................................................................................50 4.3.4. Knowledge Management, Evaluation ............................................................................................50 4.3.5. Country specificity of AC actions ...................................................................................................51 4.3.6. Coalition building ..............................................................................................................................51 4.3.7. Entry points, sectoral approaches...................................................................................................52 4.3.8. Strengthening Civil Society ..............................................................................................................52 4.3.9. Support decentralization and local participation ..........................................................................53 4.3.10. Political issues ..................................................................................................................................53 4.3.11. Summary for Sida ............................................................................................................................53 4.4. Summary of the results on the normative level................................................................. 54 5. The implementation level: aid allocation patterns compared ................................................ 56 5.1. USA.................................................................................................................................... 56 5.2. UK ..................................................................................................................................... 57 5.3. Sweden .............................................................................................................................. 58 5.4. Summary of the results on the implementation level ....................................................... 59 6. Conclusion ................................................................................................................................61 7. References................................................................................................................................ 64 8. Abbreviations............................................................................................................................71

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List of tables Table 1: Important OECD documents on corruption ..................................................................................21 Table 2: USAID, DFID and Sida compared ...................................................................................................33 Table 3: Degree of similarities to OECD recommendations ........................................................................54 Table 4: The USA’s bilateral ODA in 2004 .....................................................................................................57 Table 5: The UK’s bilateral ODA in 2004 .......................................................................................................57 Table 6: Sweden’s bilateral ODA in 2004 ........................................................................................................58 Table 7: Results summarized ..............................................................................................................................62

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1. Introduction

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In this book, I want to examine how bilateral donors perform in fighting corruption. Taking an actor-centred, policy-oriented approach I focus on three selected bilateral agencies that are heavy-weights in the aid scene: the United States Agency for International Development (USAID), the British Department for International Development (DFID) and the Swedish International Development Cooperation Agency (Sida).2 Each of the three agencies that I focus on faces corruption individually. At the same time corruption remains a common problem, given its negative consequences on development. In this book, I take a rationalist perspective. I argue that donors perform well in fighting corruption when they cooperate. In other words: when donors try to fight corruption individually in their target countries, they risk a suboptimal outcome on the global scale - or as the Organisation for Economic Co-operation and Development (OECD) phrases it: “The risks associated with a piecemeal response, in which various donor organisations act in a deliberate but uncoordinated way, are set to increase.”3 Donors thus face a problem of collective action, as fragmentation of anticorruption (AC) work is often hindering success. Regime theory provides tools to overcome problems of collective action. When states establish a regime in a certain issue area, they do so to better pursue their own individual and rational interests. In the current case, it is in the bilateral donors´ interest that their official development assistance (ODA) is used as effectively as possible. To achieve this, they need to fight corruption in their partner countries and at home in a coordinated way. Thus the question which this book addresses is: Does current cooperation between

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bilateral donors constitute a working international regime for fighting corruption in

I would like to acknowledge the help of the following people who has made this book possible: Odd-Helge Fjeldstad and Alf Morten Jerve (CMI), Sheona Duff (DFID), Bathylle Missika (OECD), Ina Eriksson (SIDA), Hansjörg Elshorst (TI), Wilhelm Mirow and Henry Thomson (FU Berlin), Christiane Arndt (Maastricht Graduate School of Governance and Harvard University), Kareen Klein (University of Cambridge and Université de Genève). I further would like to thank Desiree Nilsson (Uppsala University) for her comments at the presentation of my ideas at the Sixth Pan-European International Relations Conference 12-15 September 2007 in Turin. And above all, I would like to thank my parents for always supporting me. 2 In section 3.4. of this book I explain in detail why I have focussed on these particular cases. 3 OECD (2006), p. 3. 1

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bilateral development cooperation?4 In order to answer this question, I use the following variables: the cooperation in the field of anti-corruption in bilateral development cooperation will be the independent variable, whereas the existence of a regime in this field will be the dependent variable. Other possible independent variables such as the power distribution in the international system shall be regarded as fixed. This assumption shall be permitted as the idea of a hegemonic state in a regime entirely devoted to more or less altruistic development cooperation seems to be somewhat absurd. To operationalize the independent variable, I take two steps. In the first step, I take a look at the normative level in examining key policy papers of the three donors. My assumption is the following: states cooperate when they all incorporate the same contemporary policy thinking in their papers. To define contemporary policy thinking, I use the work of OECD/DAC.5 This group's documents, which draw upon the earlier work of the World Bank and Transparency International, reflect the smallest common denominator of ideas of the most important donor countries. I realize that by focussing on the OECD/DAC countries, I leave out a fraction of donors that are not members of this group. According to BROWNE6 about one tenth of total ODA – perhaps between 5 billion USD and 10 billion USD per year – is accounted for by donors of the south who are not members of the OECD/DAC. The largest donors from this group are China and India. Yet leaving these donors out of the picture seems to be justified when theorizing about a possible AC regime in development cooperation. Both India and China are not signatories Bukovansky (2002), p. 5. proposes an AC regime that comprises UN, IMF, WB, and OECD on the international institutional side and TI and the International Chamber of Commerce on the NGO and private sector side. One could argue that the anti-corruption regime in bilateral development cooperation that I examine in this book might as well be a sub-set of such a larger AC regime. 5 The Development Assistance Committee (DAC) is a specialised committee of the Organisation for Economic Co-operation and Development (OECD). Its members periodically review the amount and the nature of their contributions to aid programmes and consult each other on other relevant aspects of their development assistance policies. For more information on DAC's mandate visit: http://www.oecd.org/document/62/0,3343,en_2649_33721_1918654_1_1_1_1,00.html (All online resources cited in this thesis have been verified on 13 October 2007). OECD/DAC has several subsidiary bodies, among them the Network on Governance (GOVNET) which is responsible for the AC work. For more information on DAC's structure visit: http://www.oecd.org/dataoecd/50/54/18058884.PDF 6 Browne (2007), p. 121.

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of the Paris Declaration on Aid Effectiveness. For the moment they do not seem to be interested in finding any regime on aid effectiveness or fighting corruption. It remains to be seen if the UN's new bi-annual Development Cooperation Forum (DCF)7 can bridge the gap between OECD/DAC donors and the donors from the south. To sharpen the picture of the current AC state of the art in bilateral DC, I have added recent insights from scholars to better reflect the edge of academic reasoning in the field. My assumption: if donors incorporate all the core findings from the OECD papers as well as fresh academic insight simultaneously in their policy papers, they cooperate. For every donor, I map the concordance between the agency's strategy and the OECD recommendations on an ordinal scale (high, middle, low). In a second step, I look at how the policies are actually applied by taking a look at the aid allocation patterns of the three donors at issue. I examine whether similarities between donors can be found in this case. Through coordinated actions at the country level donors could avoid supplying aid to the most corrupt states. In doing so, they would show that their AC policies are more than just lip service. Only in this case can a working regime develop. To operationalize the dependent variable, I need to define what regimes actually are. I use KRASNER'S classical definition of regimes as “sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors’ expectations converge in a given area of international relations”.8 This book is structured in the following way: the section following this introduction provides information on the environment that donors operate in. Here, I deal with problems of defining and quantifying corruption as well as with the influence of corruption and development and the role of donors in fighting corruption. In the section thereafter, I Copyright © 2008. Diplomica Verlag. All rights reserved.

examine whether roles and norms for a possible regime exist by looking at key policy documents of the OECD, USAID, DFID and Sida. After that I turn my attention to the three donors’ aid allocation patterns to see if normative and implementation aspects of fighting corruption coincide. In the last section, I present the key findings of this book and

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For more details see: http://www.un.org/ecosoc/newfunct/develop.shtml Krasner (1983), p. 2.

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suggest ideas for future research.

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2. Paving the way: Some facts on corruption and development This section seeks to provide some essential information that is needed to understand the complex environment that donors operate in. It starts by explaining that donors still have difficulties to pinpoint what corruption actually is. Despite many attempts there is no universally agreed definition so far. Consequently, some of the most important attempts are briefly presented. The section then continues by explaining a second key problem that donors face: how can corruption actually be quantified? It is shown that measuring corruption is equally challenging as defining it. Following this, the effects of corruptions on development are explored which donors need to take into account when operating in their target countries. The section concludes by presenting some ideas on the particular role of donors in fighting corruption.

2.1. Defining corruption Corruption is not a new problem. In fact, it seems to be a problem that is as old as the concept of government itself. KLITGAARD provides some historical evidence: Even 2300 years ago, he writes, the Brahman Prime Minister of Chandragupta was mentioning “at least fourty” ways of stealing money from the government. And in ancient China, there was even an anti-corruption provision in the public sector: officials were granted “Yang-lien”, a special allowance to “nourish incorruptness.” Nevertheless, KLITGAARD writes, “such nourishment often failed to achieve that purpose”.9 Ancient Greeks understood corruption as “a deviation from or perversion of sound government systems.”10 There has been a whole battery of definitions of the term corruption in the AC literature of

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the recent years. Although I do not want to enter too deep into this – still unfinished – discussion, I nevertheless would like to outline a small number of influential attempts to define the term. My main aim here is to illustrate that the notion of corruption still remains somewhat unclear, even after at least two decades of intensive research. One of the fundamental definitions of corruption has been undertaken by KLITGAARD in the late 9

Examples are all taken from Klitgaard (1988), p. 7. Amundsen (2006), p. 5.

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1980s. He used a principle-agent-model to define corruption “in terms of divergence between the principal's or the public's interests and those of the agent or civil servant: corruption occurs when an agent betrays the principal's interests in pursuit of their own.” KLITGAARD has summarized his findings in a “stylized equation” of corruption: Corruption equals Monopoly plus Discretion minus Accountability. This definition has been very influential and formed the working-base base for a larger number of scholars and institutions. Among others, the World Bank based its anti-corruption work in the late 1990s on this approach.11 Yet scholars have noted that there seems to be a flaw in KLITGAARD's definition: this is due to the fact that his definition requires that the principle is not corrupt himself: “This is often not a reasonable assumption in the most corrupt countries.”12 Transparency International (TI) defines corruption as “the misuse of entrusted power for private gain”. This very broad definition thus encompasses corruption in both the private and the public sector as well as in civil society. OECD/DAC has used the following definition: “Corruption is usually defined as the abuse of public office for private gain, however, it is most helpfully viewed as an outcome, the consequence of any of a number of the failures in accountability relationships which characterise a national governance system.”13 Aside from the attempts to define the term that have been presented here, a large set of others exist. From the three donors that I focus on, only two – USAID and Sida – have defined corruption in their policy papers (see sections 4.1 and 4.3. of this paper). DFID does not use a particular definition, neither does the United Nations Convention against Corruption (UNCAC). Yet, a large amount of scholarly and practically oriented literature proves that one can fruitfully work in the field without defining the term. This is also what

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I shall try to do.

Riley (1998), p. 135. Andvig/Fjeldstad et al. (2001), p. 106. 13 OECD (2006), p. 10. 11 12

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2.2. Measuring corruption Since there is rarely hard evidence of corruption taking place in the public, donors face a measurement problem: how can reliable data on corruption be obtained? The solution has been to collect information about people’s personal perceptions of the extent of the corruption problem: “How much corruption do people think is going on?”14 This data is usually gathered from people that live in the country under review, from businesses that operate there and from country analysts that are in a position to assess and compare the situation in different countries. It has been argued though, that indicators which are mainly based on such subjective criteria such as TI's Corruption Perceptions Index (CPI)15 and Bribe Payers Index (BPI)16 are only of a limited value. On the other hand, “since corruption usually leaves no paper trail, responses about corruption based on individuals' actual experiences are sometimes the best available, and the only, information we have”17. Among others, SOREIDE has argued that the construction of indexes is key to further improve the understanding of corruption.18 It seems to be academic consensus though, that corruption indicators that are based on subjective criteria are of high value, despite some methodological problems. KAUFMANN and his colleagues put it in simple words: “corruption can, and is being, measured”19 Or as SOREIDE puts it: “The value of corruption indexes should not be doubted”20 – despite the known problems. There are ongoing attempts, though, to find other than perceptions based indicators. Recently, DREHER et al. have proposed a new index that not only derives the rank but also the distance between countries in the corruption index. They believe that “this has the potential to give a more accurate (or less biased) estimate of how the impact of corruption varies across countries

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and hence the dependent variable of interest.”21

Soreide (2003), p. 1. For more details on the CPI see: http://www.transparency.org/policy_research/surveys_indices/cpi. 16 For more details on the BPI see: http://www.transparency.org/policy_research/surveys_indices/bpi. 17 Kaufmann et al. (2006), p. 1. 18 Soreide (2003), p. 12. 19 Kaufmann et al. (2006), p. 1. 20 Soreide (2003), p. 12 21 Dreher et al. (2007), p. 460. 14 15

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2.3. Corruption and development There are multiple – and sometimes rather confusing – connections between corruption and development that donors need to consider. Or, as FJELDSTAD and ANDVIG put it: “The ‘causes’ and ‘effects’ of corruption are closely interrelated and can hardly be separated.”22 For example, the level of corruption seems to be influenced by the level of development in the country in question. It has been argued that misuse of public office is more likely to be exposed in more economically developed countries as “economic development increases the spread of education, literacy and depersonalised (‘arm’s-length’) relationships”.

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Studies have shown a strong correlation between the average income

(Gross Domestic Product [GDP] per capita) and a country’s ranking on corruption indexes. But as LAMBSDORFF explains, no causality between GDP and corruption can be derived from this insight.24 So, so for donors the puzzling question remains: “Is a country poor because of corruption, or is a country corrupt because of poverty?”25 Interestingly, there has been a debate about possible beneficial aspects of corruption. In some parts of the literature, one can find the argument that the economic benefits of corruption outweigh its costs in some countries - and that the buying and selling of political favours could have certain political and economic advantages: “One point often made is that bribery ‘greases the wheels’ by cutting red tape, and thus is improving efficiency.”26 This efficiency argument is based on the assumption that bribery might actually help to reduce the transaction costs for companies who find themselves in a jungle of public regulation provisions. According to this line of thinking, donors would not necessarily need to fight corruption because of its possible benefits. But KAUFMANN and WEI have deconstructed the efficiency argument as a myth. They found that firms that pay more bribes are nevertheless likely to spend more management time with bureaucrats negotiating regulations – and face higher cost of capital: “In fact, a consistent pattern is that bribery and measures of official Copyright © 2008. Diplomica Verlag. All rights reserved.

harassment are positively correlated across firms.”27 That means that donors have no excuse not to fight corruption, since the efficiency argument does not hold.

Andvig/Fjeldstad (2001), p. 78. Andvig/Fjeldstad (2001), p. 63. 24 Lambsdorff (1999), p. 6. 25 Andvig/Fjeldstad (2001), p. 74. 26 Andvig/Fjeldstad (2001), p. 70. 27 Kaufmann/Wei (1999), p. 16. 22 23

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But which is the exact influence of corruption on the growth of GDP in a particular target country? This question is not easy to answer as various scholars did not manage to find robust correlation between the two. For example, BRUNETTI et al. observed only insignificant effects.28 But how can this missing link between corruption and growth be explained? LAMBSDORFF suggested that the mixed evidence might be explained by the fact that corruption primarily has impacts on the accumulation of capital, but does not clearly affect the productivity of capital.29 It is important for donors to note that – without any question – corruption has a strong influence on the level of poverty in a country. TI has noted that corruption does not only reduce the net income of poor people “but also wrecks programmes related to their basic needs, from sanitation to education to healthcare. It results in the misallocation of resources to the detriment of poverty reduction programmes.”30 In the recent years, there has been a strong consensus in the academic world that a strong link between good governance and development exists. Thus, donors have sought to promote “good governance” in their target countries: “Today effective governance is recognized as a sine qua non for development and poor governance, in turn, as a contributing factor to poverty, conflict, and state failure, with repercussions for global security.“31 But what actually is “good governance”? KAUFMANN defines governance as “the traditions and institutions by which authority in a country is exercised for the common good.” In this definition, he includes three dimensions of governance: a political dimension, being “the process by which those in authority are selected, monitored, and replaced”, a economic dimension, being “the government’s capacity to effectively manage its resources and implement sound policies”, and an institutional respect dimension, being “the respect of citizens and the state for the country’s institutions”.32 He argues that “[i]mproving Copyright © 2008. Diplomica Verlag. All rights reserved.

governance and controlling corruption matter enormously for development, and countries can substantially improve, even in the short term, if the appropriate strategy and political

Brunetti et al. (1997), p. 24. Lambsdorff (1999), p. 7. 30 TI (2007), p. 2. 31 Spector (2005), p. XIII. 32 Kaufmann (2005), p. 82. 28 29

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resolve are present.”33 Donors promoting good governance often base their policies on research by BURNSIDE and DOLLAR on aid effectiveness.34 They showed that aid has been effective in countries “with good policies, good governance, and less corruption”35. At the same time, aid proved to be much less effective in countries with weak policies and high corruption. Consequently, they argue that “aid would be more effective if greater effort were made to direct it to good policy performers.”36 Following these insights, the developmental agenda has increasingly been dominated by the quest not simply to pursue initiatives “that focus on particular activities or sectors, but proposals that also deliver anti-corruption measures through wider reforms to the state.”37 In theory, one would assume that democratic institutions in target countries would make it easier for their citizens, media and watchdog-organisations to denounce cases of corruption. In practice, researchers have taken two opposite positions: “Some analysts argue that corruption is on the increase as a direct result of democratisation, since democratic political systems provide incentives and opportunities for corrupt practices. Others stress the potential of established democracies to devise institutions through which corruption can be tackled and contained.”38 The scholarly consensus that links the quality of public administration to economic development is thus contested by some researchers. There has been a longer academic discussion about findings by KAUFMANN and KRAY who suggest that while better governance clearly tends to promote economic growth, growth per se does not tend to promote better governance.39 Recently, KURTZ and SCHRANK argued that “that there is far more reason to believe that growth and development spur improvements in governance than vice versa.”40 They question fundamental cross-national measures of good governance and thus the empirical foundations of the causal linkage between growth and governance. Copyright © 2008. Diplomica Verlag. All rights reserved.

They believe “the dominant measures of governance” to be “problematic, suffering from Kaufmann (2005), p. 93. Burnside/Dollar (2000). 35 Spector (2005), p. XIII. 36 Burnside/Dollar (2000), p. 30. 37 Doig/Marquette (2005), p. 104. 38 Robinson (1998), p. 2. 39 Kaufmann/Kray (2002), p. 2. 40 Kurtz/Schrank (2007), p. 538. 33 34

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perceptual biases, adverse selection in sampling, and conceptual conflation with economic policy choices.”41 This critique has been answered by KAUFMANN et al. who defend their work in the field. They argue that the claims by KURTZ and SCHRANK are unsubstantiated and that their empirical work on the effects of governance on growth “is far removed from the best-practice frontier in crosscountry growth empirics.”42 Nevertheless, KAUFMANN et al. argue that there remain limitations of existing cross-country measures of governance. They explain a “need to complement cross-country indicators with more detailed and nuanced within-country data in order to inform efforts to improve governance at the country level.”43

2.4. The role of donors in fighting corruption Today it seems agreed that only by fighting corruption can donors help to build a better world: “Corruption undermines governance, economic growth, and, ultimately, the stability of countries and regions.”44 But this view has not always been mainstream: “For decades, international institutions had little if anything to say about corruption.“45 Players in the international scene hardly acknowledged the existence of the word “corruption” in their daily business. They rather nebulously referred to it as the “c-word”. The World Bank (WB) is often referred to as a striking example for this practice. Theoretically, the Bank team had understood the mechanisms of corruption for a long time, as a WB paper from the early 90s shows: “Pervasive corruption is particularly damaging to development. Corruption occurs in all countries and in many different forms. It tends to thrive when resources are scarce, and governments, rather than markets, allocate them; when civil servants are underpaid; when rules are unreasonable or unclear; when controls are pervasive and regulations excessive; and when disclosure and punishment are unlikely.”46 But in practice not much happened for a longer period of time: “Ten years ago, the aid donors, the World Bank, and the IMF seldom discussed corruption or dictatorship.”47 But

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things seem to have changed, as a speech by then World Bank President WOLFOWITZ on 11 April 2006 in Jakarta, Indonesia, illustrates: “Today, one of the biggest threats to Ibid. Kaufmann et al. (2007), p. 555. 43 Ibid, p. 562. 44 Spector (2005), p. 7. 45 Bukovansky (2002), p. 6. 46 World Bank (1991), p. 6. 47 Easterly (2006), p. 133. 41 42

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development in many countries […] is corruption,” he said. “It not only undermines the ability of governments to function properly, it also stifles the growth of the private sector.”48 A watershed was the World Bank’s decision in 1996 to radically reverse its longstanding policy. Before, the bank held the position that it could not explicitly recognize or seek to address the acute problems of corruption in many of its borrowing countries, because local politics were outside the Bank's official mandate. Now, those problems were given a high priority: “While World Bank lending to promote economic reforms fell by 14 per cent annually between 2000 and 2004, its lending to improve governance rose by 11 per cent annually during that period, and by the latter year 25 per cent of its lending was committed to law and public administration in borrowing countries.”49 The eventual rise of AC work in the strategies of donors is closely related to the aid effectiveness debate (see previous section of this book). Development assistance has seen some tremendous changes in the recent years – with the question of aid effectiveness in the centre. With international conferences and declarations such as the Millennium Declaration (September 2000), the International Conference on Financing Development (Monterey, March 2002), the World Summit on Sustainable Development (Johannesburg, August/September 2002), the Rome Declaration (February 2003) and the Paris Declaration (March 2005), the international community has been working heavily on the construction of a new aid architecture. One of the basic ideas is: “Not only should the recipient countries show commitment and make their national policies coherent in the pursuit of poverty reduction, but so should the donors. In addition, donors should harmonize their activities, an increasing share of donor funds should be general budget support, and donors' policies and activities should be aligned with the recipient country.”50 There is a complex relation between aid and corruption, as – among others – a recent Copyright © 2008. Diplomica Verlag. All rights reserved.

discussion paper by TI illustrates.51 Both occur in a particular form of interdependence. Of course, donors are indeed affected by corruption in recipient countries in their work and in service delivery. “Corruption within recipient countries can seriously undermine the Wolfowitz (2006). Arndt (2007), p. 3. 50 Selbervik/Nygaard, p. 29 51 TI (2007). 48 49

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achievement of intended results directly, by diverting a percentage of aid away from intended purposes and beneficiaries, or indirectly, by promoting inappropriate uses of aid.”52 But at the same time donors are also part of the problem: “Donors (bilateral or multilateral) who made and continue to make large amounts of funds available knowing the extreme weaknesses of a country's financial and other institutions, and the effect of corruption on those institutions, likewise share responsibility.”53 But this responsibility seems to be too often neglected in the Northern World.54 Take, for example, the Paris Declaration on Aid Effectiveness: although it states that corruption and lack of transparency “erode public support, impede effective resource mobilisation and allocation and divert resources away from activities that are vital for poverty reduction and sustainable economic development”55 it does not speak of the role of donors as part of the problem. The paper just deplores that “where corruption exists, it inhibits donors from relying on partner country systems.” Surprisingly, not a single word is wasted on how donors could help to reduce corrupt practices – or at least avoid fostering them. The role of donors is crucial. EASTERLY, a former senior economist at the World Bank criticises: “High aid revenues going to the national government benefit political insiders, often corrupt insiders, who will vigorously oppose democracy that would lead to more equal distribution of aid.”56 The magnitude of the difficulties that donors face cannot be overestimated: “The role that donors can play in strengthening government ownership, PFM systems and domestic accountability is therefore more complex than many are willing to admit. Different actors and interests play different roles in shaping budget policies and priorities.”57 A couple of recent studies suggest that aid actually decreases democracy and makes government worse: KNACK has found that higher levels of aid worsen bureaucratic quality and lead to more violations of the law and to more corruption.58 DJANKOW et al. similarly have found that high aid caused setbacks to democracy in the years 1960-1999.59 They Copyright © 2008. Diplomica Verlag. All rights reserved.

actually showed that the effect of aid on democracy is worse than the effect that oil has on Ibid, p. 4. CIDA (2000), p. 9. 54 Yet, recently, there seems to be evidence that a growing number of donors is starting to acknowledge this point. See e.g. SDC (2006), p. 18. 55 Paris Declaration (2005). 56 Easterly (2006), p. 135. 57 De Renzio (2006), p. 642. 58 Knack (2004). 59 Djankow et al (2005). 52 53

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democracy.60 In a somewhat cynical statement EASTERLY concludes: “Maybe bad governments attract donors who want to reform it just as sinners attract televangelists. However, if you control for this effect, donors make government worse.”61 In the scholarly debate, there have been various contributions on how donors need to improve policies in order to achieve better development results in their target countries. BIRDSALL has compiled “seven sins” that donors must seek to avoid in order to improve the quality of their aid:62 1. Impatience (with institution building) 2. Envy (collusion and coordination failure) 3. Ignorance (failure to evaluate) 4. Pride (failure to exit) 5. Sloth (pretending participation is sufficient for ownership) 6. Greed (unreliable as well as stingy transfers) 7. Foolishness (underfunding of global and regional public goods) Addressing these issues is not crucial for the partner countries’ futures but also for the donors themselves – because only in this way they can secure domestic support for their work: “Ongoing concerns about the anti-developmental or anti-democratic nature of politics and about endemic corruption in poor countries, however, undermine the case for

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increased support from rich countries.“63

The bad effect of oil on the likelihood of democracy and good governance in a particular country is well documented. Among others, Kolstad (2007) calls this the “resource curse”. 61 Easterly (2006), p. 136. 62 Birdsall (2004), p. 3. 63 De Renzio (2006), p. 627. 60

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3. Towards an AC regime in bilateral DC The main argument of this book is that donors perform well in fighting corruption when they cooperate. I argue that in this case, they would need to form an international regime64 to fight corruption in their partner countries and at home in a coordinated way. This would be in their own rational interest as it would secure that their ODA is used as effectively as possible. In this section, I examine if such a regime indeed exists. I start off by briefly explaining the idea of international regimes in general. I then continue to apply this theory to the field of this work. I use KRASNER'S definition of an international regime to show how the recent work of the donor community could be forming the basis of an AC regime in the making. I then continue to describe some basic rules and norms of this developing regime, based on key OECD/DAC documents. However, I do not address the question of compliance. Similar to BUKOWANSKY, I find the proposed regime still too young to judge its effectiveness.65 SANDHOLTZ and GRAY also do not speak about enforcement aspects in what they call not a regime but “the existence of international norms”.66

3.1. A few words on regimes In trying to theorize about international governance, scholars such as KRASNER and KEOHANE have developed the concept of international regimes in the late 1970s and early 1980s. These scholars were in fact looking to provide an alternative to neo-realist approaches that dominated IR at that time. Thus, regime theory is distinct from neo-

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realism on the one hand and liberalism on the other. It can be described as part of a neoinstitutionalist world view. One of the basic ideas behind this concept was to understand regimes as “something more than temporary arrangements that change with every shift in

I am aware that the word “institution” has now largely replaced the word “regime” in large parts of the scholarly literature. Nevertheless, I use the term in the context of this work because I think it is more appropriate for what I want to deal with in the field of bilateral DC. 65 Bukovansky (2002), p. 5. 66 Sandholtz/Gray (2003), p. 768. 64

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power or interests”67, that is distinct from one-shot agreements on the one hand and international organizations on the other. A first important use of the regime concept was the area of international trade, where scholars sought to explain how the economic institutions formed after World War II could be sustained in a time when the hegemonic USA were temporarily losing power. Later, the concept of regimes has been expanded to areas such as environment, communication and security.68 In a somewhat classical definition, KRASNER describes regimes as “sets of implicit or explicit principles, norms, rules, and decision-making procedures around which actors’ expectations converge in a given area of international relations”.69 KRASNER further defines principles as “beliefs of fact, causation, and rectitude”, norms as “standards of behavior defined in terms of rights and obligations”, rules as “specific prescriptions or proscriptions for actions” and decision-making procedures as “prevailing practices for making and implementing collective choice”. Thus, principles and rules provide the normative framework for regimes, while rules and decision-making procedures provide specific injunctions for appropriate behaviour.70 KRASNER notes that “changes in rules and decision-making procedures are changes within regimes”71 whereas “changes in principles and norms are changes of the regime itself”.72 Although the definition of regimes has been contested by some scholars, “the study of international regimes made an important contribution by supplementing the technical aspects of formal IOs with the norms and rules governing state behavior”73. The concept has been broadened and deepened since its first appearance in scholarly literature. The social-constructivist influences on the concept of regimes are particularly important.74 Constructivist scholars such as RISSE namely attacked one rationalist assumption of the regime theory: the fixed preferences of the actors.75 Constructivists rather argued that the preferences of the states can indeed be altered by a regime that they are part of. Scholars of

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the regime theory have responded by including this possibility in their theory.76 Krasner (1983), p. 2. Little (2005), p. 374. 69 Krasner (1983), p. 2. 70 Simmons/Martin (2002), p. 193. 71 Krasner (1983), p. 3. 72 Ibid, p. 4. 73 Simmons/Martin (2002), p. 194. 74 Zangl (2003), p. 136. 75 See e.g. Risse (2000). 76 Zangl (2003), p. 137. 67 68

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For practical reasons, I assume that in the present case of the developing AC regime, donors’ interests do not necessarily need to be altered by the regime in the short run. I have chosen to treat donors' preferences as fixed, as I understand the AC regime in bilateral DC as something nascent. Thus, the period under review is short enough to assume that the regime has not persisted long enough to alter the preferences of its participants.

3.2. What could the regime look like? The idea of a developing international anti-corruption regime has been raised in the scholarly literature. While BUKOVANSKY has argued for a regime that is largely based on a moral foundation,77 I argue in a purely rationalist tradition. This is because it seems to be in the rational interest of the major donors to form a regime on AC in bilateral DC. YOUNG has described three developmental sequences for international regimes. He labels them “spontaneous orders”, “negotiated orders”, and “imposed orders”.78 In my view, the developing AC regime in bilateral DC that I want describe here is a form of the “negotiated orders” that YOUNG describes as “conscious efforts to agree on [...] major provisions, explicit consent on the part of individual participants, and formal expression of the results.”79 More precisely, I understand the developing AC regime in bilateral DC as a “partial or piecemeal negotiated order” where “many problems [are] to be worked out on the basis of practice and precedent.”80 The bilateral donors have the rational interest that their ODA is used as effectively as possible. This is the main driver to set up the regime; the practical problems are to be solved during the ongoing work. But why was the regime formed in the first place? Again, YOUNG offers an explanation. He argues that leadership is a necessary condition, or “a critical determinant of success or failure in the processes of institutional bargaining that dominate efforts to form

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international regimes”81. From the three types of leadership that YOUNG presents – structural, entrepreneurial and intellectual – I find the idea of intellectual leadership most appropriate for the field in question. It is the power of ideas that “shape[s] the thinking of

Bukovansky (2002), p. 5. Young (1993), p. 113. 79 Ibid, p. 99. 80 Ibid. 81 Young (1991), p. 281. 77 78

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the principals in the process of the institutional bargaining.”82 In terms of leadership, the work of the OCED is important. The organization that is also active in the broader discussion on aid effectiveness pushed for a regulation in the field of AC. I would like to start from KRASNER'S definition to show that an AC regime in bilateral development cooperation is currently forming. Let me start with a theoretical assumption. If there really was a regime in the making, we would need to see the following: a) a distinct problem in the international relations b) a “set of implicit or explicit principles, norms, rules, and decision-making procedures” c) various actors with expectations that converge around these principles, norms, rules, and procedures. But which of these ingredients are actually present? Ad a) The international community in general and the donor countries in particular have recognized the influence of corruption on development. The Development Assistance Committee (DAC) is the body of the OECD that is mainly charged with issues related to co-operation with developing countries. An important forum for anti-corruption work is its Network on Governance (GOVNET). The OECD/DAC members have publicly recognized corruption as “a severe developmental problem” and have stated that “greater collaboration and the building of partnerships among donors and partners”83 is needed to fight it. In a recent policy paper OECD/DAC distinguishes between two types of actions that donor agencies can take to minimise the risks arising from corruption: firstly, a class of actions “whose effectiveness is not compromised by being done by each organisation separately (although the benefits will be greater the more organisations that undertake them)”, and, secondly, a class of actions that will “only be effective if they are undertaken jointly or in a strongly coordinated way”.84 OECD/DAC members thus undoubtedly Copyright © 2008. Diplomica Verlag. All rights reserved.

recognize corruption as a distinct problem in international relations that needs to be treated in a cooperative way. The donors see the risk “that donor resources will not be used for the intended purposes”, additionally they fear “that corruption will undermine the achievement of economic growth and poverty reduction by its corrosive effects on government Ibid, p. 307. OECD (2003), p.6. 84 Ibid, p.16. 82 83

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performance and private investment” and finally they are afraid of reputational risks “including the risk that aid to countries with corrupt leaders will tarnish donors' reputations and undermine the case for aid.”85 Ad b) The documents that OECD/DAC has produced in the previous years form the core of a “set of implicit or explicit principles, norms, rules, and decision-making procedures”. On the next page you will find a list of papers that are noteworthy in terms of rule development.86 Table 1: Important OECD documents on corruption Title of document Synthesis of lessons learned of donor practices in fighting corruption

OECD document number DCD/DAC/GOVNET (2003)1

Draft principles for donor action in anti-corruption

DCD/DAC/GOVNET (2005)6

Policy Paper on AntiCorruption – Setting an Agenda for Collective Action

DCD/DAC/GOVNET (2006)3/REV2

Remarks This comprehensive 60-page report was prepared by a team of consultants led by the Canadian Bruce B. Bailey. It was first discussed in October 2002 at a meeting of GOVNET. Eventually, it was published in June 2003. This paper evolved from the one mentioned above. It was first discussed at a workshop in February 2004 and drafted in March 2004. The principles were later revised to reflect comments and inputs received from GOVNET members at the 6th GOVNET meeting in January 2005. The draft principles were presented to the DAC in September 2005. This 29-page paper was prepared by GOVNET's anti-corruption task team on the basis of the “draft principles”. It was approved by the DAC in September 2006.

The following section of this book explains which rules and norms have evolved from these documents and how these rules and norms form the basis for a regime in the making. Ad c) The actors whose expectations converge around these principles, norms, rules, and procedures are the states with their respective bilateral donor agencies. The OECD/DAC

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members repeatedly stated that “new opportunities for collective action are emerging”.87 They thus affirmed their collective desire to combat corruption by cooperating on the international scale.

Ibid, p.6. Currently, DAC/GOVNET's Anti Corruption Task Team (ACTT) seeks to operationalize these documents in joint corruption assessments, and – possibly – common response principles. As these documents are not publicly available yet, I cannot discuss them in detail. 87 OECD (2006), p. 3. 85 86

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3.3. Principles, rules, norms, procedures The following principles, norms, rules, and decision-making procedures have evolved from the OECD/DAC documents:

3.3.1. Principles The principles of a regime are basic understandings among the actors taking part. Or, to put it differently, “coherent bodies of theoretical statements about how the world works”.88 As already stated, the OECD/DAC members have publicly recognized corruption as “a severe developmental problem” and have agreed that “greater collaboration and the building of partnerships among donors and partners”89 are needed to fight it. This is the fundamental principle of the developing AC regime.

3.3.2. Rules and Norms In regime theory, there is a clear distinction between norms and rules; with norms being “general standards of behaviour [that] identify the rights and obligations of states”90 and rules being often “designed to reconcile conflicts which may exist between the principles and norms”91. In practice, the difference between the two is not always that clear-cut. For this book, I have therefore chosen to combine those two categories. In the following, I will outline some of the basic rules and norms of the developing regime. In using the work of OECD DAC/GOVNET as the main foundation, I try to reflect a broad consensus of the most important donor countries on the problem of corruption.92 Where possible, I have also added findings from the recent academic literature that are likely to impact the rules and norms of the developing regime. I have structured the rules and norms derived from the OECD documents in the following way: first I will be focussing on the donor agencies Copyright © 2008. Diplomica Verlag. All rights reserved.

and their home countries. Later, I will present rules and norms that are more relevant on the partner country level. Little (2005), p. 373 Both: OECD (2003), p. 6. 90 Little (2005), p. 373 91 Ibid, p. 373 92 The twenty two member countries of the OECD Development Assistance Committee, the world's major donors, provided USD 103.9 billion in aid in 2006 (Source: http://www.oecd.org/document/17/0,2340,en_2649_34447_38341265_1_1_1_1,00.html).

88

89

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3.3.2.1. Complexity and timing First of all, donors and their partners need to understand corruption as a serious development problem in itself.93 They need to familiarize themselves with the thought that sustainable success in AC efforts will only come from comprehensive approaches. Donors should thus strive to support a large range of key governance reforms.94 AC initiatives need to be multi-pronged and sustained. In terms of timing, a long-term approach is essential. Actually, the time frames need to be much longer than experts had hoped in the past: “Despite great efforts over the past 10 years, there are indications that corruption is showing no signs of improvement, and could even be worsening.”95 Donors need to understand that it needs systemic and organisational change, including the role of civil society (see section 3.3.2.8.) and a change in the attitudes towards corruption, in order to achieve sustainable improvements. Donors have to understand that there are no quick fixes (such as higher wages in the public sector, enactment of anti-corruption laws or prosecution of a large number of corrupt officials).

3.3.2.2. Mainstreaming AC efforts in donor agencies In order to mainstream anti-corruption efforts in the agency, strong leadership – in a political and an organisational sense – is needed. Agencies must seek to minimise the risks of corruption in their operations. This holds true even in areas over which the agencies have limited control, such as loans. A central focal point at agency level should develop strategies and assist in mainstreaming of the agencies programmes at country level. Ideally, this would be a full-time core group that is reporting to or with easy access to the head of the agency. If possible, the group should draw upon the knowledge of decentralised advisers or field managers with a strong knowledge and interest in the subject of corruption. The group needs to have a strategy and operational plan with specific, time-

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bound and verifiable objectives as well as a clear budget. The work needs to be oriented according to a double agenda. It needs to aim at supply-side issues on the one hand and support partner countries in fighting corruption on the other hand. As fighting corruption is a long-term task, it does not have an end point. The agencies thus need a strategy for combating fatigue. It should provide for an initial period of intense activity, followed by OECD (2003), p. 49. Ibid, p. 51. 95 World Bank (2006), p. 1. 93 94

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lower intensity, and then another phase of new intensity.96

3.3.2.3. Supply-side issues, domestic advocacy The second of OECD/DAC's “Principles for Donor Action in Anti-Corruption” calls upon donors to “recognise that corruption is a two-way street.”97 It is important that donors play a significant role on supply-side issues related to corruption. This includes a strengthening of the agency's financial management and procurement systems over which they have direct control. Additionally, systems for loans and budgetary support over which the agency has influence need to be optimized. But donors need to do even more: bilateral agencies should engage in activities in their home countries that aim at the supply-side of corruption. The agencies both need to work on advocacy and support on the domestic level (e.g. strengthening the development and monitoring of antibribery or moneylaundering legislation, assisting countries to recover plundered state assets, policies of export credit agencies) and on the international level (e.g. strengthening conventions, international and regional collaboration, policy and efforts of multilateral agencies). They must seek to push their countries to sign, ratify and implement the relevant international conventions on corruption, namely the ones from the UN and the OECD.98 This is of particular importance as roughly a dozen OECD/DAC members have not yet ratified the UN Convention, although they were among the first to sign it in the years 2003 and 2004.99 Additionally, enforcement in many signatory countries is weak.100 Promotion of international treaties and the effective incorporation of the obligations resulting from these international treaties into national law, as well as their respective enforcement remain a vital This section is based on material from OECD (2003), pp. 31 and p. 49. OECD (2005), p. 6. 98 OECD (2006), p. 8. 99 As of October 2007, the following OECD/DAC members have not yet ratified the United Nations Convention against Corruption (UNCAC): Belgium, European Community, Germany, Greece, Ireland, Italy, Japan, Luxembourg, New Zealand, Switzerland. (Source: http://www.unodc.org/unodc/crime_signatures_corruption.html) The OECD convention has been ratified by all DAC members except for the European Commission. (Source: http://www.oecd.org/dataoecd/59/13/1898632.pdf). 100 TI's 2006 Global Corruption report explains that “enforcement has been weak in many countries (including Japan and the United Kingdom).” (Source: http://www.transparency.org/content/download/5025/29497/file/GC2006_00_part1_2_3.pdf) In July 2007, a progress report by Transparency International even came to the conclusion that “eight years after the convention entered into force, its success is not yet assured.” The report notes “significant enforcement” in fourteen countries, while deploring “little or no enforcement” in twenty countries. (Source: http://www.transparency.org/content/download/21619/314761/file/3rd_OECD_progress_report_07.p df). 96

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97

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task. A painstaking follow-up on the country level is essential.101 Development agencies, alone or in collaboration with the civil society can play an advocating role in AC reform issues within their own governments.102 Donors should also seek to encourage their governments to develop systems that better connect evidence with policy development.103 104

3.3.2.4. Knowledge management, evaluation The third of OECD/DAC's “Principles for Donor Action in Anti-Corruption” calls upon donors to “[m]arshal knowledge and lessons systematically and measure progress.”105 Knowledge management and information sharing are indeed essential as a huge number of texts on corruption have been produced over the years, both from an academic and a practically oriented angle. For many practitioners the amount and variety of material make it hard to find significant information. Thus, improving accessibility of information for fellow practitioners is a significant challenge for donors: “It is essential to make better use of existing knowledge and lessons learned, supporting governments in making it an integral part of the policy making process.”106 It has been criticized that “the sophistication of the ‘lessons learned’ in most donor evaluations is rather limited”107 and thus needs to be improved. There are actually two components: an internal and an external one. Internally, donors must seek to optimize knowledge management in their organization. MATHISEN and DUNCAN have provided striking insight into the importance of managing knowledge in DC organizations: “Knowledge is useful only when it is accessible. Inaccessible knowledge concerning projects is the same as nonexistent projects to someone seeking to use the knowledge.”108 In a peer review of the same paper, BAILEY – the main author of One form of follow-up is the documentation of “steps taken by State Parties to implement and enforce the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions”. (For more details visit: http://www.oecd.org/document/44/0,2340,en_2649_34859_36433004_1_1_1_1,00.html) Nevertheless, it should be noted that this list comprises only the participating countries’ own listings of their respective implementation steps. Weaknesses or even loopholes in the implementation might not be easily observed. 102 OECD (2003), p. 37. 103 This section is based on material from OECD (2003), p. 33, p.52. 104 OECD (2005), p. 6. 105 Ibid. 106 Ibid. 107 Hutchinson (2005), p. 17. 108 Mathisen/Duncan (2006), p. 4.

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OECD/DAC's “Synthesis of lessons learned of donor practices in fighting corruption” – argues that even a broader range of stakeholders must engage in knowledge management. He writes that dissemination and sharing of knowledge need to be optimized “not only by donors but also between donors and NGOs, research institutions and various development partners”109 This leads to the fact that there is, of course, also an external component to the issue. Donors need to cooperate at the global level, inter alia to develop “a systematic approach to dividing up efforts for undertaking strategic research/knowledge gathering and synthesis and in sharing results.”110 The Utstein Ressource Center at the Christer Michelsen Institute in Bergen (Norway) is a good example of how information can be shared among a group of like-minded donors. It is being used by six development agencies: NORAD (Norway), DFID (UK), CIDA (Canada), GTZ (Germany), MinBuZa (Netherlands), and SIDA (Sweden).111 The ultimate aim of this cooperation must be to further research the effect of all the effort being put into AC activities. Donors need to provide a high degree of transparency and share both positive and negative results.112

3.3.2.5. Country specificity of AC actions Action on corruption needs to be centred more on initiatives at the country level.113 The first of OECD/DAC's “Principles for Donor Action in Anti-Corruption” calls upon donors to “collectively foster, follow and fit into the local vision.”114 This means that donors need to support the developing countries' own anti-corruption efforts. This approach is also in line with the Paris Declaration on Aid Effectiveness that establishes the principle that setting development objectives is primarily the responsibility of developing countries, with donors playing a supporting role.115 Donors should seek to achieve a policy dialogue based on partnership principles and behaviour as this is more likely to be

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successful than solutions imposed by a donor. Donors and partners require knowledge of specific country conditions, the history of the issues as well as technical knowledge. Ibid, p.12. OECD (2005), p. 6. 111 See Utstein Group (2001). 112 OECD (2003), p. 52/53. 113 OECD (2006), p. 6. 114 OECD (2005), p. 5. 115 Paris Declaration (2005), p. 4. 109 110

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Conditionalities should be based on mutually agreed contracts. Ideally, donors should have a strong field presence. Continuity of staff helps in setting up a more fruitful policy dialogue.116 Recent literature underlines that the aspect of country specificity needs to be particularly highlighted: “the first step is to develop a country specific understanding of why corruption happens, and in which institutions or activities it occurs. In addition, it is important to assess the efforts and progress of governments and donors in seeking to address corruption directly or indirectly.”117 MUNGIU-PIPPIDI complains that in the past, both assessment instruments and the resulting AC-strategies have been simply replicated from one country to another. An argument by SHAH and SCHACTER is similar whereby many AC-programmes are “simply folk remedies or one-size fits all approaches and offer little chance of success.”118 OECD/DAC has responded to the criticism by affirming that “importing formal institutional models from OECD countries (such as anti-corruption commissions) into developing countries regardless of the governance context is unwise.”119

3.3.2.6. Coalition building Fighting corruption requires collaborative approaches. These should bring together a broad range of key, reform-minded stakeholders providing mutual support and reinforcement. Coalitions of reformers from different sectors can be a platform for coordinated action.120 A new forum – the “Global Integrity Alliance”121 – promises support for leaders that are committed to integrity and systemic change. The initiative seeks to provide education, assistance and resources to these professionals to support their efforts for good governance in their countries. Even though it remains to be seen which impact the alliance will have, donors need to support such forums. Although participatory approaches do not directly fight corruption, they are one of a number of tools that are needed. This helps to create an enabling environment. Furthermore, it is necessary to diagnose corruption problems, to build consensus on the next steps, to increase transparency and credibility and Copyright © 2008. Diplomica Verlag. All rights reserved.

to build capacity to develop sustainable reforms. Donors need to collaborate in two ways:

116 117 118 119 120 121

OECD (2003), p. 34. Doig/Marquette(2005), p. 106. Shah/Schacter (2004), p. 40. OECD (2006), p. 7. Ibid. https://www.integrityalliance.org

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with various stakeholders from the society and amongst each other.122 Uncoordinated responses to signs of increasing corruption in a particular country “are responsible for giving off 'mixed signals' and weakening the effect of any attempts by particular donors to stand firm or apply sanctions.”123

3.3.2.7. Entry Points, sectoral approaches Anti-corruption does not have to be the main point of entry — either in broad policy discussion or project design.124 Opportunities and constraints will vary according to the country context.125 Less direct, less frontal or less confrontational approaches such as focusing on improving efficiency and transparency can be a more acceptable point of entry. In some countries corruption problems are concentrated in a few sectors, “so that targeted efforts make good sense”126. Sector wide approaches (SWAPs) have been very popular in the academic literature. Scholars such as SPECTOR have argued that one of the major lessons from past experience in fighting corruption is that the problem needs to be addressed on a sector-by-sector-basis: “Within a country, corruption knows no borders: it does not remain localized in particular government departments but pervades all functions where citizens and businesses transact with officials.”127 Proponents of this reasoning argue that policy is usually made function by function. And within each function, AC strategies could be better targeted and enforced than on a larger scale. They thus suggest a decentralization of the AC efforts. “Directing anticorruption policy from a central commission or agency would not be appropriate unless the mission of such an entity would be changed to serve as a clearinghouse and oversight institution.”128 Nevertheless, they argue that inter-agency task forces and centralized information sharing (e.g. via web portals) may help to share relevant information among various sectors.129 A recent World Bank report is less enthusiastic about a sectoral approach, noting particular weaknesses in the area of public sector reform where “sector-wide assessments show relatively lower

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success rates than any other sector.”130 The authors argue that public sector reforms will 122 123 124 125 126 127 128 129 130

This section is based on material from OECD (2003), p. 37. OECD (2006), p. 8. OECD (2003), p. 33. OECD (2006), p. 8. Ibid, p. 13. Spector (2005), p. 6. Ibid, p. 7. This section is based on material from OECD (2003) p. 48. World Bank (2006), p. 10

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take a long time to show results and are sometimes more cosmetic than real.

3.3.2.8. Strengthening Civil Society “Civil society plays a key role in fighting corruption. Today, this statement is unchallenged: it has become a leitmotiv of anti-corruption discourses.”131 Civil society is a rather broad term that comprises diverse groups with varying philosophies, goals and capacities. Citizens' groups, NGOs, trade unions, business associations, think tanks, academic organisations, professional associations, religious organisations, the media, they all belong to what is usually referred to as civil society. Civil society has played a significant role in pushing for international legal instruments against corruption (such as the UN and OECD conventions). For donors engaging in AC efforts, it is important to build coalitions.

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Even unexpected and unusual alliances between NGOs and other CSOs including the private sector are possible. It has been widely stressed that “reforms will be ineffective unless demand for reform comes from more aware citizens within the country”133, that is, the civil society. CSOs can also play an important role in monitoring transparency and integrity in the public sector.134 Donors should seek to “strengthen the capacity of civil society for strengthening the demand for reform, and promoting and monitoring transparency and accountability in the fight against corruption.”135 Donors should appreciate that many civil society organizations have been involved in anti-corruption work for quite a long time. The roots of their work often go back one or two decades before anticorruption was fashionable. Of course, civil society organizations are not without their own governance and management problems. Lack of transparency and self-regulation, the role of memberships and boards, over-dependence on one leader or lack of middle managers are possible problems. There are also organizations with affiliations to those who are rather part of the corruption problem than of its solution. “Civil society organisations that have successfully avoided questionable allegiances [...] enjoy a position that allows

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them to act as watchdogs. Free of the governmental obligation of balancing interests, such independent civil society organisations can relentlessly recall the need to fight 131 132 133 134

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OECD (2003b), p. 7. E.g. the Action Plan of the Ghana Anti-Corruption Coalition is often cited as a success as it has been incorporated into the Ghana Poverty Reduction Strategy Plan. World Bank (2006), p. 1. Report cards provide citizens with an opportunity to score the performance of public service organisations. The OECD quotes examples for reports cards from India (Bangalore), Vietnam, Ukraine, Bangladesh, the Philippines and the U.S. (Washington, D.C.), see OECD (2003), p. 40. OECD (2005), p. 5.

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corruption.”136 Although they are complementary, a strong civil society is of course not a substitute for a clean, competent public service and judiciary and political system.137 A particular field of civil society that donors need to address is the media: a strong, free and independent media is a key “non-executive institution”138 that can help to strive for a more transparent society and thus help fight corruption. BRUNETTI and WEDER have shown a strong relation between a free and independent media and sinking levels of corruption.139 The same seems to hold true in terms of the free and unlimited access of citizens to the internet.140 The equation seems to be easy: where there is free media and an unhindered access to the net, there is less corruption. In fact, investigative journalists are often on the forefront of fighting corruption.141 Donors should seek to influence legislative processes that fight anti-libel laws. Such laws and additional security provisions are used to oppress journalists in many countries.

3.3.2.9. Support decentralization and local participation Local participation and community empowerment such as citizen involvement in the local budget cycle has been described as another important ingredient to fighting corruption.142 The idea behind this: If communities have more involvement, they will not steal resources that are intended for their own benefit. Ideally, this would be a self-policing mechanism, reducing corruption. There are critical voices, though: “The control of economic resources by a narrow, local elite is often difficult to circumvent by a donor-driven, community-based approach. Where genuine grass roots community initiatives exist, building on them has worked well. But where such a grass roots mobilization does not exist, donor projects – including those from the World Bank – have been usurped by local elites.”143

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136 137 138 139 140 141

142 143

OECD (2003b), p. 21/22. This section is based on material from OECD (2003), p. 34. OECD (2006), p. 11. Brunetti/Weder (2003). Graeff (2004). Andvig/Fjeldstad (2001), p. 25 note that an influential early monograph on the problem of corruption “started out from investigative journalism” and relied “to a large degree on facts collected by investigative journalists”: Doig, Alan (1984): Corruption and Misconduct in British Politics, Harmondsworth: Penguin Books. OECD (2006), p. 11. World Bank (2006), p. 11.

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3.3.2.10. Political issues Corruption is a very political issue: political patronage, dubious contributions and kickbacks are well known forms of political corruption. More elaborate forms involve e.g. the manipulation of state funds which do not come under public scrutiny – and which may in turn be used to support political activities.144 Fighting corruption is a very political issue, too: anti-corruption agencies have in many countries been used as an instrument of repression against political opponents, instead of being a tool for fighting corruption.145 TI's Global Corruption Barometer ranks political parties and parliaments among the most compromised sectors. That means that most citizens have a poor opinion of their government’s anti-corruption efforts. Sixty nine percent of the people which were questioned believed their government is not effective in fighting corruption, or that it makes no effort to fight it, or that it actually encourages corruption. Only twenty two percent labelled their government’s actions “effective” or “very effective”. 146 The OECD recommendations dealing with the political side of corruption are not extensive though. They call upon donors to seek to influence private sector firms and their agents or affiliates from industrial countries to once again tackle the supply-side of corrupt activities. Additionally, donors are asked to provide advice and legislative and regulatory models of laws related to financing political parties etc. But this can only be effective if there is a political will for change in the recipient country. This might actually not always be the case as informal structures could hinder the fight against corruption. These structures thus undermine the drive for change in the partner country. DE RENZIO explains this with regard to corruption problems related to General Budget Support (GBS): “Some of the key assumptions about the effectiveness of GBS are linked to the existence of a domestic drive for reforms leading to improved accountability and results orientation. Questioning the existence of such a drive in many recipient countries calls for a more nuanced view of the role of donors as “change agents”.147 AMUNDSEN sees a special responsibility for the donors to deal with the problem. He finds that donor coordination is key, describing Copyright © 2008. Diplomica Verlag. All rights reserved.

cooperation as “pivotal for donor agencies to have any influence over political corruption.”148

144 145 146 147 148

OECD (2003), p. 48. This section is based on material from OECD (2003) p. 48. Source: TI Website (http://www.transparency.org/news_room/latest_news/press_releases/2006/2006_12_07_gcb). De Renzio (2006), p. 634. Amundsen (2006), p. 20.

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3.3.3. Decision making procedures With regard to the decision making procedures of the developing AC regime, meaning “specific prescriptions for behaviour, the system of voting, for example, which will regularly change as a regime is consolidated and extended”,149 it is fair enough to say that, for the moment, the decision making procedures of the OECD would apply. There are no new decision making procedures needed for the regime. Basic documents of the organization are the Convention on the Organisation for Economic Co-operation and Development from 1961 and its relevant Supplementary Protocols.150 According to Article 6 of the Convention, each member state has one vote. Decisions are taken and recommendations are made by mutual agreement of all the Members, unless the Organisation otherwise agrees on special cases. Unanimity would thus be the basic voting procedure of the regime. The highest decision making body would be OECD's Council which is – according to Article 7 of the Convention – the “body from which all acts of the Organisation derive.” Bodies like DAC are subsidiary bodies according to Article 9 of the Convention. DAC meetings are attended by Paris-based delegates of OECD member countries and by officials from capitals. They are presided over by the DAC Chairman. Additionally, DAC holds an annual High Level Meeting. Its participants are ministers or

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heads of aid agencies.151

149 150

151

Little (2005), p. 373 Convention on the Organisation for Economic Co-operation and Development and Supplementary Protocols available online: http://www.oecd.org/document/7/0,3343,en_2649_34483_1915847_1_1_1_1,00.html. Source: OECD/DAC website (http://www.oecd.org/about/0,3347,en_2649_33721_1_1_1_1_1,00.html).

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4. The normative level: Three AC policy papers examined In this section, I examine the key policy papers of three donors to see if these have incorporated the OECD recommendations. If this would be the case, a set of common rules and norms, needed for the regime, would be existent. I analyse the policies of the United States Agency for International Development (USAID),152 the UK's Department for International Development (DFID)153 and the Swedish International Development Cooperation Agency (Sida).154 The three donors have a number of similarities: their countries are all heavyweights in the aid world and rank among the most important providers of ODA, although not all of this aid is channelled through the agencies in focus.155 According to recent OECD statistics, the USA remain the world's biggest provider of aid (22.74 billion USD). The United Kingdom ranks second with 12.61 billion USD, Sweden follows in seventh place with 3.97 billion USD.156 Table 2: USAID, DFID and Sida compared Agency

Staff

Field offices/ Missions Budget

Amount of country's total aid administered by agency

USAID

n.a.

≈ 60

9,2 billion USD (2006)157

n.a.

DFID

2500

64

4,438 million GBP (2005/2006)

88 per cent (2005/2006)

Sida 812 ≈ 50 14 billion SEK (2005) Source: www.usaid.gov, www.dfid.gov.uk, www.sida.se

152

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153

154

155

156 157

≈ 60 per cent (2005)

USAID's current Anticorruption strategy has been published in January 2005. Additionally, the agency has produced various papers on corruption, including the Handbook on Fighting Corruption (1999). I base my analysis mainly on the 2005 strategy. The agency produced its first AC strategy in 1999, closely aligned to the work of the World Bank. Currently, a new AC is being prepared. Contrary to the existing one, it will be designed as a UK Government Strategy and not only a DIFD one. As this paper will be not be available before mid-2008, I will analyse the old one, bearing in mind that DFID itself nowadays calls it “rudimentary”. SIDA has produced various anti-corruption policy papers. In my analysis, I focus on the 2004 Anticorruption Regulation as this is the main strategy paper of the agency, replacing an earlier version from May 2001. E.g. in the USA about 26 government institutions are involved in providing ODA. Five institutions (USAID, Defense, Agriculture, State, Treasury) accounted for over 90 per cent of the funding in 2005. Source: http://www.oecd.org/document/27/0,3343,en_2649_34603_37829787_1_1_1_1,00.html All figures for the year 2006 (preliminary data), source: http://www.oecd.org/dataoecd/14/5/38354517.pdf Of the 92, billion USD, 4,3 billion were administered by USAID directly, the rest was jointly administered with the US Department of State.

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All three agencies have been on the forefront of AC work. They are all OCED DAC members and have driven the work of fighting corruption in bilateral DC. Also, they have all developed their own strategy papers at a relatively early point compared to other agencies.158

4.1. USAID United States Agency for International Development (USAID) is the organization of the US government that is responsible for most non-military foreign aid. It is an independent federal agency, although it receives foreign policy guidance from the US Secretary of State. USAID's current Anticorruption strategy has been published in January 2005. Additionally, the agency has produced various papers on corruption, including the Handbook on Fighting Corruption (1999). I base my analysis mainly on the 2005 strategy. USAID understands itself as “a leader in fighting corruption”. The agency's strategy presents four “broad actions” for USAID. The agency shall seek to “confront the dual challenges of grand and administrative corruption”, “deploy Agency resources to fight corruption in strategic ways”, “incorporate anticorruption goals and activities across Agency work” (corruption mainstreaming), and “build the Agency’s anticorruption knowledge” (knowledge management). The focus on the public sector is noteworthy: “USAID has tended, and is expected to continue, to focus mainly on corruption in the public sector and where the public and private sectors interact. Strictly ‘private-to-private’ corruption – such as kickbacks on contracts between private companies – receives some attention through corporate governance or other related programs, but USAID, as an international bilateral donor, mainly concerns itself with the appropriate use of public resources and authority.”159 Yet

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the definition encompasses both grand corruption and lower-level, administrative corruption.

158

159

One might argue that instead of Sida one could also have picked its Norwegian counterpart NORAD. This is partly true: both countries fulfil the criteria that I have named (worldwide importance in terms of total ODA, active member of OECD DAC, existing AC strategies). Yet, I have decided to focus on Sweden for a practical reason: as Sida is a bigger organization than NORAD, it spends more money on strategy development as well as reporting. There is thus more material to work with. USAID (2005), p. 8.

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Another interesting focus of the USAID strategy lies on prevention and civil aspects of enforcement: “USAID generally concentrates on prevention and on the administrative, audit, oversight, and civil aspects of enforcement, by providing technical assistance to countries to address the causes of corruption and modify behaviors and incentives in the future.”160 This focus results from legislative prohibitions in the US. USAID’s ability to engage with law enforcement agencies to bolster the criminal aspects of anticorruption enforcement is very restricted. The agency's strategy explains that “this limitation poses a challenge for effective anticorruption programming, because it prevents USAID from implementing comprehensive prevention strategies that include the institutions, such as police forces and prosecutorial services that are often the most corrupt but must play critical roles in the fight against corruption.”161 In its strategy, the agency defines corruption very broadly as “the abuse of entrusted authority for private gain.” According to the paper, the definition “recognizes that, while corruption in the public sector has particularly devastating impacts, it cannot realistically be addressed in isolation from corruption in political parties, the private business sector, associations, NGOs, and society at large.”162

4.1.1. Complexity and timing USAID takes a broad approach towards fighting corruption, thus recognizing the complexity of the problem. The strategy states that “corruption touches every area of development, and USAID analysis and response must be equally broad.”163 To this end, the paper proposes a “multisectoral and multidisciplinary approach to combating corruption that incorporates political competition, economic competition, social factors, and institutional and organizational performance across all sectors.”164 The strategy states that “not only programs primarily focused on fighting corruption, but also broader 'governance'

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programs with a significant anticorruption dimension”165 can help to reduce the problem. So far, USAID is fully in line with the OECD's proposition to support a large range of key governance reforms. USAID also explicitly recognizes that corruption may occur in many Ibid. p. 9. Ibid, p. 9. 162 Ibid, p. 8. 163 Ibid, p. 16. 164 Ibid. 165 Ibid, p. 11. 160 161

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different forms “from lower-level, administrative corruption to a variety of activities that constitute elite or grand corruption, including state capture and predatory states.”166 In terms of timing, the strategy does not seem to be closely aligned to OECD standards, lacking a clear commitment that fighting corruption is a long term endeavour.

4.1.2. Mainstreaming AC efforts in donor agencies USAID has understood the importance of AC mainstreaming as this activity is one of the four “broad actions”167 that are presented in the strategy. Although the term “mainstreaming” does not explicitly appear anywhere in the paper, USAID is called to “incorporate anticorruption goals and activities across Agency work”. The strategy proposes different ways to actually do so. Among other things USAID is asked to “pay attention to organizational incentives and structures that support or resist a broadened approach to Agency anticorruption efforts”168. The development of an implementation plan is announced. This plan should fix inter alia next steps to incorporate specific anticorruption goals into USAID’s mission and bureau strategies and results frameworks and include anticorruption in the Agency's staff training. Nevertheless, mainstreaming is not the strongest point of the USAID strategy. This is mainly due to the fact that there is no absolute need for the agency's missions to incorporate AC issues in their policies. The following formula is used: “Where corruption is clearly going to compromise USAID’s development objectives, operating units will be expected to analyze the challenge and develop strategies and programs to respond. Where corruption is identified as the central impediment to development or the driver of fragility, operating units will be expected to develop more robust approaches and integrate anticorruption approaches widely throughout their entire portfolios.”169 What is to de done in cases where corruption is not “clearly compromising” or does not “centrally impede” USAID development objectives

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remains unclear.

166 167 168 169

Ibid, p. 14. Ibid, p. 16. Ibid, p.5. Ibid, p. 23.

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4.1.3. Supply-side issues, domestic advocacy The USAID strategy deals with issues of domestic coordination of AC policies. With regard to the US Department of State it states that “USAID works with several bureaus on formulating U.S. positions on international conventions, such as the UN Global Convention Against Corruption; participating in international conferences, such as the Global Forums Against Corruption; incorporating good governance into regional initiatives, such as the Middle East Partnership Initiative; and building anticorruption measures into emergency response activities, such as the U.S. response to Hurricane Mitch. In addition, USAID contributes to the formulation and implementation of National Security Council-led initiatives such as the Group of Eight (G8) Comprehensive Transparency Initiative.”170 The strategy foresees additional collaboration and coordination, e.g. with the US Trade Representative (“on trade-related issues, including World Trade Organization efforts to promote transparency in procurement”), the US Department of Justice (“on enhancing the prosecution function and hopes to work more closely with both State and Justice on efforts to address police corruption”) and the Department of Commerce, (“on corporate governance, commercial law reform, and related areas”).171

4.1.4. Knowledge Management, Evaluation Knowledge management and evaluation are important points of the strategy. The paper speaks of “critical gaps” in the agency's AC knowledge and calls upon USAID to “improve its capacity as a learning organization and build new anticorruption knowledge into all sectors of its operations.”172 It calls for incentives to be put in place “to accelerate innovation, learning, and the cross-fertilization of ideas.”173 The term “perhaps through

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centralized evaluations”174 is used to describe the way in which to proceed. The use of the word “perhaps” is actually interesting, as USAID is seemingly not yet convinced of the fruitfulness of central evaluations.

170 171 172 173 174

Ibid, p.9. Ibid, p. 10. Ibid, p. 25 Ibid. Ibid.

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4.1.5. Country specificity of AC actions In its strategy, USAID states that “patterns of corruption can change across countries and across sectors”175. This is important as the agency recognizes the need for country specific measures as a fundamental fact. Nevertheless, the following passage of the strategy remains relatively weak. USAID leaves a big amount of decision power with its missions. They are asked to “consider the issue of corruption and, depending upon the severity of the problem, focus their strategy in some way on the role of USAID assistance in addressing the problem”.176

4.1.6. Coalition building The strategy mentions several ways in which USAID is engaged in international initiatives against corruption. OECD DAC is named as a forum for “sharing best practices and experiences among bilateral donors.177 Furthermore, the agency’s participation in the Global Forum against Corruption, the Donor Consultative Group for Latin America and the Caribbean, and the implementation mechanism of the Inter-American Convention Against Corruption are listed. With view to cooperation with other bilateral donors, the strategy states that “USAID maintains collegial relations with various bilateral donors, most notably the UK Department for International Development, with which it undertakes joint training, research, and assessment projects”.178 The support for Transparency International is also mentioned. Nevertheless, the international component of the USAID strategy remains relatively weak. The word “cooperation” is only used once in the whole strategy – in a domestic context.

4.1.7. Entry points, sectoral approaches

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In its strategy, USAID maintains a relatively broad approach towards possible entry points for AC activities. The paper states that “institutional (i.e., bureaucratic and regulatory) endowments and societal attitudes remain important both in analyzing the extent and 175 176 177 178

Ibid, p. 23. Ibid, p. 23. Ibid, p. 10. Ibid, p. 10.

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location of corruption and in developing responses, but at the same time, the larger dynamics of economic and political competition help clarify other critical influences on the corruption problem.”179 The strategy proposes sectoral and cross-sectoral strategies to reduce corruption”180 A range of sectors suitable for sectoral AC approaches are listed in the strategy, including education, energy, environment, health, information technology and transport. With regard to sectoral approaches, the strategy sees “opportunities for addressing corruption in specific sectors, such as health or education, especially if significant donor resources are being directed to those sectors.”181

4.1.8. Strengthening Civil Society The promotion of independent media and civil society are explicitly stated goals of USAID.182 Civil society is among other things presented as important for AC advocacy and oversight functions. At the same time, the strategy explains that a classical equation of fighting corruption might – at least in some cases – be too simple. It challenges the assumption that civil society equals a shift of public attitudes and this in turn equals an increased demand for accountability in the use of public resources. This might be the case where “civil society and public education may not constitute sufficient levers for altering corrupt elites’ incentive structures.”183 This is interesting, as USAID has a nuanced – and perhaps rather realistic view – on the capabilities of civil society. At the same time, the potential of civil society risks to be partially unexplored by the agency. Coalition building and multi-stakeholder collaboration, essential cornerstones of fighting corruption according to the OECD, are not mentioned in the strategy.

4.1.9. Support decentralization and local participation The strategy mentions decentralization and local participation as “politically sensitive Copyright © 2008. Diplomica Verlag. All rights reserved.

challenges”184 for the governments in the relevant partner countries. It explains that USAID seeks to support increasing transparency and accountability through

179 180 181 182 183 184

Ibid, p. 14. Ibid, p. 2. Ibid, p. 16. Ibid, p. 1. Ibid, p. 14. Ibid, p. 32

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decentralization projects. Possible downsides of decentralization (as described in section 3.3.2.9. of this book) are not mentioned though.

4.1.10. Political issues The political context of AC work is a field where the current strategy extends the one from 1999185 as it recognizes that USAID had previously underestimated the political component of corruption. The 1999 Handbook on Fighting Corruption was based on KLITGAARD's work and assumed that institutional reforms would be the remedy to address principalagent problems linked to corruption (see section 2.1. of this book). At the same time support for civil society, media, and other public education efforts should shift public attitudes and increase demand for accountability. The 2005 strategy refines and further develops this thought. It describes a “problem with a principal-agent model of corruption, at least as it was originally conceived.”186 The classical model, the paper states, “offers little guidance when the principals themselves do not act in the public interest”187. Thus, the newer USAID strategies need to be “complemented by a more comprehensive, systemic approach that puts increased emphasis on grand corruption, underlines the larger political and economic dynamics that animate corruption, and extends our understanding of the nature and impact of political will”.188 The strategy proposes reforms “that increase competition” in the political and economical sphere189 as this helps to destroy existing corrupt networks.

4.1.11. Summary for USAID In general, USAID is to a large extent in line with the OECD proposals and contemporary policy thinking. The degree of similarities can be described as high (according to the scale described in section 1 of this book). There are some remarkable exceptions, though. First Copyright © 2008. Diplomica Verlag. All rights reserved.

of all, the agency could have been much clearer on expressing the need for long-term approaches in fighting corruption. Further, the strategy remains relatively weak on the issues of AC mainstreaming and country specificity. And it remains very weak on Hutchinson (2005), p. 7. USAID (2005), p. 13. 187 Ibid, p. 13. 188 Ibid, p. 14. 189 Ibid. 185 186

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international AC cooperation and some aspects of civil society. Coalition building, multistakeholder collaboration – be it on the country or the international level – are not at all mentioned in the strategy. At the same time, the relatively progressive attitude towards the political issues related to corruption can be seen as an asset of the paper. All in all, USAID has a sufficiently well formulated AC policy when measured against the OECD standards. There is a big disadvantage though: as the agency neglects the enormous potential of cooperation, it remains a “lonesome rider” in the fight against corruption – a fact that can only be described as suboptimal.

4.2. DFID The Department for International Development (DFID) is the part of the UK Government that manages Britain's aid to poor countries. It is headed by a Secretary of State with cabinet rank, who is formally responsible to the British Parliament. DFID has been a frontrunner in dealing with anticorruption issues in development cooperation. The agency produced its first AC strategy in 1999, closely aligned to the work of the World Bank.190

191

DFID has also been an important booster for the Extractive Industries

Transparency Initiative.192 Additionally, it has set up the “Drivers of Change” framework that seeks to understand the economic, social and political factors that either drive or block reforms within a target country.193 Currently, a new AC strategy is being prepared. Contrary to the existing one, it will be designed as a UK Government Strategy and not only a DFID one. Nevertheless, the strategy has a development perspective as it been drafted by DFID and is currently reviewed by other UK government departments.194 According to DFID officials, this strategy is to focus on four main areas: the supply side of corruption, the demand side of corruption, international architecture and internal UK government coordination.195 As this

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paper will be ready not before mid 2008, I will nevertheless analyse the old one, bearing in Full text here: http://www.u4.no/document/showdoc.cfm?id=8 In 2006, an additional white paper was produced (“Making governance work for the poor”), which states that tackling corruption is central to achieving good governance and one of the four big challenges identified to eliminating world poverty. (Full text here: http://www.dfid.gov.uk/wp2006/whitepaperprinter-friendly.pdf.) 192 http://www.eitransparency.org/ 193 http://www.gsdrc.org/go/topic-guides/drivers-of-change 194 E-Mail correspondence with DFID staff member on 29 June 2007. 195 E-Mail correspondence with DFID staff member on 5 July 2007. 190 191

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mind that DFID itself nowadays calls it “rudimentary”196 – which is in some sense ironic as it was exactly that strategy that was praised by observers not so long ago: “DFID’s strategy is most explicit in its recognition of the importance of closely integrated and holistic approaches.”197 DFID calls its strategy “holistic and global”198. In general terms, the strategy is four pronged: it strives to “support poorer states committed to effective anti-corruption strategies”, to “drive out bribery from international trade and business”, to “deter money laundering of funds corruptly acquired in developing countries" and to “protect development assistance from corruption”.199 In its own view, DFID holds a “leadership role amongst development agencies at the political level”.200 Contrary to USAID and Sida, DFID's paper does not include a definition of the term “corruption”.

4.2.1. Complexity and timing Similar to USAID, DFID takes a broad approach towards fighting corruption. The agency underlines the international dimension of the problem: “Any strategy to address it must be global.”201 Domestically, DFID has a very broad scope in fighting corruption, as it holds a mandate for bilateral as well as multilateral development co-operation. The strategy reflects the OECD's proposition to support a large range of reforms in order to fight corruption. Three ways to tackle corruption are presented: first to reduce opportunities for corruption, second to change the incentives and third to develop the constraints on corruption. This mirrors the OECD's demand that donors need to understand that it takes systemic and organisational change to fight corruption, in order to achieve sustainable improvements. Similar to the USAID strategy, the DFID paper would have benefited from a clear

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statement regarding the enhanced time frame that is needed to successfully fight corruption.

E-Mail correspondence with DFID staff member on 5 July 2007. Helland (2002), p.11 198 DFID (1999), p.1. 199 Ibid. 200 Ibid, p.27. 201 Ibid, p.1. 196 197

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4.2.2. Mainstreaming AC efforts in donor agencies The strategy does not explicitly mention the topic of corruption mainstreaming in the agency's work. But although not stated in this form, mainstreaming is an important topic for DFID. As the agency has a broad mandate, it plays a key role in AC work in the British government as a whole. In June 2006 Hilary Benn (then Secretary of State for International Development) was appointed as Ministerial champion for addressing international corruption. His task is to join up AC efforts in the UK government.202 DFID itself has an Anti-Corruption Coordinator whose task is to coordinate anti-corruption activities within DFID divisions.203

4.2.3. Supply-side issues, domestic advocacy Supply-side issues and domestic advocacy are strong points of the DFID strategy. The agency has been playing a much more active domestic role than agencies from other donor countries. Among other things it has encouraged the adoption of the OECD Convention on bribery and contributed to the UK membership costs of the Council of Europe Convention, participated in a working group on the UK law of corruption and provided funding to Transparency International.204 DFID is in a strong position to ensure policy coherence in the UK government's DC policies. It is actively cooperating with the British Government's Department of Trade & Industry, and the British Treasury on bribery and money laundering. The strategy calls upon donors to “become advocates in developed countries for changes in domestic or international law on corruption and money laundering and for improvements in their enforcement.”205 Nevertheless, DFID's success as a domestic coordinator for the fight against corruption has been questioned. DOIG and MARQUETTE note: “In practice [...] neither the NAO [UK National Audit Office] nor HM Customs & Excise appear to be part of the DFID ongoing policy circles relating to its anti-

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corruption work.”206

Additionally, an Anti Corruption Action Plan for 2006/07 was agreed by the ministers, for which there is also a progress report. A 07/08 UK Anti Corruption Action Plan is currently in the process of being drafted. 203 Doig/Marquette (2005), p. 119. 204 DFID (1999), p. 26. 205 Ibid, p. 28. 206 Doig/Marquette (2005), p. 120. 202

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4.2.4. Knowledge Management, Evaluation The strategy contains an element of knowledge-management as it proposes the establishment of a virtual resource centre to be based in the UK. The main task of this centre would be to “provide expertise both to HQ and overseas offices across the full range of [anti-corruption] activities.”207 Evaluation is not a topic that is mentioned in the strategy though. All in all, knowledge management and evaluation are not one of the strong fields of the strategy.

4.2.5. Country specificity of AC actions As DFID's strategy was published already in 1999, country specificity of AC measures – which has only recently enjoyed more interest – plays a minor role. The paper mentions country strategy documents though, that should assess the partner country's government's commitment to take action against corruption.208

4.2.6. Coalition building DFID acknowledges the importance of coalitions to fight corruption. On the national level the strategy proposes to build national coalitions against corruption. TI's concept of national integrity plans is presented with a particular emphasis on the implementation in Tanzania.209 On the international level, DFID also praises coalitions. With reference to work of the World Bank, all donors are called to develop a common and mutually supporting set of procurement policies: “Collective action of this kind would reinforce other messages about bribery in international business and to governments of aid recipient countries. Discussions in the OECD have addressed this issue but produced only halfhearted action so far.”210 A report commissioned by DFID211 gives more details on possible Copyright © 2008. Diplomica Verlag. All rights reserved.

coalitions, explaining that corruption issues can be addressed in three main collaborative arenas: collaborative funding initiatives, donor working groups and working with likeminded donors – with collaborative funding promising to be the most interesting field for a Ibid, p. 31. Ibid, p. 26. 209 Ibid, p. 11. 210 DIFD (1999), p. 23. 211 Green et al. (2005). 207 208

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cooperative approach.

4.2.7. Entry points, sectoral approaches The strategy notes that a variety of different AC projects are supported by DFID: “Some have their main purpose as combating corruption, such as support for the development of anti-corruption agencies. Equally important are those activities that are initiated for other purposes but have a major impact on the opportunities and incentives for corruption and the constraints on corrupted behaviour.”212 This approach is in line with the OECD recommendation that anti-corruption measures can have various points of entry. DFID has been criticised, though: “DFID funds a significant number of wider governance projects – covering capacity building, organisational reform, etc – but these are not yet integrated with the anti-corruption projects within an overtly inclusive approach.”213

4.2.8. Strengthening Civil Society DFID provides support to anti-corruption programmes not only within government structures but also in more broadly based civil society undertakings, and through NGO channels.214 The strategy briefly presents civil society as watchdog and anti-corruption advocate: “NGOs can be effective in identifying corruption and forcing action by government.”215 Examples from Argentina and India are cited, where pressure from civil society has helped to reduce corruption problems. Further, the paper proposes that donors worldwide should inter alia “publish detailed information on programmes, projects, budgets and contracts [...] to provide information to political parties and civil society to enable them to hold central and local government to account.”216 The strategy also mentions independent media who is described as being able to “play a vital role in exposing political

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corruption and in creating pressure to clean up party political funding and for better management of elections.”217

212 213 214 215 216 217

DFID (1999), p. 26. Doig/Marquette (2005), p. 121. Helland (2002), p. 12. DFID (1999), p. 15. Ibid, p. 24 Ibid, p. 11.

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4.2.9. Support decentralization and local participation The strategy does not contain information related this topic. It has to be noted though that DFID supports a variety of projects for decentralization and local participation – without linking these projects directly to AC work.

4.2.10. Political issues Political issues play an important role in the DFID strategy. The paper recognizes that both corruption and fighting corruption are highly political. It states “that those in power in many countries have benefited from corruption. They have therefore been slow to see corruption as a problem despite their anti-corruption rhetoric.”218 The strategy also addresses corruption in the political scene of the partner countries and calls for “commitment from all significant parties and especially the party in power. In such circumstances, a number of measures can help including rules of conduct for political parties, disclosure of contributions to parties and the personal assets of politicians, limits on campaign expenditure, state funding of parties and enforcement by an independent electoral and ethics commission.”219 Additionally, the strategy mentions that corruption makes election campaigns in partner countries expensive. “Campaign funds on this scale are difficult to find from legitimate sources.”220

4.2.11. Summary for DFID Some observers have been critical in assessing DFID's performance in fighting corruption, stating that the agency “still [has] to demonstrate that, internally, it has a coherent and comprehensive cross-cutting approach to corruption that informs its various country and policy programmes and, externally, that approach would complement the work of more Copyright © 2008. Diplomica Verlag. All rights reserved.

specialist UK institutions on recipient countries.”221 It should be noted that DFID's current strategy reflects the state of the art in fighting corruption only to some extent. The degree of similarities between the strategy and the OECD proposals plus the academic literature can be described as middle. Thus, the evaluation of the DFID strategy yields an ironic 218 219 220 221

Ibid, p. 3. Ibid, p. 15. Ibid, p. 6. Doig/Marquette (2005), p. 122.

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result. On the one hand, the agency has been a front runner on corruption related policy issues,222 on the other hand its strategy gives an outdated impression today. While the agency's broad general approach towards fighting corruption and topics like supply-side issues and domestic advocacy are strong points, other important topics remain weak in the strategy paper: knowledge management and evaluation, country specificity and other elements that only recently gained close attention in the international discourse are underrepresented. But many of these points are likely to be addressed in the new UK Government strategy that is due to appear in 2008.

4.3. Sida The Scandinavian countries have long been a model student in terms of development assistance. In the year 2006, the only countries to reach or exceed the United Nations target of 0.7 per cent of GDP were Sweden, Luxembourg, Norway, the Netherlands and Denmark.223 It has been argued, though, that “nordic exceptionalism” in DC is practically a thing of the past: “Although the Nordic donors are exceptional compared to most other donors, they are probably less exceptional today than previously. An extended group of so called- like-minded donors are adopting more or less the same policies as them.”224 I take the Swedish International Development Cooperation Agency (Sida) as a striking example of a Nordic donor. Sida is a government agency that works under the roof of the Swedish Ministry for Foreign Affairs. The agency is independent though “within the framework laid down by the Swedish Parliament and Government”.225 Government and parliament thus specify the budgets, the target countries, and the focus of Swedish international development cooperation in general. The agency is then free in its actions within the specified area. Not all Swedish ODA is channelled via Sida: in the year 2005, the

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agency was responsible for SEK 14 billion or around 55 per cent of Sweden's total budget

See e.g. Sida (2004b), p. 36. Helland (2002), p. 11 notes: “DFID has contributed extensively to the analytical work underlying current anti-corruption approaches as a contribution to improve governance, as well as to the wider frames of reference for these efforts, such as the International Development Targets/Millennium Development Goals. It has also provided leadership within the OECD, in particular with regard to the anti-bribery convention and the establishment of the Inter Governmental Financial Action Task Force.” 223 Source: OECD/DAC website (http://www.oecd.org/document/17/0,2340,en_2649_34447_38341265_1_1_1_1,00.html). 224 Selbervik/Nygaard (2006), p. 51. 225 Source: SIDA website (http://www.sida.se/sida/jsp/sida.jsp?d=115&language=en_US). 222

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for development cooperation.226 .

Sida has produced several anti-corruption policy papers, including the following: 1997: Good Administrative Practice Counters Corruption 2003: Acting on suspicions of corruption 2004: Sida's Anticorruption Regulation 2005: Audit Manual 2007: Public Finance Management in Development Co-operation In my analysis, I will focus on the 2004 Anticorruption Regulation as this is the main strategy paper of the agency, replacing an earlier version from May 2001. Sida has developed the following philosophy vis-à-vis corruption and financial mismanagement: “Never accept!, Always act!, Always inform!”227 The agency prominently states that its agreements with partners include “anticorruption clauses, and clauses that permit Sida to conduct special audits in cases where corruption is suspected, to withhold disbursements, and if deemed necessary, to terminate agreements and demand the repayment of misused funds”. 228 One of the first steps of the strategy is an attempt to define corruption. Compared to USAID's very broad approach (see section 4.1. of this book), the Sida definition is much more detailed, describing corruption as “institutions, organisations, companies or individuals obtaining improper gains by their position in an operation and thereby causing damage or loss. It includes kickbacks and bribery, extortion, favouritism and nepotism, and also embezzlement, racketeering, conflicts of interest and illegal financing of political parties.”229 At the same time, Sida states that it “is not very fruitful to spend energy on reaching agreement on a definition” and that it is “probably possible to work together with

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parties whose definition differs from Sida’s.”230

226

227 228 229 230

Source: SIDA website (http://www.sida.se/?d=105&language=en_US). Other important Swedish actors in the field of international development cooperation are e.g. the Ministry for Foreign Affairs and the Export Credits Guarantee Board. Sida (2004). Préface. Ibid. Ibid, p. 6. Ibid, p. 7.

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4.3.1. Complexity and timing Sida starts from the assumption that corruption “undermines the rule of law, demoralises political systems and democracy, distorts competition in the market system, results in the inefficient allocation of scarce resources, affects the poor disproportionately, undermines respect for human rights, contributes to environmental degradation, affects the will to invest, destroys predictability and the hope for the future” and is “a serious hindrance to development”.231 Thus, the agency's standpoint is fully in line with the OECD recommendation to understand corruption as a serious development problem in itself. Similarly in line with the OECD's recommendations concerning comprehensive approaches is Sida's philosophy to work at four different levels to counteract corruption. The first level being ethical guidelines for Sida's staff in which aspects of corruption are included; the second level being controls of DC funds and monitoring that these funds are not misused; and the third level being the participation in the development of democracy and sound social structures in the target countries. And the fourth level being an attempt to counteract corruption, together with other donors, by harmonising rules and procedures and giving prominence to the issue of corruption in the dialogue with

partners in

cooperation.232

4.3.2. Mainstreaming AC efforts in donor agencies The OECD recommendations call for strong leadership in the agency – in a political and an organisational sense – to fight corruption. Sida is a good example where both can be found alike. Sida has a task team at its headquarters dedicated to anti-corruption policies.233 Aside from the examined strategy other ethical guidelines for Sida's staff exist, such as the publications “Acting on suspicions of corruption” (2003), “Audit Manual” (2005) and

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“Public Finance Management in Development Co-operation” (2007). The tone of these publications, including the 2004 strategy is remarkable. Compared to USAID and to some extent also DFID, the Sida papers address agency staff much more directly. Throughout the strategy, the imperative form is used: “Never make...”, “You shall always inform...”, Ibid, Préface. The four step-model can be found on the Sida-Website (http://www.sida.se/sida/jsp/sida.jsp?d=258&a=5310&language=en_US). 233 Source: U4 website (http://www.u4.no/projects/utstein/policydocuments.cfm) 231 232

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“Take up the issue...”. This can be interpreted as a signal of an agency-wide culture where fighting corruption is agreed upon as a fundamental priority of work. Yet similar to the other strategies examined, Sida's paper is lacking a strategy for combating fatigue. KPUNDEH has further criticized that Sida puts only “little emphasis on building internal capacity to deal with corruption and/or promote awareness among staff.”234

4.3.3. Supply-side issues, domestic advocacy Similarly to the DFID strategy and somewhat more clear than the one from USAID, the Sida paper puts a strong emphasis on supply-side issues, declaring that corruption “always has two sides: a supply side and a demand side, someone gives and someone receives.”235 The paper proves a sound understanding that donor countries have a responsibility for the supply-side of the problem: “There is nothing that indicates that international enterprises, including Swedish enterprises, are less corrupt than local enterprises.”236 The strategy mentions that Sweden has ratified the OECD Convention and signed the one from the UN. It could be more pronounced though, in terms of domestic advocacy. It never mentions the need for Sida to enter in dialogue with fellow government agencies etc.

4.3.4. Knowledge Management, Evaluation Sida's strategy mentions evaluation and knowledge management, without giving the topic too much scope. The paper mentions that hitherto, “evaluations of anti-corruption projects have not been common.”237 Further information on how Sida plans to improve the accessibility of information on AC projects and how the agency plans to share results internally and externally are not given. Thus, Sida's strategy remains lags behind the OECD

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recommendations.

Kpundeh (2001), p. 58 Sida (2004), p. 25. 236 Ibid. 237 Ibid, p. 25. 234 235

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4.3.5. Country specificity of AC actions The strategy states that corruption is “specific to situations”. It calls upon all staff members to carefully assess the situation in the target country by using data from the country as well as from partners: “Do not hesitate to use the analyses and diagnoses made by the partner country or others, but ensure that they meet Sida’s needs of knowledge about the situation.”238 The strategy further calls upon Sida staff to take up the issue of corruption in the dialogue with partner countries: “It is important to develop a common approach to corruption and its harmful effects with our partners in cooperation, particularly in relation to the goal of development cooperation.”239 Further, the paper explains that “the way used to handle and describe the corruption issue in PRSP (or equivalent) says a great deal about the country’s awareness of the harmful effects of corruption and about its political determination to tackle the problem.”240 A report commissioned by the Sida in 2004 underlines the country specificity of political corruption – and thus the magnitude of the necessary cooperation. The report concludes that donors must not assume that problems or attempted solutions related to political corruption in one country are easily transferable to another.241 All in all, it can be said that Sida's strategy implements the OECD recommendations on addressing the country specificity of corruption – which is partly due to the fact that the OECD's recommendations are not particularly strong themselves.

4.3.6. Coalition building Like for other topics, Sida's strategy recognizes the principal need for broad coalition building without going into much detail. The strategy calls for donor coordination in the target countries, e.g. to keep reporting duties manageable for the recipients: “If all donors create their own system in the partner countries, the national systems will be undermined, and insight and overview will be reduced. This can in actual fact increase the risk of

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corruption.”242 Another indicator that Sida takes the need for coordination with other donors seriously is the fact that the U4 resource centre and its offers are mentioned several times in the relevant parts of the strategy. Nevertheless, the fact that fighting corruption requires collaborative approaches and that coalitions should bring together a broad range Ibid, p. 14 Ibid, p. 18. 240 Ibid, p. 15. 241 Carothers (2004), p. 25. 242 Sida (2004), p. 26. 238 239

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of key, reform-minded stakeholders could have been given much more room. Particularly coalitions in the target country would have needed more emphasis in the strategy. The paper is thus partially behind (s. o.) the OECD recommendations in this topic.

4.3.7. Entry points, sectoral approaches Sida proposes a sectoral approach to fighting corruption, stating that the “most highly developed methods for analysis purposes are at the sector level. Primarily, an analysis should aim at the sectors in which Sida is active.”243 The strategy explicitly mentions the U4 website and its special pages on corruption in the sectors of health and education.

4.3.8. Strengthening Civil Society In general terms, Sida's strategy recognizes the importance of civil society. It is portrayed as a watchdog that “can provide a good method to counteract risks of corruption.”244 The strategy also explains that Sida has a broader concept of the term “civil society” by including trade unions and professional organisations.245 Nevertheless, this part of the strategy remains rather meagre. The paper does not speak about the need for broad coalitions among different stakeholders, nor does it directly mention the capacity of civil society for strengthening the demand for reform, and promoting and monitoring transparency and accountability in the fight against corruption. Both are an integral part of the OECD recommendations though. Another indicator of the unrealized potential in this area is the fact that the correlation between independent media and sinking levels of corruption is not established at all. The only occasion when the strategy speaks about media is the question on how agency staff should react to media enquiries in relation to

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corruption cases in Swedish DC.246

243 244 245 246

Ibid, p. 14. Ibid, p. 26 Ibid. Ibid, p. 21.

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4.3.9. Support decentralization and local participation The strategy deals with decentralization only by describing it as a possible booster to corruption: “Decentralisation processes and privatisation processes can often be prone to corruption since the systems have not had the time to develop. Instead of combating corruption, decentralisation can, in practice, involve the decentralisation of corruption.”247 While this may be true to some extent, local participation and community empowerment as an opportunity to curb corruption are totally left out of the picture. Hence, the strategy clearly remains below the OECD recommendations here. This seems to be a remarkable fact as it draws upon research from SVENSSON who proposes to provide contributions for a “general increase in openness in society and for different ways of giving people information about the resources they are entitled to” and has observed “good results when end users have known what allocations have been made to the local level.”248

4.3.10. Political issues Political issues play a role in Sida's AC work. A first proof can be in the definition of corruption that is used by the agency (see section 4.3. of this book) where “illegal financing of political parties” is named as one possible form of corruption. This is later repeated at another point of the strategy.249 The paper also talks about a country's “political determination to tackle the problem”250 of corruption. Still, the political component of the problem plays a relatively small role in the strategy. Compared to the OCED recommendations, there is room for improvement.

4.3.11. Summary for Sida Sida's strategy is generally in line with the OECD recommendations, yet there are several Copyright © 2008. Diplomica Verlag. All rights reserved.

occasions where it is falling short of them. Topics like complexity and timing of AC work, mainstreaming in the agency, supply-side issues and the importance of country specificity are developed fully up to the OECD standard. To a lesser extent this is also the case for domestic advocacy, where the need for cooperation with fellow government agencies could 247 248 249 250

Ibid, p. 26. Ibid, p. 28. Ibid, p. 17. Ibid, p. 15.

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have been stated more clearly. In a couple of points, there is still room for improvement though. This is particularly the case with questions of decentralization, the role of civil society, and with the importance of evaluation and information sharing in the agency. The political component of corruption as well as the question of coalition building could also have had more room in the strategy. Thus, the degree of similarities between Sida's strategy and the OECD proposals plus the academic literature can be described as middle.

4.4. Summary of the results on the normative level As stated above, this book argues that donors perform well in fighting corruption when they form a regime. But does such a regime indeed exist? In this section, I have shown principles, rules and norms, and analysed in how far these are adopted by three donors in question. In conclusion, the following results occur when one examines the policy papers of the three donors with regard to the degree of similarities to the OECD recommendations plus the recent academic literature: Table 3: Degree of similarities to OECD recommendations USAID

DFID

Sida

Complexity, timing

High

High

High

Corruption mainstreaming

Middle

Middle

High

Supply-side issues, domestic advocacy

High

High

Middle

Knowledge management, evaluation

High

Middle

Middle

Country specificity

High

Middle

High

Coalition building

Middle

High

Middle

Entry points, sectoral approaches

High

High

Middle

Civil society

Middle

High

Low

Decentralization, participation

High

Low

Low

Political issues

High

High

Middle

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Notwithstanding some differences, one could thus state that the donors at issue have agreed to a basic set of principles, rules and norms as a basis of a possible AC regime.251 Fields with a low degree of similarities must not be understood as a final status. Existing divergences from the OECD recommendations do not mean that the donors have not 251

This does not mean that there is no room for improvement on the policy level. In saying this, one has to keep in mind that the OECD/DAC standards that formed the basis for my description of the “state of the art” are not exactly avant garde. Given the fact that they have been developed by the “donors club”, it is even more surprising that not all donors translate these ideas into practice – yet.

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understood the problem – in some cases changes might just need more time to adapt their policies. Particularly DFID's new AC strategy, due to appear in 2008, will surely be a big

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step ahead.

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5. The implementation level: aid allocation patterns compared In this section, I review the aid allocation of the three donor countries in question. As the existing material to this topic is limited, this section is shorter than the previous ones. But why look at aid allocation at all? My reasoning is the following: only if coherence on the policy level is backed by similar coherence on the implementation level, one could assume the existence of an international AC regime in bilateral DC. One therefore needs to look at the aid allocation patterns of the three donors in order to find possible commonalities. Only if those existed, that means if all donors would consider corruption issues when giving aid to countries where the problem is widespread, donors would act according to their own rules and norms. It needs to be said that not every aid allocation to a country with widespread corruption is problematic in itself. Donors need to set the type of aid and the mode of delivering it. The aid delivered must not worsen corruption in the recipient country. It should be an indispensable and yet challenging attempt to support the country to fight corruption.

5.1. USA The USA are the world’s most important provider of bilateral ODA. In 2004, they provided 19,7 billion USD. Interestingly, the values for ODA per capita as well as for ODA as fraction of GDP are rather low when compared to the United Kingdom and Sweden (see table 5). The percentage of ODA that the USA direct to least developed and low income countries is also remarkably low. The USA explicitly state that development cooperation is politically motivated, evoking the National Security Strategy.252 Thus, US development assistance regarded in part as a means to support US national security253 – and not to fight corruption. BERTHÉLEMY ranks the USA as “moderately egoistic” since they

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favour their trading partners as recipient countries to some extent.254

252

253 254

Source: http://www.whitehouse.gov/nsc/nss.pdf. USAID has further produced reports like “Foreign Aid in the National Interest” (Source: http://www.usaid.gov/fani/Full_Report— Foreign_Aid_in_the_National_Interest.pdf) that underline this link. ROA (2006), p. 210. Berthélemy (2006), p. 192.

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Table 4: The USA’s bilateral ODA in 2004255 Total bilateral ODA Bilateral ODA per capita Bilateral ODA as fraction of GDP ODA to least developed and low income countries256

19,7 billion USD 67 USD 0.17 per cent 50 per cent (9 billion USD)

ALESINA and WEDER have found that the USA favour democracies, but seem to pay no attention to the quality of government of receiving countries: “[T]he United States may be more interested in democratic institutions per se relative to the quality of government. Also, the United States may want to use foreign aid as a political tool to promote certain political outcomes in various parts of the world. The Middle East is an obvious, but not unique, example.” 257 Interesting in terms of aid allocation is a recent tool of US foreign assistance, the Millennium Challenge Account (MCA). The MCA is administered by the Millennium Challenge Corporation (MCC), a United States Government corporation. Established in January 2004, MCC is based on the principle that aid is most effective when it reinforces good governance, economic freedom and investments in people.

258

Consequently,

eligibility to this programme is determined on the basis of governance indicators. The most important one is “Control of Corruption” of the World Bank Institute. If a country does not score above the median, it is not eligible for the MCA.

5.2. UK Behind the USA, the UK is the world’s second most important provider of aid. In terms of ODA per capita as well as ODA as fraction of GDP it ranks in between the USA (which have lower rates) and Sweden (which has higher rates). The UK is the country that directs the largest fraction of aid to least developed and low income countries.

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´ Table 5: The UK’s bilateral ODA in 2004259 Total bilateral ODA Bilateral ODA per capita Bilateral ODA as fraction of GDP ODA to least developed and low income countries

7,9 billion USD 131,40 USD 0.36 per cent 75 per cent (5.3 billion USD)

ROA (2006), p. 349. ROA defines “least developed and low income countries” as countries with an average income of less than 2 USD per day. 257 Alesina/Weder (2002), p. 1135. 258 For more details on the MCA see: http://www.mca.gov. 259 ROA (2006), p. 342. 255 256

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Britain finds itself in a somewhat schizophrenic situation: while the country has been a radical front runner on aid policy issues, the aid flows that the UK actually disburses seem to remain rooted in strategic interests to some extent. Like the USA BERTHÉLEMY rates the UK as “moderately egoistic”.260 ALESINA and WEDER have only found an “insignificant (positive) relationship” between corruption and British aid allocation.261

5.3. Sweden Being among the world’s top ten aid providers, Sweden’s aid allocation statistics are yet remarkable. It is the only of the three countries that reaches the UN target of providing at least 0.7 per cent of its GDP as ODA. Sweden is traditionally above this level – with a comfortable margin. Statistically, the average Swede gives roughly five times as much aid as the average American and more than the double of the British rate. Sweden, as a typical Nordic donor, is spreading its aid transfers to a very large number of countries, yet denying any self-interest in their motives. Table 6: Sweden’s bilateral ODA in 2004262 Total bilateral ODA Bilateral ODA per capita Bilateral ODA as fraction of GDP ODA to least developed and low income countries

2,7 billion USD 302,10 USD 0.78 per cent 69 per cent (1,8 billion USD)

GATES and HOEFFLER have found that, unlike any of the other DAC donors, Nordic donors – with Sweden and Norway as leaders – do not give more aid to political allies: “Nordic aid allocation seems remarkably free from self-interest and, indeed, more orientated towards their stated objectives of poverty alleviation, the promotion of democracy and human rights.”263 BERTHÉLEMY has also found the Nordic donors – Sweden being one of them – to be more altruistic.264 Additionally, research by ALESINA and WEDER has proven that Scandinavian donors do reward less corrupt receivers of aid.265 Their view is that this is due to the fact that these countries had no colonies, and their

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choice of aid allocation is therefore less tied to colonial history and related political influences. Thus, ALESINA and WEDER conclude, these donors are freer to choose recipient countries in comparison to donors with former colonies or more clearly defined strategic 260 261 262 263 264 265

Berthélemy (2006), p. 192. Alesina/Weder (2002), p. 1134. ROA (2006), p. 332. Gates/Hoeffler (2004), p. 14. Berthélemy (2006), p. 193. Alesina/Weder (2002), p. 1136.

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interests.

5.4. Summary of the results on the implementation level Based on the existing literature, it might be permitted to say that aid allocation varies considerably among donors. BERTHÉLEMY has found that the big majority of donors target their assistance to their most significant trading partners, while taking at least some care of the neediest recipient countries.266 He has further researched that, in spite of the egoism of their policies, bilateral donors also implement some sort of selectivity rules based on recipient needs and merits. It has been noted that “strategic geopolitics explains only a small portion of the variation in aid receipts across countries; many bad governments of no strategic importance whatsoever still get a lot of aid.”267 AKRAMOV has found that “more than one half of the total bilateral foreign aid is allocated disregarding the quality of governance.”268 And ALESINA and WEDER have found no evidence that aid donors give less aid to corrupt countries: “Our vast exploration of the data never uncovered any even weak evidence of a negative effect of corruption on received foreign aid.”269 Some of their statistics can be interpreted in a way that donors actually gave these countries more aid. One important remark is needed though: the raw data that is used in the literature on aid allocation is not always up-to-date. ALESINA and WEDER, for example, base their findings on data from a period between the seventies to the mid-nineties. As outlined in section 2.3. of this book, corruption was not an important topic for donors at that time. But since then, the perception of corruption has changed dramatically. This means that aid allocation patterns might also have changed slightly in the meantime. But if such a change did indeed happen in practice, it cannot be observed in the literature yet. Further research will prove

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whether the problem of corruption becomes an important point when donors allocate aid. In fact, there are indications that this could be the case. BURNSIDE and DOLLAR have found that: “In the 1980s, the amount of aid a country received was not correlated with institutional quality” – as measured in the study by the Freedom House and International 266 267 268 269

Berthélemy (2006), p. 192. Easterly (2006), p. 133. Akramov (2006), p. 134. Alesina/Weder (2002), p. 1136.

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Country Risk Guide (ICRG) indicators, the latter including an assessment of corruption – whereas “in the 1990s the picture changed: countries with better institutions received significantly more aid. One standard deviation higher on the indices of rule of law and of democracy corresponded to 28 per cent more overall aid and 50 per cent more finance from the World Bank IDA facility.”270 Similarly, DOLLAR and LEVIN found that some donors choose to care about the recipient countries’ policies when allocating aid: “[T]he same group of multilateral and bilateral aid agencies that are very policy focused are also very poverty focused. The donors that appear high up in both rankings are the World Bank’s IDA facility, the IMF’s Enhanced Structural Adjustment Facility, Denmark, the United Kingdom, Norway, Ireland and the Netherlands.”271 But there are still many donors which are not yet selective in the policy dimension. And so DOLLAR and LEVIN came to the

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conclusion that “overall bilateral aid is not very selective.”272

Burnside/Dollar (2004), p.7. Dollar/Levin (2004), p.4. 272 Dollar/Levin (2004), p.13. 270 271

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6. Conclusion Scholars, policy makers, and development cooperation (DC) practitioners nowadays agree that progress on reaching the United Nation's Millennium Development Goals273 (MDGs) relies heavily on an effective fight against corruption.274 At least in theory, the aid world seems to have understood that the theme of corruption is more than “another fad which will fade (and be replaced by something else).”275 Particularly in the light of the promised increases of aid, the problem of corruption and development needs ongoing attention: an additional $50 Billion USD per year are to be expected by the year 2010 and beyond.276 Donors have understood the need to act and have achieved remarkable results in policy development in the recent years. Compared to the mid-nineties of the last century when donors even refrained from using the word corruption in their official communication – and instead covered it up by speaking of the “c-word” – the perception of corruption as an imminent problem has changed dramatically. Bilateral donors – who have been the focus of this book – have produced extensive policy documents; so did multilateral donors (e.g. UNDP) and international financial institutions. In this book, I have shown that on the normative level, a larger degree of coherence between the bilateral donor’s strategies and the OECD recommendation exists. This is good news as it leaves us with a corpus of principles, rules and norms that could form the basis of an AC regime in bilateral DC. Even if not all donors have fully incorporated all OECD regulations into their strategy papers yet, there is no need to worry. Since the policy development in the agencies and on the international level took place in parallel, it is possible that some ideas will be implemented into the donors’ strategies at a later stage. For example, the new UK strategy that is to be presented in 2008 is very likely to be a big step ahead in policy formulation. With the donors further refining their policies, the basis for an Copyright © 2008. Diplomica Verlag. All rights reserved.

AC regime in bilateral development cooperation seems to exist. But a possible regime has nevertheless not yet entered into force. This is due to the fact

273 274 275 276

For more details on the MDGs see: http://www.un.org/millenniumgoals/. TI (2007), p. 2, TI (2006), p. 121; SDC (2006), p.9., OECD (2005), p. 5. OECD (2003), p. 31. OECD (2005), p. 2.

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that the implementation level shows only few commonalities: the aid allocation patterns of the donors at issue still vary considerably. Whereas Scandinavian donors such as Sweden seem to care more about corruption when allocating their foreign aid, other donors do not seem to act accordingly. As I have shown, this could change in the future. Maybe it has already changed to some extent, but the changes cannot be observed yet, as the data that is the basis for the existing literature on aid allocation is too old to observe possible recent adjustment effects. Table 7: Results summarized Level

Action

Key documents

Normative level

Development of AC strategies Strategy papers

Implementation level Application of strategies, allocation of aid

Aid allocation patterns, country selection

Degree of similarities High/Middle Low

In summary, it can be said that a regime in bilateral DC has not yet developed because of the low degree of similarities on the implementation level. This leads us to a twofold conclusion: on the one hand, one needs to say that, so far, bilateral donors perform suboptimal in fighting corruption as they did not manage to get a regime working. On the other hand one could also say that major donors still have the chance to form this regime – if they want to. The rules, principles and norms are there. Now the major donors need to turn these rules into reality. Ongoing discussion about how exactly this could happen is urgently needed. Once, a regime is in place, one would also need to look at questions of effectiveness and compliance. For now, I have left these questions out of my analysis. As explained earlier, the reason for this is the fact that the subject under review is still too young. Even if a regime would already be working, it would be too early to judge upon its effectiveness. Recent data indicates that there is reason to be optimistic that the fight against corruption is not lost, even in seemingly hopeless cases. As TI’s recently presented CPI ranking for the Copyright © 2008. Diplomica Verlag. All rights reserved.

year 2007 suggests, there is a genuine political will to fight corruption in a number of African countries which previously scored poorly. Now, the picture in countries like Namibia, Seychelles, South Africa and Swaziland seems to look brighter due to the positive progress of anti-corruption efforts there.277 Earlier, KAUFMANN hat noted that “while it is true that institutions tend to change only gradually, and that in many countries there has 277

For more details on the 2007 CPI results see: http://www.transparency.org/news_room/in_focus/2007/cpi2007#pr

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been little improvement in the short term, we can also see that in some countries there has been a sharp improvement during a short period of time. This defies the view that while governance may deteriorate quickly, improvements are always slow and incremental.”278 Donors need to actively support well performing countries in their efforts for more transparency and reform – while at the same time taking care of poorly performing states. Fragile states need to be of particular interest in the fight against corruption as they “pose different challenges for addressing corruption than normal development contexts.”279 The recently developed OECD “Principles for Good International Engagement in Fragile States and Situations”280 that explicitly deal with the problem of corruption in such an environment are surely a big step ahead. The problems caused by corruption in relation with development aid need strong and ongoing attention. One main reason is the increase in ODA in the years to come. Donors will disburse more money into the existing distribution systems in their partner countries. This is associated with risks: “In some countries, systems may not be adequate to absorb large increases in resources without increasing wastage or fuelling leakage and corruption.”281 In a recent position paper, TI has warned already that higher disbursements from donors without a support for partner countries to address embedded corruption systems could lead to “a higher amount of funds may end up being diverted through corruption.”282 Donors need to understand that the fight against corruption is an ongoing challenge – and they still need to strengthen international legal instruments against corruption. There are still about a dozen OECD/DAC members who have not yet ratified the United Nations Convention against Corruption. At the same time, the enforcement of the OECD convention still remains weak in a number of countries (see section 3.3.2.3. of this book). Of course, the ideas presented here should be regarded as tentative and preliminary. Yet I hope that this book can provide some input for further discussion on AC work in

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development cooperation.

Kaufmann (2005), p. 88. Mathiesen (2007), p.2. 280 OECD (2007), full text here: https://www.oecd.org/dataoecd/61/45/38368714.pdf. 281 OECD (2005), p. 2. 282 TI (2007), p. 6. 278 279

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7. References

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Online resources http://www.cmi.no

Christer Michelsen Institute

http://www.dfid.gov.uk

UK Department for International Development

http://www.eitransparency.org

Extractive Industries Transparency Initiative

http://www.diw.de

German Institute for Economic Research

http://www.idea.int

International Institute for Democracy and Electoral Assistance

http://www.gsdrc.org

Governance and Social Development Ressource Centre

https://www.integrityalliance.org

Global Integrity Alliance

http://www.mca.gov

Millennium Challenge Corporation

http://www.oecd.org

Organisation for Economic Co-operation and Development

http://www.sida.se

Swedish International Cooperation Agency

http://www.transparency.org

Transparency International

http://www.u4.no

U4 Anti-Corruption Resource Centre

http://www.un.org/millenniumgoals

United Nations Millennium Development Goals

http://www.unodc.org

United Nations Office on Drugs and Crime

http://www.usaid.gov

United States Development

http://www.whitehouse.gov

The White House

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Agency

Development

for

International

Books, articles, working papers Akramov, Kamiljon (2006): Governance and Foreign Aid Allocation, Dissertation submitted at the Pardee RAND Graduate School, available online: http://www.rand.org/pubs/rgs_dissertations/2006/RAND_RGSD202.pdf Alesina, Alberto; Weder, Beatrice (2002): Do Corrupt Governments Receive Less Foreign Aid?, in: American Economic Review 92, p. 1126-1137, available online: Amundsen, Inge (2006): Political Corruption, U4 Issue No.6/2006, available online: http://www.u4.no/themes/political-corruption/documents/u4issue6_2006politicalcorruption-final.pdf. Andvig, Jens Christian; Fjeldstad Odd-Helge; Amundsen, Inge; Sissener, Tone; Soreide, Tina (2001): Corruption – A Review of Contemporary Research, Christer Michelsen Institute Report 7/2001, available online: http://www.cmi.no/publications/file/?861=corruption-a-review-of-contemporaryresearch. Arndt, Christiane (2007): The Politics of Governance Ratings, Paper presented for the Workshop “Ranking and rating public services” of the International Public Management Network, Oxford 7-9 August 2007. Berthélemy, Jean-Claude (2006): Bilateral Donors’ Interest vs. Recipients’ Development Motives in Aid Allocation: Do All Donors Behave the Same?, In: Review of Development Economics, 10(2), p. 179–194. Birdsall, Nancy (2004): Seven Deadly Sins: Reflections on Donor Failings, Center for Global Development Working Paper Nr. 50, available online: http://www.cgdev.org/content/publications/detail/2737 Browne, Stephen (2006): Aid and Influence – Do Donors help or hinder? London, Earthscan. Brunetti, Aymo und Beatrice Weder (2003): A Free Press is Bad News for Corruption, In: Journal of Public Economics, 87, p. 1801–1824.

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Brunetti, Aymo; Kisunko, Gregory; Weder, Beatrice (1997): Credibility of rules and economic growth –evidence from a world wide private sector survey, World Bank Policy Research Working Paper 1760, available online: http://wwwwds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2000/02/24/000009265_397 1110141326/Rendered/PDF/multi_page.pdf Bukovansky, Mlada (2005): Corruption is bad: Normative dimensions of the anti-corruption movement, Australian National University, Research School of Pacific and Asian Studies, Working Paper Nr. 2002/05, available online: http://rspas.anu.edu.au/ir/pubs/work_papers/02-5.pdf. Burnside, Craig; Dollar, David (2004): Aid, Policies, and Growth – revisiting the evidence, World Bank Policy Research Working Paper 3251, available online: http://econ.worldbank.org/files/34209_wps3251.pdf 65

Burnside, Craig; Dollar, David (2000): Aid, Policies, and Growth, In: The American Economic Review, Vol. 90 Nr. 4, p. 847-868, available online: http://www.worldbank.org/html/dec/Publications/Workpapers/WPS1700series/wps177 7/wps1777.pdf. Canadian International Development Agency (2000): Anti-Corruption Programming: Questions and Strategies, available online: http://www.acdicida.gc.ca/INET/IMAGES.NSF/vLUImages/HRDG2/$file/EngQ&S.pdf. Carothers, Thomas (2004): Political Party Aid, Paper prepared for the Swedish International Development Agency, available online: http://www.idea.int/parties/upload/Political_Party_Aid_by_Carothers_Oct04.pdf. De Renzio, Paolo (2006): Aid Budgets and Accountability: A Survey Article, In: Development Policy Review, Vol. 24 Nr. 6, p. 627-645. Dreher, Axel; Kotsogiannis, Christos; McCorriston, Steve (2007): Corruption around the world: Evidence from a structural model, in: Journal of Comparative Economics 35 (2007) 443–466. Djankow, Simeon; Montalvo, Jose; Reynal-Querol, Marta (2005): The Curse of Aid, World Bank mimeograph. Doig, Alan; Marquette, Heather (2005): The UK, the Commonwealth and Corruption: Assessing the Potential for Joined-Up Development Assistance, In: Commonwealth & Comparative Politics, Vol.43, No.1, March 2005, pp.102–128. Dollar, David; Levin, Victoria (2004): The Increasing Selectivity of Foreign Aid, 1984-2002, World Bank Policy Research Working Paper 3299, available online: http://www.cgdev.org/doc/event%20docs/MADS/Dollar%20and%20Levin%20%20Increasing%20Selectivity%20of%20Foreign%20Aid.pdf. Easterly, Willam (2006): The White Man's Burden, London, Penguin.

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Gates, Scott; Hoeffler, Anke (2004): Global Aid Allocation: Are Nordic Donors Different?, Paper prepared for presentation at the 4th MULTI-conference, 14th -15th October 2004, Oslo, available online: http://users.ox.ac.uk/~ball0144/nordic_aid.pdf. Graeff, Peter (2004): Medien und Korruption: Die korruptionsenkende Wirkung der Mediennutzung und der "neuen Medien", In: Vierteljahrshefte zur Wirtschaftsforschung 73 (2004), 2, S. 212–225, available online: http://www.diw.de/deutsch/produkte/publikationen/vierteljahrshefte/docs/papers/v_04 _2_4.pdf Green, Lara; Larbi, George; Hubbard, Michael (2005): Cooperating against corruption - A review of in-country donor coordination in Africa against corruption Commissioned by DFID Policy Division Anti-Corruption Team, available online: http://www.u4.no/document/showdoc.cfm?id=120.

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Helland, Johan (2002): Utstein partners' anti-corruption policies, U4 Report, http://www.u4.no/document/showdoc.cfm?id=25. Hutchinson, Francis (2005): A review of donor agency approaches to anti-corruption, Asia Pacific School of Economics and Government Discussion Papers No. 2/2005, available online: http://www.crawford.anu.edu.au/degrees/pogo/discussion_papers/PDP05-3.pdf. Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo (2007): Growth and Governance:A Reply, in: The Journal of Politics, Vol. 69, Nr. 2, p. 555–562. Kaufmann, Daniel; Kraay, Aart; Mastruzzi, Massimo (2006): Measuring Corruption - Myths and Realities, 1st Draft, May 2006, available online: http://www.worldbank.org/wbi/governance/pdf/six_myths_measuring_corruption.pdf. Kaufmann, Daniel; Kray Aart (2002): Growth without Governance, World Bank Policy Research Working Paper 2928, available online: http://wwwwds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2002/12/21/000094946_021 2060414208/Rendered/PDF/multi0page.pdf Kaufmann, Daniel (2005): Myths and Realities of Governance and Corruption, In: The World Economic Forum (2005): Global Competitiveness Report 2005-2006, p. 81-98, available online: http://www.worldbank.org/wbi/governance/pdf/21_Governance_and_Corruption_Kaufmann.pdf. Kaufmann, Daniel; Wei, Shang-Jin (1999): Does “grease money” speed up the wheels of commerce?, NBER Working Paper, Nr. 7093, available online: http://siteresources.worldbank.org/INTWBIGOVANTCOR/Resources/grease.pdf. Klitgaard, Robert (1988): Controlling Corruption, University of California Press, Berkeley, Los Angeles, London. Knack, Stephen (2004): Aid Dependence and the Quality of Governance: Cross Country Empirical Tests, in: Southern Economic Journal Vol. 68 Nr.2, p.310-329. Kolstad, Ivar (2007): The Resource Curse: Which Institutions Matter?, CMI Working Paper Nr. 2/2007, available online: http://www.cmi.no/publications/file/?2678=the-resourcecurse-which-institutions-matter.

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Kpundeh, Sahr (2001): Procedures and Guidelines of Donor Agencies to Prevent and Suppress Corruption, In: Gabriel, Lara; Stapenhurst, Rick; Thomas, Mary (2001): The Role of Bilateral Donors in Fighting Corruption, available online: http://www.u4.no/document/literature/role_bilateral.pdf, p. 55-70 Krasner, Stephen D. (1983): Structural Causes and Regime Consequences. Regimes as Intervening Variables, In: Krasner, Stephen D. (Ed.) (1983): International Regimes, Cornell University Press, Ithaca and London. Kurtz, Marcus; Schrank, Andrew (2007): Growth and Governance: Models, Measures, and Mechanisms, in: The Journal of Politics, Vol. 69, Nr. 2, p. 538–554.

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Paris Declaration (2005): Paris Declaration on Aid Effectiveness, Ownership, Harmonisation, Alignment, Results and Mutual Accountability, available online: http://www1.worldbank.org/harmonization/Paris/FINALPARISDECLARATION.pdf. Riley, Stephen (1998): The political-economy of anti-corruption strategies in Africa, In: European Journal of Development Research, Vol. 10, Nr. 1, p.129-159. Risse, Thomas (2000): “Let's argue!”. Communicative Action in World Politics, In: International Organization, Vol. 54, Nr. 1, p.1-40. Robinson, Mark (1998): Corruption and Development, Routledge, Oxford.

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Sandholtz, Wayne; Gray, Mark (2003): International Integration and National Corruption, In: International Organization Vol. 57, Nr. 4, p. 761-800. Selbervik, Hilde; Nygaard, Knut (2006): Nordic Exceptionalism in Development assistance? Aid Policies and the Major Donors: The Nordic Countries, CMI Report 8/2006, available online: http://www.cmi.no/publications/file/?2371=nordicexceptionalism-in-development-assistance. Shah, Anwar; Schacter, Mark (2004): Combating Corruption: Look Before You Leap, In: Finance & Development December 2004, p-40-43. Simmons, Beth A./Martin, Lisa L. (2002): International Organizations and Institutions, In: Carlsnaes, Walter/ Risse, Thomas/ Simmons Beth A. (2002): Handbook of International Relations, Sage, London, Thousand Oaks, New Delhi, p.192-211. Soreide, Tina (2003): Estimating corruption: Comments on available data, U4 Report, available online: http://www.u4.no/document/showdoc.cfm?id=88. Spector, Bertram (2005): Fighting Corruption in Developing Countries, Bloomfield: Kumarian Press. Swedish International Development Cooperation Agency (2004): Sida's Anticorruption Regulation, available online: http://admin.corisweb.org/files/SIDA4362en_AnitCorruption1109169386.pdf. Swedish International Development Cooperation Agency (2004b): Anti-corruption strategies in development cooperation, available online: http://www.u4.no/document/showdoc.cfm?id=99 Swiss Agency for Development and Cooperation (2006): Fighting Corruption – SDC Strategy, available online: http://162.23.39.120/dezaweb/ressources/resource_en_92770.pdf. The Reality of Aid Management Committee (eds.) (2006): The Reality of Aid 2006 - Focus on Conflict, Security and Development, available online: http://www.realityofaid.org/downloads/RoA2006_full.zip. Transparency International (2007): Discussion Paper on Poverty, Aid and Corruption, available online: http://www.transparency.org/content/download/20572/285905.

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Transparency International (2006): Global Corruption Report, available online: http://www.transparency.org/content/download/5025/29497/file/GC2006_00_part1_2_ 3.pdf. UK Department for International Development (1999): Anti-Corruption Strategy for DFID, available online: http://www.u4.no/document/showdoc.cfm?id=8. United States Agency for International Development (2005): USAID Anticorruption Strategy, available online: http://www.usaid.gov/our_work/democracy_and_governance/publications/pdfs/ac_stra tegy_final.pdf. 69

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Zangl, Bernhard (2003): Regimetheorie, In: Schieder, Siegfried; Spindler, Manuela (2003): Theorien der Internationalen Beziehungen, Leske + Budrich, Opladen, p.117-140.

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8. Abbreviations

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AC ACTT BPI CIDA CPI CSO DAC DC DCF DFID GBS GDP GOVNET GTZ HQ ICRG IDA IMF IO MCA MCC MDG MinBuZa NAO NGO NORAD ODA ODI OECD PFM ROA SIDA TI U4 UN UNCAC UNDP UNODC USAID WB

anticorruption DAC/GOVNET's Anti Corruption Task Team Bribe Payers Index Canadian International Development Agency Corruption Perception Indicator Civil Society Organisation OECD Development Assistance Committee Development Cooperation Development Cooperation Forum UK Department for International Development General Budget Support Gross Domestic Product DAC Network on Governance Deutsche Gesellschaft für Technische Zusammenarbeit Headquarters International Country Risk Guide International Development Association International Monetary Fund International Organisation Millennium Challenge Account Millennium Challenge Corporation Millennium Development Goals Dutch Ministry of Foreign Affairs UK National Audit Office Non-Governmental Organization Norwegian Agency for Development Cooperation official development assistance Overseas Development Institute Organisation for Economic Co-operation and Development Public Financial Management Reality of Aid Swedish International Development Cooperation Agency Transparency International U4 Anti-Corruption Ressource Centre United Nations United Nations Convention against Corruption United Nations Development Programme United Nations Office on Drugs and Crime United States Agency for International Development World Bank

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Christoph Seidler

studied International Relations in Dresden, Lausanne, Berlin in Oslo. He received his Master's degree in fall 2007. Currently, he works as a

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journalist in Berlin.

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