The Domestic Politics of Foreign Aid [1 ed.] 0415656958, 9780415656955

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The Domestic Politics of Foreign Aid

In spite of shared rhetorical commitments to tackling poverty worldwide, donors have varied considerably in their use of aid as an instrument for global poverty reduction. This book explains varied donor priorities by examining how societal actors, governmental actors, and the institutions that regulate their interactions influence development policy choices. The Domestic Politics of Foreign Aid challenges explanations for donor generosity that identify humanitarian values, partisan politics, and welfare state institutions as key determinants of aid-giving patterns. It explains how the preferences of diverse sets of actors are amalgamated in the domestic political arena to shape national preferences for international redistribution. Drawing on interview research conducted with a variety of stakeholders in four donor countries (Denmark, France, Switzerland, and the United States) and an extensive review of primary and secondary sources on aid politics in the countries studied, the book offers both a static overview of the characteristics of aid policymaking systems and a historical treatment of policymaking dynamics over a 25-year period (1980–2005). Applying a common theoretical framework to the four case studies and using development NGO advocacy as a starting point for examining the politics of aid, this book provides a synthesis of several strands of theoretical work dealing with interest group politics and political institutions to inform the analysis of the societal and governmental determinants of aid choices. Erik Lundsgaarde is Senior Researcher at the German Development Institute (DIE), Bonn, where his work focuses on the diversification of the actor landscape in development cooperation. He is the editor of the book Africa toward 2030: Challenges for Development Policy (2011, Palgrave Macmillan). He received his M.A. and Ph.D. degrees in Political Science from the University of Washington, USA.

Routledge Explorations in Development Studies

1.

The Domestic Politics of Foreign Aid Erik Lundsgaarde

The Domestic Politics of Foreign Aid

Erik Lundsgaarde

First published 2013 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2013 Erik Lundsgaarde The right of Erik Lundsgaarde to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Lundsgaarde, Erik. The domestic politics of foreign aid / Erik Lundsgaarde. p. cm. Includes bibliographical references and index. 1. Economic assistance–Developing countries. 2. Poverty–Government policy–Developing countries. I. Title. HC60.L864 2013 338.9109172'4–dc23 2012028246 ISBN: 978–0–415–65695–5 (hbk) ISBN: 978–0–203–07742–9 (ebk) Typeset in Times by Keystroke, Station Road, Codsall, Wolverhampton

To my mother Anette

Contents

List of figures and tables Acknowledgments List of abbreviations

ix xi xiii

1

Development aid as a policy instrument

1

2

Aid and domestic politics

21

3

Consensus and aid generosity in Denmark

43

4

The cautious humanitarian: aid politics in Switzerland

77

5

The long shadow of the past: aid politics in France

108

6

Fragmentation and micromanagement: US aid politics

144

7

Concluding considerations for development advocates

186

Notes References List of interviews Index

201 216 244 247

Figures and tables

Figures 1.1 ODA in Denmark, France, Switzerland, and the United States as a percentage of GNI (1980–2005) 1.2 Aid to lowest income countries as a share of donor national income (1980–2005) 2.1 Determinants of donor aid choices 3.1 Aid volume as a share of Danish GNI (1970–2005) 3.2 Bilateral and multilateral assistance as a share of Danish aid (1980–2005) 3.3 Share of Danish bilateral aid by income category (1980–2005) 3.4 Share of Danish bilateral aid by world region (1980–2005) 3.5 Share of Danish bilateral aid by sector (1980–2005) 3.6 Danish NGO resources (1980–2005) 3.7 Share of Danish bilateral aid channeled through NGOs (1980–2005) 4.1 Aid volume as a share of Swiss GNI (1970–2005) 4.2 Bilateral and multilateral assistance as a share of Swiss aid (1980–2005) 4.3 Share of Swiss bilateral aid by income category (1980–2005) 4.4 Share of Swiss bilateral aid by world region (1980–2005) 4.5 Share of Swiss bilateral aid by sector (1980–2005) 4.6 Swiss NGO resources (1980–2005) 4.7 Share of Swiss bilateral aid channeled through NGOs (1980–2005) 5.1 Aid volume as a share of French GNI (1970–2005) 5.2 Bilateral and multilateral assistance as a share of French aid (1980–2005) 5.3 Share of French bilateral aid by income category (1980–2005) 5.4 Share of French bilateral aid by world region (1980–2005) 5.5 Share of French bilateral aid by sector (1980–2005) 5.6 French NGO resources (1980–1995) 5.7 Share of French bilateral aid channeled through NGOs (1980–2005)

12 13 39 45 46 47 47 48 51 52 78 79 80 81 81 84 85 109 110 111 112 113 116 117

x Figures and tables 6.1 6.2 6.3 6.4 6.5 6.6

Aid volume as a share of US GNI (1970–2005) Bilateral and multilateral aid as a share of US aid (1980–2005) Share of US bilateral aid by income category (1980–2005) Share of US bilateral aid by world region (1980–2005) Share of US bilateral aid by sector (1980–2005) US NGO resources (1980–2005)

145 146 147 148 149 151

Tables 3.1 4.1 5.1 6.1

Major Danish development NGOs Major Swiss development NGOs Major French development NGOs Major US development NGOs

50 83 115 152

Acknowledgments

This book is a revised version of a doctoral dissertation submitted in 2007. Finishing this project involved support from a large number of individuals. My first debt is to Aseem Prakash, the chair of my supervisory committee, who was very generous with his time, intellectual input, and encouragement during my time at the University of Washington. James Caporaso, Christine Ingebritsen, and Erik Wibbels, as members of my reading committee, offered constructive feedback that helped to sharpen my analysis from the project’s inception to its conclusion. In the Political Science Department at the University of Washington, I would also like to thank Tony Gill, Rachel Cichowski, and Karen Litfin for their support early in my graduate career. Financial support for field research from the University of Washington from a Chester Fritz research grant from the Graduate School and via a research grant from the Nancy Bell Evans Center for Non-Profits and Philanthropy at the Daniel J. Evans School of Public Affairs is gratefully acknowledged. Field research provided a great opportunity to come into contact with a variety of helpful individuals. In Paris, Nicolas Jabko provided useful advice as I started my fieldwork. Isaline Bergamaschi, Julien Meimon, and David Sadoulet kindly shared their own work on French development policy with me and pointed me toward potential interviewees. The Department of Political Science at the University of Århus graciously provided financial and administrative support during my research stay in Denmark in the spring of 2006. Special thanks to Christoffer Green-Pedersen and Peter Mortensen for their hospitality during my stay in Århus. In Switzerland, I was grateful for Emanuela Tognola’s assistance at Alliance Sud’s documentation center in Bern. The APSA Centennial Center in Washington, DC, provided office space and administrative support as well as a congenial work environment during the fall of 2006. This project benefited enormously from the contributions of the many individuals who volunteered their time to sit down with me to discuss development policy issues in France, Denmark, Switzerland, and Washington, DC. I am sincerely appreciative of their openness, their substantial commentary, and the useful research advice they provided. I feel very fortunate to have been able to conduct these interviews as part of the research process.

xii Acknowledgments Umut Aydin and Devin Joshi provided helpful comments on an early proposal for this project. I also benefited from feedback from participants in a department colloquium at the University of Århus in June 2006 and from Rich Nielsen and participants of a panel at the 2007 ISA meeting. Many thanks also to the anonymous reviewers who provided thoughtful comments that helped me with a final round of revisions to the text. I would also like to thank my family for their support throughout the process. My brother Allan was an enormous help to me when I was in the process of completing the dissertation in Seattle, during transitions between Seattle and ‘the field,’ and while I was abroad. In Denmark I also benefited from a wonderful support base of family members who housed me and provided good company during research trips to Copenhagen. No individual has contributed more to my education than my mother, Anette. In addition to fulfilling the standard role of a supportive parent, she also made a direct contribution to this project by helping me to translate preparatory materials into Danish. This is just one small example of many forms of support she has provided through the years, for which I am very grateful. I dedicate this work to her. Finally, I would like to thank my colleagues who offered encouragement to finally transform this work into a book and the editorial team at Routledge for their kind assistance in the publication process.

Abbreviations

ACF ACFCI ACVFA ADRA AFD AID AIPAC BIFAD CCFD CEEC CFA CGD CIAD CIAN CICID CNPF COCODEV COFACE COGEMA CRS CRSP CSREES CVP DAC DAI Danida DFA DFID DGCID DGRCST DKK

Action Contre la Faim Assemblée des Chambres Françaises de Commerce et d’Industrie Advisory Committee on Voluntary Foreign Aid Adventist Development and Relief Agency Agence Française de Développement see USAID American Israel Public Affairs Committee Board for International Food and Agricultural Development Comité Catholique Contre la Faim et pour le Développement Central and Eastern European Countries Communauté Financière Africaine Center for Global Development Comité Interministériel de l’Aide au Développement Conseil Français des Investisseurs en Afrique Comité Interministériel de la Coopération et de Développement Comité National du Patronat Français Commission Coopération Développement Compagnie Française d’Assurance du Commerce Extérieur Compagnie Générale des Matières Nucléaires Catholic Relief Services Collaborative Research Support Program Cooperative State Research, Education, and Extension Service Christlichdemokratische Partei der Schweiz Development Assistance Committee Development Alternatives Inc. Danish International Development Agency Development Fund for Africa UK Department for International Development Directorate General for International Cooperation and Development Direction Générale des Relations Culturelles, Scientifiques, et Techniques Danish Krone

xiv Abbreviations DOM-TOM DREE EC EMU ENA EPIC ESF EU FAC FDP FGC FTF GDP GNI GNP HCCI HEKS IFAD IMF KULU LDC LIC LMIC LO LOLF MADCT MCC MDG MEDEF MINEFI MP MS MSF NAME NASULGC NATO NGO NIS NSC ODA ODC OECD OLIC OMB

French Overseas Departments and Territories Direction des Relations Extérieures European Community Economic and Monetary Union École Nationale d’Administration Établissement Public à Caractère Industriel et Commercial Economic Support Fund European Union Fonds d’Aide et de Coopération Freisinnig-Demokratische Partei der Schweiz Fédération Genevoise de Coopération Confederation of Professionals in Denmark Gross Domestic Product Gross National Income Gross National Product Haut Conseil de la Coopération Internationale Hilfswerk der Evangelischen Kirchen Schweiz International Fund for Agricultural Development International Monetary Fund Kvindernes U-Landsudvalg Less-Developed Country Low Income Country Lower Middle-Income Country Landsorganisationen, Confederation of Danish Trade Unions Loi Organique Relative aux Lois de Finances More Advanced Developing Countries and Territories Millennium Challenge Corporation Millennium Development Goal Mouvement des Entreprises de France French Ministry of Finance Member of Parliament Mellemfolkeligt Samvirke Médécins sans Frontières North Africa and the Middle East National Association of State Universities and Land Grant Colleges North Atlantic Treaty Organization Non-governmental Organization Newly Independent States National Security Council Official Development Assistance Overseas Development Council Organization for Economic Cooperation and Development Other Low Income Country Office of Management and Budget

Abbreviations xv PAID PL 480 PSC PVO QUODA RPR SDC SECO SF SP SVP UDF UMIC UN UNDP US USAID USDA USGLC WTO ZSP

Private Agencies in International Development Public Law 480 Professional Services Council Private Voluntary Organization Quality of Official Development Assistance Rassemblement pour la République Swiss Agency for Development and Cooperation Swiss State Secretariat for Economic Affairs Danish Socialist People’s Party Sozialdemokratische Partei der Schweiz Schweizerische Volkspartei Union pour la Démocratie Française Upper Middle-Income Country United Nations United Nations Development Program United States United States Agency for International Development United States Department of Agriculture United States Global Leadership Campaign World Trade Organization Zone de Solidarité Prioritaire

1

Development aid as a policy instrument

We will spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty, to which more than a billion of them are currently subjected. We are committed to making the right to development a reality for everyone and to freeing the entire human race from want. United Nations Millennium Declaration, September 2000

At the United Nations Millennium Summit in 2000, world leaders endorsed a long list of goals to promote peace and global development. The list included calls to halve the number of people living in extreme poverty by the year 2015 and to encourage the world’s wealthiest countries to increase development assistance to mobilize the resources needed to achieve the goals. These prescriptions were not revolutionary. As early as the 1970s, the World Bank had begun to emphasize the centrality of poverty alleviation as an international development policy goal (Finnemore 1996), while the UN proposed that industrialized donor states should allocate 0.7 percent of their national income toward development assistance. In spite of shared rhetorical commitments to tackling poverty worldwide, however, donors have varied considerably in their use of aid as an instrument for global poverty reduction. This book explains these varied donor priorities by examining how societal actors, governmental actors, and the institutions that regulate their interactions influence development aid policy. In so doing, it offers a theoretical framework for understanding foreign aid choices that places domestic politics and the development policymaking process at the center of the analysis. It challenges explanations for donor generosity identifying humanitarian values, partisan politics, and welfare state institutions as the most important determinants of donor giving patterns and explains how the preferences of a diverse set of actors are amalgamated in the domestic political arena to shape national preferences for international redistribution via foreign aid.

The characteristics of foreign aid Ever since it emerged as a policy instrument in the aftermath of the Second World War, foreign aid has been both heralded as an instrument for promoting economic

2 Development aid as a policy instrument development and improving living conditions in poor countries and criticized as an ineffective means for achieving development goals. For aid proponents, intergovernmental resource transfers can provide a needed capital injection into economies unable to accumulate capital through domestic savings or private international investment, or help to directly address the basic needs of vulnerable populations in developing countries. Aid skeptics argue in contrast that aid may actually hinder development efforts by, among other things, creating unintended incentives for developing country leaders to delay political and economic reforms.1 The immense development challenges that large segments of the world’s population continue to face lead aid advocates to continue to call for aid increases, while persisting development challenges reinforce the perception of aid skeptics that decades of aid provision have failed to deliver development results. Although the 2005 Human Development Report reported global progress in limiting impoverishment and expanding access to education and health care, the report also painted a somber image of the limited opportunities available to many of the world’s inhabitants. One-fifth of the world’s population (around 1.2 billion people) lived on less than a dollar a day, one billion people lacked access to clean water, and 800 million people lacked basic literacy skills (UNDP 2006). Notwithstanding its continually debated utility, foreign aid remains one of the main policy instruments that industrialized countries can use to redistribute wealth to the world’s poor and potentially alleviate poverty. In 2005, the 23 members of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD) distributed more than $100 billion in aid to the developing world through their own bilateral aid programs and contributions to multilateral organizations (OECD 2006a). Although the importance of aid to developing country economies varies widely, aid represents a significant source of capital for many developing nations, and in some cases has accounted for almost half of gross national income (GNI) and nearly equaled the volume of central government expenditures (Remmer 2004). The aid industry now involves a wide array of actors, including an increasingly diverse field of donors.2 However, the bulk of the world’s aid is still provided by the states that are members of the DAC.3 Although the DAC monitors its members’ budgetary commitments to aid and the contribution donors make to development at an operational level, its ability to enforce recommendations regarding the overall amount of aid member states should disburse or the content and operationalization of aid programs is limited. Without strong institutional constraints at the international level, donors have substantial autonomy in shaping aid programs, and there have long been considerable differences within the DAC donor club in the amount and nature of assistance distributed to developing nations (Botcheva and Martin 2001). The Nordic states and the Netherlands have traditionally led the donor pack in terms of the percentage of their national income allocated to development assistance, while the United States and Italy have occupied positions at the bottom of the pack of donors in recent years. In addition to these cross-national differences, there are noteworthy variations within donor countries over time. Even in Scandinavian

Development aid as a policy instrument 3 countries that have often been lauded for their contribution to international development, aid programs have not been immune from budget cuts. As an example, Denmark’s aid commitments began to drop from 2001 onward, going from a level of 1.06 percent of GNI in 2000 to 0.85 percent of GNI in 2004 (OECD 2006a). Overall aid figures highlight the different priority that donors have assigned to the use of aid as a foreign policy instrument over time. This policy instrument takes many forms, and donor choices about the content of their aid programs reveal their more specific goals. Although the DAC defines Official Development Assistance (ODA) as grants or loans directed to developing countries that are “undertaken by the official sector; with the promotion of economic development and welfare as the main objective; [and] on concessional financial terms” (OECD 2006a), this definition leaves room for donor interpretation. In some cases, funding reported as aid may not actually represent a real transfer of resources abroad. For instance, many donors have included costs associated with housing refugees and asylum seekers in the donor country in ODA figures reported to the OECD. Aid via technical cooperation has financed scholarships for students from developing countries at universities in the donor country and paid the salaries of donor consultants advising recipient governments.4 In addition, most DAC donors have tied aid at least to some degree to procurement contracts with domestic firms, providing a direct return to domestic suppliers and diminishing the overall value of aid distributed abroad (Kemp and Kojima 1985; Jepma 1991). Official aid can come in forms such as debt cancellation, macroeconomic support, project assistance administered by the donor, or project aid implemented by non-governmental organizations (NGOs). Moreover, aid can support development efforts across a variety of sectors including investments in economic infrastructure, agriculture, or social service provision. The choices that donors make with respect to the balance of different aid instruments or areas of concentration within their foreign assistance programs reflect the motivations that underlie their use of aid as a policy instrument. This book explains how domestic political processes shape the overall level of aid that donors provide as well as the content of aid programs. The analysis of factors leading donors to prioritize particular forms of assistance helps to inform discussions on aid effectiveness. Research on aid effectiveness tends to treat aid as a homogeneous sum placed into recipient country economies as an input for economic growth or human development at the macro-level (Burnside and Dollar 2000; Easterly 2003; Kosack 2003); however, aid actually enters the bloodstream of a developing economy in heterogeneous forms (Addison et al. 2005) and is disbursed by a variety of actors whose objectives are not always identical. Aid effectiveness might more appropriately be evaluated on the basis of the achievement of the specific goals that individual components of aid programs are intended to address (Fielding et al. 2006). The immediate goals of aid investments in education, health care, or sanitation are to improve literacy and reduce the incidence of disease, while aid investments in large-scale infrastructure projects are designed to achieve other outcomes such as building productive capacity in

4 Development aid as a policy instrument the recipient economy or improving linkages to domestic and international markets. Donor decisions on what purposes aid should be allocated for condition the possibilities for what types of problems recipient countries can tackle with this assistance.5

Academic perspectives on aid choices Donors have used aid to pursue a range of foreign policy objectives (Baldwin 1985), including supporting political and military allies and promoting national commercial interests. In the most skeptical view, aid in some historical cases could be considered a form of bribery, with donors transferring resources to other states as a means of securing some political concession (Morgenthau 1962). To examine the motivations underlying donor aid choices, many studies have applied a donor interest versus recipient need framework often attributed to McKinlay and Little (1977) to determine whether the geographical distribution of aid flows reflects strategic and economic considerations of donors or whether aid allocation decisions instead respond to the objective development needs of recipient countries. A common and straightforward conclusion from research in this vein has been that aid programs reflect a mixture of self-interested and altruistic motivations: most donors provide aid to address some combination of diplomatic, economic, and development-oriented goals. Studies of geographical aid allocation patterns have noted that large donors, including the United States, Japan, and France, have tended to provide aid to protect military or commercial interests abroad (Maizels and Nissanke 1984; Schraeder et al. 1998), while Nordic donors have primarily given aid for humanitarian reasons as evidenced by their attention to poverty, democracy, and good governance (Alesina and Dollar 2000; Alesina and Weder 2002; Neumayer 2003). These studies highlight important crossnational differences in donor motivations for providing aid. However, this line of research does not attempt to explain where donor motivations originate. That is, such studies do not account for why commercially oriented aid policies or poverty reduction oriented aid policies are stronger or weaker in any given donor country. Another strand of the aid literature focuses on the foreign aid programs of individual donors, outlining the objectives, characteristics, and structure of development cooperation and key issues facing donors at a particular point in time (Hoebink and Stokke 2005). While large donors have received a great deal of attention at the case level (Schraeder 1995; Ruttan 1996; Stein 1998; Eyinla 1999; Cumming 2001), the uncommon generosity of the Nordic countries and the Netherlands has stimulated interest in these cases as well (Pratt 1989; Stokke 1989). Studies focusing on these ‘like-minded’ donors have suggested that their strong support for international redistribution is essentially a reflection of “dominant socio-political values . . . underpinning the welfare state ideology” (Stokke 1989: 284). Lumsdaine’s (1993) prominent study of donor aid policies from 1949 to 1989 reinforces this point, since he argues that high commitments to development assistance are fundamentally a projection of domestic egalitarian values.

Development aid as a policy instrument 5 Lumsdaine’s work provides an empirically rich account of the rise of aid as a policy instrument and is an essential reference point in the literature on donor aid politics for several reasons. First, Lumsdaine identifies shortcomings in applying the realist approach to international relations to the study of aid, arguing among other things that the international system cannot completely determine the goals states choose to pursue, that change in the nature of the system can result from changes within states, and that ideational factors, such as unifying ideals, may represent a source of strength for a state. Second, Lumsdaine offers an explanation for donor generosity that emphasizes the domestic origins of aid choices. Finally, Lumsdaine attempts to evaluate the policies of all DAC donors on the same terms, highlighting the correlation between levels of social spending and aid outlays to argue that differences in attitudes toward domestic redistribution and preferences for international redistribution go hand in hand. There are also limitations in Lumsdaine’s analysis, however. One of Lumsdaine’s central claims is that there has been a steady and seemingly inevitable progression in the acceptance of norms of providing assistance to developing nations and in the improvement of the quality of that assistance throughout the industrialized world. Yet the cross-national differences that Lumsdaine identifies suggest that there has been substantial variation in the degree to which states have accepted or internalized benevolent development assistance norms. Though Lumsdaine asserts that humanitarian concerns for the world’s poor increased in the whole of the donor community over time, many donors have pursued aid cutbacks. One prominent example is the United States, initially the world’s leader in aid provision, which witnessed a long-term decline in aid provision from the 1970s through the 1990s. While many governments may make pronouncements in favor of reducing poverty globally, the uneven resource commitments to aid indicate that the moralistic impulses Lumsdaine associates with generous aid allocations have often not triumphed over other national preoccupations. The main shortcoming in Lumsdaine’s analysis is not that it fails to account for general trends in individual cases where aid giving practices may not closely conform to his expectations, but that Lumsdaine does not identify how domestic values and historical traditions of egalitarianism and altruism are translated into the policy choices he seeks to explain through the development assistance policymaking process itself. Lumsdaine instead finds evidence for the domestic values hypothesis in the observation that states with higher commitments to domestic poverty reduction through social compensation also tend to have higher commitments to international redistribution. This argument suggests that aid choices as well as domestic welfare choices reflect a long-term continuity in national values and have an automatic quality. Studies following this line of argumentation emphasizing the causal role of welfare state institutions also tend toward historical determinism without explaining how the legacy of egalitarian institutions locks in foreign policy choices (Noël and Thérien 1995; Thérien and Noël 2000). These studies are useful because they suggest that there are institutional differences among donor countries that influence commitments to foreign aid.

6 Development aid as a policy instrument However, whether welfare state institutions in and of themselves drive donor aid choices can be questioned since welfare states order social relations at the domestic level and create political cleavages that reflect the level of social protection accorded to various groups within the domestic political economy (EspingAndersen 1990). Groups that mobilize to protect their interests within a state’s welfare regime do not necessarily mobilize to support redistribution in the international economy. Moreover, given that welfare states have also been perceived as a mechanism for cushioning domestic publics from international market volatility (Cameron 1978; Katzenstein 1985; Rodrik 1998) and contain a national protectionist dimension (Myrdal 1960), the link between domestic solidarity and international solidarity is not self-evident. The humanitarian values and welfare state hypotheses suggest that aid policies are either a natural extension of underlying characteristics of a country’s population or an extension of a set of policies designed to compensate domestic actors from the vagaries of the market. Invoking these explanations as determinants of aid choices deprives aid policy of a politics unto itself.6 Yet aid policymaking does display a set of dynamics that distinguishes this issue area from other domestic and foreign policy problems, and it differs from welfare policymaking in fundamental respects. For example, aid policy is largely formulated out of public view while welfare policies attract the attention of the broad public. When aid is provided to alleviate poverty abroad, its beneficiaries are foreigners with little to contribute to the re-election campaigns of legislators, whereas the ability of legislators and governments to address domestic welfare demands is more likely to have electoral consequences. Finally, policy areas differ with respect to the nature of the governmental actors that are most actively involved in policy formulation. To provide one obvious example, development aid agencies have little input in determining how wages are indexed or how industrial production is regulated, but do contribute to defining and implementing development policies. This book proposes that in order to understand why aid policies differ across national settings and why they change over time, it is important both to identify the actors who favor increases in the quantity and quality of aid distributed and to examine the nature of the obstacles they face in advancing their policy goals. While Lumsdaine does identify advocates of generous aid policies—leftist parties, religious organizations, and relief agencies in particular—his analysis does not situate the experience of these actors in promoting a pro-poor agenda in a broader political context where other actors also compete for resources and have the power to shape national priorities. Policymaking processes comprise repeated interactions between actors with diverse interests operating within a given set of political institutions. In the aid policy process, some advocates have succeeded and others have failed to win state support for the transfer of resources to the world’s poor. There are religious and voluntary associations across donor countries that are similarly interested in helping vulnerable populations, yet in some settings public policy appears to bear the mark of these humanitarian-oriented groups to a larger degree than in others. Inattention to the policymaking process signals a neglect of the obstacles actors encounter in their efforts to shape policy, whether these

Development aid as a policy instrument 7 obstacles come in the form of the countervailing interests of other actors or in the form of structural barriers to securing influence that stem from the way a given political system is organized. The characteristics of domestic aid constituencies and the nature of their policy demands represent a key starting point in analyzing aid choices. However, in order to understand variations in aid commitments across countries and over time it is also necessary to take the characteristics of the governmental actors that supply aid into account and to identify how political institutions shape the interactions between actors demanding aid and those supplying it. Several scholars have recently emphasized the relevance of domestic influences on foreign aid choices. Building on a theoretical framework common to studies examining the domestic determinants of trade policy, Milner and Tingley (2010) highlight how the economic characteristics of congressional districts shape legislative preferences for aid in the United States. Faust (2008) emphasizes variations in the democratic quality of donor countries as an explanation for variations in the development orientation of foreign policy expressed across a range of externally-oriented policy fields. Analyzing several case studies of donor giving across a long time period, Carol Lancaster (2007) usefully identifies many domestic influences on aid giving, including societal and institutional variables that are also emphasized in this book, while shying away from proposing a theoretical framework for her analysis.

Approach of the book The theoretical framework orienting the analysis in this book, outlined in more detail in Chapter 2, underscores that the volume and content of donor aid programs are a product of interactions between domestic political actors taking place in the confines of a set of domestic institutions. The study is preoccupied with two broad categories of domestic actors: societal actors and governmental actors. Development NGOs and economic interest groups are the primary societal actors examined.7 Development advocacy NGOs can serve as representatives for a large and diffuse foreign constituency (the world’s poor) in the political arena within donor countries. By implementing development projects and seeking to speak on behalf of developing country populations, these organizations have a transnational character. However, in contrast to research that emphasizes the transnational dimension of NGO advocacy (Keck and Sikkink 1998; Price 2003), this study focuses on NGOs as domestic political actors. While many development NGOs may be members of international NGO networks and have operations abroad, there are several grounds for assuming that they are rooted in a domestic political context. NGOs depend on funding from private and public sources that are based primarily in individual donor countries. They possess a linguistic, cultural, and political connection to the state and to the private citizens that support their work, and the national political system in which they are embedded constitutes the primary reference point in their efforts to change policy.

8 Development aid as a policy instrument Even where domestic NGOs are affiliated with an international NGO network and share a commitment to the network’s mission, these organizations often have the autonomy to determine what types of goals and advocacy strategies they want to pursue in demanding policy change at the national level. Many large international development NGOs have affiliate organizations in multiple donor countries. Examples include Oxfam, which has affiliates in fourteen countries, and CARE, with affiliates in thirteen. National affiliates of the same international NGO often implement projects in the developing world independently of other organizations in the network, they confront different fundraising and regulatory environments, and the political context where advocacy is conducted also differs in diverse national settings. For example, although Denmark’s population is about one-tenth the size of France’s, CARE Denmark’s annual revenue in 2005 was around 7.5 million euros, while CARE France’s revenues totaled about 15 million euros (CARE France 2006; CARE Denmark 2006). NGOs with similar aims across the donor community face quite different economic and political realities. Development advocacy NGOs confront a political landscape populated by other societal interest groups such as business associations that may act as allies in efforts to strengthen aid commitments or competitors working to limit aid funding or capture a share of the aid budget for their own gain. There is a diverse set of business interests in all donor countries, and many firms and economic interest groups may have a very limited interest in aid policy. For others, particularly firms that specialize in infrastructure development or technical consulting, aid contracts can provide opportunities to add to their bottom line (Morrissey et al. 1992). These business groups may represent an additional domestic constituency supportive of increases in development funding. Other business constituencies may benefit from the creation of more favorable export and investment markets in developing countries and may take an interest in aid policy in order to expand private sector opportunities in recipient economies. However, business associations may also act as rivals to development NGOs either by seeking to restrain development spending or by dampening the poverty reduction orientation of aid programs. Because it is problematic to assume that business groups within donor countries will as a whole take a stance favorable or hostile to aid policies, identifying the preferences and resources of the range of societal actors engaged in the aid issue area is an essential building block in explaining aid choices. In attempting to influence policy, societal groups exert pressure on governmental actors that enter the policymaking process with preferences of their own and with differing levels of influence over policy choices. While the resources and collective mobilization of societal groups can contribute to their ability to defend their own interests, the institutions that determine how the relations between interest groups and governmental actors are structured can enhance or hinder the extent to which societal actors are able to make a mark on aid policy. Institutions, the formal and informal rules that regulate the interactions among actors in a political system, shape policy choices by influencing the level of access societal interests have to policymakers and by determining how authority is divided among these governmental actors.

Development aid as a policy instrument 9 Domestic institutional arrangements provide channels to societal actors to express their foreign policy preferences and to interact with the governmental actors who ultimately bear the responsibility for making aid decisions. Governmental actors include parliamentarians, executives, and representatives of the bureaucracies responsible for aid implementation. These governmental actors represent diverse domestic constituencies and possess organizational interests that color their own aid preferences. The roles these actors play in aid policymaking are shaped by functions they are assigned within the political system. The institutions that determine the level of centralization in aid decision-making or the way authority is dispersed across the political system are another component in determining how aid choices emerge because these institutional arrangements establish which actors have the greatest authority over aid decisions and the strongest potential to influence policy choices. The institutional determinants of aid choices can therefore be classified along two dimensions: a vertical dimension that identifies the links between societal actors and the policymaking apparatus and a horizontal dimension that identifies how the relations among governmental actors are organized. In focusing on the way actors interact with one another within a set of domestic institutional arrangements, the approach presented here offers a process-oriented explanation for aid decisions that identifies how the policy preferences of societal groups and governmental actors coalesce to shape national policy choices. The central outcome of interest in this study is the level of donor commitments to poverty reduction through the use of foreign aid. The analysis draws attention not only to a state’s preference for selecting a specific policy instrument (foreign aid), but also to the nature of the goals that underpin this choice. The volume of aid that is provided and the nature of the investments that are prioritized with this assistance are considered to reflect a donor’s commitment to global poverty reduction. Aid programs with a strong poverty reduction orientation privilege the improvement of the well-being of vulnerable populations in developing countries as a goal of development policy over the pursuit of direct economic or political gains to the donor. Poverty is a complex, multidimensional problem that relates not only to the material deprivation reflected in low incomes but also to the ability of individuals to lead fulfilling and productive lives (Alkire 2002). Poverty reduction as a policy goal is understood here to be closely linked to the promotion of human development, which emphasizes expanded access to health care and educational opportunities as a means of enhancing the quality of life of individuals. More expansive conceptions of poverty can include political disempowerment that only fundamental changes in political institutions can redress (Bastiaensen et al. 2005; Hickey and Bracking 2005). Although the publication of annual Human Development Reports by the UNDP (United Nations Development Program) since 1990 has highlighted this multidimensional conception of poverty and promoted policies intended to improve the well-being of individuals living in poverty, the provision of aid to address the basic needs of individuals has been recognized as a desirable means of promoting development since at least the 1970s (Hicks and Streeten 1979).

10 Development aid as a policy instrument The level of donor commitments to providing aid to address global poverty reduction goals can be measured by examining the volume and composition of aid outlays. The most commonly used indicator of aid volume is the amount of ODA provided as a percentage of GNI (Noël and Thérien 1995, 2002; Thérien and Noël 2000; Breuning 2001). Although the overall volume of aid a state provides reflects the intensity of its preference for using aid as a foreign policy instrument, to gauge the extent to which aid is directed toward poverty reduction in developing countries it is useful to examine the composition of aid flows alongside overall aid volumes, since a share of the money allocated to development assistance may in fact be disbursed to serve a variety of diplomatic, commercial, or strategic objectives of the donor country rather than to assist the poor. The distribution of aid by recipient income provides one general indicator of the poverty reduction orientation of an aid program. The DAC divides aid recipients into five income categories: Less Developed Countries (LDCs), LowIncome Countries (LICs), Lower Middle-Income Countries (LMICs), Upper Middle-Income Countries (UMICs), and High-Income Countries (HICs). In 2000, the LDC and LIC categories contained countries with per capita incomes below $760, while the UMICs had incomes higher than $3,031 and the HICs had incomes higher than $9,360 (OECD 2001a). Aid can represent an important source of capital for the world’s poorest countries, which are not likely to have the same access to international capital markets as higher-income countries. When donors focus their aid efforts on economies in the lowest income categories, this engagement reflects a commitment to providing support to populations with fewer opportunities in the global economy. In contrast, redistribution favoring higherincome developing countries might suggest that aid decisions are more likely motivated by commercial considerations such as a desire to cultivate ties to lucrative emerging market economies. A second indicator of the poverty reduction orientation of an aid program is the sectoral composition of aid, and the extent to which donors direct resources to social infrastructure and agricultural development in recipient countries more specifically. Within the category of social infrastructure and services, the DAC counts resources intended to support efforts such as school construction, clinical care, vaccination programs, family planning programs, and efforts to improve water supplies and sanitation (OECD 2006b). Investments in health care, education, and basic water and sanitation services represent commitments to increasing the quality of life of individuals by facilitating access to the basic services that reduce their susceptibility to illness and create opportunities for the acquisition of new skills through improved literacy. Proponents of the human development concept suggest that attention to the satisfaction of these basic needs increases the capabilities of individuals to lead fulfilling and economically productive lives (Sen 1999). Healthy and well-educated individuals can be considered an asset to an economy and these types of investments can be justified on economic as well as on humanitarian grounds (Streeten 1994). Increasing levels of educational attainment can improve the material well-being of individuals by leading to increased wages (Duflo 2001), while better health can not only lead to higher

Development aid as a policy instrument 11 wages and productivity (Strauss and Thomas 1998) but can also keep individuals from falling into poverty (Krishna 2004). Donor investments in the agricultural sector in developing economies represent another marker of a commitment to poverty reduction. According to the International Fund for Agricultural Development (IFAD), roughly 75 percent of the people living in extreme poverty around the world lived in rural areas in 2000 (IFAD 2001). Because agricultural production provides the rural poor with employment, income, and sustenance, investing resources in improving crop yields and natural resource management practices can contribute to enhancing livelihoods and increasing food security. DAC statistics on investments in the agricultural sector include funding for the provision of farm inputs and agricultural services as well as investments in fishery and forestry management (OECD 2006b). The attraction in relying on multiple indicators of a state’s poverty reduction orientation is that each of these indicators viewed alone may only provide a partial portrait of the quality of a state’s aid program. 8 For instance, aid distributed to relatively wealthy countries may not be a perfect indicator of aid intended for the promotion of commercial rather than humanitarian objectives, since aid may be allocated toward education and health care programs targeting the poor within comparatively wealthy countries. Similarly, aid directed to poor countries may not always be directed to addressing the basic needs of individuals living in poverty in these countries.9 In examining the levels of aid destined for the developing countries with the lowest incomes and the amount of aid directed to social infrastructure and agriculture, it is possible to paint a more accurate picture of a state’s commitment to global poverty reduction than the examination of overall aid levels permits. Ultimately, however, national commitments to global poverty reduction are also likely reflected by the total volume of resources allocated to aid. More overall aid is likely to make more funds available for pro-poor investments. The questions of how much aid a country gives and how much aid targets poverty reduction are thus linked, but they are not necessarily identical. Examining the composition of the aid budget gives direct clues about the purposes aid is intended to serve that a look at total aid volume alone cannot provide. To explain variations in donor commitments to global poverty reduction, this book first presents a theoretical framework for understanding the determinants of donor aid choices (see Chapter 2). This framework is constructed using insights from the literatures on interest group politics and NGO advocacy, the influence of institutions on political outcomes, and governmental politics. The framework draws attention to how the resources and collective mobilization efforts of domestic political actors and the institutional setting in which they operate combine to shape the volume and content of donor aid programs. This theoretical framework does not suggest that there is a singular route that leads donors to a particular level of commitments to global poverty reduction. As the second chapter explains, however, aid directed toward poverty reduction is expected to be more substantial in countries where the societal actors demanding pro-poor aid transfers have greater financial resources and where they

12 Development aid as a policy instrument are successful in building cohesive coalitions among groups that share a common cause. The pro-poor agenda can be expected to be further bolstered where aid is supplied by a political system that is both centralized and permeable to influence from domestic aid constituencies. In contrast, in countries where the anti-poverty constituency has more limited resources or is internally divided and where political institutions spread policymaking authority widely among governmental actors and limit the access of pro-poor advocates to the policy process, a weaker com­ mitment to poverty reduction through aid should result. Chapters 3 through 6 apply this theoretical framework to the study of aid politics in Denmark, Switzerland, France, and the United States from 1980 to 2005. Figures 1.1 and 1.2 compare the 1.2

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Figure 1.1 ODA in Denmark, France, Switzerland, and the United States as a percentage of GNI (1980-2005). Denmark has had the highest overall aid commitments over the entire period, and saw its aid allocations climb in general until 2001, when a sharp drop in aid expenditures is notice­ able. France and Switzerland have occupied a middle ground. While France’s aid budget was relatively high until around 1994 and Switzerland’s comparatively modest, the steady fall in French aid in the 1990s and the slow but steady increase in the Swiss aid budget led both to an aid-to-GNI ratio of about 0.4 percent by the end of the period covered. The United States was at the bottom of this pack for most of the period. Source: OECD. International Development Statistics Online.

Development aid as a policy instrument 13 performance of these donors in terms of aid volume and aid provided to lessdeveloped countries scaled by GNI during this period. This study follows a tradition of research that develops and tests theories of political phenomena through the comparative analysis of a relatively limited number of cases (Lijphart 1971; Collier 1993). As Gerring (2004) suggests, case study methods can be considered to occupy a middle ground in social scientific research by allowing for the in-depth analysis of particular outcomes while acknowledging that the processes at work in specific settings illuminate relation­ ships between variables that are relevant in understanding outcomes beyond those settings. While case studies of single units can themselves be employed in the service of testing and building more generalizable propositions (Eckstein 1975; Gerring 2007), placing case studies in a comparative framework provides one means of making the assessment of the broader significance of the relationships between variables studied in individual cases a more explicit component of the research process. The explanatory leverage that the application of the comparative method can provide is dependent on the nature of the variation in the outcome variables and explanatory variables across the cases that are examined (Geddes 1990; King et al. 1994; Collier and Mahoney 1996). There is wide agreement that limiting variation in outcomes to be explained can bias inference.10 To mitigate potential 0.4 0.35 0.3 0.25

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Figure 1.2 Aid to lowest income countries as a share of donor national income (1980-2005). This chart shows the level of bilateral aid provided by Denmark, France, Switzerland, and the United States to the two lowest income categories of recipient countries. Aid volumes to LDCs and LICs are reported as a percentage of GNI. Source: OECD. International Development Statistics Online.

14 Development aid as a policy instrument problems with selection on the dependent variable, choosing cases that vary widely in outcome is desirable. Figures 1.1 and 1.2 illustrate the range of variation that the selected case countries display with respect to the outcome of interest. The United States occupies one end of the spectrum, with low commitments to poverty reduction, Denmark occupies the other extreme with a high level of commitment to poverty reduction via aid, and France and Switzerland occupy a middle ground. To provide a basis for judgments of covariation and causation in comparative research it is useful to attempt to narrow down the number of potential explanations for a given outcome by selecting cases that have relevant attributes in common but which differ in observed outcome. While a ‘similar-systems’ design may be inappropriate when an analysis aims to examine how the interaction among different variables influences the values that the dependent variable takes on, the principle of controlling for confounding influences by analyzing cases that resemble one another in important respects is basic in comparative research. One key alternative explanation for why aid policies may vary across countries is that the position of a state within the international system shapes a state’s foreign policy outlook and the range of policy options available to any given donor. The United States and France are two of the world’s major economic, diplomatic, and military powers. Nuclear powers and permanent UN Security Council members, these two countries are a rare pair among DAC members given their active military presence in developing countries during the Cold War period in particular. Denmark and Switzerland occupy a different position in the international system as small, trade-dependent states. The effects of size on foreign policy choices may relate not just to the international position of states but to the way that the scope of a polity influences the character of the relations among political actors. Analyzing these similar pairs of states is one means of maximizing explanatory leverage. In addition to containing a cross-case component, this study relies on diachronic analysis of the aid policy process in each country over a twenty-five-year period in order to determine, as Collier puts it, “whether the dynamics of change within each case plausibly reflect the same causal pattern suggested by the comparative appraisal of the case in relation to other cases” (1993: 115). The in-depth analysis of political dynamics within a single case over time carries benefits by providing a basis for understanding complex interactions between explanatory variables, helping to identify previously overlooked variables that may influence outcomes of interest, and assessing the relevance of rival explanations. The arguments that aid choices represent a projection of the qualities of the domestic welfare state or that partisan politics determine aid policies represent the two key alternative hypotheses that are examined alongside favored explanations in this analysis. Many works have highlighted the value in using qualitative research methods to explain political phenomena (Mahoney and Rueschemeyer 2003; Brady and Collier 2004; Pierson 2004; George and Bennett 2005; Bennett and Elman 2007), elaborating justifications for the use of historically-grounded methods and outlining research strategies to lead qualitative researchers toward more conclusive findings. For these scholars, the qualitative methods associated with the consideration of a small number of cases have numerous virtues. They allow researchers to

Development aid as a policy instrument 15 situate variables of interest within the broader social and political context in which they are embedded (Locke and Thelen 1995), potentially minimize problems of measurement validity across diverse social settings (Mahoney 2007), and highlight the importance of paying attention to how political outcomes may be determined by events that unfold over a long period of time (Pierson 2004). Process-tracing is one tool for establishing causation in case-oriented research. The core of the process-tracing method is an effort to reconstruct the course of events and the constellation of variables that led to a given outcome. In order for such an analysis to be more than a descriptive study, it should be informed by propositions that identify the phenomena that a researcher expects to see when theories are exposed to historical evidence (Büthe 2002; Hall 2003). This approach involves tracking the progression of key variables of interest through time to establish whether explanatory variables and dependent variables covary and to specify how an explanatory variable as an antecedent influences the value of the dependent variable. The strength of historically-oriented research can be enhanced when the researcher strives not only to hold preferred theoretical expectations up to the light of available evidence but also to determine that viable alternative explanations do not account for the outcomes under observation (Moravcsik 1998). By focusing on identifying systematic links between perceived causes and effects and by evaluating potential alternative pathways to the outcomes in question, the study of the evolution of politics through time addresses three key desiderata in confirmation of theory: the identification of covariation, the isolation of the direction of causality, and the refutation of spurious relations among explanatory and dependent variables (Stinchcombe 1968). Process-tracing is an information-intensive method, in that it prods researchers to rely on a variety of materials to reconstruct political processes and uncover the chain of events that produced the decisions they are interested in explaining (George and Bennett 2005). As Gaddis (1997) has observed, the reconstruction of past events always requires an element of imagination, especially given the nonreplicable character of the complex phenomena political scientists seek to explain. Nevertheless, the analysis of documents produced by governmental and nongovernmental actors, journalistic accounts, and other secondary source materials can aid a researcher in identifying who the key players within a given policymaking process were, what issues were at stake, and how various actors were able to influence the final outcome. Because policymaking processes can be opaque due to the multitude of actors and inputs that are involved, interview research is an important supplement to document-based work. Interviews with participants in the policymaking process or close observers of that process are an indispensable part of research that aims to better understand the relationships between political actors, the efforts undertaken by individuals and organizations to shape policy choices, the qualities of the political setting that helped or hindered these efforts, and the extent to which these actors were influential in advancing their goals. Moreover, interviews can reveal dynamics of contestation and compromise and provide other information about decisionmaking processes that might not be recorded in materials available to the public.

16 Development aid as a policy instrument In this study a total of 77 individuals participated in semi-structured interviews that sought to examine the role of a variety of actors in the aid policy process in Denmark, France, Switzerland, and the United States. Eighteen people were interviewed in both Denmark and France, 19 were interviewed in Switzerland, and 22 individuals were interviewed in the United States. This group of individuals included 26 representatives of NGOs, 12 business association representatives, 31 individuals who were either government officials or were retired from government service, 4 development researchers, 3 individuals working in international organizations, and 1 journalist. The interviews provided a considerable amount of information on the policy priorities of diverse actors, their channels for influencing policy, and their relations with other actors. Importantly, the interviews also served to identify the factors that are most central in explaining how development aid policy is made in the countries studied and to pinpoint the actors who have left a decisive mark on aid choices.11 Throughout the book, there is attention to synthesizing existing scholarship that provides relevant building blocks to analyze the character of development policy choices across donor countries. On a theoretical level, the book brings together strands of research focusing on different types of factors that influence political outcomes. These factors include the characteristics of organized political interests and the qualities of political institutions. Empirically, this book builds on research conducted on political systems and aid politics in the individual donor countries studied. This scholarship provides an indispensable foundation for the book.

Preview of the case studies This section briefly outlines salient differences in the dynamics of aid policymaking in Denmark, Switzerland, France, and the United States to provide an overview of the case study chapters. Although the four donor countries included in this study are among the world’s wealthiest countries and are all longtime aid donors, they are clearly distinct from one another on a number of dimensions. Indeed, by virtue of their historical experiences, political geography, and ethnic composition, all states possess a brand of national distinctiveness; all states are ‘exceptional.’ Without disregarding the unique qualities of the countries studied, this study proposes that aid choices across countries and through time can be understood by adopting a common framework focusing on the characteristics of domestic actors and institutions. Along with its Nordic neighbors, Denmark has had an aid program with a strong poverty reduction orientation for decades. In the 1980s and 1990s, Danish aid commitments as a share of national income increased steadily, only to experience cutbacks after 2001. The aid program has been offered as an example of normative leadership in international affairs common in a region known for its commitment to multilateralism, the peaceful resolution of conflict, environmental protection, and increasing global equality (Mouritzsen 1995; Lawler 1997; Ingebritsen 2002). Denmark has served as an archetypal case for the argument presenting universal welfare state policies and institutions as the key determinants

Development aid as a policy instrument 17 of donor generosity. From its inception the Danish aid program has been more than the simple expression of altruistic aims of addressing the needs of impoverished populations, however. Danish aid policy has also long provided direct returns to Danish firms (Holm 1982). One striking feature of aid policymaking in Denmark is the formal integration of the business community in the aid policy process alongside other societal actors such as development NGOs, development researchers, and labor representatives through the Board for International Development Cooperation, a committee that offers advice to the minister responsible for the development cooperation portfolio and has the authority to approve or reject proposals for medium and large-scale development projects. Inventories of private voluntary organizations have identified approximately 200 organizations in Denmark working on international development issues (Larsen and Vilby 1989; Oakley 1999). The Danish development advocacy landscape has been dominated by a handful of large NGOs, including DanChurch Aid, affiliated with the evangelical Lutheran Church, Mellemfolkeligt Samvirke, a membership-based organization focused on voluntary action, and the Danish Red Cross.12 Although the Danish NGO community does not have a strong financial resource base in international comparison, Danish NGOs have enjoyed regular access to the aid administration and to the parliament, a motor for steady increases in Danish aid outlays for much of the past quarter century. The continuous progression in aid spending that Denmark experienced in the 1980s and 1990s had its roots in a proposal approved by the parliament in 1985 calling for yearly increases amounting to 0.03 percent of GNP in order to reach a goal of spending 1 percent of national income on aid by 1992 (Petersen and Thune 1985). The fusion of executive and legislative power in the Danish parliamentary system creates a compact policymaking system affording the aid administration a central position in the policy process. The system of interest intermediation allowing NGOs and business groups not only a voice but also authority in the aid policymaking process has favored the maintenance of high levels of assistance to the world’s poor by giving the work of the aid administration broad societal backing. Switzerland’s aid to developing countries has never reached levels comparable to the Nordic donors. However, Switzerland’s aid budget did progress over time and by 2005 aid volume represented 0.44 percent of the country’s GNI. In terms of content, the Swiss aid program has often been praised for its high quality, since Switzerland sends the bulk of its aid to poor countries and has distributed that aid on favorable terms (OECD 2005b). The Swiss Federal Administration plays the leading governmental role in the formulation of development policy. Within the Swiss administration, the Swiss Agency for Development and Cooperation (SDC) has been the dominant bureaucratic actor, focusing on social development issues, while the smaller Swiss State Secretariat for Economic Affairs (SECO) has had primary responsibility for private sector development initiatives undertaken with development assistance funding. Alongside the SDC and SECO, a strong Swiss development NGO community has served as a pillar of support for using aid to address global poverty reduction goals. Some 1,500 Swiss NGOs work on international development issues

18 Development aid as a policy instrument (Perroulaz 2004). As in Denmark, however, a small number of large NGOs are the most prominent advocates in the aid policy process. Organizations such as Caritas, Fastenopfer, Brot für Alle, Helvetas, HEKS, and Swissaid are among the most politically active in Switzerland. These six organizations coordinate their political work within Switzerland through Alliance Sud, a lobbying organization on development issues. In spite of the strong aid support base from within the Federal Administration and in civil society that has contributed to gradual increases in the size of the aid program, the comparatively low level of assistance Switzerland provides in relation to its national income can be explained in part by the fragmentation of authority characteristic of the Swiss political system. This fragmentation shapes policymaking dynamics within the executive branch and has also opened the way for the Swiss parliament to restrain the expansion of aid financing. Although Swiss parliamentarians have traditionally had limited interest in foreign policy matters, the budgeting competencies of the parliament nonetheless guarantee a level of influence (Goetschel et al. 2005). The Swiss Business Federation (Economiesuisse), the leading economic interest group in Switzerland, has served as a key advocate for restrained aid spending at the national level, consistently suggesting that development assistance financing plans should fit with the goal of maintaining fiscal discipline (Economiesuisse 2006). The ties that bind France and the United States to the developing world are more complex than Danish or Swiss relations with developing countries, given the broader scope of their bilateral relationships and the more transparent linkage to power politics. However, even in these countries, aid politics are strongly shaped by constellations of domestic interests and institutions. The realm of foreign affairs in Fifth Republic France has often been characterized as a domain shaped by France’s preoccupation with preserving grandeur or greatness in a global context dominated by the Cold War superpower rivalry. Maintaining French greatness involved not only promoting French culture and the universal ideas embodied by the French Republic but also preserving close ties with former French territories in the aftermath of decolonization (Chipman 1989; Schraeder 2000). French aid expenditures progressed during the 1980s but experienced significant cutbacks after 1995, recovering after the start of the new millennium. France’s aid program grew from the legacy of French colonialism and served as a pillar in an Africa policy that helped to prop up a claim to world power status. Like other areas of foreign policy, aid policy in France has largely been an executive preserve. The French president, aided by a close ‘African cell’ of advisors, has played a dominant role in aid policymaking, determining how much aid should be given and which countries should be privileged as aid recipients. With the parliament mostly absent from aid decision-making, the policymaking process has been centralized but also marked by significant bureaucratic involvement. The Foreign Affairs and Finance ministries have been the main bureaucratic players in this area, with the Agence Française de Développement (and its precursors) and the now defunct Ministry of Cooperation playing supporting roles in the development arena. As Lancaster (2007) has noted, the role of these development agencies in policymaking has historically been subordinate to the role

Development aid as a policy instrument 19 played by the Foreign Affairs and Finance ministries and the president’s inner circle. As a consequence, the diplomatic corps’ concern for promoting French language and culture worldwide and the Finance Ministry’s desire to promote French exports have traditionally been well-reflected in aid policy choices, while reducing poverty has represented a lower priority. French business interests have found a voice in the aid arena via their links to the president and departments within the Finance Ministry. At the same time, the NGO community in France has until recently been left on the sidelines in aid debates. This partly reflects the fragmented character of the French NGO community, but it also reflects limited channels of access to decision-makers available to development NGOs. The 1990s marked a period of significant change for French development policy, as steady aid cutbacks coincided with an effort to rationalize the aid policymaking apparatus. A sharp drop in aid after 1994 reflected external and domestic pressures that reduced the ability of the presidency, traditionally a proponent of generous aid outlays, to maintain the relatively high aid commitments that were characteristic of the 1980s. The incidence of a period of cohabitation offered an opportunity for aid reformers to push the country to adapt its development cooperation system, and the economic policy constraints imposed by increasing European economic integration provided an incentive to reduce aid expenditures. In the same period, crises in the Great Lakes region stoked critical assessments of France’s Africa policy, providing further impetus for aid reforms. Much like French foreign policy, American foreign policy has been marked by the desire to promote a particular set of ideas about world order. Vacillating between isolationist and interventionist tendencies, the United States has sought to promote democracy and to champion an open world economy (Lepgold and McKeown 1995; Ruggie 1997). The origins of the US foreign assistance program can also be illuminated in terms of these broad goals, since Marshall Plan aid served not only to counteract the advance of communism but also to stabilize the post-war international economy (Wood 1986). Although the US was for many years a world leader in aid provision, aid volume as a share of national income decreased steadily from the 1980s onward. In the aftermath of the events of September 11, 2001, this long-term trend was reversed and American aid commitments increased markedly. Myriad governmental actors have contributed to the formulation and implementation of US aid policy. In contrast to the French parliament, the American Congress has left an especially important mark on aid choices. The congressional role in aid policymaking has extended beyond its authority as an appropriator, in particular through the use of earmarking to specify exactly where and how aid resources should be used (Lancaster 2007). The prevalence of congressional earmarks in the bilateral assistance program has been one factor that has constrained the United States Agency for International Development (USAID), the effective advocate for pro-poor development assistance within the executive branch. In spite of its predominant role in administering the aid budget, USAID’s implementation responsibilities have not secured the agency a dominant role in the policy process. A number of bureaucracies, including the State Department,

20 Development aid as a policy instrument the Department of the Treasury, and the Department of Agriculture, also share responsibilities in managing parts of the aid budget. The distribution of aid competencies across numerous executive agencies combines with a heavy congressional hand in aid policy to foster a fragmented policymaking system in which the voice of USAID has been subordinated to both the State Department and the Congress. At the societal level, the United States development NGO community is diverse. The umbrella organization for US development NGOs, Interaction, has existed since the early 1980s and counted 190 organizations as members as of 2011. Interaction lobbies Congress to support increases in development assistance with a poverty reduction focus and many of its member organizations do the same. Achieving strengthened commitments to poverty reduction has been a challenging proposition. Part of this difficulty stems from the system of representation in the US Congress, which generates incentives for legislators to advocate policies that directly reward their constituents and to focus their efforts on narrow interests. This system also creates incentives for NGOs to advance their individual organizational interests rather than focusing on the broader goals of the development NGO community in their advocacy work. Development NGOs in the United States rarely face direct opposition from other societal groups in promoting more generous aid outlays, but instead experience indirect competition from the multitude of interest organizations vying for a share of the national budget. A number of American business interests have actually been allies in efforts to increase US aid commitments. Since the mid1990s, the US Global Leadership Campaign has, for instance, brought the NGO community into a coalition with aid contractors and major exporters in support of a more generous international affairs budget. Declining aid budgets put aid constituencies in a defensive position, and the long-term downward trend in aid expenditures has only been checked by the increasing priority the executive branch afforded international development concerns in the wake of the September 11 attacks. In the book’s final chapter, the politics of foreign aid in these four donor countries are compared more systematically in order to synthesize the material presented in the country-specific chapters and discuss how the analysis informs the study of aid politics beyond the cases studied. In looking at the political processes behind aid decisions in these four countries from a comparative perspective, it is clear that aid policy is neither a pure reflection of the characteristics of the domestic political actors engaged in this policy area nor a direct byproduct of the existence of a particular set of institutional arrangements. Acknowledging this basic conclusion is essential in better understanding why the supply of official development assistance from the industrialized world to developing countries takes the form that it does.

2

Aid and domestic politics

This book views the supply of poverty-oriented foreign aid as a product of domestic politics in donor countries. To explain variations in the nature of national commitments to international redistribution via aid, this chapter presents a theoretical framework identifying how the preferences of societal and governmental actors and the attributes of the institutional setting that mediate their interactions influence aid choices. The chapter begins by discussing the properties of aid policy as an issue area. The chapter then identifies the key societal actors engaged in the aid policy process and develops expectations about their potential for influence, drawing on the literature on interest group politics. A third section brings institutions into the discussion by highlighting how the forms of interest intermediation and the dispersion of policymaking authority shape the political landscape in which aid decisions are made. The place of governmental actors in this political landscape and their aid policy preferences are then brought into focus. The chapter concludes with a discussion of how the evolution of policy choices through time can be understood.

Characteristics of the aid issue area The attributes of an issue area can influence what types of actors will be most actively engaged in the policy process and the nature of the relations between actors within the process (Lowi 1964). Foreign policy processes have for instance been distinguished from domestic policy processes because of the prominence of executives in international statecraft and the deference of other domestic actors to executive dominance in this area. Not all foreign policy issues are equally susceptible to executive control, however. In crisis situations and on questions regarding military threats, the scope for internal deliberation and the proposal of alternative policy options by a broad set of domestic actors may be limited, whereas foreign economic policies can invite greater mobilization from domestic actors due to the material losses and gains these policies may produce for individuals, firms, or sectors and the long period of time over which the policies are negotiated. In important respects, then, the dynamics of foreign economic policymaking may resemble other domestic public policy processes (Zimmerman 1973; Potter 1980).

22 Aid and domestic politics Lowi’s (1964) influential work on the relevance of issue area characteristics in the study of politics argued that issue type drives patterns of contestation by shaping the expectations of actors within the policy process. In its most basic form, Lowi’s argument is that “policies determine politics” (Greenberg et al. 1977: 1534). Attention to issue area properties can be useful in comparative foreign policy analysis in understanding convergence in policy outputs in different national settings, as cross-national commonalities can be understood to reflect the underlying properties of the issue. At the same time, taking the characteristics of the issue area as a starting point in comparisons of foreign policy choices can also ground explanations for cross-national policy divergence because specifying the nature of the issue area highlights similarities in the locus of policymaking and the types of actors involved across countries. Divergent domestic political structures (Evangelista 1989) and the characteristics of actors themselves should then account for variations in policy choices within a single issue area. The common typology of issue areas building on Lowi’s work distinguishes between policies that are redistributive, distributive, or regulatory in nature (Lowi 1964; Peters et al. 1977). The policies termed distributive policies are similar to redistributive policies in that they require some transfer of resources between groups in the context of a national budgeting process. Distributive policy choices differ from redistributive policy choices because they are considered to be made without reference to the overall state of the national budget, and are by their nature narrowly targeted.1 Regulatory policies, in contrast, do not directly impact resource allocation but instead impose behavioral constraints on select actors. In Lowi’s view, redistributive politics activate broad class interests, and the opposition of labor and capital in welfare state politics provides a basic illustration of this. This book highlights the redistributive character of aid policy to identify the political position of aid beneficiaries in relation to other groups in the domestic political economy rather than to suggest that there is broad class mobilization related to aid. The aid issue area is redistributive inasmuch as it consists of a determination of how a national government’s wealth should be reallocated. When aid has a poverty reduction focus, it represents a transfer of resources from taxpayers in industrialized countries to beneficiaries in developing countries. In contrast to the domestic redistributive programs, which provide compensation to voters or interest groups to secure electoral gain (Dixit and Londregan 1995, 1996), aid directed toward poverty alleviation abroad benefits a diffuse foreign constituency that is unlikely to be able to directly bolster the political fortune of decision-makers in donor countries. At the same time, resources allocated for aid may come at the expense of investments in other political priorities more likely to translate into support from domestic constituencies. As a result, the politics of international redistribution differ in one fundamental respect from the politics of domestic redistribution since the populations benefiting from resource transfers intended to alleviate poverty do not constitute a political support base for decisionmakers in donor countries. As other sections of this chapter highlight, the above statement merits clarification because there are indeed domestic constituencies that support development

Aid and domestic politics 23 assistance funding, and one of the central aims of this book is to analyze how these domestic aid advocates have fared in advancing demands for more generous aid transfers. Development advocacy organizations may work to obtain additional funding for the poor and economic interest organizations may support aid increases as well. Nevertheless, when aid conforms to its definition as a resource transfer to a developing country, it should represent a net loss to taxpayers and a net gain for its intended beneficiaries in developing countries. In the budgetary process, then, the foreign beneficiaries of pro-poor aid outlays are at a natural disadvantage compared to the domestic constituencies that lose from these resource transfers. This disadvantage might be especially apparent in periods when a nation’s economy is performing poorly or when a government faces demands to pursue stringent fiscal policies. Although governments may rely on deficit spending to appeal to domestic constituencies in difficult economic times (Lizzeri 1999), they also have incentives to exercise fiscal prudence and implement cutbacks in public spending in response to growing budget deficits (Alesina et al. 1998). In deciding how to restore the health of public finances, policymakers face opposition from beneficiaries of government spending programs. Because aid cutbacks are unlikely to lead to electoral consequences, the aid budget can be expected to be more vulnerable to economic downturns than other parts of the budget, such as entitlement programs, where cutbacks would represent a direct material loss to potential voters. While struggles over the distribution of resources exist in periods of budgetary surplus as well as when there are budgetary deficits, deficits likely impose greater constraints on decision-makers (Alesina 2000), and this creates a difficult environment for aid spending. In economic upswings, in contrast, decision-makers may have more discretion in raising aid funding levels because the needs of major domestic constituencies may be satisfied to a greater degree.2 In short, given the redistributive character of aid transfers, this policy area should naturally be a low priority public spending area. The domestic economic context in which aid decisions are made frames the possibilities available to societal and governmental actors to demand larger resource transfers directed toward global poverty reduction. These structural conditions may create openings for groups to advance a policy agenda or present obstacles to promoting policy goals. However, decision-making ultimately consists of a selection among alternative policy options given a set of economic constraints. In order to understand why decision-makers choose to increase or limit the supply of pro-poor foreign aid it is thus necessary to identify the origins of the demands they face from domestic actors, the capacity these actors have for advancing their agenda, and how the preferences of political actors at societal and governmental levels are articulated within the policy process. A second defining characteristic of the aid issue area is its low salience. Although public opinion data has suggested that there are high levels of support for international redistribution across OECD countries (Noël and Thérien 2002), polling data also reveals that donor publics are ill informed about development policy and more preoccupied with other policy priorities (Cooper and Verloren van Themaat 1989; Lancaster 2000). Low salience by definition implies that broad

24 Aid and domestic politics public mobilization in an issue area is unlikely, and the absence of mobilization around the issue suggests that voters are unlikely to reward or punish political parties or politicians on the basis of their efforts to promote or limit aid funding. Where decision-making constraints imposed by an electorate recede because of limited attentiveness to the issue, specialized societal interest groups gain opportunities to assert influence over policy (Smith 2000). Low salience also gives legislators fewer incentives to invest time specializing in questions related to aid policy, meaning that executive ministries are likely to play a more prominent role in the policymaking process. Aid policy can consequently be expected to be colored more by interest group and bureaucratic involvement than higher salience issue areas.

Development advocacy and interest group politics Interest groups gain opportunities to be influential participants in the policy process in low salience issue areas because the absence of voter concern lowers the risk to politicians of pursuing policies that provide benefits to a concentrated group at the expense of a larger public (Denzau and Munger 1986; Smith 1995). The low salience of development policy provides room for interest groups such as development NGOs and business associations to shape the contours of aid policy and suggests that the engagement of both political parties and the electorate will be more limited in this policy area than in many others. The widespread use of the term ‘interest group’ belies the difficulty that scholars of interest group politics have had in adopting a common definition for the term (Baumgartner and Leech 1998). One starting point is Truman’s definition of an interest group as “any group that, on the basis of one or more shared attitudes, makes certain claims upon other groups in society for the establishment, maintenance, or enhancement of forms of behavior that are implied by the shared attitudes” (1951: 33). In more simple terms, an interest group can be defined as a group motivated to conduct political action on the basis of a commonly held interest. Interest group scholars have sought to refine this broadly appealing general definition. In their seminal study of American interest group politics, Schlozman and Tierney (1986) carefully label the political organizations they study ‘organized interests’ to reflect the possibility that interest groups may be not only membership organizations, but also organizations without a membership base, public institutions, or corporations that attempt to influence policy. The notion of interest groups adopted in this book is in line with this definition. In particular, this study draws attention to organizations that are non-governmental and attempt to influence policy decisions taken at the national level primarily via their interactions with governmental actors.3 The societal actors who are the most likely proponents of pro-poor aid policies are development NGOs with offices in donor countries. NGOs are visible actors in global development due to their advocacy work and their role in implementing development projects, including many underwritten in part by donor governments (Fisher 1997; Tvedt 1998; Hailey 1999; Hudson 2002). NGOs united by shared

Aid and domestic politics 25 principles and working on behalf of disadvantaged populations have been lauded for their promotion of progressive standards of appropriate behavior internationally by pressuring corporations and international organizations and by increasing the resource base available to NGOs operating within states to challenge government policies (Keck and Sikkink 1998). The political vocation of development advocacy NGOs is linked to the advancement of the interests of the world’s poor, a vulnerable population lacking both the resources and the political power to lobby industrialized governments for policy change for its benefit. While the advocacy role of NGOs has generally been portrayed in this positive light, a number of scholars have also pointed out that these organizations are not without pathologies. Edwards (1999), for example, is skeptical of NGO accomplishments in the development field and criticizes their limited accountability. Cooley and Ron (2002) suggest that the relations between NGOs and state actors may also be murky given the potential for NGOs to be co-opted by their funding sources or by the governments they have to work with at an operational level. Nevertheless, because development NGOs are the domestic actors with the most explicit preoccupation with global poverty issues, their advocacy efforts in the aid arena provide a basic starting point in understanding societal demands for propoor aid transfers. Keck and Sikkink’s (1998) study of transnational advocacy movements offers a key reference point in the analysis of the role of NGOs in international politics. Although Keck and Sikkink acknowledge that domestic political institutions can influence the success of advocacy across borders, noting that it is necessary to “consider the kinds of institutional structures, both domestic and international, that encourage or impede particular kinds of activism” (1998: 7), the main arena for contestation that they identify is at the international level rather than the state level. Indeed, much research on the role of NGOs in world politics shares this focus on global governance processes and transnational advocacy (Wapner 1995; Raustiala 1997; Clark et al. 1998; Reimann 2006). However, NGOs ultimately have political roots in particular national settings (Edwards 1999). Development NGOs headquartered in donor countries may disburse the bulk of their funds abroad, but their fundraising efforts occur mainly within the country where they are based, they are subject to national regulations on non-profit activity, and they are most likely to make demands on political authorities with influence in their national political system. As participants in a political process within their country of origin, these organizations can press for policy changes that affect the lives of the world’s poor. Examining the processes enabling or inhibiting NGO promotion of policy ideas within states can thus supplement studies of NGO political entrepreneurship at the systems level (Checkel 1998; Cortell and Davis 2000; Tarrow 2001), as states remain central units of political organization within the international political economy. Importantly, nation-states hold the purse strings for official development finance. In drawing attention to the varied fortunes of development advocacy NGOs within industrialized countries, this study adds to the literature on NGO political entrepreneurship and to a body of scholarship examining the relations

26 Aid and domestic politics between the state and the voluntary sector from a comparative perspective (Gidron et al. 1992; Salamon and Anheier 1998). The NGO label has been applied to describe a wide variety of organizations, some of which receive a substantial share of their funding from governmental sources (Vakil 1997). Indeed, many of the development NGOs covered in this study depend on state resources to some degree to support the development projects they implement. However, these organizations can still be characterized as ‘non-governmental’ because they are independently administered (Martens 2002). Many are outgrowths of charitable and religious movements in donor countries that either pre-dated the emergence of public foreign aid programs or emerged in response to humanitarian crises such as wars or famines in the late twentieth century. Some are domestic affiliates of international movements, such as the 29 branches of the International Save the Children Alliance; others have roots in specific religious denominations. Examples include the evangelical Lutheran organization Folkekirkens Nødhjælp in Denmark and the Comité Catholique Contre le Faim et Pour le Développement in France, leading development NGOs in their respective countries. Such organizations exist across the donor community and across a broad spectrum of religious traditions. NGOs engaged in advocacy have been distinguished from other non-state actors by the principled beliefs or moral authority that guide their action (Keck and Sikkink 1998; Price 2003). Although northern development NGOs may have special knowledge about development issues because of their operational experience and their relationships with civil society organizations and local populations affected by aid policy, like other non-state actors interested in shaping policy decisions, they face the challenge of convincing policymakers that their policy ideas are worth investing resources in (Sell and Prakash 2004). In this sense, advocacy organizations can be likened to interest groups. Moreover, it is questionable that their efforts to influence development policy are purely altruistic in character. In addition to their advocacy roles, many NGOs also act as government subcontractors and rely on state resources to fund their programs abroad. This contracting relationship offers benefits to donors as well as NGOs, because using NGOs as implementing agents may allow donors to have a presence in areas where they are unable to operate or give them an opportunity to cultivate relations with civil society organizations in recipient countries. Although a subcontracting relationship may be mutually beneficial for donors and NGOs in development policy implementation, subcontracting can also have negative consequences for the ability of NGOs to fulfill an advocacy role vis-àvis their official funding sources. For one, NGOs may expend scarce organizational resources to maintain access to public financing, which may diminish the scale of their efforts applied toward advocacy. At the same time, the willingness of NGOs to criticize donor governments may be restrained by their reluctance to jeopardize an important revenue stream. Hence, the character of the advocacy work carried out by a national development NGO community will in part reflect the nature of the competencies attributed to these organizations by the donor government itself.

Aid and domestic politics 27 The means by which NGOs attempt to influence the policy process are likely to be similar to those used by other interest groups, and the literature on interest group politics can be instructive in deriving expectations about when these groups will have more political sway. One basic indicator of a group’s potential for influence is its resource base. Financial resources are primary determinants of the size of an interest organization’s bureaucracy (Grant 2000), and the level of organizational capacity influences the ability of the organization to formulate and disseminate policy-relevant information and to devote time to maintaining regular contacts with decision-makers. For development NGOs with a primary mission of implementing development projects, additional financial resources can enable greater specialization in the division of labor within the organization and allow personnel to focus specifically on advocacy work. Oxfam America’s Annual Report for 2005 noted, for instance, that $3.5 million in increased revenues directed toward public education and advocacy work provided resources to strengthen its campaigns, in part through the opening of new field offices within the United States (Oxfam America 2006). The collective resource base of development NGOs within a state should increase their political voice in the aid policy process. Although public and private financing of development NGOs should both lead to increases in organizational capacity, NGOs with stronger financial support from private sources likely have a better ability to press for policy changes, since the availability of private funding increases the autonomy of these organizations from the state and allows them more freedom to adopt a critical stance on government policy. Political organization is a power resource (Truman 1951; Eckstein 1960; Korpi 1991), and participation in a coalition of organizations with shared interests can augment the resources of any single group. Where there are many interest groups attempting to advance a similar agenda, the level of cohesion among groups and the degree of concentration of groups in the same field will be predictors of their ability to influence policy (Thomas 1993). As Olson (1971) noted, diffuse interests face greater challenges of mobilization than more cohesive groups. Cohesion also gives like-minded groups the advantage of being able to concentrate energy on policy reform rather than inter-group disputes, and may thus strengthen the position of groups vis-à-vis policymakers (Schlozman and Tierney 1986). Development NGOs are a heterogeneous lot (Tvedt 2002). Although development advocacy organizations may share a general interest in promoting global poverty reduction, their preferences can differ regarding what policies they believe are most necessary for achieving this broad objective. Some advocacy groups may have an issue-specific focus in order to distinguish themselves from other NGOs working in the same field and to increase their chances of attracting private contributions (Cooley and Ron 2002; Hudson 2002). While specialization within the NGO community may provide advocacy networks with more reservoirs of expertise, it can also decrease the pressure applied toward the achievement of any single objective. Increasing the amount of bilateral aid available to support global poverty reduction is one of several possible policy goals that advocacy organizations may emphasize as a way of helping the world’s poor. NGOs may also

28 Aid and domestic politics promote poverty reduction by attempting to influence the policies of multilateral development agencies, by lobbying for a more pro-poor world trade regime, or by campaigning for environmental protection. Even when attention is limited strictly to bilateral aid programs, NGOs may be divided over which sectors, regions, or development instruments aid resources should be directed toward. The preferences of development NGOs for reducing global poverty and the cohesion among development organizations can be expected to influence the nature of foreign aid policies. Where development advocacy organizations are united in their focus on increasing aid outlays that contain a strong poverty reduction orientation, higher levels of aid are more likely, while fragmentation among NGOs both in terms of the policy goals sought and the strategies employed to achieve these goals can contribute to lower aid levels. Simply put, when the development NGO community’s funding base increases and when these groups speak and act in concert, a stronger anti-poverty commitment should result. Assessing the level of cohesion among development NGOs in a given national setting requires gathering information from NGO representatives on the priorities of development advocacy organizations and the nature of the collaboration or competition among them. In many donor countries, there are umbrella organizations that serve as national coordinating platforms for development advocacy groups. As of 2011, the American NGO umbrella organization Interaction counted 190 development-oriented NGOs as members; France’s Coordination Sud represents more than 130 French NGOs. The extent to which an umbrella organization acts as a political mouthpiece for the development NGO community is suggestive of the level of cohesion among development advocacy organizations. The extent of NGO coordination through a national umbrella organization is evidenced by the level of delegation of advocacy work to an umbrella organization by its member organizations and by their agreement on policy goals. NGO advocacy conducted independently of the umbrella organization and other NGOs signals more limited coordination. Economic interest groups may also be engaged in the aid policy arena for a variety of reasons. Some business interests may be involved in aid policy because of their role in project implementation (Ruttan 1996), while others may take an interest in aid because it fosters private sector development or creates market opportunities in developing countries. Many donor countries have long traditions of considering the interests of their firms when formulating aid policies. Tied aid has secured donor firms a role in procurement as well as in implementation, while export credits have served to provide donor firms with an outlet for their goods and services and to lower the risk of conducting business in developing markets by providing loan guarantees (Moravcsik 1989; Morrissey et al. 1992). Economic interest group influence over aid policy can be expected to depend on the policy priorities of these groups, their resources, and the level of coordination among groups with similar policy objectives. Some firms may have priorities that are consistent with the poverty reduction aims of development NGOs. For instance, firms working in the areas of health and sanitation have an interest in encouraging government investments in these social sectors because increased

Aid and domestic politics 29 investments may result in additional contracts. At a more general level, business groups may favor overall aid increases in order to buoy their investments overseas or to build up markets for their goods and services. Thus, demands from the business sector may encourage donor governments to increase their commitments to aid aiming to combat poverty globally. Alternatively, business opposition to aid could place pressure on governments to lower aid expenditures. While business support for aid stemming from a desire to promote commercial aims may contribute to increasing the resources available for poverty reductionoriented aid by fueling a demand for overall increases in aid volume, aid that serves the objectives of business groups may also come at the expense of pro-poor aid. If business groups favor sending aid resources to comparatively wealthy emerging market economies, the world’s least developed countries may receive less aid as a result. The sectoral orientation of an aid program can also be shaped by policy demands from the business community. Firms producing heavy machinery or specializing in construction industries can increase the demand for assistance that finances large-scale economic infrastructure projects, for example. In a study of British aid politics during the Thatcher years, Morrissey et al. (1992) note that construction and engineering firms were the business actors with the strongest interest in the aid program. These groups can act as potential rivals to the domestic development NGO constituency. In short, commercially-oriented aid allocations may diminish a state’s attention to poverty alleviation goals (Berthélemy 2006). Business groups also have a range of policy concerns that lie outside of the aid issue area. These concerns can translate into demands for governmental resource transfers to invest in domestic infrastructure improvements, research and development, or production subsidies. Such demands may compete with demands for aid to support global poverty reduction indirectly in the same way that demands for state resources from myriad other societal groups can, given that any state can only satisfy so many demands when resources are limited. However, business competition with pro-poor aid advocates can also be more overt, in that business associations may explicitly oppose increases in development financing in order to ensure that more money is available to support the political priorities they deem more pressing. The ability of business interests to advance an agenda that is either supportive of poverty reduction goals, supportive of commercially-oriented aid, or in opposition to the agenda that development advocacy organizations favor depends on the resources they direct toward political action in this issue area. Business interest groups normally possess a material advantage over advocacy organizations because they have access to funding generated through the for-profit activities of the firms they represent. Development NGOs, in contrast, depend on private voluntary contributions or funds from official sources to operate and generally work under tight resource constraints. One traditional view of the link between resources and interest group influence suggests that resources can translate into influence by helping to deliver votes in political campaigns or through the production and presentation of information to policymakers (Grossman and Helpman 2002), a time and labor intensive process. More resources enable organizations to

30 Aid and domestic politics increase the personnel concentrating on the multiple dimensions of policy work, such as the drafting of policy reports or the maintenance of personal contacts with policymakers. Although one can argue that NGOs have soft power resources, such as moral authority, that can compensate for their inherent material disadvantages, business groups also have soft power resources, given that economic policy recommendations have an authoritative quality related to the role that businesses play in creating employment and generating wealth at home and abroad (Lindblom 1977). However, the balance of NGO and business power also depends fundamentally on the extent to which business groups actually choose to engage on aid issues. As with NGOs, the business world is heterogeneous. The absence of unity among business associations can offset the advantage that economic interest groups have in mobilizing resources and can limit their ability to advance their interests (Baumgartner and Leech 1998; Woll 2006). As business groups overcome collective action problems among themselves, they not only increase their political weight by pooling economic resources but also present policy positions to decision-makers that represent a more general interest within the business community (Olson 1982; Jankowski 1988). Business associations that represent a large number of sectors or firms can have a formidable presence in a political system’s interest group landscape because they have the resources to work on a multitude of issues simultaneously. The impact of these encompassing associations on donor aid commitments ultimately depends not just on their organizational attributes, but also on their policy preferences. When their interests align with development advocacy groups, this will bolster the demand for pro-poor aid. If encompassing associations display a preference for limiting the expansion of the aid budget, for directing aid monies toward higher-income countries, or for limiting social sector or agricultural investments relative to other aid expenditures, they can be expected to place downward pressure on the poverty reduction orientation of aid programs. The first layer of this analysis suggests that while development assistance policy is an issue area vulnerable to interest group influence because of its low salience, the ability of societal actors to influence this public policy area depends not only on the material resources they are able to marshal, but also on the ability of actors to deal with a collective action problem among organizations with similar goals. In the aid policy process, development NGOs face competition from groups that have contending policy demands, but they may also be supported by interest groups for which international development is one of many preoccupations. In examining societal influences on aid policy choices, it is thus necessary to identify the preferences and characteristics of groups that represent competitors or allies to the non-governmental organizations promoting global poverty reduction goals alongside the preferences and attributes of development NGOs themselves.

Aid and domestic politics 31

Domestic institutions and governmental politics Interest groups do not operate in a political vacuum. Their demands are filtered through a political process that involves a variety of actors, including legislators, executives, and bureaucracies with interests of their own. This process is organized around a set of institutions that can be understood as “the formal rules, compliance procedures, and standard operating practices that structure the relationship between individuals in various units of the polity and economy” (Hall 1986:19). This definition of institutions encompasses both the written law that establishes how authority is divided within a political system and informal conventions that shape how actors relate to one another (Thelen and Steinmo 1996). Institutions influence patterns of contestation and cooperation in a polity by delimiting the power that individual actors have in relation to others and by imposing constraints on the behavior of actors (North 1981). By attributing power or circumscribing it, institutions can give certain actors advantages in pressing their agendas forward and disadvantage others, thus shaping the impact that actors’ preferences have over national policy choices (Immergut 1992; Milner 1997). Because institutionalist approaches in political science seek to explain how the organization of political life influences the behavior of actors and resultant policy outcomes (March and Olsen 1989; Hall and Taylor 1996), institutionalist analysis represents a supplement to rather than a replacement for the actor-oriented approaches referenced above. The value added in adopting an institutionalist framework is that this allows for the specification of how the patterns of decisionmaking and interest intermediation in a given country facilitate the translation of societal preferences into national preferences. Institutionalist approaches place the nature of the interaction between state-level and societal-level variables at the center of analysis (Thelen and Steinmo 1996). By enabling societal actors to advance their policy demands or by limiting their political opportunities, the institutional setting in which policy formulation takes place affects the nature of the capabilities needed for actors to leave a mark on national policy choices. Institutions may make political action more costly for certain actors and less costly for others, in essence increasing or limiting the resources actors require to exert influence. As Immergut (1992) notes in her study of the politics of health care policy, similarly endowed domestic groups can experience different fortunes in promoting the same goals across national settings because the opportunities for effectively using resources vary with the institutional setting these groups confront. Neo-corporatist scholarship from the 1970s offers a point of orientation in examining how the interactions between societal groups and the state shape policy outcomes in different national settings. The neo-corporatist research program challenged the pluralist perspective on interest representation, which suggested that interest groups operated in a state of more or less perfect competition with their rivals, by focusing on the way different types of institutional arrangements could shape interest intermediation (Wilson 1983; Williamson 1989). Critics of pluralism as a theoretical approach suggested that a pluralist system represented one specific type of interest representation system that could be absorbed into a

32 Aid and domestic politics broader categorization scheme. Corporatist systems occupied another end of the spectrum where the state’s strong role in regulating interest representation and limiting the number of societal interest groups involved in policymaking was considered a defining element (Schmitter 1979). Although neo-corporatist typologies were designed to illuminate differences across national political systems, as Wilson (1987) notes, different patterns of interest intermediation could exist even within a single country, since the organization of interests and their relationship to the state could vary across issue areas. Rather than offering a view of politics where groups were no longer relevant in understanding political outcomes, neo-corporatist research identified patterns of interest intermediation common outside of the American political system that had inspired pluralist theorizing. Pluralist and neo-corporatist research both shared a basic focus on examining the relationship between organized interests and government, and both acknowledged the place of institutions in shaping patterns of interest intermediation.4 This book suggests that two dimensions of the institutional setting in which aid decisions are made are important in analyzing the determinants of aid choices. The first dimension concerns patterns of interest intermediation and the level of access societal actors have to the policy process in particular. The second dimension relates to the concentration of authority over policymaking in the aid issue area. In focusing on these aspects of the institutional setting, the study builds on two key assumptions about the nature of the state in international relations. First, this framework assumes that state preferences are shaped by the preferences of societal groups and that the state is therefore not autonomous from society (Moravcsik 1997). Second, the state is not considered to be a monolith. Instead, the state can be viewed as a constellation of actors “with varying preferences who share power over decision making” (Milner 1997: 11). Because executives, legislators, and bureaucrats all have a potential role to play in the formulation of policy, it is necessary to understand how these actors relate to one another in addition to examining the influences on their own preferences. Access to the policy process As Schattschneider argued, “nearly all theories of politics have something to do with the question of who can get into the fight and who is to be excluded” (1960: 20). Explaining how political arrangements privilege certain societal actors over others has been a focus of institutionalist scholarship (Hall and Taylor 1996), and the availability of channels of access to policymakers is one fundamental determinant of the ability of interest groups to shape policy (Truman 1951; Berger 1981; Ikenberry 1988, 1989; McAdam et al. 1996; Tarrow 1998). In their notable study of interest representation in the United States, Heinz et al. (1993: 218) offer a succinct explanation of the importance of access to interest groups: “[O]nly the officials have the authority to act, to make policy decisions that can benefit or injure a group’s interests. Lobbyists can offer reasons and arguments for or against action, but it is government officials who monopolize the legitimate power.”

Aid and domestic politics 33 However, the extent to which societal groups lack authority also varies across political systems. In countries where wage policy is determined through a process of concertation between employers’ and workers’ associations mediated by the state, for instance, societal groups can actually have formal policymaking authority (Tsebelis 1995). Formalized participation in the policy process through governmental committees or via established consultation procedures where the opinions of interest groups are actively solicited are markers of high access to the policymaking process. Access need not relate to formalized consultation procedures, however. Many of the means that interest groups can use to present their viewpoints to policymakers are more informal in nature (Schlozman and Tierney 1986; Baumgartner and Leech 1998). Informal contact can take the form of telephone calls, email exchanges, ad hoc meetings related to specific issues, or person-to-person networking outside of formal consultative bodies. The availability of open channels for consultation with policymakers can lower the costs to interest groups in advancing their policy agendas. If they have reliable means of interacting with policymakers, more of their organizational resources can be devoted to developing and promoting the content of their policy demands rather than to securing access to decision-makers as an end in itself. While the level of access to decision-making can be expected to influence the fortunes of interest groups in advancing their policy agenda in general, access to policymakers can vary among domestic interest groups. Business groups and development NGOs may not have the same opportunities for interacting with policymakers. Because the state of the domestic economy and the performance of firms can shape the political fortunes of elected officials, policymakers may be naturally receptive to business interests (Lindblom 1977) and may find it easier to make time for meetings with business representatives. At the same time, involvement in policy areas outside of the aid sphere, such as trade policy or domestic economic policy, may provide business groups with more opportunities for interaction with governmental actors that can facilitate the transmission of ideas about aid policy as well. The nature of access can condition the types of strategies groups are likely to use to press for policy changes. Research on interest groups has typically drawn a distinction between insider politics, characterized by influence through direct discussions with government officials, and outsider politics, where groups attempt to use public mobilization, the media, or protest to pressure the government due to their exclusion from the policymaking process (Grant 2001; Binderkrantz 2005a).5 Broad mobilization of the public is a costly endeavor and is likely to be especially difficult in the aid issue area because development policy does not directly impact donor publics. When interest groups have limited direct channels of access to policymakers, they must expend more resources to exert policy influence. The relationship between access and resources may work in the opposite direction as well. More resource-rich organizations may naturally have an easier time gaining access to decision-makers due to their greater weight in the domestic political economy. The purpose in analyzing interest group access from an institutional

34 Aid and domestic politics perspective is to determine whether groups that are resource-poor have opportunities for participating in the political process that offset their natural disadvantages. In examining how the access dimension of the institutional setting shapes societal actors’ potential for influence, it is necessary to identify where in government a group’s main interlocutors are. If interest groups with a stake in development policy have a high level of access to governmental actors with little authority over aid policymaking, their potential for influence can be expected to be lower than in cases where interest groups have ties to more powerful decisionmakers. While interest groups may seek to develop a diverse network of contacts within government, they are unlikely to have uniformly close relations with the full range of governmental actors involved in aid policymaking. Because some organizations act as government subcontractors or are directly affected by the policies particular government agencies are responsible for implementing (Wilson 1989), they are likely to have stronger ties to these particular departments or ministries. The privileged relationship that farmers’ associations have with agriculture ministries offers a classical example of how close ties with influential governmental actors can strengthen the position of societal groups within the political process (Keeler 1996). In the aid context, development NGOs can be perceived as natural allies of the aid agencies that oversee projects implemented by NGOs and share their preoccupation with development concerns. The dispersion of decision-making authority If the access dimension of a state’s institutional arrangements specifies where interest groups can find possible points of leverage in advancing their agendas at the governmental level, the authority dispersion dimension indicates how the relations among interest group interlocutors are structured within the policy process. Examining how the formal division of authority in national political systems influences political outcomes is a central preoccupation of the veto player approach, which suggests that the existence of many institutional veto points or veto players, such as coalition partners, interest groups, or bureaucracies, makes the blockage of reform more likely and lowers the prospect for significant policy changes (Tsebelis 1995, 1999, 2002; O’Reilly 2005). Several studies building on this approach have used the level of centralization in national political structures to explain variations across industrialized countries in terms of their welfare effort or attention to domestic poverty reduction (Hicks and Swank 1992; Huber et al. 1993; Bradley et al. 2003; Moller et al. 2003). For these authors, more centralized states are better at representing a diffuse general interest in favor of increased welfare expenditures, whereas fragmented states allow better representation of narrow interests. Hence, one finds a stronger commitment to general welfare in Scandinavian states where unitary parliamentary systems facilitate the passage of welfare legislation and a lower commitment to social welfare in the United States, where the federal structure, bicameral legislature, and presidential system increase the blockage points in the policy system.

Aid and domestic politics 35 For state structure to represent a useful predictor of policy choices, it is necessary to address the way that the diffusion of authority allows for the expression of specific policy preferences. The presence of many potential blockage points in a political system is largely irrelevant if the veto players agree on the policy course that needs to be followed. The dispersion of political authority has been recognized as a means of protecting the interests of minority groups against the interests of the majority, a foundational idea in the American political system (Ethredge 1991). In veto player research on welfare efforts in industrialized countries, this quality of fragmented systems has been portrayed negatively, as the protection of particularistic interests that power dispersion assures is viewed as detrimental to the advancement of the welfare of a country’s population as a whole (Huber et al. 1993; Crepaz 1998). Disadvantaged minority interests can benefit from a fragmented system because the dispersion of authority multiplies their channels of access to the political system (Vogel 1993). In this way, a lower level of centralization increases the number of potentially influential interest group allies. However, if a fragmented system may lower the barriers for societal access to the policymaking system, it also limits the power of the individual governmental actors who share decisionmaking authority. For an interest group to successfully advance its policy priorities in this environment, it will have to convince a larger number of targets that these priorities are worthy of governmental support. As a result, interest groups potentially have to spread their resources widely in an effort to appeal to multiple targets. A fragmented policymaking system, then, increases the costs of interest representation and places resource-poor advocacy groups at a particular disadvantage. Where a decision-making process is more centralized, competition between branches of government and between government agencies is limited (Katzenstein 1978; Ikenberry 1988; Risse-Kappen 1991) and the preferences of the executive are those that have a determining influence over national policy choices. For an interest group to influence policy in this situation, it must influence the preferences of the central authority. One advantage that a centralized policymaking system should have for societal groups with limited resources is that it allows them to concentrate their lobbying efforts on a restricted target. Following this logic, a more centralized aid policymaking process should benefit groups that support stronger commitments to global poverty reduction and a fragmented policymaking process should have the opposite effect. To understand the way domestic institutional arrangements shape aid outcomes, the institutions that determine how societal interests can be articulated in the policy process and the institutions that determine how policymaking authority is dispersed must be considered together. If a centralized decision-making process allows for a more efficient use of advocacy group resources, for instance, that advantage can be offset by restricted access to central authorities. Advocacy organizations should face the best prospects for advancing pro-poor policies when the institutional setting in which policymaking takes place is both centralized and permeable to influence. The way authority is dispersed in a political system is not

36 Aid and domestic politics just consequential because it shapes the environment that societal groups confront in attempting to influence public policy, however. The dispersion of authority also has consequences for establishing which governmental actors’ preferences are likely to hold the most sway in the policy process. The level of centralization or fragmentation in the decision-making process is a function of the rules that assign responsibilities to political actors and establish how governments are formed. One fundamental indicator of the concentration of policymaking authority is the balance between the legislature and the executive in the decision-making process. Executive dominance of policymaking is likely to emerge in parliamentary democracies with majoritarian elections, while legislatures likely play a larger role both in polities where proportional representation leads to the possibility for government by minority parties and in polities where there is a constitutional commitment to the separation of executive and legislative powers (Lijphart 1984; Lijphart and Crepaz 1991). Within political systems, authority is not always dispersed in a uniform manner across policy fields. France’s hybrid presidential-parliamentary system offers one illustration, as the foreign policy sphere has typically been a privileged field of intervention for the president (Kessler 1999). While the aid arena in any given donor country can have features that distinguish it from other policy areas, development policymaking systems are ultimately nestled in a broader set of institutional arrangements that shape political dynamics in the donor country as a whole. The idea that a more centralized policymaking system will tend to produce stronger poverty-oriented aid commitments rests on the assumption that reducing the number of targets of advocacy group influence compensates for the resource disadvantage these groups often face in attempting to advance their political agenda. This also implies that, regardless of the societal influences on governmental behavior, a more centralized policymaking system will be more conducive to generous aid programs than a policymaking system where decision-making authority is more widely dispersed. This assumption can be justified on the grounds that executives are the governmental actors who serve as the leading representatives of their countries in international relations. As such, an executive may be more strongly influenced by international demands for increasing the supply of aid resources due either to pressure from foreign governments or to the perception that providing aid can help advance the executive’s foreign policy interests. Governmental politics Even in a polity characterized by the concentration of authority in the executive, policymaking is unlikely to be fully centralized, however, given that ministries or departments with a role in policy implementation will also have a role to play in policy planning (Atkinson and Coleman 1989). A second aspect of authority dispersion thus relates to the place of bureaucracies in the development policy process. Numerous bureaucracies may have some competence related to aspects of the development aid budget. For example, 27 public entities were involved in the

Aid and domestic politics 37 US development cooperation program in 2011 (OECD 2011b), with some of the main governmental actors, apart from the State Department and USAID, including the Department of the Treasury, responsible for managing relations with multilateral development banks, the Department of Health and Human Services, an increasingly important actor in managing global health financing, and the Department of Defense, which assumed special importance due to US engagement in Iraq and Afghanistan. Development policy can cover a range of technical areas with transnational dimensions, leading to the involvement of primarily domestically-oriented agencies in aid administration in areas including agriculture, health, education, environmental protection, law enforcement, or research. Competencies that are attributed to government agencies in policy implementation create organizational interests that bureaucracies seek to defend in the policy process (Wilson 1989). One influential conceptualization of bureaucrats as political actors stresses their role as budget maximizers intent on increasing funds directed to their agencies or departments in order to advance the self-interest of the bureaucracy (Niskanen 1968; Blais and Dion 1990). Bureaucratic interests related to foreign aid are likely to be influenced by organizational mandates in other policy domains where ministries, agencies, or departments are active and by the dominant mission of a bureaucracy in particular. The primary responsibility of ministries of foreign affairs is the management of diplomatic relations with other states; the main responsibility of finance ministries is the management of national budgets and economies. In these examples, bureaucrats can be expected to weigh the appropriateness of aid choices through a lens shaped by their preoccupation with broader diplomatic or economic goals. Specialized aid agencies, whose primary task it is to conduct development work, are likely to make policy demands informed by this mandate. The position within the policymaking apparatus of a ministry or agency for which the promotion of international development is its main mission is of particular interest in assessing the character of governmental support for global development goals. Because development agencies have regional and countryspecific expertise and technical expertise in designing development programs, these agencies are likely to be the strongest governmental defenders of funding global poverty alleviation efforts. When development agencies are given more independent authority and face less competition from other ministries in defining aid policy objectives, the poverty reduction orientation of a state’s aid program should increase. For example, the independence and cabinet-level rank of the UK’s Department for International Development (DFID) has been perceived as a source of strength for the UK in addressing global development goals (OECD 2010). While organizational mandates provide a basis for understanding the policy positions of bureaucracies and bureaucrats themselves, bureaucracies are also vulnerable to influences from outside of the organization, whether from societal interest groups, other governmental actors, or international actors they encounter in the context of multilateral cooperation. One key criticism of the bureaucratic politics approach to the study of foreign policy has been that it has overemphasized the autonomy of bureaucratic interests from other domestic political influences.

38 Aid and domestic politics After all, executives often select the heads of government agencies and have at least some control over the types of interests their appointees are likely to defend (Krasner 1972; Bendor and Hammond 1992), and the preferences of executives themselves are shaped by the domestic constituencies they represent. Actually, the leading proponents of the bureaucratic politics approach themselves acknowledged that both a perception of a broader national interest and a concern for domestic political interests could influence the behavior of governmental actors (Allison and Halperin 1972; Halperin 1974). In Allison’s classic formulation of the governmental politics model of decisionmaking, policy outcomes are “intranational political resultants: resultants in the sense that what happens . . . results from compromise, conflict, and confusion of officials with diverse interests and unequal influence; political in the sense that the activity from which decisions and actions emerge is best characterized as bargaining along regularized channels among individual members of government” (Allison and Zelikow 1999: 294–5). The interests of the individuals whose maneuvering shapes policy outcomes derive in part from the positions they occupy and the organizational interests their posts require them to defend, and in part from their individual attributes. Their ability to advance these interests in turn depends on their channels of access to other principal policymakers, and their political skills and policy expertise. Importantly, this formulation indicates that collaboration among agencies as well as conflict shapes policy outcomes. Where there is a lack of agreement, governmental actors have a varied set of resources at their disposal to advance their policy aims and varying authority within the process. For example, while bureaucracies may possess an informational advantage over legislators in the policy process, legislators possess an authoritative advantage over bureaucracies, given their surveillance and budgeting competencies (Bendor et al. 1985; Wood and Waterman 1991). While the institutionalist component of this analysis establishes which actors have access to the playing field and how power is distributed among the main players in aid policymaking, the governmental politics dimension emphasizes that it is necessary to understand how the interaction between players within the policy process leads to specific policy choices. Adding governmental politics as the final layer in this theoretical framework stresses the importance of agency at the governmental level. Institutions structure interactions among actors and even influence the nature of their interests, but government officials ultimately make decisions. Figure 2.1 summarizes the determinants of foreign aid choices outlined in this chapter, accommodating variables shaping cross-national and longitudinal variations in policy choices. This model attributes policy outcomes to the interaction of factors including the preferences and resources of societal actors, the institutional setting that shapes interest intermediation and the dispersion of governmental authority, and the preferences of governmental actors. Rather than representting cumulative influences of isolated factors on aid choices, this framework stresses the relevance of considering how these forces interact to produce policy outcomes. As an example, the qualities of the institutional setting can affect the nature of resources that interest organizations need to expend in order to gain influence.

Aid and domestic politics 39 Preferences, Resources, and Mobilization of Development Advocacy Groups

Preferences, Resources, and Mobilization of Economic Interest Groups

Access to the Policymaking Process Formal or Informal Consultation Procedures Location of Interlocutors in Government Centralization of Decision-Making Balance between Legislature and Executive Distribution of Competencies across Bureaucracies

Exogenous Factors: International Political Context, Domestic Economic Context

Preferences of Governmental Actors

Power of Governmental Actors

Governmental Politics

Level of Commitment to Global Poverty Reduction via Aid

Figure 2.1 Determinants of donor aid choices.

Explaining policy change over time One criticism of research on the influence of institutions on political outcomes is that it often offers a static view of the political process that may illuminate sources of cross-national variation or policy stability over time, but ultimately fails to explain the sources of policy change (Pontusson 1995). The durability of formal

40 Aid and domestic politics decision-making structures is only one element that induces stability in political systems. The budgetary politics literature suggests, for instance, that fundamental shifts in budgetary priorities are rare: budgeting can either be considered as an incremental process (Wildavsky and Caiden 1997) or as a process marked by long periods of stability interrupted by short periods of change (Jones et al. 1998). In the aid arena, several factors may limit the prospects for rapid change in donor budgetary priorities. The creation of an aid program imposes administrative costs on implementing agencies and strengthens political linkages to recipient governments. Shifts in geographical priorities can risk offending development partners that have come to rely on a given donor’s presence. Moreover, since development is a longterm process, aid agencies have an interest in seeking continued support for existing programs and projects in order to ensure that results from initial investments will not be overturned by a premature exit. Finally, investments in particular countries or sectors lead to the creation of specific knowledge at the operational level that donors have an incentive to exploit in maintaining programs. The framework for understanding aid policymaking presented in this book aims to account for the sources of policy dynamism within countries while pointing out sources of cross-national variation in aid outcomes. The factors that spur policy change may be either exogenous or endogenous to the aid policy process. Exogenous sources of policy change can include transformations in the international environment, changes in domestic economic conditions, or institutional changes resulting from demands made on the state in other policy areas. These exogenous forces can create conditions for change by shaping the nature of the constraints and opportunities that actors face. The end of the Cold War was the most significant change in the international political system during the period this study covers, and represented a potential stimulus for changes in aid programs, adding a slew of transition economies to the list of potential aid recipients and reducing ideological competition as a motive for providing aid. Such large systemic changes are infrequent, however. The state of a donor’s economy may operate as a more regular exogenous stimulus for reevaluating the budgetary priority assigned to aid. As the discussion at the beginning of this chapter suggested, because poverty-oriented aid represents a resource transfer to foreign beneficiaries, this policy area should be especially vulnerable in periods where donor governments face economic pressures at home. Persistent unemployment, budgetary deficits, or lackluster economic performance can consequently lead decision-makers to lower aid commitments (Lundsgaarde et al. 2007). Robust macroeconomic conditions can in contrast give policymakers more freedom to increase aid commitments. The impetus for policy change may also be endogenous to the aid policy process, resulting from the interactions and exchange of ideas over time between societal and governmental actors within the institutional setting that structures policymaking. While institutions may provide the context in which political actors define their demands and shape how they interact with other actors (Steinmo 1989; Thelen 2004), actors also have sources of power that are independent of the institutional setting that regulates policymaking in a specific issue area, and these

Aid and domestic politics 41 power resources vary over time. For societal actors, such resources may include financial support raised through private channels or the successful mobilization of like-minded groups. Governmental actors may see their power in the aid issue area increase or decrease due to the powers they have been assigned to address policy challenges outside of the development sphere and their success or failure in dealing with these challenges. Policy changes may then result from the changing power relations among actors operating within a given policymaking system. Because institutions are expected to have a strong influence over the way actors relate to one another and shape how they advance their policy demands, institutional changes also represent a potential source of policy change. Institutions are notoriously resistant to change, however (Pierson 2004). They may be deliberately designed to lock in patterns of power distribution that existed at the time of their creation or require such large political start-up costs that maintaining the institutional status quo becomes easier than introducing reforms. While the durability of institutions may promote stability within a political system, this same quality can inhibit adaptation to functional demands that a given set of institutions were not designed to address. As an example, the division of authority among governmental actors in French aid policymaking stemmed from the organization of the French colonial administration and the responsibilities that were given to government ministries in managing relations with specific parts of France’s overseas dominions. Although the case for the rationalization of the development aid apparatus had been made already in the early 1960s, nearly three decades passed before any significant institutional reforms were undertaken. Institutional change can emerge as a product of exogenous forces that expose weaknesses in given institutional arrangements or provide windows of opportunity for political entrepreneurs to undertake significant reforms, or as the product of more incremental processes of adaptation to changing constellations of political power that help to keep institutions in place (Cortell and Peterson 1999; Thelen 2004). As Peters and Pierre (1998) have noted, incremental patterns of institutional change should be more common in advanced industrial democracies than fundamental institutional transformations given the highly institutionalized character of their political systems. However, this dichotomy between fundamental transformation and incremental change may actually reflect an inattention to distinguishing among different types of institutions that may vary in their vulnerability to change. Constitutional rules that define how the electoral system is organized may be highly resistant to change, whereas legislation that distributes policy mandates to particular governmental actors in a specific policy field can be modified more easily. Examining the extent to which policy shifts occur in response to changes in the institutional setting within individual donor countries over time provides one way to analyze whether and how institutions influence policy outcomes. In the donor countries examined in this study, however, there have been relatively few instances of institutional changes affecting how aid policy is formulated. Among these donors, the aid policymaking apparatus in Switzerland has been the most stable, as the legislation passed in the late 1970s to organize Swiss development policymaking continued to guide policy formulation 30 years later. In Denmark,

42 Aid and domestic politics the aid policymaking apparatus experienced a change in 1991, when Denmark’s aid agency was formally integrated within the Danish Ministry of Foreign Affairs. The United States also made adjustments in the bureaucratic organization of its aid program, most notably with the addition of a new aid agency, the Millennium Challenge Corporation, at the end of the period under study. France’s aid policy apparatus has witnessed the most significant changes in this donor group, as a reform process started in the early 1990s culminated in 1998 with the elimination of one aid agency (the Ministry of Cooperation), the creation of an interministerial committee to strengthen coordination between the Ministry of Foreign Affairs and the Ministry of Finance in the aid policy process, and the creation of a new deliberative body designed to give private actors a more prominent voice in the development debate. The institutionalist component of the explanatory framework guiding this study is thus not completely static. Nevertheless, of the variables identified as determinants of aid policy choices, domestic institutions are likely to change the least over time. As such, the institutional variables are more likely to be associated with crossnational variations in aid policies than with longitudinal variations. Exogenous factors, such as transformations in the international context or domestic economic conditions, are likely to shape changes in aid policies over time. The variables that deal with the characteristics of societal actors engaged in the aid issue area occupy a middle ground. Although the characteristics of interest organizations and the level of coordination between them at the national level can be influenced by the institutional setting and can therefore contribute to the explanation of cross-national variation, NGOs and business groups do not have the inertia of more permanent governmental institutions. The power resources of these organizations can change within a stable institutional setting, so attention to the attributes of development NGO communities or the attributes of potential interest group competitors can also help to account for variations in aid policies through time.

Structure of the case studies In the chapters that follow, the framework developed in this chapter is applied to explain the aid choices of Denmark, Switzerland, France, and the United States between 1980 and 2005. The chapters are similarly structured in order to highlight the differences among these donors along the dimensions outlined above. They begin with a brief account of the size and character of the development assistance program in the donor country and identify how aid commitments have evolved over the period studied. The characteristics of the development NGO community and other societal groups engaged in aid policymaking are then mapped out. Each chapter goes on to address the nature of the institutions regulating interest group access to the policymaking process and the way that authority is divided among governmental actors. After discussing the institutional setting in which aid decisions are made, each chapter turns to a more synthetic discussion of the way that the interactions between societal and governmental actors within the context of the specified institutional setting have shaped national commitments to poverty reduction over time.

3

Consensus and aid generosity in Denmark

When Danish Prime Minister Poul Nyrup Rasmussen addressed statesmen gathered at the UN Millennium Summit, he encouraged his counterparts in other wealthy countries to increase their efforts to address developing country needs. “Let us be honest,” Rasmussen noted, “too many times we have set new deadlines to reach old goals. Now is the time to act. Now is the time to let action follow words” (Statsministeriet 2000). Few politicians in the OECD–DAC community could have made an equally credible appeal. In 2000, Denmark’s $1.6 billion development assistance budget amounted to 1.06 percent of its GNI, far above the DAC average of 0.39 percent (OECD 2007a). Denmark’s aid commitments were the highest in the donor community in that year, representing an expenditure of around $312 for every Dane. By that point Danish leadership in the development assistance field was well-established: Denmark had reached the famed 0.7 percent target in the late 1970s and steadily increased its aid expenditures in the decades that followed to top 1 percent of GNI by 1992. Together with Norway, Sweden, and the Netherlands, Denmark formed part of an elite group of countries that provided consistently substantial commitments to global poverty reduction via aid. Denmark’s rise as a leading aid donor was not inevitable. The oil shocks of the early 1970s created pressures for advanced industrial states to undertake substantial economic reforms (Mjøset 1987) and Denmark confronted economic challenges at home that could have constrained its willingness to provide development assistance. In the early 1980s, when the Danish parliament decided to gradually raise aid expenditures to reach a target of 1 percent of GNI by 1992, difficult macroeconomic conditions prevailed. Denmark had experienced declining growth rates, rising unemployment, and fiscal deficits (Schwartz 1994; GreenPedersen 2003), which the government responded to by implementing a fiscal adjustment program that included a mix of cuts in government expenditures and tax increases (Alesina and Perotti 1997). At the same time, Denmark faced little international pressure to consistently increase its aid commitments. Once Denmark had surpassed the 0.7 percent target, it was already a leader in aid provision, and Danish aid spending continued to climb even as most donor aid budgets fell well short of the 0.7 percent goal. This chapter demonstrates that Denmark’s strong record in providing resources to combat global poverty is a product of a policymaking system characterized by its

44 Aid generosity in Denmark accommodation of a broad array of societal interests and promotion of consensus among governmental actors. Both development NGOs and business interests have been active participants in aid policymaking and have been able to influence Danish aid policy through multiple channels, including through their relationships with the parliament, through their ties to the aid administration, and through their integration into the decision-making process via formal committees. These societal interests have benefited from the compact character of the policymaking apparatus, where the parliament, the office of the prime minister, and the Danish aid administration constitute the central governmental actors involved in policy formulation. This chapter first provides an overview of the Danish aid program and then outlines the characteristics of societal interests engaged in the aid sphere and the key elements of the institutional setting where aid decisions are made, before analyzing the determinants of Danish aid policy choices through time.

Overview of Danish aid choices Denmark’s aid program had modest beginnings. As a net aid recipient in the Marshall Plan years, early Danish aid efforts primarily consisted of contributions to United Nations programs (Jørgensen 1977; Holm 1982).1 In 1962, the parliament adopted the first law providing a basis for organizing the bilateral aid program, which was revised in 1971 to specify overarching development policy goals and to clarify the responsibilities of key actors within the policy process (Kelm-Hansen 2000). The 1971 law, which indicated that the main goal of the aid program was to promote the social progress and political independence of recipient countries by supporting their efforts to achieve economic growth, continues to serve as the legislative foundation for Danish development assistance policy.2 From the 1970s through the end of the twentieth century, the size of Denmark’s aid program grew steadily, measured both as a share of its GNI and in real terms, as Figure 3.1 illustrates. Nearly half of this assistance was distributed through multilateral channels (see Figure 3.2). Apart from its generosity in terms of aid volume, Denmark also demonstrated a commitment to global poverty reduction in its bilateral aid program by targeting poor countries and investing heavily in social sectors and agricultural development. Between 1980 and 2005, LDCs and other LICs on average received respectively 44 percent and 20 percent of Danish bilateral assistance (see Figure 3.3). The bulk of this aid flowed to sub-Saharan Africa and South Asia, though the Far East and the Americas became increasingly important aid destinations from the 1990s onward (see Figure 3.4). Aid to social infrastructure and services constituted the most important category of sectoral aid allocation in this period (see Figure 3.5). On average, 30 percent of Danish aid went to social sectors from 1980 to 2005, and an additional 14 percent of sectoral allocations were directed to investments in the agricultural sector; aid for economic infrastructure averaged 17 percent of bilateral allocations in the same period (OECD 2007b). As these figures suggest, poverty alleviation has long been a central focus of Danish aid policy. This focus became more explicit in strategic planning

Aid generosity in Denmark 45 1.2 1

0.8

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0.6 0.4 0.2

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Figure 3.1 Aid volume as a share of Danish GNI (1970-2005). Danish aid commitments rose steadily from the 1970s onward, reaching 0.7 percent of GNI in 1978 and 1 percent of GNI in 1992. The aid-to-GNI ratio stabilized around 1 percent in the 1990s before experiencing a decline beginning in 2002. In real terms, aid allocations increased steadily from 1970 to 2001, dropped sharply beginning in 2002, but began a recovery thereafter given a governmental commitment to provide at least 0.8 percent of GNI in aid and the strong performance of the Danish economy. Source: OECD. International Development Statistics Online.

documents in the 1990s, when the government emphasized that poverty reduction represented the fundamental principle of development assistance (Danida 1994a). The Danish government conceptualizes poverty as a multidimensional problem characterized by limited access to basic needs and economic opportunities as well as by a lack of power to change the conditions that leave individuals without these opportunities (Engberg-Pedersen 1999). Key prescriptions for adhering to the poverty reduction objective in policy implementation include prioritiz­ ing local ownership of aid programs and projects, considering the distributional implications of interventions designed to promote sustainable economic growth, and encouraging increased popular participation in the development process via support for civil society organizations and political reform (Danida 1996a, 2000b). One explanation for this high commitment to pro-poor development assistance is that public support for aid is simply stronger in Denmark than in other donor countries. While opinion surveys have indicated that a sizable majority of Danes believe that giving aid in a general sense is important (European Consortium for Agricultural Development 1984; European Cooperation and Solidarity 1988; INRA 1992), in this respect Danes are no different from other European publics.

46 Aid generosity in Denmark 100

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Figure 3.2 Bilateral and multilateral assistance as a share of Danish aid (1980-2005). Though Denmark has adhered to a general principle of dividing its aid budget equally between multilateral and bilateral assistance, bilateral aid has enjoyed a slight edge over multilateral aid. Bilateral aid accounted for 57 percent of Danish aid outlays on average in this period, while multilateral aid accounted for 43 percent on average. Source: International Development Statistics Online.

Polls conducted at regular intervals by the Gallup organization have also shown that Danes have been favorably disposed toward providing 1 percent of gross national income in aid since the mid-1970s (Thune 1981); however, as Paldam notes in his study of Danish development policy, such positive responses likely reflect a bias produced by the wording of the question. Interestingly, when monetary amounts are provided alongside or instead of the 1 percent figure, there is lower support for aid expenditures (Paldam 1997; Randel and German 1998). When the importance of development assistance to the public is evaluated alongside other issues, aid also clearly emerges as a low priority. Not surprisingly, polls indicate that development aid has consistently been considered a lower priority than issues such as unemployment, energy security, terrorism, and envi­ ronmental protection (European Consortium for Agricultural Development 1984; European Cooperation and Solidarity 1988; INRA 1992). In a study of the relationship between public opinion and public policy in Denmark from 1980 to 2003, Mortensen (2006) characterizes development aid as an unpopular issue, since Danes who would prefer decreased spending on aid consistently outnumber those who would prefer to spend more, and notes that there is a gap between these popular preferences and the priority given to aid policy at the national level.

Aid generosity in Denmark 47 100 90 80 70 60

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UMICs

Unallocated

Figure 3.3 Share of Danish bilateral aid by income category (1980-2005). Denmark has favored the poorest developing countries in its aid provision. During this period, LDCs were the largest recipients of aid, accounting for 43 percent of aid distributed on average; LICs received an average of 19 percent of Danish aid, while 11 percent went to LMICs. Source: OECD. International Development Statistics Online. 100

80

60

£ 40

20

0

Year SSA

SC Asia

NAME

Americas

Far East

Europe

Figure 3.4 Share of Danish bilateral aid by world region (1980-2005). Sub-Saharan Africa and South and Central Asia have represented the main destinations for Danish aid, respectively accounting for an average of 42 percent and 17 percent of bilateral aid allocations between 1980 and 2005. Aid to the Far East and Latin America experienced notable increases in the 1990s. Source: OECD. International Development Statistics Online.

04 20

02 20

00 20

98 19

19

96

94 19

92 19

90 19

88 19

86 19

84 19

19

19

82

100 90 80 70 60 50 40 30 20 10 0

80

%

48 Aid generosity in Denmark

Year Social

Ag

Econ

Industry

Multisector

Debt

Unallocated

Figure 3.5 Share of Danish bilateral aid by sector (1980–2005). In comparison to the patterns of aid provision by region or income grouping, the distribution of Danish aid by sector appears to display more variability through time. One noticeable trend in the sectoral distribution of aid over the course of this period is that an increasing share of aid remains unallocated by sector from the 1990s onward. Apart from aid unallocated by sector, aid to social infrastructure and services received the largest share of aid, particularly from the 1990s onward. On average, around 30 percent of Danish aid was directed to social sectors between 1980 and 2005. Aid to the agricultural sector averaged around 14 percent during the same period. The share of aid dedicated to agricultural development as well as economic infrastructure was highest in the 1980s. Source: OECD. Sectoral Distribution of Bilateral Development Assistance by Purpose: Part I (Developing Countries). Volume 2007 release 01.

This suggests that if public demand were a driver of aid choices, Danish aid commitments would likely be lower than they are. Aid policy is a low salience issue area even in Denmark. As one longtime observer of Danish aid politics noted: “it is a tiny corner of Danish politics, and a corner not many Danes are very interested in.”3

Development advocacy The Danish government’s investment in international development has been strongly supported by the development NGOs for which poverty alleviation and concern for the welfare of the world’s poor represent a central preoccupation. Two key surveys of the activities of Danish development NGOs estimated that the Danish development NGO community included some 200 organizations (Larsen and Vilby 1989; Oakley 1999), although this number is likely a low estimate. Several associations in Denmark with a development mandate shelter smaller groups, which may contribute to the work of the larger organization they are a part of or implement small development projects of their own. The large NGO Mellemfolkeligt Samvirke, also known as the Danish Association for International

Aid generosity in Denmark 49 Cooperation or simply MS, currently counts some 65 associations as members, and 250 organizations are members of Projektrådgivningen, a platform for small and medium-sized NGOs. Table 3.1 provides an overview of major Danish development NGOs, their relative size, and their primary areas of operation in 2005. The largest development and relief organization by far is the Danish Red Cross, which provides assistance to asylum seekers within Denmark in addition to its humanitarian assistance and development contributions. A handful of other large organizations represent the core of the development NGO community. MS, an organization founded toward the end of the Second World War and credited with successfully lobbying for the creation of the bilateral aid program, has historically been a leading advocacy organization and has been known for its overseas volunteer programs (Danida 2003c). Other leading development NGOs include Folkekirkens Nødhjælp (DanChurch Aid), which balances humanitarian relief and development work; Ibis, an organization focusing on education and Latin America; Red Barnet, an affiliate of the International Save the Children Alliance; and CARE Denmark, working mainly on natural resource management issues. A variety of smaller NGOs with narrower areas of specialization also dot the development NGO landscape. Examples include the Danish Afghanistan Committee, and Kvindernes ULandsudvalg (KULU), a women’s rights organization. Official development assistance has dwarfed the private resource base of Danish development NGOs, and in comparison to other DAC member countries the amount of money raised by domestic NGOs to support international development work is modest. According to OECD statistics, from 1980 to 2005 private contributions to Danish NGOs averaged 0.02 percent of GNI, which placed the Danish development NGO community behind 14 other donor NGO communities and ahead of just seven (OECD 2007a).4 As Figure 3.6 suggests, the private resource base of Danish development NGOs has been stable over time, apart from a surge in private contributions in the early 1990s. Development NGO operations have been funded to a large extent by contributions from public sources, including the Danish aid administration and other donors. In 2005, for instance, the share of revenue provided by public entities to leading NGOs ranged from around 60 percent for the Danish Red Cross and DanChurch Aid to 86 percent for MS and 97 percent for Ibis (Dansk Røde Kors 2006; Folkekirkens Nødhjælp 2006; Mellemfolkeligt Samvirke 2006; Ibis 2006). These organizations benefited from the expanding aid budget. Throughout the 1990s the government sought to formalize its partnerships with NGOs, notably by formulating framework agreements to assure coordination at the level of planning, increase flexibility with respect to project implementation, and limit the administrative burden on the aid administration itself (Danida 1996b). The Danish government has considered its reliance on NGOs as outlets for public development resources to be advantageous for numerous reasons. Because of their attention to marginalized groups that often live in remote areas, NGOs can help to engage with populations that state-to-state transfers or government-run aid projects may have difficulty reaching. In addition, NGOs are considered valuable development agents

humanitarian aid; development; HIV/AIDS voluntary action; advocacy education; Latin America child protection child sponsorship support for UNICEF; children; education child sponsorship natural resource management workers’ rights development and relief in Africa conservation humanitarian aid; development umbrella group for youth organizations umbrella group for missionary organizations umbrella group for small NGOs

1922

1944 1966 1945 1972 1954 1963 1987 1987 1987 1972 1947 1940

1912** 1995

$700,612 $16,842

$36,777,607 $28,019,430 $24,521,824 $21,527,456 $19,954,538 $12,612,689 $11,633,491 $8,679,604* $8,228,932* $6,153,169 $5,040,341 $3,583,812

$73,454,496

$158,081,412 $93,129,295

Annual revenue

UNICEF SOS-Kinderdorf Intl. CARE Intl. Labor movement ADRA Intl. World Wildlife Fund Caritas Intl.

World University Service Intl. Save the Children Alliance

Lutheran Church

International Red Cross

Affiliation

Revenue figures were taken from annual reports from the websites of the organizations in 2007. Revenue figures are reported in US dollars and unless otherwise noted provide figures for the year 2005. The 2005 revenue figures are likely higher than normal for humanitarian aid organizations in particular, given the influx of private donations provided in the aftermath of the Asian tsunami in December 2004.

Notes: * figures for 2004; ** development arm founded in 1986.

Sources: Danish Red Cross, http://www.drk.dk; Danish Refugee Council, http://www.flygtning.dk/; DanChurch Aid, http://www.noedhjaelp.dk/; Mellemfolkeligt Samvirke, http://www.ms.dk; Red Barnet, http://www.redbarnet.dk; Børnefonden, http://www.bornefonden.dk/; Dansk UNICEF Komité, http://www.unicef.dk/; SOS Børnebyerne, http://www.sos-boernebyerne.dk/; CARE Denmark, http://www.care.dk; U-Landssekretariatet, http://www.ulandssekretariatet2.dk/; ADRA, http://www.adra.dk; WWF Denmark, http://www.wwf.dk; Caritas Denmark, http://www.caritas.dk; Danish Youth Council, http://www.duf.dk; Dansk Missionsråd, http://www.dmr.org; Projektrådgivning, http://www.prngo.dk/.

asylum seekers; humanitarian aid aid to refugees and displaced persons

1876 1956

Danish Red Cross Dansk Flygtningehjælp (Danish Refugee Council) Folkekirkens Nødhjælp (DanChurch Aid) Mellemfolkeligt Samvirke Ibis Red Barnet Børnefonden Dansk UNICEF Komité SOS Børnebyerne CARE Denmark U-Landssekretariatet ADRA Denmark World Wildlife Fund Denmark Caritas Denmark Dansk Ungdoms Fællesråd (Danish Youth Council) Dansk Missionsråd Projektrådgivning

Operational focus

Est.

Organization name

Table 3.1 Major Danish development NGOs

Aid generosity in Denmark 51 0.07 0.06 0.05 %

0.04 0.03 0.02 0.01 0 1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Year Grants as % of GNI

Gross Flows as % of GNI

Figure 3.6 Danish NGO resources (1980–2005): NGO grants and gross outflows from NGOs to developing countries as a percentage of GNI. This chart provides an indication of the resources that Danish development NGOs have from private sources. The private resources of Danish NGOs have been fairly stable through time: one can note a small increase in 1985, coinciding with collections to address the African famine, as well as a noticeable increase in the early 1990s. Trends in NGO resources measured in constant dollars mirror the trends reported here. Gross NGO flows represent the “expenditure by national NGOs on development assistance and relief, together with any additional contributions in kind, made to developing countries, multilateral organizations, or international non-governmental organizations. Net grant figures exclude official subsidies provided for NGO programs.” See the DAC Statistical Reporting Directives, http://www.oecd.org/dataoecd/36/32/31723929.htm#code 415 (accessed April 11, 2007). Source: OECD. International Development Statistics Online.

because of the links they provide to civil society organizations in recipient countries that may empower the poor and support democratization processes (Danida 2003a). Figure 3.7 provides a snapshot of the importance of development assistance channeled through NGOs in the Danish aid program, though it also signals problems with the comprehensiveness of data collected on NGO aid over time. Danish development NGOs devote most of their organizational resources to field operations, with a small group of individuals in an NGO’s secretariat typically taking responsibility for policy work within Denmark.5 An organization’s operational work nevertheless supports political work at the national level, since it informs policy positions and is a basis for the credibility of the expertise organizations bring to the national policy dialogue.6 While there is broad agreement among development NGOs that increasing aid to reduce poverty is desirable, their varied areas of operational emphasis lead them to stress a variety of issues in policy and advocacy work. Among the largest NGOs, the Danish Red Cross and DanChurch Aid concentrate more on emergency assistance issues given their dual mandates as humanitarian relief and development organizations, MS and Ibis place greater emphasis on structural determinants of global poverty such as inequalities in the

52 Aid generosity in Denmark 25

20

15

£ 10

5-

0

Year • Official Support

• Aid Through NGOs

Figure 3.7 Share of Danish bilateral aid channeled through NGOs (1980-2005). 'Aid through NGOs' in the above chart represents "Bilateral aid administered by NGOs on behalf of the official sector. In other words, ODA channeled through NGOs, as distinct from official support for NGOs' own programs which is reported separately." This second category of aid is listed as 'official support' in the above graph. Descriptions of the flows come from the DAC Statistical Reporting Directives, http://www.oecd.org/ dataoecd/36/ 32/31723929.htm#code 415 (accessed April 11, 2007). Source: OECD. International Development Statistics Online.

world trading system, CARE highlights rural development and environmental issues, and protecting children is at the center of Red Barnet's political agenda. In contrast to many other donor countries, there has not been an umbrella organization in Denmark providing a mouthpiece for the development NGO community as a whole.7 However, there are groupings that promote NGO collaboration around specific issues. The coalition 92 Gruppen (the 92 Group) was founded prior to the 1992 Rio Earth Summit and counts around 20 NGOs as members, working on sustainable development issues in connection with international conferences.8 In conjunction with the formalization of its partnership with development NGOs, the Danish government formed an NGO contact committee (NGO Kontaktudvalget) in 1993 to provide an informal forum for dialogue between the government and the NGO community on issues of concern to NGOs, including the development of the government's civil society strategy and the evaluation of NGO contributions to the aid program (Danida 1994b, 1998). This committee met twice weekly and included 15 large and medium-sized NGOs before the government decided to end the government-NGO dialogue through this committee in 2001 (Danida 2002). The committee members maintained the committee in a loosely organized form after that decision was taken, however.9 There is also concertation among organizations that raise funds through public collections to establish codes of conduct and ad hoc collaboration on policy questions, especially

Aid generosity in Denmark 53 among a core group of large NGOs including MS, DanChurchAid, Ibis, and Red Barnet. The absence of a cohesive umbrella organization suggests that there is an impulse among NGOs to maintain an independent profile. Among leading development organizations, the Danish Red Cross is the most aloof from the rest of the community because of its size, its commitment to the principle of neutrality, and its special status vis-à-vis the government.10 Establishing the independence of an organization from other NGOs can have an economic motive, since NGOs are in competition with one another for members and financial contributions and more formalized collaboration with other NGOs can serve to lower the visibility of an organization’s brand. However, this profiling is perceived to be more likely with respect to operational work than in the policy arena.11 Maintaining independence from other organizations may also have a political motive, in that some NGOs do not want to jeopardize broad-based support that they have at the societal or governmental levels by aligning themselves with organizations that appeal to a narrow base constituency.12 Thus, in addition to having a limited private financial base, the Danish NGO community does not always constitute a unified political bloc in the aid policy arena. Chapter 2 suggested that when the resource bases and level of political coordination of the development NGO sector are higher, aid spending will also tend to increase. The evidence just presented does not seem to lend support to these assertions as a good basis for understanding Denmark’s high aid commitments. Development NGOs have without question been politically active on aid issues, but they have had limited backing from private funding sources and have only moderately sought to influence aid policy through collective political action. It follows that other qualities in the Danish aid policymaking system must offset the limited resources and internal coordination that the NGO community has brought to the aid policy process.

Economic interest group engagement The limited cohesion of the development NGO community contrasts with the concentrated character of Danish business and labor organizations (Wallerstein and Golden 1997). These organizations can further be distinguished from development NGOs because aid policy is one of many policy fields where they are politically active and a lower priority area of intervention in relation to other parts of their policy portfolios. Nevertheless, these actors represent a key part of the socalled “resource base” whose expertise informs aid choices and whose engagement in the policy process creates broad support for the Danish aid program. The involvement of business interests in the aid policy process is a product of a conscious effort by the Danish government to expand the range of stakeholders in the aid program. In 1961, a governmental report indicated that it was “of decisive importance for the creation of a solid and stable foundation for Denmark’s cooperation with developing countries to arouse the business community’s interest in aid and guarantee its active involvement” (cited in Jørgensen 1977: 183,

54 Aid generosity in Denmark author’s translation). While governmental actors were early proponents of bringing business interests into the development policy fold, as the size of the aid budget increased, so too did business attention to this issue area (Holm 1982). One longstanding principle guiding the Danish aid program has been an agreement to split aid funds evenly between multilateral and bilateral assistance, with another half of the bilateral share representing a “return percent” to Danish business interests. The business community took great interest in maintaining this share of aid and attempted in the late 1970s and early 1980s to increase it at the expense of Danish contributions to multilateral organizations (Svendsen 1981, 1989). The “return percent” consisted primarily of loans used to support recipient country purchases of Danish goods and services or export credits to lower the risk to Danish producers of entering developing country markets. Key justifications for subsidizing companies in this way included the perception that developing countries represented particularly costly markets for small firms to penetrate and that firms needed help to compete with other donors’ firms that received similar subsidies (Struwe 1982). The leading advocate for the interests of Danish enterprises has been the Confederation of Danish Industry (Dansk Industri), representing some 10,000 firms spanning a range of economic sectors.13 Over the period studied, the aid policy emphasis of this association evolved from demanding a piece of the aid budget to placing greater weight on promoting the role of the private sector in the development of recipient countries, and the level of engagement of the association on aid issues also increased over time.14 In response to the reworking of the Danish aid strategy that took place in 2000, Dansk Industri listed four key goals that aid policy should address, including making aid as effective as possible, ensuring that aid would stimulate private sector development, fostering collaboration with enterprises to bring about increased investment in developing countries, and encouraging the aid administration to collaborate with firms in order to finance projects focusing on infrastructure development (Dansk Industri 2000). Agriculture has long represented a bedrock sector in the Danish economy and agricultural interest organizations have been perceived as especially powerful political actors (Ingebritsen 1998; Daugbjerg 1999). Agricultural producers, cooperatives, and firms in the food processing industry are represented by Landbrugsrådet (the Agricultural Council), a sector-wide umbrella organization.15 Like the Confederation of Danish Industry, Landbrugsrådet has supported aidfinanced export promotion, but has also been an advocate for increasing investments in the agricultural sector and rural development in recipient countries and supportive of technical assistance to strengthen local farmers’ associations and cooperatives. For most of Landbrugsrådet’s members, aid policy has represented a low priority.16 On one level this reflects the limited importance of developing country markets to Danish agricultural producers, although it is also a consequence of the policy challenges related to the EU’s Common Agricultural Policy and increasing pressure from environmental and consumer groups on domestic agricultural and food safety issues that have weakened the domestic position of agricultural producers in their core policy arena (Daugbjerg 1999).

Aid generosity in Denmark 55 Another leading interest organization in the Danish political system is the Confederation of Danish Trade Unions, or LO (Landsorganisationen), which represents about half of the Danish labor force.17 The priority the labor movement assigns to ensuring that workers have employment opportunities has historically made labor organizations sympathetic to the “return percent” notion in aid policy, since helping Danish firms to thrive internationally would also help create jobs within Denmark (Holm 1982). In fact, within the aid arena LO is a steady ally of the Confederation of Danish Industry, reflecting the tradition of social partnership in Denmark that has contributed to good working relationships between employers’ and workers’ associations.18 The interests of labor organizations in aid issues have grown along with the expansion of the Danish aid program. In 1987, LO and FTF (Confederation of Professionals in Denmark), Denmark’s second largest union, joined forces to found Fagbevægelsens U-Landssekretariat.19 This organization’s development work focuses on issues dear to the labor movement, including strengthening the ability of workers to participate in collective bargaining, defending workers’ rights and encouraging compliance with International Labor Organization conventions, and promoting safe working environments (U-Landssekretariatet 2007). These themes have represented key priorities for LO in the aid policy process. While development aid cannot be considered a top political priority for any of these organizations, all of them have demonstrated support for the aid program over time. As the discussion later in this chapter argues, the support from these concentrated interest organizations has represented an important basis for the sustained support that the Danish aid program has enjoyed over the last few decades.

Interest group access to the policymaking process Chapter 2 proposed that when development advocates enjoy greater access to governmental actors, a stronger donor commitment to poverty reduction is likely to emerge. For Danish interest groups active in the aid arena, securing access to policymakers is not challenging: NGOs and other interest groups have high access to governmental actors. Development NGOs and economic interest organizations have multiple informal points of contact within the aid policymaking apparatus and also participate in the policy process through formalized channels. The study of interest group politics has enjoyed a resurgence in Danish political science research (Blom-Hansen and Daugbjerg 1999; Christiansen and Rommeveldt 1999; Blom-Hansen 2000; Binderkrantz 2005b). One of the main questions this research explores is whether corporatist patterns of interest intermediation characterized by the formal integration of societal groups into processes of policy formulation and implementation have ceded ground over time to pluralistic patterns of interest group interaction with governmental actors. These studies have typically concluded that while corporatist organs linking the government to societal groups have declined in importance over the last few decades and lobbying in the Danish parliament has increased, this does not suggest that interest groups have abandoned

56 Aid generosity in Denmark contacts with the administration as a means of influencing policy (Sidenius 1997; Binderkrantz 2005b). The characterization of the Danish system of interest representation that emerges from these studies is that it contains elements of both corporatism and pluralism as conventionally conceived. Consistent with these conclusions, interest representation on aid questions takes place in multiple arenas and at varying levels of formality. The aid policymaking system is an inclusive one where NGOs and economic interest groups have regular contacts with bureaucrats, high-level executive officials, and parliamentarians. A central element in a corporatist system of interest intermediation is “the penetration, incorporation, or integration of interest groups into the apparatus of the state,” chiefly via committees linked to state bureaucracies (Johansen and Kristensen 1982: 191). In the Danish aid system, the Board for International Development Cooperation is the primary corporatist organ that allows societal interests a direct entry point into the policymaking process. Known colloquially as Danida’s Board, this board serves in an advisory capacity to the minister responsible for development aid. It consists of nine individuals appointed by the minister and representing a cross-section of the aid “resource base.” Although its members are appointed to the collegial body in a personal capacity, the Board has historically split representation evenly between development NGOs, development researchers, and representatives of leading economic interest groups.20 The composition of the Board is notable because it is not a direct reflection of the power that the actors represented have within the Danish political system. The traditional balance between NGOs and economic interest groups has allowed NGOs to have a voice within this body that is disproportionately strong in relation to their broader political power. Importantly, the Board has authority to approve grants for development projects above a certain threshold; in 2003 this amount was DKK 5 million (OECD 2003a).21 Another function of the Board is to deliberate on the content of aid programs to promote their coherence with the guiding principles of Danish development cooperation and to reflect concerns raised by the societal groups represented. In practice, the Board serves as a filter between the aid administration, which prepares proposals to be discussed, and the minister responsible for development cooperation.22 On the one hand, the vetting of proposals that takes place assures that an independent body of development experts has evaluated the desirability and feasibility of committing resources to specific projects and helps the aid administration to improve project design. On the other hand, this process guarantees that aid initiatives have the stamp of approval of major interest groups, which is advantageous since the minister then has a basis for demonstrating societal support for the aid administration’s work. Administration proposals are occasionally withdrawn if the Board does not think a given course of action is wise.23 In addition to serving as a forum for promoting the views of societal actors visà-vis the aid administration, the Board also allows for an exchange of ideas among societal actors themselves, which can build consensus around aid questions. As one NGO representative suggested, the participation of groups with varying

Aid generosity in Denmark 57 organizational interests within the Board “creates a policy community where members are familiar with others’ arguments and strive for common understanding.”24 Sustained interaction can foster consensus by clarifying policy positions and creating trust among participants.25 The Board can lead societal actors themselves to adopt accommodating positions in relation to other interest groups while allowing all of the interest group representatives to shape the thinking of fellow Board members. Interest organizations are incorporated into the aid policy process through other committees as well. The Council of International Development is a deliberative body having a more limited mandate and a wider membership, including representatives from the NGO sector, the research community, and economic interest organizations.26 Charged with following the work of Danida’s Board, but meeting less frequently, the Council provides a forum for the minister responsible for development cooperation to present the government’s yearly priorities to societal actors. Formal committees have also been set up to independently address issues of concern for both NGOs and the business community, enabling societal groups to provide special input on aid matters directly affecting them. In the early 1990s, the government established an NGO contact committee to aid in the development of a new strategy for NGO–government implementation partnerships. The strategy that emerged balanced the aid administration’s interests with those of the NGO community, recognizing “the need to consolidate the activities of the [nongovernmental] organizations, to strengthen the dialogue on development strategies and country selection, and to implement administrative simplifications that cater to small organizations in particular” (Danida 1994b: 7, author’s translation). A similar committee was created by government initiative in the same period to involve economic interest organizations in the formulation of a new strategy for the role of the business community in the aid program. One aspect of this committee’s work was to identify proposals that could broaden the engagement of the business community beyond its traditional emphasis on supplying goods via tied aid. A strategy paper developed by this committee indicated that it was important that “the question about the involvement of the Danish resource base— and not least the Danish business community—in development cooperation is not reduced to a discussion about the return percent alone, but that the debate . . . contributes to more dynamic and forward-looking perspectives” (Danida 1993: 5, author’s translation). Committees involving targeted reference groups may also be convened by the aid administration in preparing new aid strategies that have a topical or region-specific focus.27 Thus a spectrum of aid stakeholders has had direct access to policymakers through these consultative bodies. Apart from these formal means of interaction, NGOs and economic interest groups have had a more informal running dialogue with the aid administration. Some of these interactions relate to the management of the parts of the aid program implemented by NGOs and businesses rather than to efforts to influence policy per se. Frequent discussions regarding operational issues as well as concerns about how aid priorities are translated into more concrete proposals take place among

58 Aid generosity in Denmark NGOs and relevant offices within the aid administration. These offices can include the regional bureaus with responsibilities for countries where NGOs have programs or the office that directly manages the humanitarian assistance and NGO partnership portfolio.28 The relationship between NGOs and the aid administration, especially at lower levels where narrow technical questions are the focus of discussions, are marked by a high degree of mutual understanding. In the words of one NGO representative: “there are some subjects where if one talks to the administration, it is a [development] specialist talking to another specialist, and there is therefore a certain partnership, common attitudes, and [a common] foundation.”29 In short, NGOs enjoy a healthy working relationship with aid bureaucrats, who solicit their advice at times and are receptive to their concerns. While these contacts can provide interest groups with influence over technical questions, policy priorities are formulated at a higher level. For groups to influence the overall direction that aid policy takes, they must also interact with governmental actors with a political mandate. In a similar manner, business groups have points of contact within the aid administration dealing with specific projects where private actors are involved in implementation.30 The bureau that oversees the use of private sector instruments in the aid program is one focal point for business groups and serves as an interface between the private sector and the administration on questions related to quality assurance in contracting, procurement issues, and the business-to-business programs aimed at fostering private sector development in recipient countries through direct cooperation between Danish firms and private sector actors in the developing world.31 At the lower rungs of the bureaucracy, business groups and NGOs have had similar opportunities for expressing their views and open access to offices that directly address their areas of emphasis.32 These patterns of open access to lower-level bureaucrats are replicated at higher levels within the aid administration. For example, one representative of a leading Danish NGO remarked that “if I call the head of Danida and say that I would like to meet with him, I can be reasonably sure that it can be arranged within a few days. I do not abuse that, but have access.”33 A counterpart from the business community offered a similar view of the prospects for interacting with higher-level officials, indicating that his organization enjoyed “possibilities for dialogue at all levels,” including regular contact at the ministerial level.34 One distinction that exists between economic interest organizations and NGOs with respect to access to the policymaking process is that economic interest groups have a broad range of contacts with ministries whose competencies lie outside of the aid issue area due to the large number of issues where they are politically active, while the ties that development NGOs have to the executive are largely limited to the aid administration.35 So long as the aid administration retains a central position in the formulation of development policy, the limited influence that NGOs have over other bureaucratic actors will likely not affect the ability of the NGO community to shape aid decisions; however, widening the field of bureaucratic players with responsibilities in aid policy formulation could well be detrimental to NGO influence.

Aid generosity in Denmark 59 The minister holding the development cooperation portfolio sits at the top of the aid bureaucracy and represents another key contact point for NGOs and other interest groups.36 The minister has the dual responsibility of conveying the aid administration’s positions to the prime minister and the parliament and of directing the administration’s operationalization of aid guidelines. The next step up in the aid hierarchy is the prime minister. After 2001, under the government of Anders Fogh Rasmussen, direct access to the government via the office of the prime minister was perceived to be more restricted than was traditionally the case. The prime minister’s distance from societal actors even affected business groups that might naturally have had greater access to a leader representing a party of the center-right.37 The elimination of the NGO contact committee in 2002 was one expression of the changed attitude toward active consultation of NGOs in particular. Even with these changes, however, leading NGOs still had intermittent contact with the prime minister’s office, and the limited access that NGOs experienced with Fogh Rasmussen abated as the prime minister became more personally engaged on aid issues.38 Interest groups also cultivate ties with parliamentarians to advance their viewpoints on aid issues. In line with the pattern of open access that characterizes interest group relations with other governmental actors, NGOs and other interest organizations maintain regular lines of communication with members of parliament working on aid issues.39 The parliamentarians most engaged on aid issues are members of the Foreign Affairs Committee, including around 20 representatives. Within this group, interest groups maintain special contacts with the foreign policy spokespersons for the major political parties. The prominent role of party spokespersons in representing the views of a given party within a specific policy area and in serving as leaders in the formulation of the party’s position on foreign policy matters restricts the number of effective targets of interest group influence within the parliament. Although leftist parliamentarians have been perceived to be more sympathetic to the positions advanced by development NGOs, NGOs work with members of parliament across the political spectrum.40 Indeed, because the parties that are left of center may already be more supportive of NGO positions, NGOs may devote a larger share of their time to attempting to sway members of parliament that are right of center. Some NGOs might also consider identifying too closely with parties of the far left that may have similar positions on development aid to be a political liability.41 An important part of the work of NGOs in their relations with parliamentarians is providing information that members of parliament may not have time to collect or evaluate on their own. This information can produce interpellations directed to the government or guide parliamentary thinking on aid priorities.42 NGO engagement at the parliamentary level can be mutually advantageous for parliamentarians and NGOs because NGOs possess knowledge and parliamentarians hold influence.43 Hence, interest organizations can influence policy by contributing to the parliament’s knowledge base. In summary, development NGOs and other interest organizations in Denmark enjoy a high level of access to governmental actors through several channels.

60 Aid generosity in Denmark There is a tradition of directly integrating societal interests into the policy process via formal committees, while NGOs and economic interest groups can also engage executive actors and members of parliament on aid issues informally with relative ease. In spite of their limited resources, development NGOs have opportunities for participating in the aid policy process that are similar to the opportunities more powerful economic interest organizations possess.

The distribution of authority in the aid arena Chapter 2 suggested that a more centralized policymaking system provides a more favorable climate for pro-poor aid commitments than a policymaking system where decision-making authority is widely dispersed. In Denmark, the ability of societal groups to shape aid policy is facilitated by the compact nature of its aid policymaking system, which revolves around three governmental actors: the parliament, the office of the prime minister, and the aid administration. Because the political mandate of the executive depends on the composition of the parliament and the administration responds to governmental priorities, there is a coherence in the policymaking process, and aid choices can be understood as a product of collaboration between actors who are mutually dependent on one another rather than as the result of a competitive struggle between actors with fundamentally divergent interests. In Denmark there is a fusion of legislative and executive authority in its unitary parliamentary system, and the choice of a prime minister and the preferences of the executive are thus shaped fundamentally by the nature of the parliamentary majority that allows a prime minister to hold office. One feature of Nordic political systems is the prevalence of minority governments, where the ruling coalition represents a parliamentary minority (Strøm 1990). Since the so-called ‘earthquake election’ of 1973, which brought losses to the largest parties and increased the representation of small parties in the parliament, minority governments have been the norm in Denmark. Between 1973 and 2005, there was just one short-lived majority government, which lasted from 1993 to 1994. It is widely recognized that collaboration between the governing coalition and opposition parties is one main consequence of minority government (Strøm 1986, 1990; Damgaard 2004; Arter 2006; Christiansen and Togeby 2006). In order to obtain a parliamentary majority for its budget to pass, the government must negotiate with parties outside of the government and accommodate their positions to some degree. Hence, minority government encourages consensus-building between the governing coalition and non-governing parties. Minority governments may also depend on a single party outside of the ruling coalition to guarantee the passage of their legislative program. Such a support party (støtteparti) will have the ability to demand special concessions from the government and this means that relatively small parties outside of government can leave an important mark on legislation. The budgetary authority of the parliament (Blöndal and Raffner 2004) makes the body a critical player in setting the level of resources that can be devoted to development aid. Beyond influencing aid volumes, the parliament can also shape

Aid generosity in Denmark 61 general policy priorities and the selection of aid recipients. A list of criteria for program country selection outlined by the Foreign Affairs Committee in the parliament in the late 1980s provided a lasting framework for determining geographical aid allocation. The committee’s criteria indicated that Danish engagement in a particular country should consider the country’s state of economic and social development and its own development plans, its access to aid from other donors and its ability to use and benefit from aid, the possibility of promoting sustainable development to provide enduring benefits to the poor, the ability to promote respect for human rights, the possibility to ensure that women could be assured a central place in the development process, and the previous experiences of the Danish aid administration. If these criteria have been taken into consideration, the committee proposed that the possibilities for participation by the Danish business community should also be evaluated in selecting program countries (Estrup 1995). The parliament has a number of other means to influence the policy process such as presenting written questions to the minister responsible for development, asking ministers to appear before a parliamentary committee to address the concerns of members of parliament, and raising issues in interpellation debates.44 Although limited legislation is produced in the aid policy arena, the parliament also participates in the preparation of new aid strategies related to specific country programs or sectors of intervention, which the government presents to the Foreign Affairs Committee to solicit commentary.45 In these ways, the parliament contributes to the formulation of overarching aid guidelines and exercises surveillance of the executive in policy planning and implementation. Given the parliament’s responsibilities in shaping the overall contours of aid policy, understanding the determinants of parliamentary preferences informs the explanation of Denmark’s sustained aid commitments. The Danish electoral system combines personal voting where voters can select specific candidates with party list voting (Arter 2006). Even with this balance between individual and party representation, in practice there is strong party cohesion and parliamentarians represent the positions of their political parties (Esaiasson 2000). A system of proportional representation with a low (2 percent) threshold for party representation allows small parties to take part in the legislative process. Thus parties such as the far right Danish People’s Party (Dansk Folkeparti), the center-right Christian People’s Party (Kristeligt Folkeparti), the center-left Social Liberals (Det Radikale Venstre), and the leftist Socialist People’s Party (Socialistisk Folkeparti) have been represented alongside the historically powerful Conservative, Agrarian Liberal, and Social Democratic parties (Einhorn and Logue 2003). Small parties may attempt to build a profile on issues that have narrow appeal in the broad public but which secure support from the small number of voters who believe strongly in those issues. If small parties are necessary partners in coalition formation or in maintaining majority support for legislation, the government will likely address these parties’ niche issues. The office of the prime minister plays an agenda-setting role by outlining the government’s overall development policy priorities. In 2003, for instance, the

62 Aid generosity in Denmark government of Anders Fogh Rasmussen presented its aid strategy with the publication of A World of Difference, calling for greater attention to human rights, democratization, and good governance, a stronger integration of security and antiterrorism concerns in aid planning, increased prioritization of refugees and humanitarian assistance, and a heightened focus on aid effectiveness (Danida 2003b). In elaborating these priorities, the prime minister’s office relies on the expertise of the aid administration, which has the task of translating general guidelines and desired areas of emphasis into concrete policy proposals. Within the general aid policy framework proposed by the government and the parliament, the aid administration exercises considerable influence over policymaking and in determining how aid resources are used. One parliamentarian noted that the aid policy area is one where “much is delegated to the bureaucracy. It cannot be otherwise. We cannot take every individual project into consideration; we also should not do this . . . Because then every member of parliament would want to have his own project . . . that would not be proper, sensible.”46 On a yearly basis, the administration presents a rolling five-year plan to the parliament to outline its programmatic emphases, for instance by identifying the sectors that represent the main areas of intervention in individual recipient countries (Danida 2001). In preparing these plans, the bureaucracy does not simply promote its own organizational objectives, but also incorporates the government’s favored orientations. The bureaucracy’s role in crafting proposals involves striking a balance between political priorities and the preferences of the bureaucracy conscious of the constraints on pursuing a given course of action.47 In contrast to many aid bureaucracies, the Danish aid administration has benefited from being largely insulated from bureaucratic competition in the area of aid implementation, since bureaucratic responsibilities for aid policy formulation have been concentrated within a single administrative structure. The unified bureaucratic structure allowed the aid administration to maintain a central position in the aid policy process. As one commentator noted: “Danida has for many years exerted considerable independent influence, not only with respect to concrete adjustments to development policy principles, but also with respect to the formulation of policy” (Martinussen 1989, cited in Olsen 2001: 112, author’s translation). Until 1991, the aid administration was a semi-autonomous agency within the Ministry of Foreign Affairs known as Danida—the Danish International Development Agency. In that year, the Ministry of Foreign Affairs implemented a reorganization that divided the ministry into two pillars, following a principle of geographic specialization. The North Group would focus on all aspects of foreign policy relating to OECD countries, Eastern and Central European countries, and the transition states of the former Soviet Union; the South Group would have responsibility for foreign policy relating to developing countries (Christiansen 1992). Because the work of the South Group dealt overwhelmingly with aid issues, this pillar was an heir to Danida and the terms Danida and South Group were essentially synonymous. One consequence of the reorganization was an integration of the career advancement system of previously disparate units within the Ministry of Foreign

Aid generosity in Denmark 63 Affairs, so that the personnel in the North and South Groups became part of a unified civil service.48 The restructuring raised concerns that Danida’s development expertise would be watered down as foreign policy generalists rotated into the South Group (OECD 1995a; Martinussen 1999). However, following the reorganization, technical advisors that had enjoyed a special status in Danida’s system remained as consultants within the South Group to bolster the administration’s capacity for program evaluation, and the ties that Danida maintained with the Danish resource base through its advisory bodies were also unaffected (Christiansen 1992). A simultaneous move toward more decentralized programming that placed more decision-making authority in the hands of field missions also enhanced the responsiveness of the South Group to development needs in the program countries with a field presence.49 The greater integration of traditional foreign policy and development considerations has also been viewed positively, since it acknowledges that efforts to promote sustainable economic and social development abroad depend on the political framework in which economic interventions take place. Moreover, the unified ministerial structure can limit the potential for the marginalization of development cooperation as a foreign policy priority (Olsen 2001). The division of authority within the Foreign Affairs Ministry along geographical lines provided a level of autonomy allowing the aid administration to retain its central position in aid policy formulation. This point is not self-evident, given that efforts by foreign affairs ministries in other donor countries to absorb aid agencies have undermined the influence that aid agencies have over aid decisions, as chapters 5 and 6 will illustrate. One explanation for why the Danish model of a development agency nestled inside the Foreign Affairs Ministry can still promote an agenda that prioritizes development objectives relates to the general character of Denmark’s foreign policy interests. Denmark’s commercial and strategic interests in the countries falling under the South Group’s purview were limited. By one estimate, approximately 60 percent of the South Group’s work related directly to aid issues; for regions where Danish aid was concentrated, the dominance of the aid portfolio was even greater.50 Although this discussion has highlighted how some features of the Danish aid policymaking landscape have changed through time, its main focus has been on identifying the characteristics of the main actors within this system and the role of governmental actors within the policy process. In summary, aid policymaking revolves around a limited number of governmental actors, with the parliament and government setting the financial parameters for the aid program and providing overarching policy guidelines and the aid administration being charged with operationalizing those general priorities. The symbiosis between the legislative authority and the bureaucracy reflects their common domestic constituencies. Leading economic interest organizations and development NGOs have taken an active interest in aid policy and express their preferences through regularized interaction with both the aid bureaucracy and Danish parliamentarians. From this overview of the aid policymaking system, it should already be apparent in the light of the framework presented in Chapter 2 why Denmark has

64 Aid generosity in Denmark been a leading donor. Although the Danish NGO community has limited private resources, business support for aid, a high level of access for NGOs and other interest groups in the policy process, a highly centralized policymaking process, and an aid bureaucracy with a high level of autonomy have all contributed to Denmark’s generous aid record. The next section examines how the features of the policymaking system that have been outlined above can be sewn together to explain Denmark’s aid choices from 1980 to 2005.

The evolution of policy choices The steady increases in aid that Denmark achieved from the early 1980s through the start of the new millennium were a product of a politics of accommodation that sustained a governmental consensus resting on a foundation of support from the Danish business and development NGO communities. The key feature of the aid policies emerging from this consensus was the coupling of a strong poverty reduction focus marked by high aid volumes and an emphasis on aid to poor countries with a guarantee of a return on this investment for the Danish business community through tied aid. Although the aid program experienced reliable increases in resources through much of the period this study covers, the aid consensus that had been a basis for high aid outlays was challenged in 2002, when sharp aid cutbacks were enacted, a funding decline attributable to the changed preferences of the government resulting from a shift in the broader domestic political landscape. Even with the advent of a parliamentary majority more hostile to aid, however, the principles guiding Danish policy were not fundamentally challenged and the government ultimately agreed that the overall aid volume would not descend below 0.8 percent of GNI, a figure in excess of nearly all other donor countries. The societal and institutional foundations of the Danish aid program provided for the continuation of Denmark’s existing commitment to international development, albeit without the resource expansion characteristic of previous decades. The expansion of the aid budget from the 1980s onward took place during a period of overall restraint in the management of the Danish economy. At the beginning of the 1980s, Denmark found itself with large fiscal deficits, having pursued an expansionary fiscal policy to respond to the economic crisis induced by the oil shocks of the 1970s. Although fiscal problems abated under the conservative coalition governments that first gained power in 1982, the economic reform policies set in motion at this time did not stave off a recession beginning in 1987. Unemployment rose until 1993, when the overall economic situation began to improve markedly (Alesina and Perotti 1997; Andersen 2000; Green-Pedersen 2001a, 2003). If aid choices had purely been shaped by prevailing economic conditions, the aid budget should not have experienced the increases it did in the 1980s in particular. By 1980, the Danish bilateral aid program had existed for nearly two decades and several guiding principles concerning how aid would be provided were already well established. The roughly equal division of the overall aid budget between

Aid generosity in Denmark 65 multilateral and bilateral channels was one principle; the equal division of bilateral assistance between grants to support health, education, and rural development projects and loans to support the purchase of capital goods was another (Svendsen 1981). In presenting the government’s aid priorities to the parliament in 1980, the Social Democratic foreign minister Kjeld Olesen also affirmed the government’s intention to focus aid efforts in a limited number of poorer developing countries, particularly Kenya, Tanzania, Bangladesh, and India, which had been the leading aid recipients up to that point (Olesen 1981). Under Anker Jørgensen’s Social Democratic government, aid was under fire not only because of continuing domestic economic problems, but also due to critical reviews of Danish aid projects conducted by the National Audit Office and criticisms of long-term development aid programs raised by the Swedish Nobel laureate Gunnar Myrdal (Olesen 1982; Kelm-Hansen 2000). The Social Democratic government maintained a commitment to an aid target of 0.7 percent of GNP, but could not bring about aid increases. During his tenure as foreign minister, Olesen had established a commission to review the principles guiding Danish aid policy in light of Denmark’s accumulated international development experiences and the New World Economic Order being proposed at the time. As part of its mandate, the commission was required to “seek guidance about the viewpoints expressed within the business community and the labor movement, the Council and Board for International Development Cooperation, private organizations, and others” in examining Danish aid priorities (Danish Ministry of Foreign Affairs 1981: 412, author’s translation). Presided over by Ole Bang, the commission included two NGO representatives from MS and Folkekirkens Nødhjælp, a representative of LO, a representative of the Confederation of Danish Industry, three individuals representing Danida and its board, and four individuals nominated in a personal capacity. The conclusions of the commission confirmed the value in maintaining existing development cooperation orientations and could be interpreted as a means of placing the aid consensus on a firmer footing. According to Nissen (1983), the committee provided a means for dispensing with aid criticisms that had been raised at the beginning of the decade. Writing shortly after the release of the committee’s report, Nissen noted that, with the establishment of the committee, the government could “hope for a depoliticization and a downplaying of a part of the criticisms that had appeared. It has furthermore been important to secure the continued anchoring of aid policy in the broad and highly varied field of interest organizations in the issue area” (1983: 164, author’s translation). Without changing the basic orientations of aid policy, the commission’s work provided a stamp of approval for the government to build on the status quo. Before the commission had finished its deliberations, the Social Democraticled government was replaced by one led by Conservative Prime Minister Poul Schlüter. Schlüter’s government took up the commission’s recommendations, reaffirming that the aid effort should focus first and foremost on poor countries while suggesting that development cooperation with richer developing nations should take place on more commercial terms (Ellemann-Jensen 1983). Discussing

66 Aid generosity in Denmark the new government’s positions on aid in front of the Council for International Development Cooperation, Foreign Minister Uffe Ellemann-Jensen indicated that while the government remained committed to the fundamental principle of using aid to address the needs of developing countries, it also viewed the integration of business concerns as a means of sustaining support for the aid program. EllemannJensen remarked that if aid policy were to “strive for a balance, so that consideration can be given to the desire to create jobs in the Danish business community, without weakening the main objective of aid,” this would serve to “strengthen popular understanding and support around development aid” (1983: 404, author’s translation). The rightist government also proposed increases in the aid budget to 0.73 percent of GNP in 1983 and 0.74 percent in 1984. As the statement above suggests, while adhering to established aid practices, the new government sought to emphasize the integration of the business community in the aid program to an increasing degree so as to contribute to the health of the domestic economy and ensure that the aid program itself would not be fundamentally challenged. Consistent with its receptivity to a central role for business in the aid program, the government also underlined the importance of investing in economic infrastructure and productive sectors as a means of securing improved living conditions for poor populations (Ellemann-Jensen 1984). In emphasizing investments in these sectors, the government was extending the principle of balancing to the manner in which aid would be implemented, suggesting that investments in productive sectors and infrastructure to spur economic growth would complement investments in social infrastructure (Ellemann-Jensen 1984). Although Danish aid commitments were already among the highest in the world at this point, two exogenous forces in the early 1980s provided a climate where aid advocates could secure more substantial resource commitments and establish the basis for continued aid increases through the 1980s and 1990s. One of these external forces was the well-publicized famine in the Horn of Africa, which caught the attention of the public and parliamentarians alike, leading to NGO collection campaigns and an interpellation debate within the parliament on the subject of how Denmark should respond. Christian Kelm-Hansen, a Social Democratic member of parliament and the chair of Danida’s Board at the time, noted before a party congress that “as far as the catastrophic famine in Africa is concerned, what we are confronted with almost daily in the media is the ugly face of underdevelopment itself” (Kelm-Hansen 2000: 182, author’s translation). Proposals from the far-left party SF, the Social Democrats, and the Social Liberals suggested that Denmark’s response to the famine should build on the contributions collected through NGOs. The results of the 1984 election also contributed to creating a political climate where further aid increases could be envisaged. After this election, the ‘four-leaf clover’ minority government, a coalition of the Conservatives, the Liberals, the Christian People’s Party, and the Center Democrats, relied on the support of the centrist Social Liberals to push its economic reform agenda through the parliament (Green-Pedersen 2003). Increasing the resources provided for development was a central concern of the Social Liberals, who pressed for a concrete timetable for meeting a goal of allocating 1 percent of GNP for aid by 1992. This proposal was

Aid generosity in Denmark 67 adopted in 1985 with the backing of a non-governing parliamentary majority consisting of the Social Liberals, the Social Democrats, the Socialist People’s Party (SF), and the Left Socialists. The majority voting in favor of this proposal noted that “the situation in the developing world, particularly in the poorest countries . . . is so serious that it necessitates an increased effort on the part of wealthy countries” (Folketinget 1985: 341, author’s translation). The governing coalition, which voted against the proposal, did not dispute the idea that it was necessary to maintain a strong aid commitment, but was uncomfortable with the proposed timeline and believed that the state of the Danish economy should be taken into consideration when evaluating future aid increases (Folketinget 1985).51 The result of the victory for the non-governing ‘aid majority’ was to set the Danish aid program on a course of continuous expansion, which remained unchallenged until 2002. The ability of Danish development NGOs to leave their mark on aid policy and hence Danish foreign policy during this period was highlighted in their contribution to making Denmark’s aid program respond to two major international political issues. One issue was the civil unrest in Central America, a region that left-leaning NGOs found appealing due to the rise of a socialist regime in the form of the Sandanista government in Nicaragua, an appeal magnified by Nicaragua’s location in America’s backyard (Friis-Bach et al. 2008). The second issue was the fight against South African apartheid, which Denmark responded to by providing assistance within South Africa and to the frontline states neighboring the apartheid regime (Folketinget 1988). In both cases, support to NGOs was a central part of Danish assistance to these troubled regions. Denmark’s Conservative foreign minister, highlighting the importance of development assistance in Danish policy toward both regions, noted that support in these areas contributed to “efforts to promote a peaceful development toward social justice, respect for basic rights, and political stability” (Ellemann-Jensen 1986b: 426, author’s translation). These region-specific investments underline the domestic basis for foreign policy choices, since in both cases Denmark’s work on these issues was in opposition to the policies promoted by the United States, a NATO ally. The years following the 1985 decision to establish a firm timetable for moving toward a 1 percent aid target were marked by efforts to ensure that the growing aid program could be effectively administered. The aid administration embarked on an internal review process to strengthen its management system and establish better linkages between strategic planning and project implementation (EllemannJensen 1989; Olsen and Udsholt 1995). This review culminated in a ‘Plan of Action’ that Danida completed in 1988, a planning document that the aid administration had ownership of, as it was not submitted for review to Danida’s Board before it was made public (Svendsen 1990). The plan notably emphasized the need to concentrate aid resources in a limited number of countries: decisions about which program countries should be selected became a topic for debate within the parliament and among interested societal groups in subsequent years. The role of development NGOs and business interests in the aid program was also addressed in the Plan of Action. Funding for NGO programs would increase,

68 Aid generosity in Denmark while new administrative procedures would be put in place to minimize the organizational resources Danida would need to expend to oversee the NGO component of the program. Private sector participation in the aid program would also be reformed. While Danida did not question the principle that half of bilateral aid, or approximately one-fourth of total Danish assistance, would be tied to purchases in Denmark, it did argue for a reorientation in the character of tying requirements so that Danida could have more flexibility in matching private sector resources with the development needs of recipient countries (Ellemann-Jensen 1989). Although the governing coalition clearly sought to maintain a role for Danish enterprises in the aid program, this principle had backing across the political spectrum. Discussing Danida’s Plan of Action, the Social Democratic foreign policy spokesperson Helle Degn noted that her party recognized that there were “opportunities to promote the business community’s active involvement in fulfilling the goal of poverty-oriented aid” (Folketinget 1989: 439, author’s translation). Indeed, even NGOs recognized the importance of maintaining a role for business in the aid program. In a statement delivered to the parliament and foreign affairs minister regarding the Plan of Action, a group of 11 NGOs noted that “the Danish business community should continue to have the possibility to deliver goods and services in connection with Danish development aid. However, this consideration should be subordinate to the fundamental principle regarding [the aid program’s] poverty orientation” (Dansk Missionsråd et al. 1989: 425, author’s translation). As Denmark prepared to disburse an ever-increasing share of its national wealth abroad, the fall of communist regimes in Eastern Europe provided another stimulus for policy reevaluation, not only because Denmark’s European backyard came to include economies in transition that were potential aid recipients, but also because the failure of communism seemed to underline the limitations in economic development strategies that emphasized state intervention over a reliance on market forces. Following from Danida’s Plan of Action, the selection of program countries where Denmark would pursue a higher degree of concentration in aid allocations became a key focus of aid policymaking. The process of country selection, like the overall administrative reform effort, was steered by Danida itself. As Kelm-Hansen outlines in his account of aid policymaking in Denmark from the 1950s through the 1990s, the parliament’s role in country selection revolved around the elaboration of the seven selection criteria already mentioned, while the aid administration, in consultation with the resource base represented on its board, had the task of actually deciding which countries would be chosen (Kelm-Hansen 2000). The first list of program countries, presented in the five-year plan prepared by Danida in 1990, reflected the same kind of compromise that had characterized aid policy up to that point. Most of the countries (Bangladesh, Bhutan, Ghana, India, Kenya, Mozambique, Nepal, Tanzania, and Uganda) were LICs or LDCs, while three others (Zimbabwe, Egypt, and Thailand) fell into a higher income category, a choice considered to be a nod to Danish business interests. The inclusion of Egypt and Thailand on the list of concentration countries drew some criticism from

Aid generosity in Denmark 69 development NGOs. Prioritizing middle-income countries alongside poorer countries was perceived to water down the poverty reduction focus of the aid program, even if the official policy line continued to underline the centrality of poverty reduction as a policy goal (Jensen and Bischoff 1989). For the government, however, the country selection process was a reflection of the consensus politics that had long characterized aid policymaking. Discussing the list of priority countries, the foreign minister remarked that there is a tradition that Danish aid policy rests on a broad political foundation. It has been that way for the more than 25 years that we have provided official development assistance. And it has moreover been that way in the most recent years, when the course for a more dynamic and goal-oriented Danish aid policy has been set out. (Ellemann-Jensen 1991a: 412, author’s translation) Defending the slate of countries selected in this first round of program concentration, the foreign affairs minister affirmed that a poverty orientation remained a cornerstone of aid policy (Ellemann-Jensen 1991b). At the same time, Denmark was also moving toward a redefinition of its aid strategy to address global challenges brought into the international spotlight with the opening up of the Eastern bloc. Issues such as environmental protection, women’s rights, and the promotion of democracy and human rights became increasingly important concerns (Ellemann-Jensen 1993). By 1992, Denmark not only met the 1 percent aid target it had set for itself seven years before, but also committed a new envelope of resources to environmental protection and humanitarian assistance, so that 1.5 percent of national income would be allocated as some form of aid by the year 2002 (Olsen and Udsholt 1995). The creation of a new funding envelope for these global challenges highlights the strong political basis for continued support for assistance to developing countries. 52 Even when Poland, a close Baltic neighbor, began its democratic transition, aid advocates succeeded in ensuring that new funds destined for there would not be drawn from the aid budget, but instead from funds overseen by the Ministry of Finance (Kelm-Hansen 2000). Soon after the decision to create an additional aid funding package was taken, Poul Schlüter’s government was replaced by a new coalition under the leadership of Social Democratic Prime Minister Poul Nyrup Rasmussen. The transition did not change the momentum in the aid program generated by the aid administration in concertation with interest organizations and the politics of accommodation. As noted above, special committees had been established to promote dialogue between the aid administration and the NGO and business communities in order to formulate new strategies for the involvement of these actors in the aid program. For large NGOs, this process resulted in the formulation of framework agreements that outlined general parameters for aid implemented through these organizations to reduce the administrative burden of NGO oversight on the administration itself. The main development with respect to the business community was the

70 Aid generosity in Denmark creation of a private sector program, a main goal of which was to view the business community as a development vehicle that could adapt Danish technological knowhow to varying local circumstances.53 Where business interests had previously emphasized the importance of maintaining tied aid to support the delivery of Danish goods and services, the private sector program marked a shifting orientation to view business participation in the aid program as a means to build partnerships with firms in recipient countries. The preparation of the government’s new overall development strategy included a process of extensive consultation with the Danish business and NGO communities (Danida 1993, 1994b; Wøhlk 1994). Labeled A Developing World, this new strategy was designed to preserve the overarching frameworks for Danish development policy that the parliament had supported in previous decades and to prepare the aid program for the emerging challenges gaining in importance on the development agenda in the 1990s. The strategy highlighted the continued poverty reduction focus of the aid program, identified gender, the environment, good governance, and human rights as cross-cutting concerns, and called for limiting the number of sectors of engagement within individual recipient countries as a means of making aid more effective (Danida 1994a).54 It also signaled the continuation of a dialogue with the aid resource base, particularly with respect to the formulation of country-specific strategies for program countries. The economic recovery after 1993 ensured that, with the 1 percent target in place, the aid budget would continue to expand through the end of the decade to the benefit of major stakeholders, including Danish firms and development NGOs. The focus of the aid administration during the late 1990s centered on operationalizing the 1994 strategy, in particular by attempting to tie country programming more directly to the development strategies of recipient countries themselves (Danida 2000a). The automatic aid increases assured with the adherence to a 1 percent GNP target and sustained economic growth served to limit contention in this policy area in the 1990s. As one aid official noted: “with this target, aid rose a great deal over many years and one could cater to all special wishes without having to say no to anyone; so you could be friends with everyone.”55 The longstanding consensus that Denmark should maintain a commitment to the 1 percent target was finally challenged as a result of a change in the domestic political landscape exogenous to the aid policy process that produced a shift in governmental preferences regarding aid expenditures, leading to sharp aid cutbacks. In the November 2001 election, Anders Fogh Rasmussen’s Liberal party (Venstre) outperformed the Social Democrats at the polls and formed a minority coalition with the Conservative People’s Party. The victory of the rightist parties in part reflected the ability of the Liberals and Conservatives to take issue ownership of welfare policy, proposing improvements in parental leave, increased funding for health care, and reform of the health care system to increase access to private hospitals (Andersen 2003). Immigration represented another salient campaign issue and contributed to a strong showing for the right-wing Danish People’s Party, which gained nine additional seats in parliament, making it the

Aid generosity in Denmark 71 third largest party in the parliament (Andersen 2003). Although the Danish People’s Party was not brought into the coalition government, its votes could guarantee Rasmussen’s minority government a parliamentary majority and it became the government’s support party. Rightist parties had governed Denmark for much of the 1980s when the aid budget witnessed significant increases. The distinction between the political context after 2002 and that prevailing under the rightist minority governments of the past was that, with the Danish People’s Party as a support party, the governing coalition did not have to make accommodations that moved its positions closer to those of the opposition outside of the majority, as it was required to do when centrist parties were critical to maintaining legislative support, but rather could promote its agenda by accommodating a single party at the opposite end of the political spectrum from the opposition parties outside of the majority. A weakening of the consensus politics of the past is understandable in terms of this shift in the balance of political power within the parliament. Soon after taking office, Rasmussen moved to reduce Denmark’s aid budget, a course suggested in the political campaign when Rasmussen had indicated that the additional investments in health care he sought could be financed through aid cutbacks (OECD 2003a; Lancaster 2007). In 2002, the aid-to-GNI ratio was scaled back to 0.96 percent in comparison to 1.03 percent in the previous year, which still left Denmark ahead of all other donors, and represented a figure comparable to the aid commitments realized in the 1990s. More substantial cuts were enacted in the following year, however, and by 2005 Denmark provided just over 0.8 percent of GNI in development aid. These cutbacks were painted as part of an effort to use aid resources more effectively (Danida 2003b).56 Funding was trimmed for the aid administration’s own programs as Denmark discontinued operations in three program countries, and the cutbacks also sharply reduced funding to Danish NGOs (Olsen 2005). If the aid consensus surrounding the maintenance and increase in aid levels had been founded on support from a broad group of societal interests, as this chapter has argued, why was the government able to scale back the aid program from 2002 onward? The evolving nature of government–NGO relations seems to offer a partial explanation, though the central reason for the shift in policy lies in changing governmental preferences and not in changing preferences among societal actors. From the 1980s on, Danish NGOs had succeeded in advancing a global poverty reduction agenda and by the early 1990s the largest NGOs were formally integrated into the aid implementation system through framework agreements. On the one hand, the inclusion of NGOs in the aid policy sphere served NGO aims of making Danish aid policy work for the poor and provided a steady stream of financing for their own work internationally to further contribute to the advancement of that goal. On the other hand, the privileged position that NGOs had obtained by the early 1990s paradoxically weakened their political power. Comfortable with their policy successes, NGOs did not really need to be vocal political actors in the late 1990s, so the political engagement of the community

72 Aid generosity in Denmark was not as strong at the time that the cutbacks were enacted as it had been in the 1980s, even though the private resource base of the community was similar in both periods. The reliable growth in state funding for NGOs reduced their need to seek contributions from the public, and private backing for these organizations did not grow in the 1990s, as Figure 3.6 suggested. One observer of aid politics in Denmark highlighted the lack of independence of Danish NGOs from the aid administration itself, which also made NGOs more reluctant to challenge the government.57 A member of parliament who opposed the cutbacks underscored this link between NGO dependence on public funding and reluctance to propose changes to the aid budget: “we have criticized many NGOs, because they have been very silent, and do not go out and defend the ideals one should stand for because they are afraid their funding will be reduced.”58 One consequence of the reductions was the emergence of a debate about the size of the aid budget that had largely been dormant over the previous decade and a half. While as a group development NGOs were in a weak position to challenge the cutbacks, together with parties in the parliamentary opposition they proposed renewed aid increases.59 Development NGOs also raised concerns about greater dispersion in aid programming due to a proliferation of new government initiatives and took issue with the seemingly hostile stance of the government toward the role of NGOs in the aid program.60 While budgetary reductions represented a departure from the 1 percent commitment, the new government maintained many of the main elements of Danish aid policy, including upholding poverty reduction as its fundamental aim and pursuing the general strategy to concentrate aid efforts in a limited number of countries and sectors. The new government also implemented a reform of the private sector cooperation program so that business participation in the aid program would be driven more by the demands from recipient economies rather than by what Danish firms wanted to supply (Danida 2003b) and underscored the high priority attached to promoting development on the African continent (Danida 2005). The downward slide in overall volume appeared to reach a lower limit in 2005, with a government pledge that Denmark’s aid contributions would not fall below 0.8 percent of gross national income (VK Regeringen II 2005). A seemingly skeptical stance on development assistance that characterized Rasmussen’s early years in office thus gave way to an acknowledgment of the strengths and utility of the aid program. At the beginning of 2006, speaking before the Council for International Development Cooperation, the prime minister himself reflected on the development challenges that he had witnessed firsthand in visiting Africa in the previous fall, and emphasized the continued contribution that Denmark would make to addressing these challenges. Rasmussen noted that a heightened integration of developing countries in the global economy will depend on an elevation of the level of development on all fronts . . . It is not just a question of private sector development. It is also a question of basic education, gender equality, health care and the environment. (Statsministeriet 2006, author’s translation)

Aid generosity in Denmark 73 In its essence, this statement highlights a key element of continuity with aid politics of the past in pointing to the need for a balance between development strategies typically favored by business and NGO communities.

Alternative explanations Denmark approximates a ‘most-likely’ case for the partisan and welfare state hypotheses on aid giving that represent the main alternative explanations to the argument offered here that Danish aid choices can be understood as a product of NGO and business accommodation within the context of an open and compact policymaking system. Dispelling these alternative explanations in the Danish case thus provides a strong basis for invalidating or at least weakening their explanatory power (Eckstein 1975). On the surface, the hypothesis that high aid commitments are a reflection of leftist political power is an appealing one. In Denmark, parties of the left held a parliamentary majority for the years covered in this study when aid budgets rose consistently, and the victory of a rightist majority in November 2001 precipitated sharp cutbacks in development assistance outlays. However, this tidy picture is complicated by the recognition that in both 1985, when Denmark established a clear timetable for increasing its aid commitments in order to reach a 1 percent of GNP aid target, and 2002, when the aid budget began to be scaled back, minority governments based on a coalition of the Conservative and Liberal parties held power. One key difference between these two episodes is that in 1985 the rightist coalition government was dependent on a centrist party favoring aid increases (the Social Liberals) to obtain a legislative majority, while in 2002 the government could press its legislative agenda through with the support of a party of the far right (the Danish People’s Party) that would go along with the Liberal party’s more skeptical view of aid. The willingness of the Liberal party in 2002 to reduce aid marked a departure from the party’s traditional acceptance of the aid consensus, however. The rightist minority government did not challenge the decision made by the ‘aid majority’ in the 1980s or early 1990s to continuously increase aid expenditures and presided over a period of adjustment in aid policy when the centrality of poverty reduction was firmly enshrined and development obtained an elevated foreign policy profile. Throughout the 1980s and 1990s, parties from the left and right were in broad agreement about the principles guiding aid policy and were supportive of maintaining robust aid commitments. As one observer of the Danish aid policy process noted: “all parties have always stood together on aid policy. Large parties, Conservatives, and so on.”61 This aid consensus was produced through compromises that ensured that key societal actors, and not least the business community, would support the aid program. Two elements of the institutional setting in which aid policy is made served to build consensus. One was the formal integration of leading interest organizations in the aid policy process via their representation on the aid administration’s oversight board. The other was the practice of minority government. The persistence of this consensus in spite of the shift to the right in Danish politics is also notable, since the rightist minority government that came to

74 Aid generosity in Denmark power in 2001 respected the central tenets of aid policy developed during the 1980s and 1990s and agreed to set a minimum aid target of 0.8 percent of GNI. The government also resisted demands from its far-right support party to further reduce the aid budget.62 A second leading alternative explanation for aid policy choices views aid commitments as a reflection of welfare state regime type. The Danish welfare state approximates Esping-Andersen’s definition of a universal or social democratic welfare state, where the state provides generous benefits in the areas of health care, education, unemployment insurance, and old-age pensions in a redistributive and comprehensive manner, as high and low income earners alike are beneficiaries (Esping-Andersen 1990). The bundle of programs linked to social transfers is a central part of the domestic political economy, and as a set of domestic spending programs the welfare state can be understood to be a dynamic entity tied to domestic economic fortunes. The macroeconomic problems Denmark experienced in the 1980s placed pressure on its generous system of social transfers. A focus of the conservative-led minority government that came to power in 1982 was to respond to these economic difficulties by stimulating private sector over public sector growth (Andersen and Greve 1996). One means of doing so was to implement a freeze in social security benefits as part of a plan to curb public expenditures. Retrenchments in welfare expenditures also occurred across the 1980s and 1990s, particularly in the areas of public health spending, unemployment benefits, and early retirement programs (Swank 2000; Green-Pedersen 2001b). Interestingly, the return of a social democratic government in 1993 paved the way for further welfare state reforms. Although the universalism of the Danish welfare regime was not fundamentally called into question (Andersen and Greve 1996; Kuhnle 2000), the adjustments in transfer programs undertaken in the 1980s and 1990s highlight that welfare state policies have adapted in light of economic challenges. The retrenchments in welfare provision that accompanied the process of adjustment were not mirrored in the direction that aid commitments took from the 1980s through the 1990s, suggesting that the dynamics of aid policymaking and welfare state politics are not identical. Indeed, the politics of the welfare state and aid politics differ in fundamental respects. Welfare policy is a high-salience issue area (Andersen 2000) that accounts for a large share of public expenditures and can influence whether parties win or lose elections; in the aid sphere it is interest organizations rather than voters who provide the most consistent sources of societal pressure. The traditional cleavage between business and labor that exists in the welfare policy realm is also absent from the aid policymaking process, as the labor movement has largely been supportive of maintaining a central role for the Danish business community in the aid program as a means of promoting job creation.

Aid generosity in Denmark 75

Summary Denmark has long been a leading donor, committing to aid increases while spending from the donor community as a whole stagnated. The high priority that Denmark has assigned to addressing global poverty via aid transfers is remarkable, given that for roughly half of the period under consideration Denmark experienced economic pressures that might have provided a justification for limiting its aid expenditures. The active involvement of a range of organized interests in the policymaking system has provided a base of support for this generous aid program. Although Danish development NGOs have a limited private resource base, they have nonetheless been able to foster a strong commitment to poverty reduction within the aid program because of their open access to the policymaking process. Together with economic interest organizations, they shape the orientation of the aid administration through participation in corporatist organs, including representation on the Board for International Development Cooperation, and also seek influence via regular contacts with aid bureaucrats, ministers, and parliamentarians. The participation of the business community in the aid arena alongside development NGOs has encouraged parties across the political spectrum to accept high aid outlays. Although one focus of business engagement on aid issues has been to secure direct returns to Danish enterprises, the goal of supporting domestic firms has been subordinate to poverty reduction objectives, and the acceptance of this principle has increased through time. The interests of the business community have also evolved over time to focus increasingly on private sector development questions rather than on providing outlets for Danish goods and services. The integration of business groups, NGOs, and development researchers into the aid policy process as advisors to the minister holding the development cooperation portfolio strengthens the place of the aid administration in the policy process by creating a broad domestic constituency for its work. The aid administration has played a central role in determining the content of aid policy. Danida served as a motor for the administrative reforms of the 1980s and carried out a strategic planning process that resulted in moves toward greater geographical and sectoral concentration. The aid administration has faced little competition from other governmental actors in defining aid policy content. However, the overall financial parameters in which the aid administration operates are determined primarily by the parliament, where a consensus on aid issues has been the norm. In summary, aid politics in Denmark has been characterized by the accommodation of key societal interests within a centralized decision-making system. The Danish case does not support the proposition that economic conditions shape aid choices. In Denmark, the aid budget rose steadily in difficult economic times and during the period of economic expansion that took place after 1993. When significant cutbacks were initiated, the Danish miracle economy was still going strong. The resources and collective mobilization efforts of NGOs also do not appear to account for Denmark’s high aid commitments, as NGOs have had modest resources and have sought to maintain independence from other organizations in political work, even if collaboration takes place on an ad hoc basis. In spite

76 Aid generosity in Denmark of these factors, Danish NGOs have at times been very successful advocates for development, for instance by promoting poverty reduction as the fundamental goal of development policy. In advancing their agenda, NGOs have benefited from a system that provides them with direct access to a centralized policymaking process where the aid administration itself has been a pivotal actor. The institutional setting in which aid decisions are made and support from a wider domestic constituency have compensated for the limited resources of development NGOs in the Danish case. Although the accommodation of diverse interests within the aid program carries the potential to dilute its poverty reduction orientation, there are also clear advantages to the Danish model. One is that the incorporation of societal interests whose primary political concerns are not related to aid policy creates a larger base of support for aid overall and has increased the willingness of the government to make aid a national policy priority. In the inclusive policy system, development NGOs and economic interest organizations also have opportunities to interact on a regular basis, and can therefore acquire a more holistic understanding of development problems by learning from actors with divergent viewpoints. Finally, the involvement of these diverse actors also contributes expertise needed to address problems that are multidimensional in nature. By allowing a diverse set of societal groups a stake in the formulation of aid policy, Denmark likely increases the prospects that its aid contributions will address the development needs of the diversity of actors present in recipient countries, be they children, farmers, trade union members, or entrepreneurs.

4

The cautious humanitarian Aid politics in Switzerland

Adolf Ogi’s speech at the Millennium Summit marked the first time that a president of the Swiss Confederation had addressed the General Assembly.1 Although Switzerland had been a member of numerous UN agencies, it only joined the international organization in 2002 following a national referendum on UN entry. Switzerland’s reluctance to fully embrace multilateralism through UN membership contrasts with currents of internationalism that afford the country a central role in the global political economy.2 A cradle of international humanitarian law, it is a center of global governance as the host to a slate of UN agencies and the World Trade Organization (WTO). Switzerland is also home to major multinational corporations such as the pharmaceutical giants Roche and Novartis and the food industry leader Nestlé, and the banking groups UBS and Crédit Suisse are international leaders in financial services (UNCTAD 2005). In 2000, Switzerland provided $890 million in aid to developing countries, representing an expense of $117 for every Swiss resident or 0.34 percent of GNI (OECD 2007a). This made Switzerland the seventh most generous donor measured against its national wealth and the fourteenth largest donor in terms of the size of its aid program. While Switzerland sits in the middle of the OECD-DAC donor pack, its aid program has often been praised for its poverty reduction emphasis, evidenced by attention to locally determined needs and its highly concessional character (OECD 1996b). Though Switzerland’s aid program may be modest in size, the assistance it delivers tends to be of a high quality. To explain Swiss aid choices, then, it is necessary to account for these two features of its development assistance program. On the one hand, overall aid spending has been restrained; on the other hand, aid resources have been directed to addressing poverty reduction goals. Restraint in aid budgeting is not due to the absence or weakness of a pro-development constituency. The development NGO community in Switzerland has a solid financial resource base, is well-organized, and has exerted constant pressure on the Swiss government and parliament to increase funding to alleviate poverty. In promoting a pro-poor aid agenda, this community has been supported by a strong aid agency within the Foreign Affairs Ministry having a high level of control over policy content. However, constraints on expanding the aid budget are imposed by the structure of the Swiss executive branch, where seven ministers share executive authority, and by a parliament for

78 Aid politics in Switzerland which foreign policy concerns have not represented a high priority. At the societal level, powerful Swiss business interests, whose positions on aid are linked to concerns about maintaining discipline in public expenditures in general, have favored restraint in aid budgeting. After outlining overall trends in Swiss aid provision, this chapter identifies the characteristics of the societal and govern­ mental actors involved in aid policymaking, maps out the institutional setting in which aid decisions are made, and then examines the evolution of Swiss aid policy over the period 1980-2005 to explain Switzerland’s aid profile.

Overview of Swiss aid choices Like Denmark, Switzerland was a recipient of Marshall Plan assistance, and its earliest aid efforts consisted of contributions to technical assistance programs managed by the UN.3 In 1956, Switzerland took the first steps toward establishing its bilateral aid program and by the early 1960s had decided to disburse its aid contributions primarily through bilateral channels (Von Schrotter 1981). The legislative framework for Swiss aid dates to a federal law from 1976, which outlined the guiding principles and main objectives of development cooperation. 0.5 0.45 0.4 0.35 0.3 £

0.25 0.2

0.15 0.1

0.05 0

Year

Figure 4.1 Aid volume as a share of Swiss GNI (1970-2005). Between 1970 and 1983, Switzerland’s aid to national income ratio more than doubled. The following years were characterized by a high level of stability, with a modest upward trend visible in the 1990s. The aid ratio peaked in 1992 at 0.45 percent as a result of Switzerland’s accesion to the Bretton Woods institutions. Growth in the aid-to-GNI ratio since 2004 has been facilitated by Switzerland’s incorporation of expenses related to asylum seekers into the aid figures reported to the DAC (OECD 2005b).

Source: OECD. International Development Statistics Online.

Aid politics in Switzerland 79 This law indicated that development efforts should target the world’s poorest populations and be respectful of the rights and interests of development partners and conscious of the needs of the populations served (Assemblée Fédérale 1976). The law also identified several priority areas of intervention, including rural development, job creation, and the management of environmental and demographic change. From the end of the 1970s onward, Switzerland’s aid budget experienced slow but steady growth (see Figure 4.1). Most of this aid was distributed bilaterally: bilateral aid averaged close to three-fourths of total aid expenditures between 1980 and 2005 (see Figure 4.2). OECD-DAC peer reviews of Swiss development policy have regularly praised the poverty focus of the Swiss aid program. The DAC’s 2001 review noted simply that “the hallmark of Swiss ODA is that it is targeted at the poorest countries” (OECD 2001c: II-11). LDCs received on average about one-third of aid allocations during this period, with the income group absorbing the largest share of aid allocated by income category in all but two of the years under consideration. As Figure 4.3 indicates, however, the share of aid to the least developed countries declined over time. Through the 1980s, the LDCs consistently attracted around 40 percent of bilateral aid, while their average aid share between 1991 and 2005 was just below 30 percent.4 While the share of Swiss aid going to LICs was stable over the entire period, accounting for 13 percent of aid allocations on average, the share directed to LMICs increased, absorbing an average of 100 90 80 70 %

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Figure 4.2 Bilateral and multilateral assistance as a share of Swiss aid (1980–2005). On average, approximately three-fourths of Swiss aid was provided through bilateral channels, though this share reached a low point of 60 percent in 1992. Source: OECD. International Development Statistics Online.

80 Aid politics in Switzerland 100 90 80 70

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Figure 4.3 Share of Swiss bilateral aid by income category (1980–2005). LDCs have been privileged recipients of Swiss aid; however, their share of total bilateral aid declined over time, while the share of aid allocated to LMICs increased. Source: OECD. International Development Statistics Online.

23 percent of the aid share from 1991 to 2005 in comparison to 16 percent during the 1980s. Sub-Saharan Africa and South and Central Asia were the most important destinations of Swiss assistance and respectively received an average of 40 percent and 19 percent of bilateral aid between 1980 and 2005 (see Figure 4.4). Latin American countries attracted a relatively stable share of aid, accounting for 15 percent of bilateral aid on average, while the Middle East and Far East have not been prioritized. In the 1990s, aid to the Balkans increased the share of development aid provided within Europe. In line with the 1976 law, Switzerland has traditionally emphasized the agricultural sector in its aid program. The focus on rural development issues was strongest in the 1980s, representing a fourth of aid expenditures during that decade, and declined after the beginning of the 1990s, accounting for less than 10 percent of aid expenditures between 1991 and 2005 on average (see Figure 4.5). Aid to social sectors has been a more stable emphasis, amounting to 20 percent of aid expenditures from 1980 to 2005. Taken together, aid provided to social sectors and agriculture accounted for an average of 36 percent of bilateral aid across this period, with the share of aid directed to these sectors representing nearly half of aid outlays for much of the 1980s.5 Investments in economic infrastructure were in contrast a low priority in the aid program, while humanitarian assistance enjoyed greater prominence: an average of 17 percent of aid was provided in the form of food aid or emergency assistance between 1980 and 2005. The overwhelming

Aid politics in Switzerland 81 100 90 80 70 %

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Figure 4.4 Share of Swiss bilateral aid by world region (1980–2005). Sub-Saharan Africa, South and Central Asia, and Latin America represent the three most important destinations for Swiss aid, though the 1990s witnessed a rise in aid allocated to European countries.

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Source: OECD. International Development Statistics Online.

Year Soc

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Emrgcy

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Figure 4.5 Share of Swiss bilateral aid by sector (1980–2005). Aid to social sectors accounted for an average of 20 percent of bilateral aid flows between 1980 and 2005. In the 1980s, agriculture was the leading sector in Swiss development assistance, but this emphasis declined markedly in the 1990s. Switzerland has also provided a substantial amount of its aid in the form of humanitarian assistance. Source: OECD. Sectoral Distribution of Bilateral Development Assistance by Purpose: Part I (Developing Countries). Volume 2007 release 01.

82 Aid politics in Switzerland majority of aid (on average 97 percent) was provided in grant form rather than via loans. In short, Swiss aid efforts focused on the poorest developing countries and on terms promoting responsiveness to recipient needs. Public opinion polls in Switzerland have indicated that development assistance has a wide base of support among the general public. The Swiss Development Cooperation Agency (SDC) and leading NGOs have sponsored public opinion surveys at regular intervals to gauge attitudes toward aid spending (Isopublic 1984, 1989, 1994; Gesellschaft für Praktische Sozialforschung 1999, 2005). These surveys reveal that sizable majorities—between 75 and 80 percent of respondents in the five iterations of the polls conducted between 1984 and 2004—believed that aid should be provided as a form of solidarity with fellow human beings. When asked whether aid to developing countries should be increased, maintained at its present level, or decreased, however, respondents have displayed a preference for the status quo, with between 40 and 56 percent favoring a continuation of existing funding levels. Though the percentage of the Swiss public supportive of aid increases has at times been substantial, representing 36 percent of the sample in the 1984 survey and reaching 37 percent in 1989, this figure has diminished over time, while the share of respondents favoring aid decreases has increased. In the 2004 survey these groups were nearly equal in size, representing 22 and 21 percent of respondents respectively. While the surveys suggest that the public is generally supportive of development assistance, they also point out that many Swiss citizens are uninformed about aid policy: clear majorities of respondents had difficulty identifying the federal agencies responsible for managing the aid program and consistently overestimated the size of the Swiss aid budget.

Development advocacy One expression of support within Swiss society for international development is the financial backing that individuals provide to NGOs. The Swiss are among the most privately generous donor publics, and between 1980 and 2005 the average volume of aid provided by NGOs for development purposes was higher only in Ireland, Norway, and the Netherlands, representing approximately 0.06 percent of GNI (OECD 2007a). There is a long Swiss tradition of providing humanitarian aid. Organizations advocating greater Swiss involvement in international development built on the work of the relief organizations that provided assistance in the interwar and early post-war years within Europe (Weidmann 1993). Table 4.1 provides an overview of leading NGOs with a development mandate, and Figure 4.6 charts the progression of the resources of the NGO community through time. The private financial resource base of NGOs was stable through the 1980s, increased slightly in the 1990s, and progressed more markedly from 2000 onward. Although the Swiss bilateral aid program has historically relied heavily on NGOs as implementing agents (see Figure 4.7), Swiss NGOs have substantial private backing in addition to the funding they receive from the state. Among leading development organizations, Helvetas was exceptional in deriving more than

1866 1901 1981 1946 1955 1960 1959 1982 1959 1961 1945 1936 1948 1961 1908 1972 1971 1968 1966

Swiss Red Cross Caritas Doctors without Borders-Switzerland HEKS Helvetas Terre des Hommes Foundation (Lausanne) Swisscontact World Vision Swiss Committee for UNICEF Swiss Catholic Lenten Fund Pestalozzi Children’s Foundation Schweizerisches Arbeiterhilfswerk Swissaid Bread for All Christoffel Blindenmission Terre des Hommes (Geneva/Basel)

Alliance Sud Bern Declaration Fédération Genevoise de Coopération

advocacy advocacy umbrella organization for NGOs in Geneva

humanitarian aid; social services humanitarian aid; social services catastrophes; health care provision peace promotion; education; agriculture water; infrastructure; education children’s rights; maternal health vocational training; SMEs; finance child sponsorship; humanitarian aid children’s rights; education agriculture; health youth and education workers’ rights; rural development agriculture; GMOs; patent law fair trade; finance; information society blindness; disability children’s rights; education

Operational focus

$2,774,102 $1,745,100 $453,625

$568,577,600 $97,690,666 $67,817,919 $54,565,730 $44,513,917 $37,804,163 $30,489,360 $30,122,468 $29,139,382 $17,452,384 $17, 005,600 $12,514,777 $12,295,912 $8,666,082 $5,019,485 $4,662,157

Annual revenue

Protestant Church CBM Intl. Intl. Terre des Hommes Federation

Trade Unions; Social Dems.

World Vision UNICEF Catholic Church

International Red Cross Catholic Church MSF Protestant Church

Affiliation

Notes: Revenue figures were taken from annual reports available on the websites of the organizations or in published form. Revenue figures for the year 2005 are reported in US dollars. The 2005 revenue figures may be higher than normal for humanitarian aid organizations in particular, given the influx of private donations provided in the aftermath of the Asian tsunami in December 2004.

Sources: Red Cross, http://www.redcross.ch; Caritas, http://www.caritas.ch; Doctors without Borders, www.msf.ch; HEKS, http://www.heks.ch; Helvetas, http://www.helvetas.ch; Terre des Hommes Foundation, http://www.tdh.ch; Swisscontact, http://www.swisscontact.ch; World Vision, http://www.worldvision.ch; Swiss Committee for UNICEF, http://www.unicef-suisse.ch; Swiss Catholic Lenten Fund, http://www.fastenopfer.ch; Pestalozzi Children’s Foundation, http://www.pestalozzi.ch; Schweizerisches Arbeiterhilfswerk, http://www.sah.ch; Swissaid, http://www.swissaid.ch; Bread for All, http://www.ppp.ch; Christoffel Blindenmission, http://www.cbmch.org; Terre des Hommes, http://www.terredeshommes.ch; Alliance Sud, http://www.alliancesud.ch; Bern Declaration, http://www.evb.ch; Fédération Genevoise de Coopération, http://www.fgc.ch.

Est.

Organization name

Table 4.1 Major Swiss development NGOs

84 Aid politics in Switzerland 0.14 0.12 0.1 %

0.08 0.06 0.04 0.02 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year NGO Grants

Gross NGO Flows

Figure 4.6 Swiss NGO resources (1980–2005). The private resources of Swiss development NGOs (reported here as a share of GNI) experienced slow and modest increases through time, increasing more markedly after 2000. Figures for 1997 appear to be an aberration from the overall trend. Gross NGO flows represent the “expenditure by national NGOs on development assistance and relief, together with any additional contributions in kind, made to developing countries, multilateral organizations, or international non-governmental organizations. Net grant figures exclude official subsidies provided for NGO programs.” The description of the flows comes from the DAC Statistical Reporting Directives, http://www.oecd.org/dataoecd/36/32/31723929. htm#code 415 (accessed April 11, 2007). In constant dollars, gross private NGO aid grew from approximately $200 million to nearly $400 million by the end of the period, experiencing a dip in the 1990s. Source: OECD. International Development Statistics Online.

50 percent of its revenue from official sources (Helvetas 2006); organizations associated with churches are markedly less dependent on public financing. For example, both HEKS and the Swiss Catholic Lenten Fund obtained about 13 percent of their revenue from public sources in 2005 (Fastenopfer 2006; HEKS 2006). One inventory of NGOs counted some 1,500 Swiss NGOs working on international development issues (Perroulaz 2004).6 The NGO sector is heterogeneous and reflective of a diverse civil society fostered by religious and linguistic pluralism and decentralized governance. As Table 4.1 illustrates, Switzerland’s development NGO community is dominated by organizations that have roots in Swiss society rather than by organizations with international origins.7 The largest Swiss humanitarian organizations have significant mandates outside of the development cooperation field: in 2005 the Swiss Red Cross spent only 42 percent of its budget abroad (Schweizerisches Rotes Kreuz 2006), while 60 percent of Caritas’s funds went to international work (Caritas Schweiz 2006). Other major development NGOs include HEKS and Bread for All, both associated with the

Aid politics in Switzerland 85 45 40 35

%

30 25 20 15 10 5 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year Official Support

Aid through NGOs

Figure 4.7 Share of Swiss bilateral aid channeled through NGOs (1980–2005). ‘Aid through NGOs’ in the above chart represents “Bilateral aid administered by NGOs on behalf of the official sector. In other words, ODA channeled through NGOs, as distinct from official support for NGOs’ own programs which is reported separately.” This second category of aid is listed as ‘official support’ in the above graph. Descriptions of the flows are available in the DAC Statistical Reporting Directives, http://www.oecd.org/dataoecd/ 36/32/31723929.htm#code 415 (accessed April 11, 2007). Source: OECD. International Development Statistics Online.

Protestant Church, the leading secular organizations Helvetas and Swissaid, and the Swiss Catholic Lenten Fund. In addition to these large organizations, there are numerous small NGOs, including many that participate in NGO federations organized at the cantonal level acting as liaisons with local and federal governments (Fino 2004). The oldest of these federations is the Fédération Genevoise de Coopération (FGC), an umbrella organization for 45 small NGOs based in the canton of Geneva and founded in 1966 (FGC 2006). Other NGO federations have appeared more recently elsewhere in non-German speaking areas, notably in the cantons of Vaud, Valais, and Ticino (Fino 2004). The main vocation of development NGOs is to support development efforts either directly through programs they manage on their own or by contributing resources to other organizations active in the Global South. Advocacy directed to policy questions in Switzerland consumes a relatively small share of organizational resources. One indication of this is that in 2005 the revenue of the largest advocacy organization, Alliance Sud, was the equivalent of just over 1 percent of the combined revenue of its six large member organizations. The dependence of NGOs on contributions from individuals and from public sources can limit their freedom to allocate resources toward advocacy. From one end, individuals may contribute to an organization to support specific projects, such as school construction or the

86 Aid politics in Switzerland delivery of relief supplies, but may be less interested in funding a more intangible action such as promoting policy change via lobbying.8 From the other end, organizations receiving state support have to be careful to avoid using these resources to lobby governmental actors. Two main NGOs focus their work on development advocacy efforts within Switzerland. The first is the Bern Declaration, an organization counting more than 20,000 individuals as members. Although the Bern Declaration was an important advocate for increasing aid in the late 1960s and early 1970s (Spörri 1993), its advocacy work has focused more recently on other Swiss policies with major implications for developing countries, including patent law, international financial regulation, and trade policy.9 Alliance Sud, the second main advocacy organization, also addresses financial and trade issues alongside its aid policy work. While these two organizations are potential competitors in the areas of trade and finance, in practice there is also collaboration on issues of common interest. Examples include coordination in the preparation of media strategies on policy toward the WTO and joint leadership in the International Tax Justice Network, an NGO network working against tax evasion and promoting equitable systems of taxation globally.10 A key difference between the two organizations is that the Bern Declaration has tended to conduct campaign-oriented advocacy, while Alliance Sud has adopted a direct lobbying approach, focusing on maintaining contacts with governmental actors as a means of advancing its agenda.11 The two organizations can thus be viewed as fulfilling complementary roles in the development policy system. Founded in 1971, Alliance Sud is a coalition of six of the largest development organizations (Swissaid, the Swiss Catholic Lenten Fund, Bread for All, Helvetas, Caritas, and HEKS) that have secular, Catholic, and Protestant affiliations.12 Alliance Sud identifies itself as a lobbying organization and serves as the primary mouthpiece for its member organizations vis-à-vis the Swiss parliament and the Federal Administration on policy questions. The member organizations are represented by their leaders on Alliance Sud’s board of directors, which meets regularly throughout the year to discuss the organization’s political priorities, while a permanent secretariat manages the execution of the coalition’s political strategy.13 There is a clear division of labor between Alliance Sud and its members, whose organizational resources are largely directed toward managing foreign operations. While individual member organizations may conduct advocacy work on specialized issues—Swissaid carries out work on genetically modified foods, Bread for All addresses the problem of a global digital divide, and Caritas deals with peace promotion, for instance—development aid questions are effectively delegated to Alliance Sud. The actions that the member organizations undertake to further aid objectives, for example through the mobilization of their individual networks, are coordinated by Alliance Sud and aim at complementing its work. Over the past few decades, the coalition has promoted a consistent aid agenda, trying to ward off budget cutbacks and increase aid funding and to ensure that aid reaches the poorest populations, notably by taking a critical stance against

Aid politics in Switzerland 87 large-scale economic infrastructure projects funded through export credit schemes.14 In an elaboration of its policy priorities published in 2004, the organization called for Switzerland to move toward the 0.7 percent aid target and advocated safeguarding social rights through investments in health care and education, protecting natural resources, and supporting the development of civil society by funding NGOs (Niggli 2004). The initial effort by leading NGOs to combine to form Alliance Sud at the beginning of the 1970s and agreement to delegate political work to the organization at that time has served to diminish competition within the NGO community over time. As one NGO representative noted, the long tradition of collaboration has carried additional advantages for NGOs as well because, as a result of “this big step in the 1970s, the lobby work could be developed in a very professional and steady manner.”15 Swiss NGOs are not novices when it comes to lobbying. Although Alliance Sud is not an umbrella organization for the Swiss development NGO community as a whole, by virtue of its size and organizational permanence it is a focal point in the NGO community and plays a broad coordinating role on an ad hoc basis. When the SDC began a process of redefining its strategy for cooperation with NGOs after 2004, for example, Alliance Sud served as a facilitator for a more comprehensive Swiss NGO platform.16 As is the case in other donor countries, Swiss development NGOs are inevitably also competitors in the domestic fundraising market, and this competition can create incentives to limit coordination. To dampen this rivalry, many NGOs are members of the Zewo Foundation, a standards setting organization for non-profit organizations that raise money through public collection campaigns. A main objective of the Zewo Foundation is to promote transparency in the fundraising market by establishing common accounting standards and requiring members to present the public with truthful information about how donations will be spent. The organization also coordinates the fundraising efforts of its member organizations, setting a calendar for public collection campaigns that ensures that potential donors will not be inundated with funding appeals all at once (Davatz 2004; Gerster 2006). This system of coordination is advantageous for member organizations because it reduces the direct competition that they face from other groups dependent on collection campaigns. The wide participation in this certification program is indicative of a level of professionalism in the NGO community that strengthens its ability to maintain support from the general public and to conduct effective political action. In short, the Swiss development NGO community possesses two characteristics that leave it in a strong position to serve as an advocate for pro-poor aid commitments at the national level. Swiss NGOs have a relatively strong financial resource base and represent a cohesive political community. The ability of Swiss NGOs to resolve collective problems and act in a unified manner in the aid sphere is noteworthy, given that the NGO community is naturally heterogeneous as a result of the underlying diversity of Swiss society. Even though NGOs have affiliations with different religious denominations and headquarters in different cantons, they have recognized the benefits of pooling their efforts to work toward shared goals.

88 Aid politics in Switzerland These qualities of the development NGO community should augur well for high levels of giving in Switzerland.

Economic interest group engagement Development NGOs confront a political landscape where economic interest groups act as potential competitors in influencing the government’s resource allocation decisions. The interest group landscape in Switzerland is dominated by a handful of cohesive industry organizations organized along sectoral lines, including the Bauernverband (the Swiss Farmer’s Union) and the Gewerbeverband, an association for small and medium-sized enterprises oriented toward the domestic market.17 The most powerful interest organization in the foreign economic policy arena has long been the umbrella organization for the export-oriented business sector (Katzenstein 1984), Economiesuisse, which shelters firms in such pivotal industries as banking, insurance, pharmaceuticals, watchmaking, and telecommunications under its roof (Economiesuisse 2006). Economiesuisse, or the Vorort as it was known until 2000, is politically active across a broad spectrum of policy fields, including education policy, economic and monetary policy, fiscal policy, energy policy, environmental policy, and competition policy, and its importance in shaping policy is widely recognized. In a study of influence in the Swiss political system that drew on reputational assessments of the power of various political actors, Kriesi (1982) found that the Vorort was the most powerful political actor measured by the number of issues where the elites surveyed considered an actor to have decisive influence. Kriesi’s study indicated that political actors believed that the Vorort was more influential than the Federal Council (the executive) and the parliament. The positions of Economiesuisse on aid policy have focused on the link between aid and export promotion and on the relationship between aid expenditures and the maintenance of sound public finances. With respect to export promotion, one of Economiesuisse’s key concerns has been maintaining an export risk guarantee mechanism to cushion exporting firms from exchange rate volatility or political difficulties in the destination country that may prevent them from collecting adequate payments for their goods. In the early 1980s, Economiesuisse lobbied against a proposal that would have required the export risk guarantee program to take the fundamental principles of development assistance policy into consideration when deciding on grants (Schweizerischer Handels und Industrie Verein [SHIV] 1981). Arguing that such a proposal would dilute the intended focus of the credit program on preserving jobs within Switzerland, the Vorort was satisfied with the provision that development policy guidelines would apply only to decisions related to export credits to poorer developing countries, which were not major export destinations. The export industry association has also recognized that developing economies have great potential as growing markets to absorb exports. However, for Economiesuisse, the onus for building capacity within these economies to make them more active participants in the international trading system lies primarily

Aid politics in Switzerland 89 with regimes in developing countries themselves. Economiesuisse has suggested that development policy should consciously reflect the consideration that aid by itself is not a panacea for resolving problems of economic underdevelopment. In its 1984 policy yearbook, the organization included the following lament: “That barriers to aid effectiveness can lie in the internal organization of a country and in its economic policy is today almost a triviality, but it is not sufficiently recognized in official development policy” (SHIV 1984: 59, author’s translation). This statement reflects the organization’s general preference for supporting a liberal market economy and the rule of law, conditions needed to make countries attractive destinations for foreign direct investment, and signals its support for considering good governance as a main criterion for making aid allocation decisions. One other leading concern of Economiesuisse that informs its view of aid policy relates to its promotion of the sound management of public finances. For exportoriented industries, limiting budgetary deficits and exercising spending restraint are considered a high priority because a restrained posture underpins monetary stability (SHIV 1981). At the same time, public spending increases can also create pressures for increased taxation, and Economiesuisse has consistently sought to minimize the tax burden on the firms it represents. Economiesuisse thus views the question of how much aid Switzerland should provide through the lens of limiting growth in public expenditures. In a paper written to inform the Swiss position on development financing prior to the 2002 Monterrey Conference, Economiesuisse clearly articulated the link between aid outlays and the state of public finances, noting that aid “cannot be separated from the distributional struggle over scarce public resources. In other words, development aid cannot by itself make demands to be exempted from cutbacks that impose higher-level fiscal exigencies” (Economiesuisse 2002: 3, author’s translation). The statement challenges the practice of setting aid targets using the aid-to-GNP ratio and fixing these targets over a period of several years. Aid is not a priority policy area for Economiesuisse, and hence the organization believes that the aid budget should not be accorded automatic increases without consideration for the overall state of the national economy and the national budget. Furthermore, the organization has considered recent international calls for substantial increases in development financing, both through development assistance and innovative financing sources such as global taxes, to be impractical and ineffectual.18 Although the concern that Economiesuisse has expressed in keeping aid expenditures down as a means of controlling government spending in general has been present in the organization’s policy statements at least since the beginning of the 1980s, it assumed a more publicly active role in the aid arena only relatively recently, especially in conjunction with international conferences on development financing.19 However, due to the weight of the organization in the domestic political economy, even indirect engagement on aid issues from Economiesuisse likely carries consequences for aid prospects. As noted above, Economiesuisse’s main demand with respect to aid has been to limit the expansion of this part of the federal budget, and the interest organization thus represents the primary societal

90 Aid politics in Switzerland opponent of the NGO community. The opposition of business interests to aid and the unified position of the export-oriented business community act as forces limiting Switzerland’s aid commitments.

Interest group access to the policymaking process The ability for certain societal actors to counter the influence of others is shaped by the qualities of the institutional setting that determine how these actors are represented within a political system. Analyzing patterns of interest organization and interest representation has been a focal point of research on the Swiss political economy, and the nature of interest representation is a key element in the classification of Switzerland as a consociational democracy (Konkordanzdemokratie) or as a liberal corporatist system (Lembruch 1979, 1993; Katzenstein 1984; Lijphart 1999). Both labels refer to the accommodation of interest associations in a policymaking process characterized by regular bargaining among interest groups. Although there is regular interaction between interest groups and governmental actors in the aid arena, aid policymaking departs from the general pattern described in studies of corporatism where negotiation between societal actors is a defining trait, since there is little formal concertation among groups with opposing interests in this issue area. In attempting to influence aid policy, interest groups have multiple channels of access to exploit, however, including direct participation in policymaking through formal consultation procedures and direct contact with the Federal Administration and parliamentarians. Societal interest groups in Switzerland are allowed to formally participate in the preparation of legislation before it is presented for parliamentary approval via the Vernehmlassung procedure, also known as the pre-parliamentary consultation procedure (Klöti et al. 2004). This procedure allows interest groups as well as the cantons to present a written commentary on the content of the administration’s policy proposals within a set time period. Although this procedure can be understood as a means of assuring open access to the policymaking process, the relative power of concerned interests clearly shapes the prospects that their positions on a given proposal will be incorporated into revisions. This is because the procedure can be viewed either as a means of demonstrating to the parliament that a proposal is responsive to societal concerns or as a means of cushioning the Federal Administration from a threat of a referendum that may arise if it pursues policies that societal interests oppose (Armidgeon 2001a; Linder 2005). The referendum, an instrument of direct democracy, can also provide an avenue for societal interests to shape policy outcomes. However, organizations that can mobilize resources more easily to collect required signatures from the general public and to carry out a campaign are more likely to be able to challenge the government through this channel. Linder (2005) notes that collecting signatures for a referendum might itself cost between 200,000 and 600,000 Swiss francs (roughly $160,000 to $480,000); winning public votes likely requires an even greater investment.20 Interest groups can also collect signatures to present a petition to the government without necessarily calling for a referendum. For example, in

Aid politics in Switzerland 91 1990 the Swiss Coalition of Development Organizations spearheaded a petition campaign that proposed that Switzerland should provide 700 million Swiss francs in conjunction with the 700th anniversary of the Confederation in 1991. NGOs succeeded in collecting some 250,000 signatures of support (Arbeitsgemeinschaft 1990). Though the administration and parliament are obligated only to take petition initiatives into consideration, enough signatures may offer a strong incentive for governmental actors to respond favorably to the concerns expressed. Another formal channel of access that societal actors have to the policymaking process is via representation on the Advisory Committee on International Development Cooperation. As defined in the ordinance dating to 1977 specifying how the 1976 development law would be implemented, this committee’s general responsibilities include advising the Federal Administration on international development issues and examining the goals, priorities, and overall conception of Swiss development policy. The committee, whose members are selected by the Foreign Affairs and Economic Affairs ministries, can also submit proposals to the administration (Conseil Fédéral 1977). The membership of the committee includes representatives from development NGOs, private industry, the media, and academia, as well as parliamentarians representing the main political parties.21 In practice, the committee functions as a sounding board enabling the administration to take potentially divergent viewpoints into consideration in the early stages of policy development. The broad representation of societal and governmental actors on the committee gives the administration an advantage in its interactions with the committee. As one member of the Advisory Committee noted: “The administration is naturally several steps ahead of most of the committee members, the lead is with them; there are not a lot of committee members that are in the field of development policy in their daily activities.” 22 The generalist orientation of this committee also allows members from the development NGO community to play a more prominent role. While the advisory committee offers NGOs and economic interests an institutionalized forum for expressing their views, it also meets infrequently (four times annually) and has no formal authority in the decision-making process. Thus interest groups need to use other avenues in order to leave a mark on aid decisions. Interest groups also have recourse to more informal channels of interaction with governmental actors. By virtue of its size and economic importance, Economiesuisse has a wide network of contacts across the government and in the parliament, including with the Foreign Affairs Ministry where the greatest responsibility for development aid resides.23 However, because aid policy is not a high priority area for the organization, the interactions between Economiesuisse and the departments in the administration responsible for determining the substance of development policy are more limited than in other policy fields. In the aid system, the Economic Cooperation and Development Division of the State Secretariat for Economic Affairs (SECO) is the main interlocutor for Swiss business interests, while the business community interacts with the SDC more intermittently and does not actively seek to shape the content of policy formulated within the SDC.24

92 Aid politics in Switzerland In contrast, the SDC is the most important contact point for development NGOs within the Federal Administration. One main conduit for NGO interaction is the NGO section in the SDC’s bilateral development cooperation division, which negotiates the funding agreements for NGO projects and promotes issues of concern to the NGO community within the SDC.25 NGOs have historically had a close relationship with the SDC, in part because the agency’s work built on a legacy of NGO development work and partly because the SDC did not have the capacity to implement all of the resources it was allocated on its own.26 This history of collaboration has meant that the policy orientations of the SDC and Swiss NGOs have been similar and that the dialogue between the agency and NGOs has been based around information exchange for mutual benefit. For the SDC, a policy dialogue with NGOs offers a means of building support for the agency in the broader political system, as the SDC is dependent on the NGO community to serve as a societal advocate for its work vis-à-vis the parliament in particular.27 For NGOs, collaboration with the SDC carries the benefit of obtaining access to proposals before they are presented to the parliament and having an opportunity to comment on policy developments at an early stage.28 If NGOs have good access to divisions within the SDC, there are also regular contacts at higher levels within the administration. For instance, Alliance Sud has organized semi-annual meetings between the foreign affairs minister, effectively the representative of the SDC within the seven-member executive, and representatives from the NGO community, including both the heads of Alliance Sud’s member organizations and leaders from other major development NGOs.29 While the contacts between NGOs and other government departments are not as extensive as is the case with the SDC, NGOs also maintain a dialogue with SECO and the Finance Ministry. Interest organizations can also attempt to influence policy through their contacts with parliamentarians. Because the Swiss parliament is a so-called militia parliament, where parliamentarians do not meet continuously throughout the year and are expected to maintain an occupation outside of government, they may be especially dependent on interest groups for information about specific policy questions. Moreover, parliamentarians may themselves have affiliations with particular interest associations and serve as de facto representatives of these groups within the parliament (Baeriswyl 2005). This multi-faceted character of parliamentary representation has been viewed as a means of giving interest groups inordinate influence in the Swiss political system (Tschäni 1983). Development NGOs may also benefit from this practice, since some members of parliament sit on the boards of NGOs and hence provide a direct link between the organizations and the parliament.30 To leverage influence within the parliament, NGOs rely on the small number of parliamentarians who take an active interest in aid issues to advance their positions within the legislature. To this end, Alliance Sud organizes an informal working group of parliamentarians that meets at the beginning of the quarterly parliamentary sessions and offers a forum for dialogue between these members of parliament, the NGOs, and representatives from relevant federal departments. An

Aid politics in Switzerland 93 estimated 10 to 20 parliamentarians take part in these informal meetings.31 This group provides a natural entry point for the NGO coalition in the parliamentary process, though obtaining support for its political agenda ultimately requires backing from a wider parliamentary coalition. If development NGOs have a high level of access to parts of the administration and certain parliamentarians, these reliable access points represent only a subset of the actors with influence over aid choices. Chapter 2 identified the level of NGO access to the policymaking process as a factor that could influence the ability of NGOs to express their policy demands, given that the availability of channels of access to the policymaking process might offset natural resource disadvantages of NGOs in any political system. It is thus useful to consider whether the nature of access to the aid policy process provides NGOs with any advantages over interest group competitors. The Advisory Committee on International Development Cooperation offers NGOs one entry point into the policymaking system, placing them on a roughly equal footing with other interest organizations represented in the consultative body. By itself, however, the advisory committee has relatively little weight in the policy system overall and as a consequence this organ does not secure NGOs inordinate influence. Through the Vernehmlassung procedure and through the right to present petitions to the government, NGOs have institutionalized means of access that provide extra pressure points outside of regular lobbying channels, which may give NGOs an added advantage. Finally, the privileged nature of the relationships between Swiss NGOs and the SDC provides NGOs with a governmental ally in efforts to increase the size of the aid budget and offers NGOs an ability to directly shape the content of policy formulated within the SDC. On balance, the nature of NGO access to the policymaking system should enhance the ability of NGOs to advance their policy demands.

The distribution of authority in the aid arena The second key dimension of the institutional setting that this book identifies as a determinant of aid choices is the level of centralization in the policymaking system. On this count, Switzerland’s political institutions likely inhibit growth in aid funding, since authority over aid decisions is distributed more widely than, for example, in Denmark. Switzerland’s political system has been described as labyrinthine because the country possesses a combination of seemingly unusual institutions, including a collegial executive and a permanent coalition government (Lane 2001). The Swiss political system can be considered to be more fragmented than the unitary parliamentary democracies of northern Europe along three dimensions: the independence of the executive from the legislature, the nonhierarchical character of the executive, and the strong system of federalism. The first two elements of Switzerland’s institutional setting are the most relevant to the study of aid policymaking and will be discussed in detail below. The primary responsibility for the formulation of aid policy guidelines as well as the selection of geographical and sectoral priorities for aid allocations rests with

94 Aid politics in Switzerland the Federal Administration. The administration is presided over by a sevenmember executive known as the Federal Council, whose members are elected individually to four-year terms by the parliament. The members are not vulnerable to a no-confidence vote once elected, assuring a degree of independence between the executive and the legislature (Klöti et al. 2004). To ensure that the composition of the executive reflects the balance of political forces in Switzerland, the so-called formule magique (magic formula) guides the selection of members of the Federal Council, as two representatives from each of the Social Democratic, Radical Liberal, and Christian Democratic parties were traditionally granted a position alongside a single representative from the Swiss People’s Party (Klöti et al. 2004). This longstanding formula was modified when the Swiss People’s Party received an additional seat on the Council in the aftermath of the 2003 elections at the expense of the Christian Democrats (Church 2004). Each member of the Council heads a government ministry.32 Although the Federal Council is a collegial body that in principle strives for consensus-based decisions (Klöti et al. 2004), decisionmaking within the executive essentially requires agreement among the majority. Hence, decisions can be made with the assent of four of seven ministers, or three of four in meetings where the minimum number of ministers is present (Linder 2005). The diffusion of authority within the executive can act as a constraint on individual ministries, which must ensure that their policy proposals and budgetary requests are acceptable to other ministries before these requests are submitted for parliamentary approval. An ordinance dating to 1977 provides the framework for the division of executive authority in the aid sphere. This ordinance identified two departments, the Swiss Agency for Development and Cooperation (SDC) and the State Secretariat for Economic Affairs (SECO), as jointly responsible for the formulation of the overall guidelines of Swiss aid policy, the selection of areas of intervention, and the management of the aid program (Conseil Fédéral 1977).33 The SDC has been the leading agency in terms of the resources it manages. In 2005, 54 percent of bilateral aid and 85 percent of multilateral aid were administered by the SDC, accounting for 60 percent of the total aid program, while SECO managed around 24 percent of the overall aid budget (SDC/SECO 2006).34 Although it remains the lead development agency, the share of aid resources managed by the SDC has declined over time: in 1995 the agency oversaw 80 percent of Swiss aid and in 2000 that figure had declined to 75 percent (OECD 1996b, 2001c). Both the SDC and SECO are departments nestled inside ministries: the SDC resides in the Department of Foreign Affairs, while SECO is part of the Department of Economic Affairs. In spite of their status as subsidiary agencies, however, both the SDC and SECO are considered to be powerful units within their respective ministries.35 The power of the SDC within the Foreign Affairs Department is attributable in part to the large volume of the department’s budget that it administers (Goetschel et al. 2002). The size of the SDC within Foreign Affairs has provided the agency with a degree of independence, and its policy orientation is also distinct from the larger department, as the SDC follows a mandate of serving developing countries’

Aid politics in Switzerland 95 needs, while Foreign Affairs has a mandate of serving Swiss interests abroad.36 As mentioned above, the SDC’s outlook coheres with the preferences of the development NGO community. Its main thematic areas of intervention include health, education, water, and rural development. In the introduction to its 2003 message to the parliament detailing proposed programmatic emphases, the SDC outlined its view of poverty reduction: “Poverty reduction efforts must comprise political-institutional frameworks, aspects of social development such as education and health along with the availability and distribution of resources” (DEZA 2003: 4626, author’s translation). Contributing to long-term development processes by adapting interventions to local conditions and aiming to ensure that aid is complementary to efforts undertaken by recipient governments and local populations have represented key goals of the SDC’s work (DEZA 1987). SECO, the other main aid agency, also emphasizes poverty reduction objectives as a core motivation for its work, though it interprets pro-poor policy through a lens linking poverty reduction to macroeconomic stability, trade and investment promotion, infrastructure development, and private sector development in general (SECO 2006).37 This economic policy focus fits with the broader mandates of the department in which the agency is located, which include responsibilities for domestic economic development policy, labor market policy, and foreign trade policy. In focusing on improving the macroeconomic framework for development and promoting the better integration of developing economies in the international trading system and global financial markets, SECO favors development instruments such as general budgetary support, debt relief, financing small and mediumsized enterprises, and public–private partnerships. Its economic policy orientation and emphasis on these instruments shape SECO’s preferences regarding geographical aid allocation.38 As a consequence, the geographical priorities of the SDC and SECO do not always overlap. In 2004, for instance, the SDC and SECO had 7 concentration countries in the Global South in common (Bolivia, Burkina Faso, India, Mozambique, Nicaragua, Peru, and Vietnam), while 10 of the SDC’s 17 priority countries and 8 of SECO’s 15 priority countries were not priorities for the other actor (OECD 2005b). Although there are differences between the SDC and SECO with respect to their preferred areas of concentration, there is at the same time regular coordination between the two agencies to promote consensus around overall strategic orientations and to facilitate cooperation at the operational level (OECD 2005b). The two agencies also share the common goal of increasing the overall size of the aid budget.39 The division of aid responsibilities across these two ministries is considered to be an advantage in the budgetary process, since two of the seven members of the Federal Council should be naturally supportive of maintaining aid funding (Gerster 2006).40 However, this also means that five of seven members of the collegial executive can potentially counter demands for aid increases. To fund their activities, the SDC and SECO prepare policy guidebooks known as messages, which are presented to the parliament every five years to obtain approval for the framework credits providing the financial parameters for development operations (SECO 2002; DEZA 2003). This multi-year budgetary planning

96 Aid politics in Switzerland process is considered advantageous from a development perspective because it increases the predictability of aid flows to recipients and is an asset in implementing long-term projects.41 Even with the approval of framework credits, however, the aid budget is subject to reevaluation on a yearly basis alongside other public expenditures. Parliamentary involvement in aid policy is limited primarily to the approval of the aid budget. The Swiss parliament, known as the Federal Assembly, is a bicameral body where authority is shared equally between the two chambers. One chamber, the National Council, is elected through proportional representation, while representatives sitting in the other chamber, the Council of States, win seats through majoritarian elections organized by canton (Kriesi 2001). One feature of the Swiss parliament is that it is in theory a semi-professional body, with both houses holding formal sessions for a total of only twelve weeks per year, distributed across four sessions (Klöti et al. 2004). Though this militia system has in practice given way to a more professionalized parliament due to an increasing workload for parliamentarians in committees that meet outside of the quarterly sessions (Kriesi 2001; Linder 2005), the lack of permanent administrative support and the time constraints imposed by the militia system place parliamentarians at an informational disadvantage on policy questions where they do not have prior experience. This informational disadvantage can be beneficial for interest groups attempting to shape the policy positions of legislators. Beyond its budgetary authority, the parliament also has surveillance powers. The foreign affairs committees in each chamber oversee the development work of the SDC and SECO. This surveillance capacity is not regarded as a strong constraint on the administration, since the aid agencies have control over the selection of recipient countries and the design of the aid program, and substantive policy discussions are largely limited to the period surrounding the presentation of each five-year plan. Parliamentary interest in aid policy is most keen in relation to programs in countries with high visibility on the international political agenda, such as North Korea, Cuba, or Iraq, and the administration must respond to questions from parliamentarians on these sensitive areas of intervention.42 The division of authority among governmental actors in the aid arena can be summarized as follows. Two agencies, the SDC and SECO, share responsibility for formulating the content of aid policy and determining Switzerland’s geographical and sectoral priorities. Of these two agencies, the SDC, oriented toward social development concerns, historically controlled the largest share of the aid budget, while the smaller agency SECO emphasized the importance of supporting improvements in macroeconomic frameworks and investments in private sector development. These agencies, both powerful administrative units in their respective ministries, shaped the content of the aid program with limited interference from other governmental actors. However, the ability of both agencies to elevate aid as a budgetary priority at the national level has been constrained by other governmental actors. These constraints come from the collegial character of the Swiss executive and from the need to gain parliamentary approval for the aid budget. The clear division between the legislature and the executive and shared

Aid politics in Switzerland 97 decision-making authority across executive agencies create a policymaking system with a low level of centralization. In the Swiss aid policymaking system, a distinction can be drawn between the dispersion of authority with respect to the formulation of policy content and with respect to aid budgeting. As noted above, the determination of geographical and sectoral priorities is a process that has typically revolved around the two lead aid agencies, the SDC and SECO, with limited interference from other governmental actors. As Chapter 2 suggested, when development agencies have greater authority in aid policy formulation, a stronger poverty reduction orientation can be expected. The centrality of the aid agencies in determining policy content has indeed produced a strong poverty focus at the level of aid programming; however, these agencies face more direct competition with other bureaucracies in the budgeting process. This distinction between policymaking dynamics with reference to the geographical and sectoral concentration of aid and the dynamics of the budgeting process explains why Switzerland’s aid program has historically had a strong poverty orientation without necessarily having high overall aid funding levels.

The evolution of policy choices From 1980 to 2005, Switzerland incrementally increased its aid expenditures, moving from an aid-to-GNI ratio of 0.24 percent to 0.44 percent. This outcome reflects the constant pressure applied on the government and parliament by Swiss development NGOs to maintain aid commitments and the aid administration’s ability to defend the aid budget in the face of economic constraints. Although Switzerland was among the world’s wealthiest countries between 1980 and 2005—its average per capita GDP was $31,653—it also had to deal with domestic economic stagnation during this period.43 As a consequence, debates about aid levels have consistently been tied to concerns about the health of the Swiss economy and public finances. In 1980, the Swiss aid program was still young. Only four years had passed since the legal basis and organizational framework for development cooperation had been formalized. Following a short period of limited criticism of the aid program, the work of the SDC came under fire from the private sector and the parliament in 1980, in particular because of a proposal to set up a new organization (Intercooperation) to serve as an aid implementing agent. A central concern voiced by the SDC’s critics at this time was that the new organization, operated by development NGOs, would compete with technical consulting firms and would limit the role of Swiss firms in the aid program (Forster 1982). Though the conflict was ultimately resolved by clarifying the contractual obligations of the new organization vis-à-vis the Federation (Arbeitsgemeinschaft 1981), this debate highlighted the opposition that existed within the business community toward aid that did not provide a direct return to Swiss firms. Although Switzerland emerged from the economic crises of the 1970s in good shape and could be considered an economic success story in relation to other advanced industrial economies in the early 1980s given its low inflation and

98 Aid politics in Switzerland unemployment rates (Danthine et al. 1987), its restrictive fiscal policy made the aid budget vulnerable to cutbacks.44 In 1981, in response to persistent budget deficits, the parliament proposed a round of budgetary belt-tightening across all departments in the Federal Administration, calling for each department to reduce expenditures by 10 percent in the coming year. Development cooperation expenditures would have to be reduced by an additional 8 percent, or 18 percent in total (IUED 1983). Challenging the disproportionate reductions in the aid budget, the Swiss Coalition of Development Organizations, by then close to a decade old, noted that “such a reduction is shameful for Switzerland, which continues to be the world’s richest country. It occurs at the expense of the voiceless and the poor” (Arbeitsgemeinschaft 1981, author’s translation). Faced with the continuing prospect of aid reductions, the Coalition launched a petition campaign in 1983 to urge the parliament to uphold commitments that the Federal Council had made at the beginning of the decade to increase Swiss aid spending. Acknowledging that the state of public finances required restraint in expenditures, the Coalition nonetheless argued that the global economic downturn affecting the Swiss economy was more detrimental for developing countries dependent on natural resource exports due to falling demand and that their situation justified aid increases rather than reductions (Arbeitsgemeinschaft 1983). The NGO petition campaign collected more than 200,000 signatures over a seven-month period. The effort was at least a partial success, since the government agreed to increase aid in the following budget cycle (Arbeitsgemeinschaft 1984).45 Business interests benefited from aid increases in this period as well, as funding for the commercial and economic instruments managed by SECO also grew (IUED 1985). The growth in private sector instruments raised concerns among NGOs about the quality of Swiss aid, especially regarding the use of mixed credits. In a letter to members of the Commission for Foreign Economic Policy in the Council of States, the Coalition indicated that “Not only are mixed credits out of the question for the poorest countries, but evaluations have also shown that they are first and foremost suited for deliveries in the areas of industry and economic infrastructure . . . but not in agricultural or social sectors” (Arbeitsgemeinschaft 1986, author’s translation). NGOs were more receptive to the use of other kinds of economic instruments such as balance of payments support, however. In 1987 the aid administration submitted a report to the parliament on Switzerland’s development cooperation experiences from 1976 to 1985 (DEZA 1987). The report underlined the challenges that Switzerland faced as a small donor in achieving development objectives, due not only to the imbalance between the size of its aid program and the scope of the challenges facing developing nations, but also to the sometimes unfavorable political, economic, or institutional frameworks prevailing in recipient countries that hampered aid effectiveness. To increase aid effectiveness, the report argued for a greater concentration of resources in fewer program countries. At the same time, the aid agencies behind the report made a plea for increasing the size of the aid program, noting that “in light of Switzerland’s strong external interdependence, which is often highlighted and which reflects a liberal foreign trading order, one can ask whether

Aid politics in Switzerland 99 Switzerland’s public engagement corresponds to its own interests in international relations” (DEZA 1987: 10, author’s translation). In presenting this review of achievements and remaining challenges in the development field, the SDC and SECO proposed elevating support for aid. Through the late 1980s, development NGOs lamented the slow progression in the aid budget. In a letter addressed to the Federal Administration from May 1988, the Coalition of Swiss development NGOs called for sharp increases in aid expenditures in the lead-up to the 700th anniversary in 1991 of the Swiss Confederation’s founding, which would serve “to signal to the world that Switzerland, as the richest industrialized country, is ready to accept shared responsibility for less affluent parts of the world” (Arbeitsgemeinschaft 1988, author’s translation). The administration’s response to this letter expressed sympathy for the position while linking restraint in the aid budget to overall budgetary constraints: If the Federal Council has not thought it possible to realize a more rapid expansion of aid expenditures to better respond to the urgent needs it is aware of, it is due to the general financial perspectives of the Confederation and the absolute necessity of maintaining a satisfactory equilibrium in this domain. (Arbeitsgemeinschaft 1988, author’s translation)46 Fiscal prudence again served as a barrier to aid increases. The response from the SDC and SECO to the NGO letter highlights that while these agencies might share the NGOs’ desires to increase aid funding, their position within a government concerned with limiting expenditures placed a damper on their ability to realize that goal. As the decade concluded, though, the aid budget did experience steady growth in real terms and edged up slightly as a percentage of national income, a trend facilitated by a long period of economic expansion (OECD 1990). In the aftermath of the debt crisis in the mid-1980s, two leading development NGOs affiliated with the Protestant and Catholic churches (Bread for All and the Swiss Catholic Lenten Fund) paved the way for a major initiative that sought to relieve the debts of highly indebted poor countries and develop a new framework for managing debt cancellation to ensure that the effort would benefit poor populations within these countries (Bauer 1988). The NGO Coalition launched a petition campaign late in 1989 and ultimately gathered around 250,000 signatures in support of a proposal to make 700 million Swiss francs available for debt relief in conjunction with the Swiss Confederation’s 700 year anniversary. As the NGOs had intended, the petition’s proposals were placed on the parliamentary agenda for 1991 (IUED 1992). This effort resulted in a debt forgiveness program based on a commitment of 400 million francs from the Confederation that provided a model for international debt relief programs later in the decade.47 One innovative aspect of the program was that it called for collaboration among three key actors: SECO, the SDC, and the NGO community. SECO was responsible for managing the first phase of debt cancellation relating to the purchase of developing country debts from Swiss creditors. The SDC was responsible for elaborating strategies to ensure

100 Aid politics in Switzerland that a portion of the funds offset by debt cancellation would be directed toward poverty reduction efforts. Finally, the NGO community was granted a formalized consultative function (SECO et al. 2001). The large share of aid directed to debt relief operations in the 1990s (see Figure 4.5) can be traced directly to the initiative taken by development NGOs at the beginning of that decade. The financial resource base of the NGO community increased at the start of the decade as well (see Figure 4.6), although the petition campaign began before these increases were registered. The availability of the petition as a means of influence more than a change in the NGO resource base enabled NGOs to effectively make this demand on the Swiss government. The emergence of new democracies and market economies in Eastern Europe and the end of the Cold War created an opening for reorientations in Swiss foreign policy. Switzerland approved an economic assistance package for Eastern European countries for the first time in 1990, which was followed up in 1991 with a more extensive framework credit for European transition countries. Importantly, this funding was governed by a principle of additionality, whereby the funds allocated to European countries would not come at the expense of aid to developing nations (IUED 1993). Switzerland also strengthened its multilateral engagement during this period, notably by becoming a member of the Bretton Woods institutions in 1992, following a referendum vote that May. Though Switzerland had long maintained an association with these institutions and provided co-financing for World Bank projects, its reticence in joining could be attributed to a concern over the monetary policy implications of IMF membership in particular (Forster 1992; Languetin 1992). Entry into these institutions carried a high price tag and funding for multilateral development agencies increased from 244 million Swiss francs in 1991 to 430 million in 1992, providing for an exceptional increase in the multilateral aid share in addition to an overall aid increase (IUED 1994). This exceptional funding increase was notable because the decision to join the Bretton Woods institutions was viewed favorably by the outwardly-oriented business community, which has long preferred limited aid spending. Summarizing the interests that motivated the move toward Swiss IMF and World Bank membership, a governmental report indicated that “an important place is given to the interests that Swiss export-oriented industries gain from member status: the IMF and World Bank represent a collective good (framework conditions for international trade) that benefits all countries, and especially Switzerland as an open economy dependent on exports” (Organe Parlementaire de Contrôle 2003: 17, author’s translation). One advantage for Switzerland in joining at this time was that it could enter with a group of Eastern European and former Soviet countries and thus obtain a position on both organizations’ executive boards, providing greater leverage in the decision-making process. At the same time, membership in the Bretton Woods institutions had mixed support from the NGO community. Within the NGO Coalition, the Swiss Catholic Lenten Fund, Helvetas, and Caritas supported entry, while Bread for All was opposed and Swissaid opted not to take a position on the issue (Arbeitsgemeinschaft 1992). A number of smaller NGOs

Aid politics in Switzerland 101 also took a critical stance toward IMF and World Bank entry (Dannecker 1994). This episode supports the proposition that aid commitments are higher when there is greater support from the business community. The additional development funding linked to IMF and World Bank entry is all the more remarkable because it came at a time of growing domestic economic strain. In 1991, the country was faced with a recession and growing budgetary deficits, which provoked renewed stringency in public expenditures (OECD 1992b). NGOs had sought to prevent budgetary cutbacks directed at the aid program and expressed concern about the consequences of new orientations in Swiss foreign policy for development assistance (Arbeitsgemeinschaft 1991). As the NGO community fought to limit reductions to traditional priority areas within the bilateral aid program, the aid administration was in the process of formulating a new strategic framework for development policy to address the challenges presented by the changing international context. This process, involving a wider interministerial dialogue on development issues, culminated in the Federal Council’s release of the North–South Guidelines in 1994 (OECD 1996b). The central theme in this policy document was that Switzerland needed to adopt a more holistic view of its development policy. The document highlighted the multidimensional character of relations with developing nations and suggested that effectively working toward the resolution of problems in developing countries required a greater coherence across policy dimensions such as trade policy, security policy, and development assistance policy. In part, the guidelines reaffirmed existing orientations in aid policy, emphasizing the importance of investments in the agricultural sector, for instance (SDC 1994). However, in calling for a broader framework for understanding Swiss policy toward the developing world, the document also pointed to new areas of emphasis that might compete with traditional development investments, including increased participation in international peace promotion efforts. The guidelines also indicated that the government would seek to reach an aid target of 0.4 percent of GNP by the end of the 1990s. Increasing aid funding proved difficult, as budget deficits persisted and the economy experienced a slow recovery from recession (OECD 1995b). When the aid administration presented its proposal for a new framework credit in 1994, it encountered opposition within the Federal Council from the Ministry of Finance, which favored a budgetary request for the development assistance envelope 300 million Swiss francs below the figure requested by the Foreign Minister. 48 Though the National Council accepted the budget presented by the Federal Council, the Council of States voted for further reductions, setting a course for continued stagnancy in aid funding.49 The NGO community was not only critical of declining aid commitments, but also voiced concern about the insufficient degree of aid concentration, as departments outside of the SDC with responsibilities for aid resources did not adhere to the SDC’s principles of concentration (Arbeitsgemeinschaft 1994).50 In this period, humanitarian aid and aid to the former Yugoslavia increased as a result of concerns over refugee flows from the conflict-ridden region, placing pressure on funding to other regions in a context of overall sluggishness in aid financing (OECD 1996b).

102 Aid politics in Switzerland The introduction of new areas of emphasis such as linking aid to refugee policies had two related consequences. One was the declining centrality of the development-oriented components of the aid budget as a share of total aid funding and the concurrent diminution in the share of aid provided to the lowest income countries (see Figure 4.3). The second consequence of the expansion of policy priorities was to diminish the centrality of the SDC and SECO within the aid policy system. Though they remained the key bureaucratic actors in this domain, new themes in development cooperation opened the door for greater involvement of the Federal Office for Migration and the Federal Department of Defense and therefore increased the prospects for bureaucratic competition. Although Switzerland’s aid budget did not progress as a share of national income in the late 1990s, the fact that aid spending remained stable while the government attempted to rein in budget deficits through spending cuts across government departments could be regarded as a partial success for the aid program. The head of the SDC throughout the period, Walter Fust, was widely recognized as possessing a budgetary competence and personal lobbying network that helped to cushion his own agency from further reductions (Schneider 1999).51 For its part, the NGO community continued to demand aid increases and urged the government and the parliament to take steps to reach the 0.4 percent target that the Federal Council had committed to at the beginning of the decade. In appealing to the parliament in 2000 to make provisions in the budget for the coming legislative period to reach the target, the NGO Coalition emphasized the good reputation of the Swiss aid program. In a letter to parliamentarians, the Coalition noted: “experts around the world praise the high quality of the Swiss development cooperation program . . . But at the same time they criticize the insufficiency of funding, the gulf between quantity and quality. It is time to close this gap!” (Arbeitsgemeinschaft 2000, author’s translation). In spite of this pressure, however, mobilizing resources beyond existing funding levels remained a challenge. At the start of the new millennium, the pro-aid lobby saw renewed gains in backing from private contributors, as Figure 4.6 illustrates. However, the NGO community also began to face increasingly overt opposition from the exportoriented business sector. In the lead-up to the Monterrey Conference on development financing in March 2002, Economiesuisse elaborated a policy paper on funding for development that emphasized the positive contribution of private sector engagement in increasing the integration of developing nations in the world economy. Outlining the advantages that foreign direct investment could provide in increasing productivity and knowledge transfer, the paper indicated that “there is therefore no ‘poverty trap’ today that can only be breached by a massive increase in official development assistance” (Economiesuisse 2002, author’s translation). While the paper acknowledged the contribution that ODA could make toward the provision of public goods creating favorable framework conditions for trade and investment, the organization opposed the government’s target to reach an allocation of 0.4 percent of national income by 2010. As noted above, the business association believed that aid funding decisions should not be given a privileged

Aid politics in Switzerland 103 position by setting funding goals without reference to the overall state of the economy and budgetary constraints. Switzerland arrived at this target well ahead of 2010, though the NGO community and aid administration were not pleased with how this was achieved. To lower the risk of falling into a pattern of deficit spending, the parliament approved a debt containment rule in 2001, which imposed limits on spending to maintain a balanced federal budget (Kraan and Raffner 2005). As the framework credit for development assistance managed by the SDC came up for review in 2003, the aid administration confronted these constraints, and while the Federal Council approved a real increase in aid outlays, the budget’s rate of increase would make it difficult to climb toward 0.4 percent by the end of the decade.52 The parliament’s decision at the end of the year to agree to an increase in real terms only half as generous as the increase proposed by the Federal Council only made the prospect of attaining the target more difficult.53 The government’s solution to meeting the 0.4 percent target in the face of budgetary constraints was to include expenses related to housing asylum seekers and refugees within Switzerland as development assistance in 2004 (OECD 2005b), a move made possible by the lenient accounting standards tolerated by the DAC. Switzerland had previously been a champion of stricter reporting requirements within the DAC to ensure that only funding for development purposes was counted as assistance.54 As donor countries prepared to evaluate their contributions to achieving the Millennium Development Goals in 2005, Switzerland offered few signs of its willingness to increase aid funding. Having attained its 0.4 percent target, the government would postpone the reevaluation of aid targets until 2009 (Conseil Fédéral 2005).

Alternative explanations In Lumsdaine’s (1993) analysis of aid choices, Switzerland represents a deviant case because it is a state where the population at large displays a commitment to humanitarian values through generous private contributions to development organizations, while the government’s commitment to development is modest in international comparison. Lumsdaine suggests that this inconsistency may be attributable to Swiss skepticism toward centralized government and a tradition of avoiding foreign entanglements. This explanation is intuitively appealing given the importance of the cantons in the Swiss political system and the long tradition of neutrality in international affairs. However, the explanation undervalues the role of non-governmental development organizations as political actors. These organizations have for decades demanded that the central government increase aid in order to supplement the funds the organizations raise themselves to address development needs. However, in their attempts to increase the priority assigned to development at the national level, the aid constituency has faced opposition from other political actors who have sought to limit the expansion of the aid budget. The outwardly-oriented business sector in particular has been a strong advocate for exercising restraint in public expenditures and maintaining low levels

104 Aid politics in Switzerland of taxation. Competing societal priorities of this nature affecting aid policy are neglected in Lumsdaine’s classical treatment of aid politics. Could the quality of the Swiss welfare state regime offer an explanation for its aid choices? Esping-Andersen (1990) describes Switzerland’s welfare regime as one combining a high degree of liberalism with a moderate degree of universal welfare state properties. In their study of the link between welfare regime type and aid spending, Noël and Thérien (1995) find that Switzerland is an outlier, spending less on aid than it should given its score on the socialist welfare state measure, which they suggest may be accounted for by Switzerland’s position as a late developing welfare regime. The Swiss welfare state did develop later than in other advanced industrial countries (Ordlinger 1998), but recent research has indicated that its distinctiveness from other welfare state regimes in Europe is not as great as is sometimes assumed. Armidgeon (2001b) indicates that Switzerland approximates the continental European welfare state model due to its reliance on contributions rather than taxation for financing and its preference for benefits directed to traditional households where men are the primary income earners. Interestingly, the size of the Swiss welfare state has expanded considerably over the last several decades. As Lane and Maeland (2001) report, the size of the public sector in Switzerland grew to be the largest among OECD countries measured as a percentage of GDP, and its social expenditures have also increased substantially. In 1980, social expenditures amounted to 15 percent of Swiss GDP. By 1990 the figure had risen to 20 percent, and by 1998 Switzerland provided social spending equivalent to 28 percent of its GDP (OECD 2001b). The percentage of Swiss public expenditures devoted to social spending has also been the highest among DAC donors. From 1990 to 1998, Switzerland’s social expenditures accounted for between 60 and 75 percent of public expenditures, while in the donor community as a whole the average was around 50 percent throughout this period (OECD 2001b). Recent research on the Swiss welfare state suggests that it is generous, but not universalist or egalitarian in its orientation. In the aid policy sphere, just the opposite pattern seems to hold. Switzerland’s aid program might be considered egalitarian in nature given its poverty reduction focus, while its overall aid spending has been modest. Switzerland’s aid program is not simply a reflection of its domestic welfare regime. Another alternative explanation for aid choices is that they reflect the partisan composition of the government. It is also difficult to account for Swiss aid choices on the basis of partisan and electoral politics. The decentralized character of political organization and the semi-professional status of Swiss parliamentarians have helped to create a weak party system (Klöti et al. 2004). Switzerland’s political landscape has also been marked by a high degree of stability, with the parties represented in the permanent grand coalition in the Federal Council—the Social Democratic Party (SP), the Radical Liberal Party (FDP), the Christian Democratic Party (CVP), and the Swiss People’s Party (SVP)—constituting the nation’s main political forces. The balance of political power has historically been in the center of the political spectrum, the home of the FDP and the CVP, though recent elections produced notable gains for both the Social Democrats and the

Aid politics in Switzerland 105 Swiss People’s Party, suggesting an increasing level of polarization in Swiss politics (Church 1996, 2000, 2004). For more than 40 years, the magic formula provided for an unchanged balance of political power within the collegial executive, which meant that the policy orientation of the executive was not tied to the electoral fate of governing parties. The formula was finally called into question in 2003, following the electoral success of the far-right Swiss People’s Party and the declining fortunes of the centrist parties, leading to an additional seat for the SVP on the seven-member Federal Council (Church 2004). This readjustment marks an important shift in Swiss politics and might indeed have consequences for aid choices if centrist parties move toward the right in order to gain backing from the SVP’s supporters. However, for most of the period covered in this study, a stable balance of partisan power prevailed. It is notable that the three parties that held the most power in the 1980s and 1990s (SP, FDP, and CVP) all expressed support for development assistance targeting the needs of the poor. For the liberal FDP, a stalwart defender of an open international economy, taking responsibility for international development was linked to the recognition of global interdependence (PRD 1984). The Christian Democrats have expressed similar views. In a paper from 2000 outlining its positions on development assistance, the party suggested that “It is a moral duty to bear joint responsibility to alleviate hardship and to provide help where human survival is at risk” (CVP 2000, author’s translation). In spite of these proclamations in favor of development assistance, however, it is also clear that aid is a low priority issue area for parties across the political spectrum.

Summary Two key traits have characterized the Swiss aid program. On the one hand, it has maintained a strong poverty reduction focus by directing aid to the poorest countries, investing in the development needs of vulnerable populations, and providing assistance on highly favorable terms. On the other hand, Switzerland’s overall development assistance contributions have long been modest, often falling below the DAC average. A politically cohesive development NGO community with a strong basis in Swiss society has been an advocate both for increasing overall aid commitments and for ensuring that aid is targeted to the poor. The high level of coordination within the NGO community is manifest in the lobbying organization formed by the largest development NGOs to directly pressure the parliament and the administration to increase funding for global poverty reduction. Since Swiss NGOs are among the most resource-rich in the donor community and have a long history of coordinated political action at the national level, one might expect Swiss aid choices to reflect their preferences. While the analysis in this chapter suggests that NGOs have indeed brought pressure to bear on the government to increase aid and have worked to influence policy content, these victories for NGOs have fallen short of their goals for Swiss aid policy. In the struggle over scarce state resources, the organizational acumen of the NGO lobby has not been sufficient to overcome

106 Aid politics in Switzerland competition from other well-organized and resource-rich organizations operating at the national level. While the opposition from the internationally-oriented business community to increased aid was mostly indirect in the period studied, Switzerland’s leading business association, Economiesuisse, has long associated aid funding with the question of managing public finances and, as the mouthpiece for the exporters that help to maintain Switzerland’s high national income, its voice carries a great deal of weight in many political arenas. Over time the organization’s opposition to aid increases has become more direct, posing a clear challenge to the agenda promoted by development NGOs. The Swiss case therefore underlines the need to incorporate interest group competition into a framework for understanding aid choices. Interest organizations have opportunities to shape the policy positions of governmental actors in the Federal Administration and the parliament through formalized channels of access including advisory committee participation and the presentation of opinions through a pre-parliamentary consultation procedure. If these means of access and other contacts with parts of the Federal Administration are advantageous for NGOs, the need to actively lobby members of parliament in order to influence budgeting decisions creates a disadvantage for NGOs given the loosely organized and militia character of the parliament, which increases the number of targets for lobbying and places time constraints on legislators that may limit opportunities for interaction with development NGOs. In Switzerland, the dominant issue in aid advocacy has related to aid volumes rather than aid quality. The emphasis on volume is attributable to the fact that the SDC, the leading executive actor on aid policy, has had a great deal of autonomy in setting geographical and sectoral aid priorities and has pursued an agenda that is largely consistent with the development thinking prevalent in the NGO community. Although the SDC and its sister agency SECO are considered to be powerful political actors, the Swiss political system constrains their ability to demand increased aid resources. One constraint lies in the nature of the executive branch, where decision-making authority is shared among seven ministers. The parliament acts as an additional brake on increasing aid funding, and its role in aid policymaking has been tied primarily to its budgetary authority. This dispersion of authority at the governmental level along with opposition from business interests have limited the expansion of the aid budget in spite of NGO pressure and strong aid bureaucracies. Economic conditions have often shaped the opportunities and constraints facing Swiss aid advocates. A period of strong economic growth created favorable conditions for the maintenance of the aid budget in the late 1980s, while recurring budgetary deficits in the 1990s served to increase contention surrounding it. In discussing the economic conditions serving as a backdrop for aid politics, it is important to emphasize that Switzerland was one of the world’s richest countries throughout the period studied. The fiscal constraints limiting aid expenditures, rather than simply reflecting underlying structural conditions such as the overall performance of the economy, are themselves a product of policy choices. These choices highlight the consistency between government policy and the positions of

Aid politics in Switzerland 107 an export-oriented business sector concerned with monetary stability and limiting taxation. While it is natural for a government to be responsive to the demands of organizations representing a major source of government revenue and job creation, the success of the business community in pushing its agenda forward also underlines the challenges that NGOs, as relatively resource-poor organizations, face in serving as advocates for a poverty reduction agenda. Even with a cohesive and professional lobbying group in place, these organizations confront a political landscape where there is competition from interest organizations that can exercise much broader influence.

5

The long shadow of the past Aid politics in France

Unlike Denmark and Switzerland or other donors where aid programs emerged in response to political and economic opportunities and development needs in newly independent countries, French development assistance has much deeper roots. As a colonial power, France created a complex web of ties with the territories under its political control and the management of French relations with aid recipients has been strongly shaped by institutions pre-dating the independence of France’s colonies. The colonial connection is not the only distinctive aspect of France’s aid program. Among large donor countries, France has been a leader in terms of overall aid volume, allocating an average of 0.51 percent of its national income to aid between 1980 and 2005. The year 2000 marked a low point for aid contributions, with aid dropping to 0.3 percent of GNI or $4.1 billion (OECD 2007a), a figure representing an outlay of just under $70 for each French resident. As Figure 5.1 indicates, there has been considerable variation in French aid commitments through time: the aid budget rose throughout the 1980s, only to fall sharply after 1994 both in real terms and as a share of national income. The high aid commitments of the 1980s came during a period of economic stagnation. Facing recession and high unemployment, President François Mitterrand’s government undertook a series of reforms that included the imposition of fiscal austerity measures such as social expenditure cuts, the restructuring of pivotal industries, and decentralization in the public sector (Schmidt 1990; Blanchard and Muet 1993; Smith 1995). Why was development assistance, a policy area that should be particularly vulnerable in times of economic distress, seemingly insulated from the period’s economic pressures? Moreover, given its relatively high aid commitments in the 1980s, why did France undertake marked cutbacks in aid outlays after 1994? To answer these questions and to understand French aid choices between 1980 and 2005, it is necessary to examine the dynamics of aid policymaking in the executive branch, as aid policy, like other aspects of foreign policymaking, was marked by a concentration of executive decision-making authority. For successive French presidents, development policy served to cultivate often personalized political relationships with developing country leaders to further the diplomatic goal of maintaining France’s position as a major international power. Within the French bureaucracy, the Ministry of Foreign Affairs acted as a further

Aid politics in France 109 0.7 0.6 0.5 0.4

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Figure 5.1 Aid volume as a share of French GNI (1970-2005). After falling throughout the 1970s, France’s aid-to-GNI ratio climbed in the 1980s, and topped 0.6 percent between 1989 and 1994. French aid outlays then dropped sharply in the 1990s, reaching a low of 0.3 percent of GNI in 2000 before climbing again from 2001 onward. In real terms, French aid was stagnant in the 1970s, climbed steadily between 1981 and 1994, and dropped significantly after 1995. At the end of the period studied, the value of ODA recovered in real terms to approximate the high point reached in the early 1990s. Source: OECD. International Development Statistics Online.

support for a diplomatically-oriented aid program, while the heavy involvement of a powerful Finance Ministry in aid policymaking served to advance French commercial interests. In this policymaking landscape, the governmental actors whose organizational interests cohered most closely with the goal of promoting poverty reduction goals have been in a subordinate position to governmental actors favoring the use of aid for diplomatic and commercial objectives. Moreover, the French development NGO community had little influence in pushing aid commitments in a more pro-poor direction due to its limited resource base and political outsider status.

Overview of French aid choices Existing studies of aid provision often present France as an archetype of an egoistic donor and highlight several general trends. In their surveys of aid allocation patterns, Maizels and Nissanke (1984) report that France has given aid most generously to its former colonies and trading partners, while Schraeder et al. (1998) stress France’s preference for giving to francophone countries. Alesina and

110 Aid politics in France Dollar (2000) note that French aid flows have displayed a low level of responsiveness to recipient income and levels of democracy, and Neumayer (2003) indicates that, in comparison to other large donors, French aid is the least responsive to recipient needs measures such as quality of life indicators. Berthélemy (2006) similarly places France toward the bottom of the list ranking donors in terms of their egoism or altruism considering the relationship between aid and donor exports. France’s aid program has combined two key qualities: aid volumes have been generous in international comparison, while the content of aid policy has been oriented toward the fulfillment of diplomatic and commercial objectives, with developmental objectives occupying a subsidiary role. As Figure 5.2 illustrates, approximately 75 percent of French aid was allocated through bilateral channels between 1980 and 2005 on average.1 LDCs were the recipients of the largest share of aid by income category, serving as the destination for an average of just under 30 percent of bilateral flows (see Figure 5.3), a figure comparable to Swiss performance on this measure. At the same time, slightly less than 40 percent of French bilateral aid went to countries listed in the three highest income categories, including to French Overseas Departments and Territories (DOM-TOM) such as French Polynesia and New Caledonia.2 Geographically, France has privileged aid to the African continent: close to 50 percent of bilateral allocations were directed to sub-Saharan Africa. North Africa and the Middle East absorbed an additional 100 90 80 70 %

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Figure 5.2 Bilateral and multilateral assistance as a share of French aid (1980–2005). The bilateral share of French aid has been relatively stable through time, accounting for an average of 75 percent of aid outlays between 1980 and 2005. In 2001, the bilateral share of French aid dipped to a low point of 62 percent of total aid flows. Source: OECD. International Development Statistics Online.

Aid politics in France 111 100 90 80 70 %

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Figure 5.3 Share of French bilateral aid by income category (1980–2005). LDCs received the largest aid share, an average of 30 percent between 1980 and 2005. LICs received 15 percent on average, while LMICs received an average of 20 percent of aid flows. The large share to MADCTs represents funding to Overseas Departments and Territories, which were removed from the recipient list in 2000. Source: OECD. International Development Statistics Online.

15 percent of aid flows on average (see Figure 5.4).3 In contrast, Latin America, the Far East, and South and Central Asia have received more modest amounts of French aid. In its sectoral allocations, France has favored economic infrastructure development (see Figure 5.5). Though 25 percent of aid went toward economic infrastructure investments between 1980 and 2005, the share of bilateral flows allocated to this sector was especially high in the 1980s, representing an average of nearly 40 percent of aid flows between 1980 and 1994. During the same period, investments in agricultural development and social infrastructure and services were comparatively low, though aid to social sectors represented a growing share of the aid budget after 1994. Even after a sharp decline in economic infrastructure investments, economic instruments still loomed large in the aid program. Debt relief accounted for about a third of bilateral aid after 1998 (OECD 2007b). If these elements of the aid program are viewed together, French development assistance occupies a middle ground in terms of its poverty reduction orientation, since the overall volume of aid was relatively high (though it declined over time), the share of aid to LDCs and other low income countries represented a stable though not a majority share of bilateral aid, while commitments to social infrastructure and agricultural development have traditionally been more limited.4 The use of poverty reduction as an orienting development policy goal was only integrated into French aid programming relatively recently (OECD 2004). In a study evaluating the poverty focus of various European aid programs in the 1990s,

112 Aid politics in France 100 90 80 70 %

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Figure 5.4 Share of French bilateral aid by world region (1980–2005). Sub-Saharan Africa represented the main aid destination, receiving just under 50 percent of aid flows during this period on average. North Africa and the Middle East were also key aid destinations, receiving an average of 15 percent of aid, as was Oceania (11 percent on average), reflecting high transfers to French Polynesia and New Caledonia in particular. Source: OECD. International Development Statistics Online.

Cox and Healey (2000) note, for example, that France had not developed poverty reduction strategies for recipient countries and similarly had not introduced procedures to ensure that individual development projects incorporated a poverty reduction orientation. Since 2000, the importance of the concept of poverty reduction in development planning has increased, however.5 The July 2004 meeting of the Comité Interministériel de l’Aide au Développement (CICID), an interministerial committee charged with improving coordination among executive agencies with responsibilities in policy planning, reflected this changing orientation in calling for increased attention to the preparation of country-level strategies and multiyear sectoral programming to align aid contributions with international efforts to work toward the Millennium Development Goals and to improve the coherence of aid interventions with poverty reduction strategies formulated by recipient countries (CICID 2004). In comparison to other European publics, French popular support for development assistance has been among the lowest according to the Eurobarometer surveys conducted at regular intervals in the 1980s and 1990s (European Consortium for Agricultural Development 1984; European Cooperation and Solidarity 1988; INRA 1992, 1999). These polls point out that the French have tended to emphasize the need to address domestic problems or political problems within Europe before

Aid politics in France 113 100 90 80 70 %

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Figure 5.5 Share of French bilateral aid by sector (1980–2005). Aid for economic infrastructure was the largest share of bilateral aid allocated by sector between 1980 and 2005, accounting for 26 percent of aid flows. Between 1980 and 1993, aid for economic infrastructure averaged 38 percent of total outlays. In the same period, aid for social services and infrastructure was low (11 percent of bilateral aid on average). After 1994, the importance of investments in social services and infrastructure increased, to average 33 percent of bilateral aid between 1994 and 2005, while aid to economic infrastructure declined. Debt relief increased in importance in this period, accounting for an average of 34 percent of French bilateral aid between 1998 and 2005. Aid to the agricultural sector has been limited throughout the period, representing 7 percent of aid flows on average. Source: OECD. Sectoral Distribution of Bilateral Development Assistance by Purpose: Part I (Developing Countries). Volume 2007 release 01.

turning to international development issues to a larger degree than other donor publics (INRA 1992, 1999; Noël and Thérien 2002). Still, the French conform to other tendencies visible across the donor community: aiding poor countries is a low priority in relation to questions such as unemployment, energy security, and environmental protection, yet there is consistently majority support for providing aid. At the same time, the level of public knowledge about development questions is low. As an example, when individuals in France were asked in 2004 whether they had heard of the Millennium Development Goals, only 4 percent of respondents answered yes (European Commission 2005).

Development advocacy Prominent studies of the relationship between state and society in the foreign and domestic economic policy arenas in France stress the weakness of societal actors and the dominance of the state bureaucracy in policy formulation (Katzenstein 1978; Schmidt 1996). While the character of societal organization likely varies across issue areas (Keeler 1987), this general characterization holds some truth in

114 Aid politics in France the development policy arena.6 The French development NGO community has limited financial resources and constitutes a loosely coordinated national political force. As a result, the pressure exerted on governmental actors from the NGO sector has not been strong. Table 5.1 provides an overview of the major French NGOs working in the international development field. Although there is a long tradition of charitable giving in France (d’Orfeuil 2006), many development NGOs were established only in the aftermath of decolonization and in response to humanitarian crises facing specific developing countries. Perhaps the most notable of these organizations is Médécins sans Frontières (Doctors without Borders, or MSF), founded in 1971 by a group of doctors upset by the neutrality of the Red Cross in the face of civilian massacres during the Nigerian civil war who sought to ‘bear witness’ to human atrocity while providing needed medical assistance (Dauvin and Siméant 2002). Another of the largest development NGOs, Médécins du Monde, is a direct offspring of MSF, born in 1980 out of a difference of opinion among MSF’s leaders about whether the organization should support an action to send a boat to Vietnam in 1979 to attest to human rights violations.7 A 2004 inventory of French development NGOs, or international solidarity organizations as they are commonly known in France, listed 329 associations active in this field (Commission Coopération Développement 2004).8 As the list of organizations in Table 5.1 suggests, there are relatively few large NGOs in this community. By way of comparison, two of France’s largest development NGOs, the Comité Catholique Contre la Faim et pour le Développement (CCFD) and Secours Catholique, have budgets that are comparable to those of the large Swiss NGOs HEKS and Helvetas, in spite of the fact that Switzerland’s population is nearly eight times smaller than France’s. Indeed, the French NGO community is among the most resource-poor within the donor community. Between 1980 and 1995, the resources French development NGOs provided for development work overseas averaged just 0.01 percent of French GNI (OECD 2007a). NGO resources have increased incrementally through time, however, as Figure 5.6 illustrates. These increases were facilitated by the emergence of public collection campaigns as important sources of financing in the 1980s.9 The upward trend visible through the early 1990s continued through the end of the decade, with French NGO funding nearly doubling between 1991 and 2001 (Commission Coopération Développement 2003). As Figure 5.7 indicates, the share of French bilateral aid channeled through NGOs has been quite small. In most years between 1980 and 2005, aid to NGOs amounted to less than 1 percent of the bilateral aid budget. This lack of public funding has encouraged French NGOs to seek financing from other donors, particularly the European Union (Ryfman 2004). The overall dearth of support from both private and public sources has also provided a stimulus for internationalization among the largest French NGOs. Siméant (2005) notes that the creation of international affiliates by MSF, Médécins du Monde, Action Contre la Faim (Action against Hunger, ACF), and Handicap International, France’s biggest relief and development organizations, has been motivated by a desire to tap into

hunger; post-conflict humanitarian relief assistance for handicapped humanitarian aid; medical care rural development; peace promotion; education; health humanitarian aid education; child sponsorship education; health; food security; water basic services; rural development post-conflict assistance; health care rural development; urban employment rural development; social infrastructure hunger; rural development; health food security; health; education

1979 1982 1980 1961 1946 1981 1983 1976 1979 1980 1978 1960 1963 1988 1994 1984

Agir Ici (Oxfam France) Coordination Sud Survie

$45,625,000 $29,702,500 $19,750,000 $17,182,233 $14,300,190 $9,035,098 $2,677,202 $2,403,978 $1,872,839

$84,531,403 $77,542,608 $68,389,635 $46,303,750

$911,500,000 $173,894,351

Sources: French Red Cross, http://www.croix-rouge.fr; Médécins sans Frontières, http://www.msf.fr; Action Contre la Faim, http://www.actioncontrelafaim.org; Handicap International, http://www.handicap-international.fr; Médécins du Monde, http://www.medecinsdumonde.org; Comité Catholique Contre la Faim et pour le Développement, http://www.ccfd.asso.fr; Secours Catholique, http://www.secours-catholique.asso.fr; Aide et Action, http://www.aide-et-action.org; CARE, http://www.carefrance.org; GRET, http://www.gret.org; Aide Médicale Internationale, http://www.amifrance.org; Interaide, http://www.interaide.org; Eau Vive, http://www.eau-vive.org; Comité Français de Solidarité Internationale, http://www.cfsi.asso.fr; Terre des Hommes, http://www.terredeshommes.fr; Agir Ici, http://www.oxfamfrance.org; Coordination Sud, http://www.coordinationsud.org; Survie, http://www.survie-france.org. Notes: * 2004 figures. Revenue figures were taken from annual reports available on the websites of the organizations. Revenue figures are reported in US dollars and provide figures for the year 2005. The 2005 revenue figures may be higher than normal, given the influx of private donations in the aftermath of the Asian tsunami in December 2004.

Intl. Terre des Hommes Federation Oxfam (since Oct. 2006)

Caritas Action Aid CARE

ACF Intl. Handicap International Médécins du Monde Catholic Church

International Red Cross MSF

Annual revenue Affiliation

advocacy; fair trade $1,358,803 umbrella organization for development NGOs N.A. French Africa policy N.A.

humanitarian aid; social services humanitarian aid; medical care

1864 1971

French Red Cross Médécins sans Frontières (Doctors without Borders) Action Contre la Faim (Action against Hunger) Handicap International Médécins du Monde Comité Catholique Contre la Faim et pour le Développement Secours Catholique Aide et Action CARE GRET Aide Médicale Internationale Interaide Eau Vive Comité Français de Solidarité Internationale Terre des Hommes France*

Operational focus

Est.

Organization name

Table 5.1 Major French development NGOs

116 Aid politics in France 0.03 0.025

%

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Gross Flows

Figure 5.6 French NGO resources (1980–1995). The chart shows aid distributed by French NGOs overseas as a percentage of GNI, a reflection of the overall NGO resources. According to the DAC, gross NGO flows represent the “expenditure by national NGOs on development assistance and relief, together with any additional contributions in kind, made to developing countries, multilateral organizations, or international non-governmental organizations. Net grant figures exclude official subsidies provided for NGO programs.” The graph illustrates that the resources of French NGOs have grown steadily since the early 1980s in real terms and as a share of GNI. However, even with these increases the French NGO community remains resource-poor in comparison to other donors’ NGO communities. The description of the figures comes from the DAC Statistical Reporting Directives, http://www.oecd.org/dataoecd/36/32/31723929.htm#code 415 (accessed April 11, 2007). In constant dollars, NGO resources rose from just over $50 million in 1980 to nearly $350 million in 1995. Source: OECD. International Development Statistics Online.

more lucrative fundraising markets and to gain access to funding from donor governments that are potentially more receptive than the French government to their work in certain regions.10 This observation indicates that the character of the funding climate within a donor country can influence patterns of NGO political action. The search for public financing at the EU level potentially represents a distraction from advocacy directed toward the French government and may present an additional obstacle to NGO influence. The increasing financial resources of French NGOs over time were accompanied by efforts to strengthen NGO coordination. Throughout the 1980s, a key cleavage in the community that undermined enhanced coordination was a divide between NGOs engaged in long-term development work and those providing emergency assistance, a debate that reflected differing views on what types of development cooperation interventions could most directly assist populations in need (Allou and Brugière 2004).11 The competition between organizations engaged in emergency assistance and development work abated as organizations recognized the complementary character of these types of interventions (Vuianovith 1994). The move toward greater coordination was also spurred by a need to better attract

Aid politics in France 117 2 1.8 1.6 1.4 %

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Figure 5.7 Share of French bilateral aid channeled through NGOs (1980–2005). The above chart represents “Bilateral aid administered by NGOs on behalf of the official sector. In other words, ODA channeled through NGOs, as distinct from official support for NGOs’ own programs which is reported separately.” The chart highlights the low level of support that NGOs have received from the French government and the low dependence of the government on NGOs as implementing agents. For most years, the NGO share of bilateral aid represents less than 1 percent of total aid expenditures. An exception is 1985, when NGO contributions were likely higher due to famine relief. The definition of these flows comes from the DAC Statistical Reporting Directives, http://www.oecd.org/dataoecd/ 36/32/31723929.htm#code 415 (accessed April 11, 2007). Source: OECD. International Development Statistics Online.

funding from public and private sources. As one journalist noted, as the debate between organizations engaged in emergency work and those focused on development work died down, the spectrum of organizations “accepted the need to create synergies in the field as well as in front of donors, in order to appear as serious secondary actors capable of managing increasingly important sums of money.”12 Although various NGO platforms had emerged in the 1980s, at the beginning of the 1990s these organizations still did not provide the NGO community with a coherent voice at the national level. In 1990, the leading NGO platforms banded together to form a liaison committee (the CLOSI), which served as a forebear to the national umbrella organization Coordination Sud, founded in 1994.13 In the words of one NGO representative, the creation of Coordination Sud represented a “realization among associations of the necessity to organize to have a dialogue with public authorities.”14 The creation of the organization at that time could be seen as an extension of the trend of increasing resources and coordination that had existed over the previous decade. Coordination Sud counts around 130 associations and platforms as members.15 These associations include organizations that conduct development work abroad as well as groups that focus on development research or development education within France.16 The umbrella organization serves multiple functions. It acts as a forum for dialogue between the diverse set of platforms and associations it represents and serves as a mouthpiece for the NGO community in relations with

118 Aid politics in France international NGO networks (Fagnau 2004). It is also a resource base for member organizations to improve their chances of obtaining funding, especially from official sources. Given the importance of NGO co-financing from the European Commission, the umbrella group is active at the EU level in seeking to shape European development policy and to maintain NGO access to EU funds. The organization’s dual mandate is also apparent in Coordination Sud’s work within France. On the one hand, the organization serves as a trade association, attempting to secure funding from the French government and increase the role of NGOs within the aid system; on the other hand, it conducts advocacy work to shape French aid choices.17 Having a secretariat that in 2006 included just over a dozen individuals, the organization’s resources to pursue all of these aims are limited. Although the umbrella organization adheres to a principle of subsidiarity in its political work, allowing its member organizations to take the lead on issues that are of central concern to them, aid is a policy area where Coordination Sud has a possibility of playing a more exclusive advocacy role.18 On aid questions, there are only a small number of organizations that devote resources to advocacy, and for those associations that do, such as CCFD and Agir Ici, aid is a small area of interest in comparison to questions dealing with international trade and finance and the policies of the Bretton Woods institutions.19 Highlighting this limited capacity for political action, one NGO representative noted: “it is not as though civil society in France is that strong in its advocacy efforts on ODA questions; structurally it is rather weak.”20 Though Coordination Sud has become increasingly visible as a mouthpiece for French NGOs since its founding, outside observers of the NGO community note that there continues to be a lack of coherence within the community. In a study of French foreign policy, Kessler identifies several characteristics of the NGO community that make governmental actors reluctant to regard NGOs as partners in development. NGOs can be considered to be “too numerous, giving in to ferocious competition, [and are] often highly dependent on ‘micro-politics,’ that is, being supported by a well-known personality but having no real operational area” (Kessler 1999: 465, author’s translation). From the governmental perspective, increased receptivity to the viewpoints NGOs present would likely follow from enhanced coordination among NGOs. As one senior aid official noted: “French NGOs have difficulty defining their strategic agenda and instead have the tendency to view us as a financial counter.”21 This criticism highlights the importance of organizational resources and the professionalization of organizational action that follows from increased resource endowments as a determinant of interest group influence. While NGOs have experienced a rise in professionalization over the last two decades, with permanent salaried employees replacing volunteers in many organizations, small organizations continue to struggle to move in this direction (Ryfman 2004).22 In short, France’s aid advocacy community operates under tight resource constraints. One casualty of resource pressures is the capacity to conduct policyoriented work that has larger aims than seeking public financing. Few NGOs conduct direct advocacy work that aims to influence French aid policy. Although Coordination Sud has played an increasingly important role in aid advocacy on

Aid politics in France 119 behalf of the broader community it represents, its ability to pressure the government has also been limited by the organization’s multiple mandates and divided attention between the French and European political arenas. Overall, the French NGO community has been in a weak position to demand aid increases for the benefit of the world’s poor. Given these qualities of the French development NGO community, when the attributes of these societal actors are viewed in isolation from other elements of the aid policymaking system, one might expect that French aid commitments and the poverty reduction orientation of the aid program would be quite low. However, as discussed later in this chapter, it is clear that factors at the governmental level have outweighed weak demand from the NGO community and been instrumental in shaping the nature of French aid choices.

Economic interest group engagement The French business community has been in a better position to increase the societal demand for aid than the NGO community. Business interests do not face the same challenge that NGOs experience in presenting a professional image to governmental actors for obvious reasons. Business associations are able to generate their own resources through the market and have an organizational capacity that permits them to operate with the same administrative efficiency that government officials are accustomed to. The French business community can also be distinguished from the NGO community by the long tradition of federation among French firms that has produced a concentrated interest group landscape. Major interest associations in the business world include the MEDEF (formerly the CNPF), the leading employers’ association, and the ACFCI, the umbrella group for chambers of commerce throughout France (Wilson 1987; Woll 2006). While both of these organizations have taken an interest in aid policy, for example by supporting aid that accompanies foreign investment, their policy priorities lie in other domains. The European common market is especially important in their international policy portfolios. For one group of firms, however, French aid policies in Africa in particular have represented a central preoccupation. These firms have sought influence through their participation in the association known by its acronym CIAN, the Comité des Investisseurs en Afrique Noire (Committee of Investors in Black Africa).23 As its name implies, the organization defends the collective interests of French firms with investments in Africa. Its members are currently responsible for approximately 75 percent of French economic activity in Africa.24 The organization has represented some of France’s most prominent firms across a variety of sectors, including the transportation giant Bolloré, the energy powerhouse Total, Air France, the bank BNP Paribas, and Accor, a leader in the hospitality industry. One key concern of this association has been to ensure that aid would stimulate private investment in Africa and strengthen the business climate for firms establishing a presence there. This association has sought to keep France’s eyes trained on aid to Africa, particularly as emerging markets in other world regions, notably

120 Aid politics in France Latin America and Asia, have received increased attention from the government and French firms.25 The association has also favored the use of specific instruments in the aid program such as aid for private sector development, export credit mechanisms, and the cancellation of debts owed to commercial creditors.26 The volume of French trade with Africa is modest in comparison to France’s trade with developed regions. Nevertheless, the level of commercial exchange between France and Africa has been significant given the overall marginalization of African economies in global trade. Between 1980 and 2004, the African continent absorbed an average of 7.7 percent of French exports. The share of French exports destined for Africa declined over the course of this period, however. In 1980, 13 percent of France’s exports went to Africa. By 1990 the figure was down to 7.1 percent, and in 2004 this share declined further to 5.4 percent. During the same period, French imports from Africa represented 5.7 percent of all French imports on average. In every year during this period, the share of French exports going to Africa was higher than the share of French imports coming from Africa (UNCTAD 2007). Within Africa, several countries represented especially attractive markets for French firms. These countries included Côte d’Ivoire, Senegal, Gabon, and Cameroon, where reasonably well-developed infrastructure, natural resource endowments, and close political ties between national elites and French political figures combined to produce a hospitable business climate for French enterprises (Anderegen 1994). A concentrated group of firms with African investments (members of the CIAN in particular) benefited from the close relationships between political elites in France and France’s privileged economic partners in Africa, and the directors of French enterprises themselves have been identified as an important part of the networks linking Paris to African interests (Smith and Glaser 1992). Perhaps the most prominent French company to benefit from the special economic and political relationships between France and African countries was Elf-Aquitaine, whose power in the oil rich Gulf of Guinea, according to Smith and Glaser (1992), was comparable to the power of American oil companies in the Persian Gulf region. Elf’s most important source of oil in the region was Gabon, a sparsely populated but mineral-rich country home to one of Africa’s longest serving leaders, Omar Bongo, who led the country between 1967 and his death in 2009.27 Prior to 1994, when there was a final move toward privatization, the French state was a majority stakeholder in Elf.28 Hence, there was not always a strict line of separation between commercial and state interests. Another example of this can be found in the nuclear industry, which was more resistant to privatization.29 The state maintained control over the Compagnie Générale des Matières Nucléaires (COGEMA), the global leader in nuclear energy production, working on all parts of the production cycle, from uranium extraction to waste disposal. France’s civilian nuclear program depends on reliable access to uranium, and African countries have been key suppliers of this strategically important mineral (Martin 1989). As Martin (1989) notes, for Gabon and Niger, two major uranium producers, provisions assuring France a stable supply of uranium and other minerals were written into defense cooperation agreements signed in the 1960s and 1970s,

Aid politics in France 121 and the French state-owned nuclear company was highly involved in exploration and mining in these and other countries. Given the proximity of the energy sector to the French state, patterns of resource extraction for energy production could be expected to influence aid allocation patterns. One retired aid official made note of this possible correlation, stating that “in the case of a very poor country like Niger, the trend line for French ODA between 1975 and 1998 closely follows the trend line in uranium production in the Arlit mine and its trading rates. One can find the same connections for oilproducing countries. But it is very difficult to find a simple explanation of the decision mechanisms that produced these parallels.”30 If the decision-making process is difficult to pinpoint, it is nevertheless clear that these leading industries have had a presence near the apex of political power and are naturally implicated in policy discussions that affect their operations and French energy security. While aid policy is not a central concern for many parts of the French business community, the firms that have maintained the greatest interest in retaining commercial ties to African markets have represented a cohesive force in the aid arena as members of the CIAN. For these firms, aid has been viewed as a policy instrument that is complementary to efforts to promote trade and investment. As such, these firms represent a constituency for generous aid commitments, but also a constituency privileging commercial objectives over developmental goals in determining how aid resources should be used.

Interest group access to the policymaking process The foregoing discussion suggests that opportunities for interest representation in the aid arena have been quite different for business interests and development NGOs. Simply stated, major business groups are insiders, while NGOs have been policy outsiders (Cumming 2001). These patterns of interest representation have not been constant through time, however. In line with broader transformations in the relationship between business and the state in France associated with declining state involvement in economic planning (Schmidt 1996), the informal networking that formerly characterized business–state relations in the development sphere has ceded ground to a style of interest group politics where business increasingly exerts pressure on the government as an external actor (Smith and Glaser 1997). At the same time, NGOs have seen their access to governmental actors increase through time, due to the creation of arenas for consultation and increasing receptivity to their participation at the highest levels of government. Even with these developments, however, these two categories of actors still have different channels of access to the political process, with business interests enjoying a high level of access to policymakers and NGOs having more limited access. When the French president conducts official visits abroad, for instance, it has not been uncommon for representatives of major French firms to take part in the delegation; CIAN is likely to be present in missions to African countries.31 The business community has multiple avenues to express its preferences on development-related issues, including contacts to parliamentarians and to members of the ‘African cell’

122 Aid politics in France of advisors close to the president, in addition to direct contact with the office of the president.32 The CIAN in particular has also maintained ties to key aid agencies, especially the Ministry of Cooperation and the Finance Ministry, relationships characterized by mutual information exchanges.33 Within the Finance Ministry, export-oriented firms have had close contacts with the Direction des Relations Économiques Extérieures (DREE), the department responsible for export promotion, as well as the COFACE, France’s export credit agency (Boisgallais and Verschave 1994).34 In contrast to business actors, the points of entry for NGOs to the policy system have been more peripheral, including participation in consultative committees of marginal significance and contacts with governmental actors with limited authority over aid decisions. In line with increased openness in the socialist administration of François Mitterrand toward interest group participation in policy deliberations (Wilson 1987), the first official forum for dialogue between the administration and the NGO community was established in 1983. The creation of this forum, the Commission Coopération Développement (COCODEV), signaled increased government willingness to acknowledge the relevance of NGOs as development actors and reflected the growing visibility of NGOs in this field (Commissariat Général du Plan 2002). The 1970s had been a takeoff period for French NGOs, and the late 1970s and early 1980s brought the first efforts at collective organization within the NGO community. Though COCODEV was overseen by the Ministry of Cooperation, it brought together representatives of the main ministries with aid responsibilities and representatives of leading NGO platforms. The focus of its quarterly meetings was the discussion of projects co-financed by the government and carried out by NGOs (Kessler 1999). Given the small share of aid provided through the NGO cofinancing channel, this forum offered a limited vehicle for advancing NGO concerns related to broader policy questions. In addition to having a restricted mandate, the COCODEV was also considered a government-dominated discussion forum, with the responsible minister determining the commission’s agenda.35 As part of a larger reform of French development cooperation, another consultative body was established in 1999 to provide NGOs and other societal actors with a forum for expressing their policy views. The Haut Conseil de la Coopération Internationale (HCCI) consisted of 45 individuals representing a broad spectrum of governmental and non-governmental organizations, including NGOs, representatives of French regions, employers’ associations, trade unions, and development researchers.36 Meeting at least twice a year, the body issued policy recommendations, provided an arena for information exchange between aid officials and civil society representatives, and prepared reports through working committees (HCCI 2005). Although it was a consultative organ associated with the prime minister’s office and linked to the highest levels of interministerial dialogue on aid issues, in practice this forum did not increase the leverage of NGOs vis-à-vis the government.37 The wide membership of the body diluted the influence of NGOs over policy recommendations, which did not have a binding quality. In 1999 a consultative structure specific to the NGO community was also

Aid politics in France 123 created to provide a forum for dialogue between NGOs and the AFD. Current operations as well as the AFD’s general policy orientations were excluded from consideration in this committee’s deliberations (Commissariat Général du Plan 2002). Apart from these formal consultative structures, NGOs have intermittent contacts across the aid administration and with parliamentarians. Among governmental actors, members of parliament have been especially important interlocutors for NGOs, particularly those parliamentarians charged with the preparation of regular reports that review the state of aid policy.38 Until very recently, with the introduction of a general reform in the evaluation and approval of public finances (the LOLF), the parliament has had little authority to influence aid choices, however.39 One prominent NGO attempt to leverage contact with parliamentarians to promote a more substantial investment in poverty reduction efforts came in the early 1990s, when the NGO Survie spearheaded a campaign directed at the parliament proposing a bill to mobilize additional development resources and to ensure that the most disadvantaged populations would receive increased attention within the aid program. By 1994, the campaign had collected the signatures of 442 deputies, representing about three fourths of the National Assembly. Ultimately, however, this bill did not enter into force because the government never placed it on the agenda, signaling the dominance of the executive in this domain (Verschave 1999).40 Seeking to influence parliamentarians reflects an ‘outsider’ strategy because it is an indirect mode of influence: the ultimate targets of political action are the policymakers in the executive branch holding decision-making authority. NGOs have increasingly been able to cultivate direct contacts with bureaucrats working within the aid administration. For Coordination Sud, the closest contacts have been with officials in the Ministry of Foreign Affairs, where the coordinating office for NGO financing is also located. According to a representative of the umbrella organization, the receptivity of bureaucrats to interacting more regularly with the organization increased following the publication of its first extensive report on French aid policy in 2005.41 As the NGO community has displayed an increased independent capacity for action, access to the policymaking process has increased as well. In sum, French NGOs have been at a dual disadvantage in the development policy arena. On the one hand, the community lacks resources and has struggled to coordinate its political action, and on the other hand the access of the community to the policymaking process has been restricted.

The distribution of authority in the aid arena To explain aid choices, it is necessary to identify the aid preferences of governmental actors and the way that power is distributed among them. The promotion of a poverty reduction agenda via aid can be expected to be stronger when governmental actors that share the pro-poor policy orientations of NGOs (whether due to their own preferences or NGO influence) play a central role in aid policy

124 Aid politics in France formulation, and are capable of defending aid commitments within the policy system. The natural allies of development NGOs are development agencies. In France, governmental development advocates have long been secondary players in a policy system dominated by the president, a group of advisors close to the president, and two powerful bureaucracies whose primary mandates fall outside of the development cooperation arena: the Foreign Affairs Ministry and the Ministry of Finance. The centrality of diplomatic and commercial objectives within the aid program has reflected the preferences of these key actors. The position of various executive agencies within the aid apparatus was itself a product of France’s history of engagement with the developing world, and the dispersion of authority among a variety of actors was a vestige of the multi-faceted character of this engagement. This section identifies the main governmental actors with responsibilities in the aid issue area in France, identifies their interests, and highlights their sources of power relative to other governmental actors. The power of these actors has not been constant through time, and the aid program experienced an important organizational reform toward the end of the period studied. As the dynamics of reform will be discussed in detail in a subsequent section, this section draws attention to the place of central governmental actors in the aid policy system prior to the reform initiated in the early 1990s. The presidency The character of the relations between France and her colonies after the Second World War shaped the aid policy system that emerged in the wake of decolonization. France’s relationships with these territories also had a profound influence on the organization of the French political system itself, as the the Fifth Republic emerged during this same period of adjustment. One of the most important features of the political system mapped out in the 1958 Constitution was the creation of a strong executive, making foreign policy a domaine réservé (a reserved domain of intervention) for the French president (Kessler 1999).42 The dominance of the executive in foreign policy was solidified under Charles de Gaulle’s presidency, and his successors remained faithful to the foreign policy orientations he laid down (Petiteville 1996). De Gaulle sought, in Hook’s words, “to renew France’s substance and power, to restore her influence abroad, and to have her play as independent and active a role on the world stage as the world and French resources allowed” (1995: 53). As numerous scholars have suggested, Gaullist foreign policy was oriented around the promotion of French grandeur, or greatness, a sentiment reflected in de Gaulle’s oft-cited statement that “France is not really herself unless in the front rank” (quoted in Chipman 1989: 22). The preferences of the presidency concerning development cooperation reflected this preoccupation with maintaining a position for France near the center of a world political stage dominated by the confrontation between the United States and the Soviet Union. One means of increasing influence globally was to demonstrate that France retained influence in its former colonies. Thus it was

Aid politics in France 125 important to ensure that political ties to these territories would not be severed as states gained independence. The advent of development cooperation provided a means of guaranteeing that former colonies would continue to provide a base of political support. In return for economic, military, and administrative assistance, newly independent states would allow France to preserve a sphere of influence and prop up its claim to great power status. Rather than marking a break with the past, the cooperation agreements that formalized the post-colonial relationships between France and its former territories could be seen as instruments for ensuring the long-term survival of existing ties (Martin 1985).43 The ability of France to leverage its ties with former colonies into global influence could only be accomplished if independent governments continued to favor cooperation with the former metropole. The maintenance of stable regimes friendly to France therefore represented a natural corollary of a foreign policy that aspired to global influence. In addition to influencing the volume and geographical concentration of aid, these presidential foreign policy preferences also influenced how aid would be used. In the decades after the end of colonialism, France provided large amounts of aid, directed that aid predominantly to the African continent, and invested heavily in technical cooperation designed to strengthen the administrative capacity of recipient governments as well as in large infrastructure projects that could enhance the prestige of allied leaders (Cumming 1995). The ‘African cell’ associated with the presidency has been an important focal point in French development policymaking. This advisory body had several main responsibilities. First, it acted as a conduit for African leaders as well as business groups to express their concerns to the presidency. Second, it was a source of initiatives of presidential policy toward the African continent, for example relating to decisions to maintain support for specific leaders or to determine the agenda of Franco-African summits. Finally, it also served a coordinating role between the various agencies responsible for the implementation of France’s Africa policy (Cyrille 1994). The African cell had a special role in cultivating networks linking African elites, French political and business figures, and military and intelligence services (Petiteville 1996). The personalized character of the relations maintained between French and foreign elites through the African cell attracted criticisms of the body that emphasized the clandestine nature of its work (Lewin 2001). The Quai d’Orsay Although the presidency retains ultimate decision-making authority in the aid arena, the president relies on government agencies assigned responsibilities for managing relations with developing countries to formulate and execute aid policy.44 The influence of these agencies over policy choices depends on the size of these responsibilities in relation to other governmental actors as well as their exogenous power resources. In examining the weight of various bureaucracies within the aid system, it is therefore necessary to understand both their official functions within the aid apparatus and the power resources stemming from their involvement in other policy domains.

126 Aid politics in France The main mission of the French Ministry of Foreign Affairs (also known as the Quai d’Orsay, or the Quai) is the management of international diplomatic relations. By virtue of its primacy as a ministry in the general conduct of foreign relations, the Quai has traditionally had a close relationship with the presidency.45 The ministry also shares the presidency’s interest in preserving French influence in the world. Although the Quai’s role in managing diplomatic representations globally implies that it does not have a restricted geographical focus on foreign policy questions in general, its responsibility in directly managing aid resources has had a limited geographical scope. As an extension of the division of authority that existed in former colonial territories, the Quai entered the post-colonial era with particular responsibilities for cooperation with North African countries.46 In addition to its role in providing technical assistance to the states that were the first to gain independence, the Quai controlled technical assistance to states outside of the privileged sphere of intervention, countries hors champ in French aid jargon, which excluded former French colonies in sub-Saharan Africa. The Quai’s share of the aid budget has been low in comparison to the other main ministries. In 1989, for example, it directly administered only 9 percent of the total aid budget (OECD 1994). The Ministry of Cooperation From the time of decolonization, the Quai d’Orsay sought to extend its influence in aid policymaking by exercising control over the Ministry of Cooperation, the ministry established to oversee development cooperation with the countries comprising the so-called pays du champ, which included France’s former subSaharan African colonies (Meimon 2005).47 The Ministry of Cooperation occupied a precarious position within the aid system following its creation in 1959, often being the object of administrative reshuffling that led to a downgrading of the ministry’s status. Between 1980 and 1998, when the ministry was folded permanently into the Quai, it alternated between being an independent ministry and being a ministry or secretariat directly subordinate to the Quai d’Orsay (Meimon 2005). In addition to lacking permanence in its official status, the ministry was also weakened by its dependence on other ministries for its administrative personnel (Petiteville 1996). Bureaucrats posted on a temporary basis from ministries such as the Ministry of Education or the Ministry of Health supplemented the administrative corps of the Ministry of Cooperation. The Ministry of Cooperation managed two main development instruments. One was the Fonds d’Aide et de Coopération (FAC), a financial instrument providing grants for investments in agricultural development, social infrastructure, and economic infrastructure among other areas. The second instrument was technical assistance, the contribution of personnel intended to strengthen the administrative capacity of newly independent states by providing professionals (known as coopérants) to occupy posts in civil administration and to serve as teachers and health care providers (Kessler 1999; Bossuat 2003). This technical assistance gave the ministry a significant field presence: in 1990 there were some 8,000 coopérants posted in the ministry’s priority field of intervention (Ministère de la Coopération

Aid politics in France 127 1994). The ministry managed approximately 23 percent of the total aid budget on average between 1980 and 1997 (Meimon 2005). Of all the components of the aid administration, the Ministry of Cooperation was most closely aligned with the position that aid should contribute to poverty reduction. As Meimon (2004) notes in a study on the socialization of development professionals, individuals who sought work in the ministry and individuals working for development NGOs had similar traits: they were likely to have had early experiences in the developing world, a background in political activism and civic engagement, and a desire to commit to a cause. One distinction between these two groups of individuals was generational. Individuals who found development work appealing were likely to go to the Ministry of Cooperation in the 1960s and 1970s, when opportunities existed through this governmental channel, while individuals entering the development marketplace in the 1980s and onward could also find work in the NGO community (Meimon 2004). The Ministry of Cooperation was torn between dual mandates. On the one hand, it was a development agency, working toward the social and economic development of the countries in which it intervened. On the other hand, it served a more directly political function, offering a mouthpiece for the defense of African interests within the development policy apparatus. The capacity of the ministry and its leaders to advance a development agenda was limited by the interest that other governmental actors had in maintaining control over the development cooperation agenda. As Kessler notes: “for the presidency, a good Minister of Cooperation is a practitioner who takes his dossiers to heart, knows how to deal with his African interlocutors, but does not have too many initiatives” (1999: 315, author’s translation). The Ministry of Finance The French Ministry of Finance (MINEFI) has held a dominant position in the aid administration.48 As with other ministries, its responsibilities in this domain can be traced back to the role that it played in managing colonial relations.49 One of its most important functions has been the management of monetary cooperation with states in Western and Central Africa.50 This monetary cooperation involved the maintenance of a common currency in this region (the CFA franc) with a fixed exchange rate with the French franc. Perceived advantages of this arrangement for African states within the ‘CFA franc zone’ included the limitation of exchange rate volatility and the promotion of general economic stability (Van de Walle 1991). Monetary cooperation also carried benefits for the French Treasury, since franc zone countries were required to contribute a majority share of the foreign exchange earnings back to France in order to maintain reserves to offer balance of payments support to the CFA countries in times of need (Staniland 1987). These responsibilities in monetary cooperation made the Finance Ministry an important actor in providing financial assistance to the pays du champ and favored the selection of aid instruments aimed at macroeconomic stabilization. MINEFI’s macroeconomic focus in development cooperation was reinforced by its mandate

128 Aid politics in France to represent France within the Bretton Woods institutions and regional development banks, leading the ministry to monitor the coherence of French action with policy emanating from the international financial institutions.51 Alongside the macroeconomic dimension of development policy, another area where the ministry exercised power was in the realm of export promotion. As noted above, the DREE and COFACE offered credits to French firms to accompany their investments abroad.52 Reflecting its wide range of responsibilities in multilateral and bilateral aid programs and the extensive geographical scope of its actions, the Finance Ministry managed a larger share of the aid budget than any other ministry or agency (OECD 1994). In addition to weight within the aid apparatus stemming from the volume of aid monies MINEFI controls, the ministry’s budgetary competence provides an additional source of power. The Finance Ministry is responsible for preparing the overall aid budget and submitting aid figures to the DAC and in this capacity serves as a reference for other ministries that control parts of the aid budget while exercising budgetary control to ensure that expenses are in line with the engagements decided by the government.53 The Agence Française de Développement The Agence Française de Développement (AFD), now considered France’s pivotal operational agency in development, originated during the Second World War when France’s colonies provided a support base for the Free French government in exile.54 In its earliest incarnation, the AFD assured the circulation of money in territories under the control of Free France and acted as a treasury for the government. After the war, its monetary responsibilities in overseas territories were supplemented by tasks linked to the reconstitution of the French empire, which involved investment in social and economic development in particular (Barbier 1992). Prior to decolonization, the AFD’s orientation as a development bank was therefore already established. The AFD was in many respects similar to the Ministry of Cooperation, attracting individuals seeking a career in development and intervening in the same countries. The ministry and the AFD differed in their sectoral emphases, however. Where the Ministry of Cooperation focused on social infrastructure and services and technical cooperation, the AFD’s responsibilities lay in productive sectors such as energy provision, financial systems, and private sector development.55 In addition, the AFD’s investments primarily took the form of concessional loans. This division of labor created certain inefficiencies in aid delivery. According to one longtime aid official, the operational overlap between the Ministry of Cooperation and the AFD created the disadvantages of “poor visibility for partners who did not know whom to address [and] conflicts over the distribution of financing,” among other problems.56 While the AFD and the Ministry of Cooperation had a similar mission, the AFD enjoyed greater autonomy for multiple reasons. One was the character of the agency’s statute. As a so-called EPIC (a public establishment of commercial and industrial nature), the AFD was subject to state control but also permitted to function as a private sector actor to some degree, which allowed the agency to

Aid politics in France 129 operate in accordance with a principle of seeking out profitable investments.57 Consistent with its private sector orientation, the agency created a specialized private subsidiary (PROPARCO) in 1977 to provide investments for infrastructure and the development of financial markets and to support growth in small and medium-sized enterprises (PROPARCO 2005). Another factor that strengthened the autonomy of the AFD was its close relationship with the Ministry of Finance, which acted as the agency’s guardian and supplied the agency with the credits used to fulfill the agency’s mission as a development bank.58 The agency’s top management has often had a background in the Ministry of Finance, underlining the consistency in orientation between the ministry and the AFD.59 This affinity meant that the Finance Ministry acted as a protector of the AFD, a relationship that contrasted with the nature of the relations between the Quai d’Orsay and the Ministry of Cooperation. In summary, centralization in the aid policymaking process in France is enhanced by the absence of legislative authority over aid decisions and the dominance of the president in foreign affairs more generally. While the French president has traditionally occupied a predominant position in determining aid priorities, the distribution of responsibilities in aid implementation across multiple ministries and agencies within the executive branch also introduces an element of bureaucratic competition and greater fragmentation in the policy system. The following section draws attention to the intra-governmental dynamics of the aid policy process in explaining the evolution of French aid choices through time.

The evolution of policy choices Recognizing that the residue of the colonial experience produced an aid system that distributed responsibilities for managing relations with developing countries among multiple governmental actors is the starting point for understanding the evolution of French aid choices. These actors were not equally powerful. Due to their authority outside of the aid arena, the Ministry of Foreign Affairs and Ministry of Finance held a dominant position, while the position of the two organizations with a strong development mandate, the Ministry of Cooperation and the AFD, was subordinate to the two larger ministries. While the AFD was sheltered by the Ministry of Finance, the Ministry of Cooperation faced regular pressure from the Ministry of Foreign Affairs that weakened the position of this ministry within the aid system. Holding ultimate authority over aid decisions, the president had a determining role in shaping priorities, and aid choices in the 1980s reflected the presidency’s interest in maintaining French influence in Africa as a means of sustaining international influence. By the end of that decade, however, forces exogenous to the aid policy system created pressures for a transition away from the status quo in aid provision that had prevailed since France’s colonies gained independence. Mounting economic pressures associated with the move toward European Union placed constraints on the amount of aid that could be provided, while the changed global power structure and visible policy failures on the African continent weakened France’s ability to

130 Aid politics in France adhere to a diplomatic rationale in aid provision. The declining control of the president over the aid agenda as a result of cohabitation in the 1990s encouraged a break with the logic of aid provision focusing on the maintenance of ties with friendly leaders. These exogenous pressures contributed to a sharp reduction in aid spending and provided an opening for a reform of the policy system in the 1990s that had long been proposed but had never been achieved. The outcome of the reform process was determined by the dynamics of the relations between governmental actors with varying power resources to ensure that their interests were taken into consideration. In 1980, the presidential term of Valéry Giscard d’Estaing was coming to a close. The following year, Giscard d’Estaing was defeated by the socialist candidate François Mitterrand in the second round of voting. Mitterrand’s victory provided the left with its first opportunity to govern the country since the Fifth Republic’s founding (Keeler and Schain 1996). The shift in the balance of political power from right to left signaled the possibility for change in both the domestic and foreign policy arenas.60 Jean-Pierre Cot, the first person to head the Ministry of Cooperation during Mitterrand’s presidency, noted in his memoirs that an early sign that France might adopt an approach to the developing world based on solidarity rather than a continuation of Gaullist policies was Mitterrand’s gesture soon after the May 1981 elections to lay a rose at the tomb of Victor Schœlcher, a leading French abolitionist (Cot 1984). Indeed, in September of that year, at a UN conference on LDCs, Mitterrand expressed France’s willingness to increase its aid commitments to reach the 0.7 percent target by 1988 and to increase funding to LDCs at the same time (Mitterrand 1986). While the aid budget did increase during Mitterrand’s presidency, the socialist leader remained faithful to the policy orientations established by his Gaullist predecessors, where aid represented a means of maintaining French influence in its privileged sphere of intervention. Mitterrand’s acceptance of the status quo was made clear after the newly appointed Minister of Cooperation (Cot) attempted to launch a reform intended to elevate development goals within the aid system. Cot’s reform was not the first proposal for modifying the orientations of the French aid program: in 1963, the ‘Jeanneney Report,’ the product of a special government commission to review the aid program, suggested that France should provide aid outside of its former colonies, increase its reliance on multilateral development organizations, and rationalize its aid administration (Lancaster 2007). These suggestions were not acted on in the 1960s or 1970s, and Cot’s reform program took up these longstanding prescriptions for improvement. When he arrived at the Ministry of Cooperation, Cot found a staff committed to the African continent and to its development. Cot noted that the ministry’s personnel brought a “remarkable knowledge of the field and of people” to their work (Cot 1984: 199, author’s translation). One of the key constraints the ministry faced in Cot’s view related to the fact that it was an executing agent for development policy, but removed from the policy planning process. A centerpiece of Cot’s proposed reforms was thus to establish an administrative structure that would improve the coherence of decision-making and execution by granting a single

Aid politics in France 131 minister the responsibility for coordinating governmental actions in the aid arena. In addition to this restructuring, Cot also advocated placing greater emphasis on recipient countries outside of francophone Africa, increasing the multilateral dimension of France’s assistance program, and incorporating human rights and democratization considerations into aid allocation decisions (Cot 1984). Cot’s tenure at the helm of the Ministry of Cooperation was short, lasting only 18 months. His resignation followed months of mounting dissatisfaction within the presidency with his efforts to move aid policy in a new direction, discontent shared by African leaders such as Gabon’s Bongo, Zaire’s Mobutu, and the Central African Republic’s Kolingba, who pressured the president to block the reform initiatives (Marchesin 1995).61 By the end of 1982, it was clear that Mitterrand would not pursue a change of course. According to Bayart: “As before, the priority would be accorded to the ‘pré-carré’ of French-speaking countries, with emphasis placed on solidarity, security, and co-development for mutual benefit” (1984: 38, author’s translation). While blocking the reform of the aid apparatus, Mitterrand moved to concentrate decision-making control in this policy area more firmly in the hands of the presidency. This was accomplished by reinforcing the central place of the African cell in the decision-making process. The personalized character of French policy toward Africa was strengthened at the same time. A close friend of the president, Guy Penne, headed the African cell, while Jean-Christophe Mitterrand (the president’s son) served as Penne’s deputy (Bayart 1984). The consistency in orientation between Mitterrand’s African cell and its Gaullist forebears was stressed by Jacques Foccart (de Gaulle’s special advisor on African affairs) years later, who noted: “I met Penne and I noticed that his way of conceiving Franco-African affairs was more similar to mine than to Cot’s. We did not have any profound disagreements, and he did not believe it to be necessary to denigrate my actions” (Gaillard 1997: 303, author’s translation).62 Mitterrand’s approach toward Franco-African relations and aid policy was oriented around the notion that maintaining friendly regimes in its francophone sphere of influence would support the maintenance of global influence. Speaking at the first Franco-African summit of his presidency, Mitterrand reflected this sentiment, indicating that the gathering created an imperative to discuss not only specific political issues among those present, but also global political issues. He noted: “we are a large portion of the world and we have a say in universal affairs” (Mitterrand 1986: 370, author’s translation). Mitterrand’s belief in the importance of Africa to France’s global ambitions was decades old. In the 1950s, he had written that “without Africa there will not be a history of France in the 21st century” (cited in Marchesin 1995: 8, author’s translation). As Minister of Overseas France during the Fourth Republic, he helped to prepare the way for a negotiated end to colonialism in Africa that promoted the continued association of newly independent states with the former metropole. This early political experience in African affairs also allowed Mitterrand to cultivate personal relationships with leading post-independence political figures, Côte d’Ivoire’s first president, Felix Houphouët-Boigny, being chief among them (Marchesin 1995). The centralization of decision-making authority under Mitterrand’s presidency meant that a

132 Aid politics in France determination to uphold France’s position in the world and to sustain longstanding ties with African leaders represented key determinants of aid choices in this period. The victory of the right in the 1986 legislative elections prepared the way for France’s first experiment with cohabitation, a situation where the president and prime minister represent different parties. The leader of the Gaullist RPR party, Jacques Chirac, became prime minister and the country’s chief administrator, while Mitterrand remained the head of state. Without a parliamentary majority to back his agenda and unable to control the legislative agenda advanced by the prime minister, the advent of a divided executive weakened the policymaking prerogative of the president. Although cohabitation presented a particular challenge to presidential authority on domestic public policy questions, Chirac also sought to exert influence on foreign policy questions, for instance by representing France in international diplomatic meetings where the president was also in attendance (Poulard 1990). Chirac’s intention to play an active role in African affairs was manifest in his appointment of Jacques Foccart to head an African cell attached to the prime minister’s office that functioned in parallel to the presidency’s own cell. If cohabitation highlighted differences between the leaders of the right and the left over domestic issues such as privatization and social policy, it also illuminated the consistency between the Gaullists and Mitterrand in terms of their views on policy toward Africa. Foccart’s cell enjoyed good relations with the president’s Africa advisors, and not least Jean-Christophe Mitterrand (Gaillard 1997). While the increased division of authority that emerged as a result of cohabitation could have challenged Mitterrand’s capacity to continue to pursue his African agenda, in actuality the status quo prevailed again, given the similar preferences of the prime minister concerning Africa policy. The willingness of both Mitterrand and Chirac to maintain relatively high levels of aid in the 1980s was striking given the continued economic difficulties that France experienced during this period. The country faced persistently high unemployment and slow economic growth, which encouraged fiscal austerity in order to control inflation (Sachs et al. 1986). By the start of Mitterrand’s second presidential term in 1988 economic conditions had improved somewhat, with the country seeing lower budget deficits and more robust economic growth (Jarrett and Louppe 1991). As Mitterrand’s final term in office unfolded, however, the high aid spending that had accompanied France’s Africa policy during the previous decades became unsustainable, as changes in the international context imposed greater budgetary constraints and exposed the failures of development policy driven by diplomatic motives. The sharp aid cutbacks that France undertook after 1994 signaled a transition to a reformed aid policymaking system, the nature of which reflected the distribution of power among governmental actors when the window for reform created by external events opened. The fall of the Berlin Wall in November 1989 was a watershed in world politics, and shaped both the future political organization of Europe and the nature of the relations between industrialized countries and the developing world. The triumph of the people over authoritarian regimes in Eastern Europe had provided a lesson in the value of democracy, and at the Franco-African summit in La Baule

Aid politics in France 133 in June 1990, President Mitterrand suggested that French policy toward Africa would increasingly take this lesson to heart. Speaking at the summit, Mitterrand first emphasized the continuity that he hoped France would maintain in its aid commitments: “France is determined to pursue its policy and therefore to aid Africa, whatever may be and whatever may be said about it” (Ministère des Affaires Étrangères 1990: 126, author’s translation). The most significant aspect of the president’s address was the emphasis he placed on democratization and the connection between aid and progress toward democratization, interpreted as a signal that aid would be conditional on democratic reform.63 While Mitterrand’s government did not stray far from its pattern of support for authoritarian leaders in the years following the articulation of the “La Baule Doctrine” (Bayart 1992), it nevertheless signaled that a window for reform in the conduct of French–Africa relations had been opened. At the beginning of the 1990s, intimations of a reform in French development assistance began to appear. Reports produced by government officials addressed themes that had been raised during the earliest years of Mitterrand’s presidency and decades before, such as how France should develop its aid relations with nations outside of its francophone priority countries and how the administration of the aid program could be adapted to improve coherence (Vivien 1990). Yet apart from a slight reorientation in aid allocations that increased the resources provided to economies in the Far East and decreased aid to the least developed countries, the existing areas of emphasis in Mitterrand’s aid policy remained unchanged and France did not reduce its overall aid commitments in the early 1990s. In maintaining aid levels, the government was not buoyed by a robust economy. Instead, France continued to face climbing unemployment, budgetary deficits, and slow growth rates (OECD 1992a, 1993; Cameron 1995). The inability of the socialist government to pull the country out of recession helped to secure rightist parties a major victory in the 1993 legislative elections (Machin 1993), which in turn paved the way for a second period of cohabitation. Edouard Balladur, Chirac’s finance minister from 1986 to 1988, became prime minister. In addition to inheriting the constraints of an ailing economy, Balladur started his term with the mandate of moving France toward participation in Europe’s Economic and Monetary Union (EMU), requiring adherence to convergence criteria that included limiting public debt and exercising fiscal restraint to limit budgetary deficits to 3 percent of GDP (Sandholtz 1993).64 In contrast to the situation during the first period of cohabitation, Balladur promoted policy choices that countered Mitterrand’s preference for maintaining the status quo. In particular, Balladur sought to align France’s aid program more closely with policies favored by the Bretton Woods institutions and to implement a devaluation of the CFA franc, which had previously been resisted. Consistent with the imperative to maintain discipline in public finances, streamlining aid policy to better utilize aid resources was also on Balladur’s agenda (Fuchs 1995). The CFA franc devaluation carried out under Balladur’s leadership marked an important turning point in French development cooperation. Pressure to devalue the currency (maintained at a fixed exchange rate of 50 CFA francs per French

134 Aid politics in France franc) had been building for at least a decade. This pressure stemmed from the deteriorating economic conditions in Africa in the 1980s and was amplified by the way monetary cooperation in the franc zone was managed during that period. As Hibou (1995) notes, because of France’s preoccupation with keeping the zone intact, there was a willingness to overlook the poor management of public finances in countries within the zone. This created tension between France and the IMF and World Bank, institutions that promoted fiscal and monetary policy reform as a means of addressing the difficult economic challenges that African countries faced in the 1980s and early 1990s. Within France, the Ministry of Finance was receptive to a move toward devaluation and to aligning French policies with the prescriptions of the Bretton Woods institutions earlier than other governmental actors, due to the increasing costs that maintaining an overvalued CFA franc imposed on the Treasury (Wilson 1993).65 Given a preference for reform within the Finance Ministry, the persistence of the overvalued currency was attributable to the desire for continuity of President Mitterrand, which was shared by the African leaders with whom he had close relationships.66 Thus the 50 percent devaluation of the currency enacted in January 1994 dealt a blow to a development cooperation policy motivated primarily by a concern for maintaining stability in relations between France and its African partners. The devaluation was one manifestation of the ‘Balladur Doctrine,’ which would make French budgetary assistance in Africa contingent on recipient country adherence to reforms proposed by the IMF and World Bank. The devaluation and the Balladur Doctrine did not just represent a synchronization of French policy in the region with the Bretton Woods agenda; these policy reorientations also pointed to a movement away from the maintenance of an exclusive zone of influence in that they prepared the way for greater investments from the multilateral development banks and other donors (OECD 1994). The departure from the status quo was reflected not only in changing aid volumes, but also in the changing sectoral composition of the aid budget. As Figure 5.5 illustrates, the devaluation signaled a shift away from spending on large economic infrastructure projects. With the reduction in expenditures directed toward these large projects, the share of the budget devoted to social infrastructure and services increased. The change in orientation in 1994 highlights the importance of the preferences of governmental actors in influencing aid choices. It is noteworthy that CIAN had opposed a devaluation of the CFA franc, a position attributable to concerns about the potential destabilization in economies where its members had established operations and to the diminished value of firms’ assets within the currency zone that would result from a changed exchange rate.67 Balladur enacted this policy in opposition to the presidency, African leaders, and the French business community, and could do so because of the increasing power of the prime minister relative to the president that resulted from the practice of cohabitation. French aid spending remained stable in 1994, in part due to measures intended to soften the impact of devaluation on African economies. In the same year, French policy toward Africa came under increasing scrutiny in response to the Rwandan

Aid politics in France 135 genocide and the perception of French complicity in it (Utley 2002). The events in Central Africa highlighted the priority that France had attached to maintaining sympathetic regimes and the central place of diplomatic objectives in development cooperation. Criticism related to African policy failures affected not only the presidency and the Quai d’Orsay, but also the reputation of the Ministry of Cooperation. Because it operated exclusively in the area of development cooperation and had traditionally been viewed as a ministry with close ties to African leaders, the ministry came to be associated with the more problematic elements of France’s relations with Africa to a greater degree than other bureaucracies.68 The drop in aid funding from the mid-1990s to the end of the decade coincided with a process of reforming France’s development policy apparatus. The main objectives of a reform had by that time been sketched out numerous times. They included finding a good balance between multilateral and bilateral contributions, reevaluating the notion of a privileged geographical area of intervention, and, most importantly, improving coordination so that resources were used more efficiently (Fuchs 1995). Resolving the question of how the aid apparatus should be restructured to promote greater coherence in the formulation and execution of aid policy presented an obvious challenge, in that moves toward increased coordination would inevitably infringe on responsibilities that individual ministries had maintained up to then. The outcome of the reform process was determined by negotiation among governmental actors that varied in terms of their ability to protect their own interests. In 1995, the long period of socialist rule under Mitterrand came to an end and Jacques Chirac became president. That reform in the aid system should occur during Chirac’s term of office was not self-evident. He had, after all, been a supporter of the established system, and after his election Jacques Foccart returned as a special advisor on African affairs. The return of Chirac and Foccart created an interesting situation because Balladur’s rightist government had initiated a reform process that the newly elected president from the same party was reluctant to embrace. Moreover, Chirac’s prime minister, Alain Juppé, was a proponent of continuing to move the reform forward.69 Discussing the dynamic between Chirac and Juppé in the development policy arena, Marchal noted that “the tone was quickly set; the reforms would be possible only with the consent of the French President’s African interlocutors—that is to say, never” (1998: 359). Under cohabitation, the power of the prime minister to control the political agenda had been enhanced; however, when the president and the government were from the same party, the president maintained the upper hand. While Juppé and Foreign Minister Hervé de Charette had suggested soon after the elections that the Ministry of Cooperation would be incorporated into the Ministry of Foreign Affairs within a short period of time, Chirac and Minister of Cooperation Jacques Godfrain held a different view. In September 1995, Godfrain told a reporter: “Do not speak of a merger. That does not correspond to reality.” Then in December of that year, Chirac stated on a visit to Benin:

136 Aid politics in France I would like to take advantage of this occasion to say to all of our African colleagues that the minister in charge of cooperation will continue to be their primary partner, with all of his competencies, all of his receptiveness, and all of his autonomous means.70 As this statement illustrates, Chirac’s primary objection to the proposed reforms was the potential downgrading of the Ministry of Cooperation within the aid apparatus. A merger of the ministry into the Quai d’Orsay would threaten to dilute the priority attached to francophone Africa, given the Quai’s wider geographical mandate. Ultimately, resistance from the presidency and the Ministry of Cooperation made it difficult for Juppé to achieve his desired reforms. By early 1996, Juppé had only been able to produce minor changes in the aid system, including the creation of an interministerial committee (the CIAD) that would meet at least once a year to set overarching aid priorities and to promote better coordination between the Ministry of Foreign Affairs, the Ministry of Finance, and the Ministry of Cooperation.71 For reasons that are difficult to surmise, Chirac exercised his presidential authority to dissolve the parliament in 1997, leading to new legislative elections. The elections suggested a miscalculation on Chirac’s part, as the rightist parliamentary majority was replaced by a leftist one (Hainsworth 1998). This event exogenous to the aid system enabled reforms that had been initiated under Balladur and pursued by Juppé, but which had in essence been advocated at the start of Mitterrand’s first term, to finally take hold. The new socialist prime minister, Lionel Jospin, led this final push toward reform. Cohabitation again weakened the ability of the president to impose his will on a government not controlled by his party, and continuing policy failures in Central Africa offered further evidence of the shortcomings of the old patterns of Franco-African relations with which President Chirac was associated (Marchal 1998).72 Even with the increasing power of a reformist prime minister in relation to the president, the move toward a rationalization in the aid administration still faced the challenge of modifying an institutional set-up that distributed responsibilities across ministries that were interested in defending their positions within a reformed system. A key sticking point in the reforms proposed by Juppé had been the proposal that the Ministry of Cooperation be placed under the more direct control of the Quai d’Orsay. The interest of the Quai in such an arrangement was clear. The department in the Quai responsible for development assistance (the DGRCST) was a weak department, lacking technical personnel and resources, and having a lower capacity in the development cooperation sphere than the Ministry of Cooperation (Bergamaschi 2005).73 Absorbing the Ministry of Cooperation would thus allow the Quai to have a larger development budget and extend its ability to directly control aid resources within the so-called champ that had been the Ministry of Cooperation’s privileged domain. The Ministry of Cooperation would lose its autonomy in such an arrangement, yet even so the interests of the ministry were not unambiguous in this reform process. Meimon (2005) argues, for instance, that the impulse for defending the ministry

Aid politics in France 137 from within was compromised by a division among its personnel. For administrators with an educational background from the prestigious Ecole Nationale d’Administration (ENA), joining the Quai represented a desirable move because of its greater prestige. Given the ministry’s disadvantages linked to its recent association with African policy failures and lack of external power resources, the Ministry of Cooperation was in a vulnerable position as the reform process started. As noted above, the president had earlier defended the preservation of the Ministry of Cooperation, offsetting its vulnerability to some degree. The Ministry of Finance (MINEFI) had also favored maintaining a Ministry of Cooperation during Juppé’s tenure, given concern that its disappearance would leave the Quai in a better position to accumulate responsibilities in the area of economic cooperation that could ultimately come at the expense of MINEFI’s own authority in this domain (Sadoulet 2005). However, in the course of the interministerial deliberations on reform in the aid system in 1997, MINEFI changed its stance and accepted the folding of the Ministry of Cooperation into the Quai on the condition that its own areas of competence would not be infringed (Sadoulet 2005). This conversion of sorts enabled a reform of the aid administration that was officially announced in February 1998. The main elements of the reform reinforced the central position of the Quai and MINEFI within the aid policy process. The Quai could be considered a victor, having finally succeeded in wresting competencies away from the Ministry of Cooperation.74 For its part, MINEFI could be satisfied not only with its continued control over its financial instruments, but also with the strengthening of the role of the Agence Française de Développement (AFD), which became the ‘pivotal’ actor in the area of development operations. The Quai and MINEFI would share responsibility for overseeing the AFD’s operations, and interministerial coordination in strategic planning would be assured through the creation of a committee composed of representatives from ministries managing aid credits known as the CICID, whose secretariat would also be jointly managed by the Quai and MINEFI (Tavernier 1999).75 The decline in aid volumes following the CFA franc devaluation continued during the reform period. The mid-1990s were a period of slow growth and flat unemployment rates, and governments during this period endorsed fiscal consolidation and spending restraint as a means of adhering to the Maastricht convergence criteria (OECD 1996a, 1997a), though the French economy began to gain steam again toward the end of the decade (OECD 1999). Pressures for domestic economic adjustment and the concomitant calls for reform of the aid policy apparatus combined to restrain the overall aid budget. The ministries involved in development cooperation were seemingly more preoccupied with ensuring that reforms would leave their organizational interests intact rather than with funding issues during this period. The geographical allocation of aid was also discussed as a result of the reform process, opening the way for a distribution of resources that did not simply mirror historical patterns of aid flows by eliminating the Ministry of Cooperation’s special

138 Aid politics in France geographical zone of intervention. The 1998 reform indicated that aid would become more selective, being concentrated in a ‘Zone de Solidarité Prioritaire’ (ZSP), including the least developed countries without access to capital markets (Tavernier 1999). The countries included in this zone would be selected through an interministerial process overseen by the CICID. In spite of the potential for a change in orientation, the first list of priority countries decided on after the reform was largely consistent with traditional areas of concentration. Countries in francophone Africa and the Maghreb represented the majority of countries identified in the group of 54 countries selected as concentration countries, though the list of priority countries also pointed to an extension of French engagement in anglophone and Lusophone Africa by including South Africa, Mozambique, and Angola.76 As Perrin (2003) indicates, although the logic of breaking with the champ and hors-champ distinctions and the creation of a new category of concentration countries were presented as a means of avoiding scattering aid resources too thinly, the number of countries included in the ZSP was large, so real efforts at concentration would require greater selectivity. The reforms created formal mechanisms for enhancing coordination between ministries with potentially divergent interests on aid issues. However, an increase in the prioritization of poverty reduction objectives was not an immediate consequence of this. As the DAC’s first peer review of French aid following the reforms suggested: “poverty reduction has certainly become one of the objectives of aid, but it is not the ultimate goal” (OECD 2000b: I-18). The peer review identified the persistence of different approaches to development among major ministries as a factor contributing to the absence of a strong poverty reduction emphasis. The actors favoring poverty reduction still occupied a subordinate position within the aid administration. The Quai’s absorption of the Ministry of Cooperation’s responsibilities meant that technical personnel from the Ministry of Cooperation entered the Quai’s Directorate General for International Cooperation and Development (DGCID), which had a mandate to promote French language and culture abroad alongside its development mandates. While the reform strengthened the AFD’s position in the aid system, as a development operator its traditional emphasis had been in economic infrastructure, financial systems, and development lending, and its focus on social aspects of development, including investments in education and health care, came to occupy a more prominent position in the agency’s policy portfolio only later.77 The AFD’s new tasks point to a transition from being a development bank to being a development agency integrating both existing concerns for leveraging aid to promote private sector development and concerns for providing direct assistance to populations in need. The place of an economic growth-oriented logic of aid provision was preserved in the reform process, as MINEFI continued to consolidate its power within the aid system.78 MINEFI and the Quai, as co-guardians of the AFD, continued to have a leading role in shaping geographical and sectoral aid allocation decisions following the reforms of the late 1990s; hence it is not surprising that the reforms failed to produce an immediate shift in development policy priorities. At the dawn of the new millennium, France experienced a short period of

Aid politics in France 139 economic growth and declining unemployment, allowing a temporary easing of spending restrictions (OECD 2000a). This economic upswing quickly gave way to an economic slowdown driven by an international downturn that imposed more restraint on government spending (OECD 2003b). France’s aid-to-GNI ratio reached a low point during the economic uptick and then began to climb as the country’s economic situation deteriorated. After 2002, French aid increased following commitments made by President Chirac in international meetings on development financing, producing targets to move France toward an aid-to-GNI ratio of 0.5 percent by 2007 and 0.7 percent by 2012 (OECD 2004). In 2002, presidential power in the aid arena increased as a result of the end of a five-year period of cohabitation and the beginning of a new presidential term. Thus the increases in aid outlays in recent years follow the pattern of aid giving evident in previous decades, when aid commitments grew as a result of presidential dominance in this policy area.79 This discussion of aid policy dynamics in France has emphasized how intragovernmental politics have influenced aid choices. It has also underlined that these intra-governmental dynamics have an institutional basis. The distribution of responsibilities in development cooperation, dating to the period of decolonization or before, provided numerous ministries with bases of strength in this policy area. While the aid apparatus was stable under presidents favorable to maintaining the status quo, a window for reform that opened with the end of the Cold War provided opportunities for bureaucratic actors to renegotiate their positions within the aid administration. The reform process reinforced the dominance of the two ministries that had historically been the most powerful aid actors, the Ministry of Foreign Affairs and the Ministry of Finance, while diminishing the position of the Ministry of Cooperation, a ministry long vulnerable to outside influence but pursuing development objectives.

Alternative explanations The main alternative explanations for aid choices suggest that patterns of aid provision are a reflection of partisan politics and the nature of a donor’s welfare state. France provides a relatively straightforward test of the partisan politics hypothesis, given executive dominance within the policymaking process and the alternations in power between the socialist and Gaullist parties. There is little support for the partisan hypothesis for aid choices in this case. President Chirac’s efforts after 2002 to increase aid funding provide one example that leftist parties in France do not have political ownership of development issues. The absence of strictly partisan imprints on aid policy between 1980 and 2005 can be demonstrated by a brief review of points highlighted earlier in this chapter. The aid increases of the 1980s might be interpreted as a product of a socialist foreign policy agenda.80 Indeed, prior to the presidential election of 1981, the socialists had prepared a proposal for reforming French Africa policy, calling for aid increases and a more development-oriented and less self-interested development assistance program (Whiteman 1983). The attempt by Jean-Pierre Cot to introduce

140 Aid politics in France reforms into the aid system was consistent with this program. This reform effort was short-lived, however, and was ultimately blocked by the president’s preference for maintaining the status quo in development cooperation, supported by African political elites on whom Mitterrand depended to maintain global political influence. This course was consistent with the policies of Mitterrand’s Gaullist predecessors. Development assistance was not the only policy area where continuity with the foreign policy orientation laid out by Mitterrand’s predecessors was evident. Noting the preservation of Gaullist foreign policy traditions, Hoffmann writes in an analysis of Mitterrand’s early years in office: “The foreign minister remains under tight supervision from the Élysée Palace, and the Socialist party’s contribution to decision-making in foreign affairs, unlike its contribution in domestic policy matters, has been nil” (1984–5: 42). Chirac’s agreement with Mitterrand’s foreign policy during the first period of cohabitation from 1986 to 1988 further underscores this consistency. The steady aid increases that characterized much of Mitterrand’s presidency came to an end in 1994, when the Balladur government implemented a significant devaluation of the CFA franc. This broke with the longstanding reticence to devalue linked to a concern about damaging the interests of political elites and French business interests within the common currency zone. This change, too, might suggest that aid choices have a partisan flavor: Balladur was, after all, a politician from a rightist party. As noted above, the first cohabitation between 1986 and 1988 had not produced any changes in the aid policy system because Chirac and Mitterrand shared common goals with respect to France’s development cooperation policy. After 1993, however, the preferences of the prime minister and the president did diverge and cohabitation reduced the president’s ability to maintain control over the development policy agenda. When Chirac (a rightist leader) became president, he also faced a prime minister with divergent policy preferences who supported continuing the aid reform process. Because Chirac’s prime minister was from the same party, the president was able to resist a change of course. When Lionel Jospin, a socialist, became prime minister in 1997 and cohabited with Chirac, a situation mirroring the experience of the second cohabitation between 1993 and 1995 emerged. After 1997, the reform of the aid system proceeded apace. The changes in the French aid system in the 1990s were made possible by cohabitation, which increased the power of prime ministers who viewed aid policy through a lens shaped by their role in domestic economic management. The reforms themselves were not owned by a single political party, but reflected a longterm effort to rationalize the aid administration that was driven by bureaucratic actors.81 Thus the aid reform implemented after 1998 under a socialist government was an extension of policies advocated under Balladur’s rightist government. The power of the prime minister relative to the president rather than the partisan colors of these actors was an important determinant of aid policy during the period studied. Aid policies have also been considered to reflect the character of a state’s welfare regime. In their study of the ties between welfare state regime types and

Aid politics in France 141 aid commitments, Noël and Thérien (1995) find that France is an outlier, contributing more in overall aid than expected given the limited socialist or universalist properties of its welfare regime (Esping-Andersen 1990). France has been characterized as a conservative or continental welfare state due to its focus on income-maintenance and dependence on financing through individual contributions (Palier 2000). The long-term trend in French social spending does not mirror the overall trend in aid provision, since social spending experienced slow but steady increases in the 1980s and 1990s measured as a share of French GDP (OECD 2001b), while aid spending witnessed a sharp drop after 1994. In addition, the governmental priority attached to social policy has seemingly been higher when aid outlays reached their lowest levels. During Mitterrand’s presidency, governmental priorities concerning domestic economic management related to efforts aimed at economic restructuring, and maintaining low inflation was a more important goal than controlling the high level of structural unemployment. As noted at the beginning of this chapter, restraining growth in social expenditures during this period represented one means of pursuing an ambitious economic reform program. In contrast, under the socialist government of Lionel Jospin (between 1997 and 2002), when aid funding stagnated, welfare policy in France became more redistributive in nature, the state adopted a more active stance in instituting policies for job creation, and low-income earners gained both wage increases and lower tax burdens (Clift 2002). Rather than reflecting trends in social welfare provision in France, aid policy appears to have evolved according to its own logic.

Summary From this analysis of the influences on French aid choices, it is clear that French NGOs have historically had a limited capacity to increase societal demand for propoor development assistance. This limited ability stems not only from the weak financial position of the NGO community, but also from its fragmented character and its slow efforts to collectively mobilize. The coherence of the development NGO community has increased over time, reflecting a growing resource base and increasing professionalization. Even with a steady increase in resources over the last two decades, however, French development NGOs remain a modest constituency for global poverty reduction. The level of NGO access to the policymaking process has not compensated for the resource mobilization challenges that French NGOs have faced, since these actors have mainly found an interface with the aid system in consultative committees with restricted mandates and in contacts with governmental actors such as parliamentarians whose influence over aid decisions has been minimal. Business associations have, in contrast, historically had a stronger voice in the development cooperation arena, due not only to the concentrated character of French economic interest associations but also to their close proximity to powerful governmental actors. Indeed, until the early 1990s, the line of separation between the private and public sectors was not always clear cut, and the readiness of the government to privilege aid recipients that provided economic advantages reflected

142 Aid politics in France the consonance of state and business interests. A small group of firms with investments in Africa and easy access to the Ministry of Finance and to the Presidency have represented an important pressure group for promoting an aid policy favorable to cultivating commercial ties with African countries. The distribution of authority within the aid policy system was a legacy of colonialism and the responsibilities that governmental actors were assigned to manage the complex set of relationships with former colonies were retained in some form after France’s colonies formally gained independence. With the French legislature absent from foreign policy processes, the president has been the hub of this decision-making system. The main priority of the president in aid policymaking has been to maintain France’s global influence, which meant maintaining close political ties with leaders in a privileged sphere of influence in francophone Africa. While this preference supported a significant commitment to aid overall, the pursuit of poverty reduction goals within the aid program was subordinate to investments in helping aligned leaders to stay in power. Development bureaucracies have occupied a relatively peripheral position in the aid policymaking system, where the influence of two powerful bureaucracies, the Ministry of Foreign Affairs and the Ministry of Finance, has reinforced the emphasis on diplomatic and commercially motivated aid investments. The supremacy of the president in aid policymaking was challenged from the 1990s onward, when a series of exogenous events weakened the president’s power relative to other governmental actors. The advent of a second period of cohabitation in 1993 and events spotlighting the failures of French policy in Central Africa created an opportunity to implement reforms designed to rationalize a policymaking system characterized by overlapping bureaucratic mandates and limited interministerial coordination. The outcome of the reform process undertaken during the 1990s reflected contests and compromise between ministries with responsibilities in the aid issue area that varied in their ability to defend their organizational interests as the reforms unfolded. The Ministry of Cooperation was the governmental actor weakened most substantially by the reform, since its mandates were essentially absorbed by the Ministry of Foreign Affairs, while the Ministry of Finance maintained its leading role and the AFD saw its competencies in the development assistance field expand. The ability of the AFD to independently shape the aid agenda rather than act as an executing agent of these larger ministries will likely determine the extent to which France can focus greater attention on poverty reduction goals in the future. In concluding, it is also important to highlight the fact that domestic economic conditions have not been straightforwardly tied to France’s aid commitments. Under Mitterrand’s presidency, aid seemingly escaped the spending restrictions that characterized other areas of public expenditure. The presidential priority in maintaining global influence outweighed the economic costs associated with aid provision during this period. Aid expenditures were first seriously linked to domestic economic conditions under the Balladur government, which entered office in the wake of a persistent inability to resolve domestic economic problems including high structural unemployment. France’s commitment to take part in the

Aid politics in France 143 common European currency imposed an additional set of economic constraints on policymaking, encouraging greater prudence in the management of public expenditures. As Chirac’s commitments to increase French aid spending after 2002 demonstrated, however, when the president has greater control over both diplomatic and economic policy questions, aid appears to be less vulnerable to cutbacks even when the economy is sluggish. This observation underscores that economic conditions do not predetermine aid choices alone. Rather, the changing power of actors who view aid outlays as a burden on public finances can influence whether economic conditions will impact aid choices.

6

Fragmentation and micromanagement US aid politics

In 2000, the United States provided $9.9 billion in official development assistance, the equivalent of 0.1 percent of GNI, an expense of around $36 for every American. Due to the sheer size of the US economy, overall US aid contributions have been substantial in global comparison, accounting for approximately 22 percent of all aid provided by DAC members on average between 1980 and 2005. In 17 out of 26 of those years, the United States provided more development assistance than any other donor (OECD 2007a). Over time, however, the United States experienced an erosion of its leading position in aid provision, ceding this distinction to Japan for much of the 1990s. When aid contributions are compared against national income, however, the image of the United States as a leader in this policy field is questionable. Measured against national income, US aid fell slowly but steadily in the 1980s, from 0.27 percent of GNI in 1980 to 0.2 percent in 1990 (see Figure 6.1). In the 1990s, aid outlays stagnated in real terms and as a share of GNI, hovered around 0.1 percent. Although aid spending increased in the aftermath of the attacks of September 11, 2001, the United States continued to lag behind most donors. In 2005, when the aid-to-GNI ratio reached its highest level since 1986 at 0.22 percent, US aid allocations were well below the DAC average of 0.46 percent. Only Greece and Portugal allocated a lower share of national income to development assistance in that year. This chapter examines the domestic political and institutional determinants of US aid decisions. Americans are privately generous in their contributions to development NGOs, a key domestic constituency for pro-poor aid transfers. Alongside these organizations, many other groups have taken an active interest in aid policy, including for-profit aid contractors, agricultural producers, and ethnic interest groups. Although all of these groups share a common interest in growing the aid pie, the way authority is distributed among governmental actors encourages individual organizations to defend more narrow aims in attempting to shape aid decisions. The US aid policymaking system is fragmented, with numerous executive agencies having responsibilities for managing portions of the aid budget. Although the responsibility for managing the largest share of the aid budget has historically fallen to the United States Agency for International Development (USAID), this agency operates under constraints imposed by other governmental actors, chief among them the State Department and the Congress, and has not been

US aid politics 145 0.35 0.3 0.25 0.2

£ 0.15 0.1

0.05 0

Year

Figure 6.1 Aid volume as a share of US GNI (1970-2005). As a general trend, US development declined from the 1970s through the 1980s. The 1990s were a decade of stagnancy in aid funding. After 2001, development aid enjoyed a comeback, reaching a level of 0.22 percent of GNI by 2005. In real terms, American aid spending was stable in the 1970s and 1980s, declined in the 1990s, and experienced sharp growth after 2001. High volumes in 2004 and 2005 reflected major debt relief deals concluded in those years, particularly with Iraq and Nigeria. Source: OECD. International Development Statistics Online.

in a strong position to demand resource increases. A defining feature of the US aid system is the central role played by the legislative branch, which influences not only the level of aid provided but also the content of aid policy, particularly through the practice of earmarking funding for specific types of development projects. Between 1980 and 2005, the Congress put a brake on foreign affairs spending, and the steady decline in US aid expenditures through the 1980s and 1990s in part reflects the increasing assertiveness of the Congress in foreign policy and its willingness to sacrifice development assistance in the service of federal deficit reduction.

Overview of US aid choices Starting with McKinlay and Little (1977, 1979), a number of quantitative analyses of aid-giving patterns have painted a fairly consistent picture of US motives for selecting aid recipients. The propensity of the United States to send aid to countries of strategic importance such as military allies (McKinlay and Little 1977, 1979; Maizels and Nissanke 1984; Schraeder et al. 1998) or political allies (Wang 1999; Alesina and Dollar 2000) has been well-documented. Several studies indicate that

146 US aid politics US giving has been responsive to human rights and democracy promotion concerns (Cingranelli and Pasquarello 1985; Poe 1992; Meernik et al. 1998; Apodaca and Stohl 1999; Neumayer 2003), and other work also points to a link between trade patterns and aid giving, with countries exporting more to the US receiving lower levels of assistance (Meernik et al. 1998; Fleck and Kilby 2006). With the exception of Fleck and Kilby (2006), who examine the partisan determinants of giving, the aim of such studies has been to identify broad motives for giving rather than to explain the origins of these motives and why they appear to outweigh development-oriented concerns. Studies of geographical aid allocation separate the question of where aid goes from how much donors actually provide in total. The observation that US aid has been used to protect geo-strategic interests or to promote democracy abroad does not explain why the United States has provided low amounts of aid compared to other donors. In the 1980s, US aid spending declined steadily as a share of national income but remained stable in real terms, while the 1990s were characterized by dropping aid commitments both in real terms and as a share of national wealth (see Figure 6.1). On average, between 1980 and 2005 three-fourths of US aid was bilateral, with an especially pronounced emphasis after 2002, with the bilateral share climbing to 91 percent of aid flows in 2005 (see Figure 6.2). In addition to providing low amounts of aid overall, the United States has also not directed the bulk of its aid to the poorest developing countries. Between 1980 and 2005, aid 100 90 80 70

%

60 50 40 30 20 10 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 Year Bilateral

Multilateral

Figure 6.2 Bilateral and multilateral aid as a share of US aid (1980–2005). The bilateral share of American aid has increased through time, accounting for just over 60 percent of total aid flows in 1980 and more than 90 percent of the aid total in 2005. Source: OECD. International Development Statistics Online.

US aid politics 147 to LDCs amounted to 16 percent of total aid flows, while aid to other low income countries accounted for just less than 6 percent of bilateral aid on average (see Figure 6.3). The US has instead prioritized aid to countries in middle and higher income categories. Lower middle-income countries received 35 percent of US aid on average in this period, while countries identified as MADCTs (more advanced developing countries and territories), the highest income grouping for aid recipients, received an average of 15 percent of bilateral aid.1 The high share of aid directed to Egypt and Israel helps to account for the weight given to higher income categories. Israel, a high-income country, received 16 percent of US aid on average, while Egypt, a middle-income country, received an average of 14 percent of US aid.2 Not surprisingly, a larger share of American development assistance (close to one-third on average) went to North Africa and the Middle East than to any other region in the period studied (see Figure 6.4).3 In contrast, Latin America and sub-Saharan Africa received around 15 percent of US aid, while the amount of aid sent to South and Central Asia and the Far East has been more modest. In light of low overall aid levels and the limited attention paid to LDCs and low-income countries, American development assistance has had a low poverty reduction orientation. However, sectoral aid allocation patterns present a more

100 90 80 70 %

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Figure 6.3 Share of US bilateral aid by income category (1980–2005). The United States privileged recipients in the LMIC category, providing an average of 35 percent of its aid to this income group. LDCs received only 15 percent of US aid on average, while LICs received just 5 percent of aid flows. Flows in the MADCT category essentially reflect flows to Israel, which was removed from the list of Part I recipients in 1997. Source: OECD. International Development Statistics Online.

148 US aid politics 100 90 80 70 %

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Figure 6.4 Share of US bilateral aid by world region (1980–2005). The largest share of American aid between 1980 and 2005 went to North Africa and the Middle East, which received an average of about 30 percent of aid flows during this period. Aid to this region reached its high point in 1991 (the year of the Gulf War), accounting for nearly 50 percent of US bilateral aid in that year. In the same period, sub-Saharan Africa and the Americas received about 15 percent of aid flows on average. Source: OECD. International Development Statistics Online.

mixed picture, displaying important variation over time (see Figure 6.5). Aid to social sectors was the single most important category of aid investments on average between 1980 and 2005, with nearly 30 percent of bilateral aid directed toward social infrastructure and services. This high average was driven especially by the high share of aid destined for social sectors after 1994. Between 1994 and 2005, aid to social sectors averaged 42 percent of the US total, compared with an average of 16 percent in the previous years. Investments in agricultural production were highest in the 1980s, when rural development funding represented about 10 percent of total aid. Aid used to purchase agricultural commodities provided as food aid constituted a relatively large component of the foreign assistance program, 18 percent of aid funds on average, with this share being largest in the 1980s.4 A similar story holds for program assistance such as structural adjustmentrelated support: 35 percent of aid between 1980 and 1990 took this form, while only 7 percent of aid on average served this purpose in subsequent years.5 Although US commitments to global poverty reduction are low in international comparison, the American public displays many of the same tendencies that characterize attitudes toward development assistance around the world. In a notable study of foreign aid and US public opinion, Kull and Destler (1999) argue that the American public’s antipathy toward aid has been exaggerated. While

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Figure 6.5 Share of US bilateral aid by sector (1980–2005). Between 1980 and 2005, aid to social sectors was the largest single priority sector on average, accounting for 28 percent of aid flows. Investments in agricultural production have been more limited. Food aid has been another key component of the aid program. Though the share of aid devoted to food aid has seemingly declined over time, part of this decline is likely attributable to the provision of commodity support in the form of emergency assistance, a category of expenditures included in the ‘other’ aid category. Source: OECD. Sectoral Distribution of Bilateral Development Assistance by Purpose: Part I (Developing Countries). Volume 2007 release 01.

numerous polls have reported that sizable majorities of Americans favor aid cutbacks, these negative attitudes are driven by a lack of knowledge about US aid spending. When respondents are asked how much aid the US should provide, Americans tend to provide figures that are higher than existing levels, and when provided with information about how much the US spends, a majority of respondents favor maintaining or increasing current funding levels. Kull and Destler (1999) report that public support for aid directed toward developmental goals is stronger than for aid supporting strategic goals. Some 75 percent of respondents in the study that served as the basis for much of Kull and Destler’s analysis supported maintaining or increasing funding for aid for development, while 56 percent believed that aid to Israel and Egypt should be reduced. Follow-up studies (PIPA 2001; PIPA/Knowledge Networks 2005) have reinforced these findings, suggesting that Americans have grown increasingly favorable to development assistance over time. The 2005 study even indicated that 65 percent of Americans were willing to support spending an equivalent of 0.7 percent of US national income on development aid. Though this public opinion data is often invoked by aid proponents as a demonstration of the American public’s broad backing of the aid program, this claim should be tempered by the consistent finding that domestic priorities are of greater importance to respondents than foreign assistance issues. In a 2005 Gallup poll asking Americans to identify

150 US aid politics the most important issue facing the nation, only 2 percent of respondents mentioned foreign aid, which was coupled with “a focus on other countries” (Gallup Poll 2005).

Development advocacy As willing as individual Americans may be to support aid increases at one end of a telephone line, the mobilization of a large group of people around a low priority issue is a challenging task. There is, however, a US development NGO community that continuously attempts to pressure the government to increase the volume of resources directed toward global poverty reduction efforts. USAID counts 578 NGOs in its registry of US private voluntary organizations (PVOs), a designation given to organizations that receive USAID funding.6 Because this NGO registry only includes US-based organizations that implement projects abroad, adding NGOs such as Interaction, Bread for the World, and Results, which focus on advocacy within the United States, pushes up the estimate of US NGOs active in global development. Given that many local churches across the country contribute to the development actions of the denominational umbrella organizations that are registered as PVOs, the scope of voluntary participation in development is likely much greater than the number of registered PVOs would suggest. The US development NGO community is not the most resource-rich within the DAC. Between 1980 and 2005, development aid from US NGOs amounted to around 0.04 percent of US GNI on average, while aid from the US government averaged 0.17 percent of GNI during the same period. The volume of resources allocated by US NGOs is nevertheless substantial. In 2005, American NGOs distributed close to $9 billion in foreign assistance, which surpassed the official aid provided by most individual donor countries. Indeed, large American NGOs such as World Vision, Catholic Relief Services, or CARE have funding that places them in the league of the bilateral aid programs run by small donor countries.7 As Figure 6.6 indicates, funding for American development NGOs was relatively stable for much of the period under study, though the amount of private aid provided as a share of national income declined slightly in the early 1990s. Between 1997 and 2005, development contributions from NGOs experienced impressive growth, nearly tripling in real terms during those years. Table 6.1 provides an overview of the major US development NGOs. This list identifies a number of leading organizations both among those that conduct development operations and those that have a more exclusive advocacy focus. The US development NGO community is diverse, reflecting the pluralism of American society. This community can be divided along a number of dimensions. There are faith-based and secular organizations, NGOs with worldwide networks and organizations focusing on individual countries or specific regions, organizations that carry out development work across a variety of sectors and NGOs with a niche orientation, organizations that are based in the nation’s capital and those with headquarters in other parts of the country.8 Many major religious denominations have affiliated development organizations. These include the Adventist

US aid politics 151 0.08 0.07 0.06 0.05 £

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0

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Figure 6.6 US NGO resources (1980-2005). After dropping slightly in the 1990s, private funding for American NGOs rose as a per­ centage of GNI from the late 1990s onward. In constant dollars, there was a high degree of stability in aid to NGOs until the late 1990s, when NGO funding experienced significant growth. In the figure, gross NGO flows represent the “expenditure by national NGOs on development assistance and relief, together with any additional contributions in kind, made to developing countries, multilateral organizations, or international non-governmental organizations. Net grant figures exclude official subsidies provided for NGO programs.” Gross flows for American NGOs were not reported after 1985, and this accounts for the overlapping trend line for most of the period covered. Definitions are from the DAC Statistical Reporting Directives, http://www.0ecd.0rg/data0ecd/36/32/31723929.htm# code 415 (accessed April 11, 2007). Source: OECD. International Development Statistics Online.

Development and Relief Agency (ADRA), American Jewish World Service, Baptist World Alliance, Catholic Relief Services (CRS), Latter-Day Saints Charities, Lutheran World Relief, and the United Methodist Committee on Relief, among others.9 Other organizations have religious roots without representing a specific denomination: examples include World Vision and Food for the Hungry. Leading secular NGOs in the US include CARE, Save the Children, and Oxfam America. The largest of these organizations maintain governmental affairs departments that conduct advocacy on broad aid questions in addition to working on securing funding linked to organizational interests.10 Government funding for these organ­ izations can represent sizable sums. In 2005, CARE received 35 percent of its funding ($192 million) from the US government, while CRS obtained $189 million of its revenue (27 percent of total funding) from the government (CARE USA 2006; Catholic Relief Services 2006). A small number of organizations concentrate more exclusively on advocacy aimed at increasing aid funding directed toward

1881 1953 1943 1945 1932 1954 1961 1933 1979 1956 1946 1970 1957 1971 1945 1985 1984 1972 2000 1980

American Red Cross

World Vision Catholic Relief Services CARE Save the Children MAP Academy for Educational Development International Rescue Committee Mercy Corps ADRA Church World Service Oxfam America Pathfinder Intl. Food for the Hungry Lutheran World Relief Action against Hunger Interaction Bread for the World ActionAid Results

children’s rights humanitarian aid; agriculture; education agriculture; education; health children’s rights; advocacy medical care; health education refugee assistance hunger; civil society; water; youth food security; health; education children’s health; agriculture; water emergency assistance; trade; advocacy reproductive health; family planning emergency aid; agriculture; HIV/AIDS rural development; emergency relief hunger; malnutrition; emergency aid umbrella group for development NGOs advocacy advocacy advocacy

disaster relief

Operational focus $6,008,600,000* ($154,300,000) $905,000,000 $694,176,000 $547,318,000 $396,622,000 $349,491,227 $285,531,211 $196,166,000 $184,679,010 $130,696,250 $91,819,814 $79,298,000 $76,739,339 $66,662,637 $48,665,222 $21,931,549 $5,131,589 $5,050,092 $1,395,047 $799,916

Annual revenue

ActionAid Intl.

Christian Lutheran Church ACF Intl.

Seventh-Day Adventist Church Ecumenical Oxfam Intl.

IRC

Intl. Save the Children Alliance

Christian Catholic

International Red Cross

Affiliation

Sources: American Red Cross, http://www.redcross.org; World Vision, http://www.worldvision.org; Catholic Relief Services, http://www.crs.org; CARE, http://www.care.org; Save the Children, http://www.savethechildren.org; MAP, http://www.map.org; Academy for Educational Development, http://www.aed.org; International Rescue Committee, http://www.theirc.org; Mercy Corps, http://www.mercycorps.org; ADRA, http://www.adra.org; Church World Service, http://www.churchworldservice.org; Oxfam America, http://www.oxfamamerica.org; Pathfinder, http://www.pathfind.org; Food for the Hungry, http://www.fh.org; Lutheran World Relief, http://www.lwr.org; Action against Hunger, http://www.aah-usa.org; Interaction, http://www.interaction.org; Bread for the World, http://www.bread.org; ActionAid, http://www.actionaid.org; Results, http://www.results.org. Notes: * 2006 figures. Revenue figures were taken from annual reports available on the websites of the organizations. Revenue figures are reported in dollars and are for 2005 unless otherwise noted. These revenue figures include money from governmental as well as private sources. The 2005 revenue figures may be higher than normal due to the response to the Asian tsunami and Hurricane Katrina. Red Cross funds directed to international relief and development are listed in parentheses.

Est.

Organization name

Table 6.1 Major US development NGOs

US aid politics 153 poverty reduction. Bread for the World, an ecumenical organization with a national network of grassroots activists, and Interaction, the umbrella association for US development NGOs, are among the most visible examples.11 Interaction was founded in 1984 and counts close to 200 development organizations as members.12 Member organizations reflect the diversity of the NGO community and vary in their size, religious affiliations, and fields of intervention. Because of this diversity, Interaction’s advocacy work focuses on issues where NGOs are in broad agreement and avoids dealing with more contentious issues. Maintaining and increasing funding levels for poverty alleviation-oriented accounts within the federal budget and addressing issues concerning NGO– government relations in aid implementation represent two key areas where Interaction can present a strong common position in its advocacy work.13 On policy issues specific to individual sectors, such as food aid or population planning, consensus within the community is more difficult to achieve and so Interaction’s role in advancing positions on these questions is more limited.14 Its role in coordinating the governmental relations work of its member organizations is similarly related to the general themes where a common interest is easier to identify. The specific organizational goals of the diversity of US development NGOs can create “a cacophony of public policy dialogues.”15 Sectoral specialization in areas such as education, gender, health, microfinance, or democracy promotion can mean that there is limited exchange between organizations across this community and little perceived common cause beyond the issue of increasing aid funding. Sectoral specialization can nevertheless also promote cooperation within subsets of the NGO community around more narrow themes. The Basic Education Coalition, an advocacy group with 18 member organizations that focuses on raising the profile of primary education in development, and Millennium Water Alliance, a group of 12 organizations promoting increased investments in water quality and sanitation, provide two examples of this type of cooperation.16 On balance, the US development NGO community can be considered to lie in a middle range of resource strength, both in terms of its financial means and its internal cohesiveness. A level of coordination around unified principles clearly exists within this community, with Interaction serving as a focal point for NGO advocacy efforts on broad areas of common interest. However, this community is also heterogeneous and includes many organizations relying on access to governmental resources to support their development work. The importance of public financing to individual organizations can create incentives for NGOs to pursue governmental relations strategies that focus more on capturing a share of available aid resources than on the promotion of overall aid increases for the benefit of the NGO community at large as well as the world’s poor. Given these characteristics of the American development NGO community, US aid commitments might be expected to fall into a middle range with respect to their poverty reduction orientation. However, overall aid trends suggest that American giving patterns have not simply mirrored trends in resource availability or collective mobilization in the NGO community, underlining the need to

154 US aid politics consider other elements in the political environment NGOs operate in to account for the nature of US aid choices.

Broader interest group engagement In their efforts to influence US policy, development NGOs face competition not only from other non-profits, but also from the panoply of organized interests pressing agendas forward and attempting to gain a share of governmental resources. Within this universe of organized interests, many groups outside of the development NGO community share an overall interest in enlarging the size of the aid budget in part because they are beneficiaries of aid resources and play an important role in aid implementation.17 These groups include development contractors, universities, and producers and service providers in the agricultural sector. This section outlines the key interest organizations that populate the aid policy arena in the United States. USAID has differed from other donor agencies in its heavy reliance on private contractors in aid implementation.18 Berrios (2000) reports that roughly half of all aid funding managed by USAID was provided in the form of contracts, the bulk of which went to for-profit companies. Prominent development contractors include Chemonics and Development Alternatives Inc. (DAI), organizations implementing projects across a wide spectrum of sectors; Research Triangle International, focusing on education and health; and the Louis Berger Group, an engineering and construction firm.19 According to representatives of this community, development contractors have not been heavily engaged in attempting to influence the policy priorities of governmental actors or in direct lobbying for increasing the funding for their preferred sectors of intervention.20 Their governmental relations activities have centered instead on contract management issues and guaranteeing that legislative initiatives do not jeopardize their ability to compete in the development marketplace. The reluctance on the part of aid contractors to conduct policy-oriented lobbying partly reflects a perception that such efforts would be viewed by governmental actors as self-serving, but also relates to the recognition that contractors do not represent a broad domestic constituency since they are primarily headquartered in the Washington, DC area and implement projects abroad. According to one representative of a contracting firm, the organizational culture of development contractors long reflected the view that these firms were not in a strong position to play a leading aid advocacy role.21 Even so, development contractors recognized in the early 1990s that if they did not have a presence at the congressional level, the sector could be vulnerable to restrictions placed on their work or exclusions from funding opportunities proposed by potential competitors such as NGOs. As a consequence, aid contractors joined forces with the Professional Services Council (PSC), a lobbying organization for government contractors.22 The work that the PSC conducts on behalf of the aid contracting community relates primarily to regulatory issues such as the nature of procurement regulations and reporting requirements, though it may also address contractors’ concerns about specific

US aid politics 155 pieces of legislation if these proposals are considered to unfairly privilege other aid implementing agents.23 Concurrent with the increased reliance of USAID on private implementing agents, contractors have increasingly acted as advocates for USAID’s work.24 Although aid contractors naturally compete with other contracting firms, they have found it useful to collaborate in governmental affairs work and represent a coherent force that has an added capacity for influence as a result of participation in a larger lobbying organization representing government contractors. The American university community has also had a financial stake in the US foreign assistance program. State research universities and land grant colleges have received aid funding since at least the 1950s, and were incorporated into the US aid system due to the technical expertise that they could contribute to development work (Ruttan 1996). Colleges and universities have an interest in maintaining funding for programs implemented under Title XII of the Foreign Assistance Act, which include Collaborative Research Support Programs (CRSPs), which aim to increase linkages between American research institutions and universities in developing countries, and agricultural extension programs managed through the Cooperative State Research, Education, and Extension Service (CSREES), an arm of the United States Department of Agriculture (USDA).25 While many colleges and universities maintain governmental affairs offices to address the range of public policy issues affecting their campuses, this community also has an umbrella organization, the National Association of State Universities and Land Grant Colleges (NASULGC), which conducts governmental affairs work on aid issues on behalf of member research institutions in all 50 states. The constituency for agriculture in the US aid program includes implementing organizations and agricultural producer groups that take part in the aid program by supplying agricultural commodities as food aid. The International Development Division of Land O’Lakes, which carries out a variety of projects related to the development of agricultural cooperatives, market development, and livestock management among other issues, and Global Food and Nutrition, Inc., a technical assistance and research organization, are examples of firms in the first category. Producer associations such as the National Association of Wheat Growers, the National Corn Growers Association, and the National Potato Council fall into the second category. Alongside the producer groups and shipping companies interested in maintaining stable funding levels for food assistance, a coalition of several leading NGOs and cooperatives known as the Alliance for Food Aid is also an advocate for funding commodity support to address food insecurity arising from emergency situations and chronic food shortages.26 While agricultural associations have been a constant presence within the aid community, other business associations also surface intermittently. The US Chamber of Commerce has supported incorporating commercial considerations into the aid program, for example by encouraging the government to increase resources allocated to private sector actors, to invest in market-oriented reforms in recipient countries, and to maintain a robust and internationally competitive tied aid program (Archey 1991). However, aid policy has not been followed closely

156 US aid politics by the broad business community (Lancaster 2007). The development NGO community thus does not face direct opposition from a unified business community. There is indirect competition with business groups, just as there is indirect competition with public interest groups and other organized interests that have diverging funding priorities. The most prominent ethnically-oriented group active in the aid arena is the American Israel Public Affairs Committee (AIPAC). AIPAC’s effectiveness as an interest organization is widely recognized. As one longtime member of the development policy community noted: “Without question AIPAC and their lobbying for Israel is acknowledged to be the most successful lobbying of any group that operates around the foreign assistance program.”27 AIPAC’s goals in the aid arena are straightforward. In a summary of its key positions the organization notes that “US aid to Israel is a cost-effective tool of US foreign policy that enhances American national security interests by strengthening our only democratic ally in an unstable and vital region of the world.”28 While increasing aid funding gives AIPAC a common objective with development NGOs and other interest associations, its interests lie in directing aid resources to a single country. In addition to these organized interests, another set of potentially influential societal actors within the aid policy system are Washington, DC-based think tanks, which exert influence through the dissemination of research and policy recommendations. These organizations are primarily engaged in a competition of ideas rather than a competition over resources, though their policy proposals may also express resource allocation preferences. In the aid field, the most active think tanks have been the Overseas Development Council (ODC) and the Center for Global Development (CGD). The ODC conducted development policy advocacy for 30 years before it dissolved in 2000 as a result of declining financial support.29 This organization was credited with emphasizing the importance of the basic needs mandate in aid provision from the 1970s onward and also addressed broader issues such as the link between globalization and development. The ODC encouraged the government to adopt a more coherent approach to aid policy that would make it possible to better evaluate its effectiveness, and also emphasized the need to make poverty reduction a central goal of US aid policies (Sewell 1994). The CGD has emphasized similar themes since its founding in 2001. Other think tanks, such as the Brookings Institution, the Hudson Institute, the American Enterprise Institute, and the Center for Strategic and International Studies, intervene on aid and development issues in a more limited way, as domestic policy and national security issues represent higher priority areas. The development policy interest group landscape is thus quite heterogeneous. Although there are instances of federation and concertation among like-minded actors, for example through the association Interaction in the case of development NGOs or through the Professional Services Council in the case of development contractors, even with these sector-specific associations, the field of organized interests is diffuse. As emphasized above, many of these groups share a common interest in increasing overall aid funding levels, though they may have different

US aid politics 157 priorities regarding aid recipients or sectoral emphases. Reflecting this common interest, a broad coalition of interest groups focusing on the simple question of increasing aid funding emerged in 1995. The US Global Leadership Campaign (USGLC) was founded in response to dramatic budgetary cutbacks affecting aid spending as well as other components of the 150 Account, also known as the International Affairs Account.30 Commenting on the origins of this coalition, one centrally placed observer remarked that “nothing sharpens the mind more than when everyone’s threatened.”31 In addition to reducing development assistance funding, the cutbacks affected areas of international affairs spending that had traditionally received robust support, such as aid to Israel and support for the Export-Import Bank, an agency managing export credits for US corporations. The goal of the founders of the USGLC was to build a coalition capable of conducting professional lobbying to stave off further spending reductions and to advocate funding increases. Over the course of its first decade, the coalition expanded steadily to include some 400 organizations, such as firms in agribusiness, engineering, finance, and pharmaceuticals alongside development NGOs and development contractors. Aerospace giants like Boeing and Lockheed Martin and NGOs like CARE or Mercy Corps have found a common purpose and collaborate within the coalition. Beyond creating a coherent voice for funding increases in international affairs, the USGLC also encouraged organizations with previously more distant relationships within the coalition to soften their view of competitors with different perspectives on how aid monies should be distributed, contributing to healthier relations among member organizations.32 From action related to a narrow aim shared by the diverse membership, a larger sense of community has begun to emerge within this coalition. The rise of the USGLC underlines that important parts of the US business community are generally supportive of increasing aid funding. Support from the business community for aid increases should serve to generate increased governmental support for aid transfers by enlarging the size of the domestic aid constituency. In the United States, numerous interest groups have an interest in the aid budget but these organizations’ demands are not always complementary with NGO demands. The interests of agricultural producers and NGOs may overlap with regard to increasing the supply of agricultural commodities to needy populations, and for-profit development contractors and NGOs may overlap in supporting increased funding for social infrastructure in poor countries, but in other cases interest group demands are more directly at odds with NGO preferences. AIPAC’s focus on aid to Israel, a high-income country, provides a prime example. The participation of these interest organizations in the aid arena introduces competition with NGO demands unless groups articulate a common demand for overall aid increases in addition to their more narrow policy aims. The emergence of the US GLC represented an important development for this very reason: it voices the common interest of its member organizations and unifies the message that societal interest groups present to policymakers.

158 US aid politics

Interest group access to the policymaking process One of the advantages that participation in the USGLC offers to its members is that it allows organizations to multiply their avenues of access to decision-makers through association with members that have access to a different set of governmental actors. Because the governmental networks of Caterpillar and CARE are not likely to overlap due to the nature of their central policy priorities and their geographical bases of operations, joint action can bring mutual benefits in expanding access. The alliance of NGOs and business groups can not only increase access to decision-makers, but also contribute to making the arguments of the actors assembled more compelling. As one NGO representative noted: You take Boeing and Mercy Corps into a meeting and you get their attention because they want to know what these people possibly could say that are in agreement. And they can’t agree on much, but they stop where they have to, and that’s actually been incredibly effective.33 Collective mobilization is advantageous because it increases the weight of participating organizations in the policy process and offers coalition members an ability to build relationships with a broader range of governmental actors than they would be able to court individually. Interest group access to policymakers can occur through two main channels. One is via contacts with the executive branch, comprising the presidency and a host of executive agencies; the other is via interactions with the legislative branch, the two houses of the US Congress. As in other donor countries, consultative committees in the United States provide one formal means for societal groups to interact with executive agencies. The Advisory Committee on Voluntary Foreign Aid (ACVFA) has served as an interface between private development actors and USAID. It is composed primarily of development NGO representatives, but also includes representatives of other organizations such as private development firms and universities. In meetings held every trimester, this committee addresses issues related to policy design and implementation practices. The committee does not have specific responsibilities in policy formulation, and its ability to influence the work of USAID therefore depends on how any given administration decides to engage with the PVO community through this channel.34 In the 1990s, for instance, during Brian Atwood’s tenure as AID administrator, USAID involved the NGO community in instituting reforms in administrative procedures such as reporting requirements that had direct consequences for how the relations between AID and PVO contractors were managed, while after 2001, when Andrew Natsios headed the agency, the advisory committee was viewed more as a forum for exchanging ideas than as a vehicle for providing NGOs with influence.35 In addition to the ACVFA, there is a Board for International Food and Agricultural Development (BIFAD), a more compact committee advising AID on issues related to Title XII programs and largely representing universities involved in agricultural research programs. A Food Aid Consultative Group also exists for NGOs, businesses, and

US aid politics 159 universities to advise AID and the USDA on questions related to the food assistance program.36 Development NGOs and other private actors that take part in the implementation of the aid program maintain regular contacts with the leading executive agencies to address operational concerns.37 The ability of interest groups to shape the policy priorities of these agencies is nevertheless limited by the constraints that agencies themselves face in determining their priorities. At one level, agencies are bound to implement policies that are consistent with the priorities spelled out by the White House, while they are also subject to oversight from the US Congress, which may enact legislation that reduces their freedom of action. Because the Congress has final authority over resource allocation issues, interest group influence at the congressional level can outweigh any influence won in the early stages of the policy or budgetary pipeline.38 As a result, the access that groups have to members of Congress and the staffers that work alongside them in managing their offices and preparing legislation represents a key determinant of their ability to shape resource allocation patterns. Legislators operate under tight time constraints given their responsibilities for contributing to policy formulation across a range of issue areas and their need to maintain ties to their congressional districts and serve as a liaison between constituents and the federal government. These constraints imply that legislators will have to be selective in allocating time to actors seeking influence. The sheer number of interest groups competing for congressional attention further forces legislators to limit the time they give to individual organizations. Interest groups can provide direct benefits to legislators in three main ways, which can in turn influence legislators’ willingness to grant interest organizations access to the policy process. First, interest groups can act as a liaison between a legislator and constituents. If an interest group is linked to a representative’s electoral district, the willingness of a legislator to take their positions into consideration can translate into electoral support from the interest group’s members. Second, an interest group may provide resources to a legislator in the form of campaign contributions that can bolster a legislator’s reelection prospects. Third, interest groups can supply legislators with information about policy options that can enhance their technical understanding of issues. Interest groups vary in the extent to which they can provide these three types of resources (constituent support, money, and information) to legislators. Think tanks are essentially information providers (Rich and Weaver 1998), while NGOs and business groups can provide constituent support and campaign contributions as well. Although Washington, DC-based advocacy organizations fulfill a similar role to think tanks in terms of information provision, many development NGOs also have networks that extend into congressional constituencies. Atlanta-based CARE and Boston-based Oxfam America, for example, have regional offices that contribute to the organizations’ fundraising efforts but also serve as means of building up a capacity for advocacy that mobilizes a larger domestic constituency. The advocacy groups Bread for the World and Results are known for cultivating networks at the grassroots level nationwide with the express purpose of having

160 US aid politics constituents make a case for global poverty alleviation to their elected officials.39 The One Campaign, launched in 2004, has followed a similar strategy, attempting to build local support to produce change at the national level. Organizations that have the full range of resources at their disposal can be expected to have the most ready access to legislators. AIPAC provides a notable illustration of an interest organization that can combine information provision activities, direct financial support, and constituent-driven lobbying in its influence efforts. Business groups that operate across a number of districts should naturally also have an advantage in gaining access to policymakers.40 For interest organizations of all stripes, patterns of access may also relate to the personal networks that interest group representatives cultivate. NGOs may have more access to key decision-makers than their dearth of resources and lack of national constituencies would normally predict due to the individuals who sit on their advisory committees or boards of directors. NGOs attracting former public servants to their ranks have the possibility to maintain regular contacts with senior government officials.41 In sum, while interest organizations have limited formal channels for accessing the policymaking process given the restricted scope of consultative bodies within the executive branch, because legislators tend to be responsive to societal actors, members of Congress offer important access points for interest organizations within the policy process. The sheer variety of actors seeking a share of legislators’ attention means that elected representatives have to be selective in allocating their scarce time. In this context, the access that organizations have to legislators can be influenced by organizational resources. In contrast to interest groups that are constituents, campaign contributors, and information providers all at once, NGOs can at most offer legislators incentives to provide access on the basis of their ability to offer relevant information and their role as representatives of constituent interests. Moreover, NGOs operate under resource constraints due to the nature of their funding sources. On the one hand, they must be careful to avoid the perception that their advocacy work is being underwritten by public funding; on the other hand, diverting resources from development work toward political action may limit the contributions they are able to collect from private sources. These constraints suggest that NGOs will naturally have less access to legislators than organizations with bases in many congressional districts that have the resources to support campaigns. Limited access to a large number of legislators may encourage NGOs to focus on narrow organizational aims in their governmental affairs work.

The distribution of authority in the aid arena In attempting to influence aid policy choices, interest groups in the United States face a diffuse policymaking system where policy formulation and implementation responsibilities are divided among numerous agencies within the executive branch, including the State Department, the Treasury Department, the US Department of Agriculture, and USAID. Another dimension of the fragmented policymaking system is the substantial role played by the legislative branch in shaping aid deci-

US aid politics 161 sions. While legislatures in many other donor countries participate in aid politics through the approval of the aid budget, the involvement of American legislators in this policy area extends to micro-level determinations about how aid resources can be spent. The legislative arena is also the main place where interest groups focus their efforts to influence aid choices. The practice of earmarking aid funding gives individual members of Congress an ability to require executive agencies to disburse funds in very specific ways, and by extension constrains the ability of agencies to autonomously determine aid priorities.42 This section outlines the responsibilities and interests that actors across the US government have in the aid policy system in order to provide a baseline for understanding the patterns of contestation that underlie US aid choices. The White House and the National Security Council As the nation’s chief executive and an elected official representing the entire populace, the president is the leading governmental actor in the foreign policy arena. Though the US Constitution establishes foreign affairs as a domain of shared power between the Congress and the presidency (Fisher 1988), the president is the head of state and thus the preeminent representative of the country in international relations. Beyond the formal responsibilities attributed to the president in the Constitution, including the power to negotiate treaties and to act as commander in chief in times of war, the president has a right of initiative in the legislative process and has a unique ability to shape the national political agenda (Kingdon 1995; Peake 2001). Through this agenda-setting function and the appointment of the leaders of executive agencies, the president’s preferences can set out broad priorities in foreign assistance spending. The president sits atop a federal administration that translates his general priorities into policy and advises him on the appropriateness of specific policy choices. The closest presidential advisors are the members of the National Security Council (NSC), which include the vice president, the secretaries of state and defense, the director of central intelligence, and the chairman of the joint chiefs of staff (Kegley and Wittkopf 1996). Although the role that the NSC and National Security Advisor assume in decision-making processes likely depends on the way the president chooses to manage this body (Rockman 1981; Hermann 1994), it nevertheless represents the highest-level advisory group attached to the White House and is the primary organ responsible for interagency coordination around foreign policy issues. Presidents have also made use of organs for interagency coordination on economic policy issues, including foreign economic policy, with Bill Clinton’s creation of a National Economic Council representing an attempt to provide a more formalized advisory body than had existed under previous administrations (Weatherford and McDonnell 1996). As the short list of NSC principals suggests, the president’s main advisors occupy positions that require a constant evaluation of the threats facing the United States, and the NSC is naturally preoccupied with strategic considerations. As such, the NSC can be expected to view aid through a lens linking aid provision to

162 US aid politics the maintenance of military and political alliances enhancing US security interests or to the stabilization of regions that the administration considers to be of vital interest. The State Department An emphasis on strategic considerations also characterizes the aid preferences of the State Department, the government department responsible for managing diplomatic relations. The State Department was responsible for administering less than 20 percent of the foreign assistance budget in 2005 (OECD 2006c), although this figure belies its importance in influencing aid decisions. The aid preferences of the State Department relate to the maintenance of a volume of funding to promote American security and economic interests abroad. The State Department has viewed aid as an instrument to secure support from allies, to provide US firms with access to foreign markets, and to promote political stability (US Department of State 1982). The State Department’s diplomatic lens has also been associated with a preference for giving aid to address short-term political issues rather than longterm development goals.43 A key aid instrument used to advance the short-term diplomatic and military objectives favored by the State Department has been the Economic Support Fund (ESF). This instrument has been characterized by its flexibility, being subject to fewer conditions and less direct congressional oversight in comparison to other types of assistance. The State Department oversees where ESF funds are allocated, while USAID actually administers the program. Although the instrument is tied directly to support for allies, it constitutes economic rather than security-focused assistance. The ESF mainly aims to aid recipients by providing balance of payments support to ensure that recipient governments will have necessary resources in their own national accounts to devote toward their defense. The ESF has traditionally been an instrument that has been highly concentrated in its use. During the Vietnam era, countries in Southeast Asia were the primary recipients, while Egypt and Israel became leading recipients of ESF funds from the late 1970s onward (Nowels 1989a). Consistent with its mandates in the areas of international diplomacy and national security, the State Department has also traditionally held responsibility in the aid arena for contributions to UN agencies and issues such as migration and counter-narcotics policy (OECD 2006c). The State Department has also been a leading agency with respect to humanitarian assistance, reflecting its mandate to respond to international crises. The Department of the Treasury In the aid policy process, the main role of the US Treasury Department is to manage relations with the IMF and multilateral development banks. This role has given the department direct responsibility for administering a large share of multilateral assistance. Its total aid share has generally been lower than the State Department’s: in 1998 it amounted to 12.6 percent of the aid budget, in 2002 to

US aid politics 163 10.7 percent of the total aid budget, and in 2005 its share was down to 4.5 percent of total aid spending (OECD 2006c). As the leading governmental actor overseeing the domestic economy and foreign economic relations, its weight outside of the aid arena is substantial. Its perspective on aid issues is shaped not only by its special relationship to international financial institutions but also by a more general preoccupation with economic efficiency. As one observer noted, the Treasury Department is filled with personnel that are finance people, that are economists, that come out of banks and so on, and so they want to see the numbers, they want to see the analysis, and they could care less about what this country did to help the US with a vote at the UN.44 This concern for a demonstration of economic returns places the Treasury’s view of appropriate uses of aid funds at odds with the orientation of a State Department concerned with maximizing diplomatic gains with the support of the aid program. However, the role of the Treasury in the bilateral aid program is limited.45 The Treasury Department participates in several interagency advisory bodies, relating to food aid programs and issues concerning relations with multilateral institutions such as UN agencies and the OECD DAC (Nowels 1989b), but its engagement on aid issues relates mainly to US policy toward the international financial institutions. The United States Agency for International Development USAID was created with the passage of the Foreign Assistance Act of 1961, which sought to rationalize the administration of the economic component of US aid programs (Ruttan 1996). Although USAID traditionally administered a larger share of the US aid budget than any other governmental department or agency, accounting for 64.3 percent of the aid budget in 1998, 50.2 percent in 2002, and 38.8 percent in 2005 (OECD 2006c), and is the repository of development expertise within the US government, it is, as one observer of US aid politics noted, “a strategically disempowered agency” within the aid policy system.46 On the one hand, this disempowerment results from the agency’s subordinate position within the executive branch. The State Department and the NSC in particular restrict the scope of USAID’s autonomy by influencing how aid can be allocated geographically. On the other hand, the agency’s ability to independently shape aid choices is also limited by constraints imposed by the US Congress, especially the constraints that emerge as a product of congressional earmarks, which mandate that the agency must allocate resources toward specific types of projects favored by individual members of Congress. Lancaster (2007) reports that, for the 2005 fiscal year, in three of the key program areas AID was responsible for implementing (the Child Survival Account, the Development Assistance Account, and the Economic Support Fund), the value of earmarks approached or exceeded the total value of appropriations. Earmarks for Child Survival added up to $1.6 billion compared to

164 US aid politics appropriations of $1.5 billion, Development Assistance earmarks totaled $1.7 billion in comparison to appropriations of $1.4 billion, while ESF earmarks totaled $2.5 billion, just below the $2.8 billion appropriated for that instrument (Lancaster 2007: 88). In order to preserve spending discretion given these constraints, AID has had to resort to counting individual projects as fulfilling multiple earmarks. For example, the agency might address an earmark to promote environmental protection, an earmark to improve agricultural production, and an earmark to deal with water issues by implementing a single project related to water conservation in farming.47 As Ruttan (1996) notes in his wide-ranging overview of the US foreign assistance program, USAID can be distinguished from other governmental actors involved in the aid arena both by its ‘development ideology’ and its concern for making efficient investments in promoting development goals. Ruttan writes that “agency staff share with technocrats in the planning agencies of developing countries a view that, when assistance resources are used to achieve political objectives, it is often at the cost of economic growth and viability” (1996: 12). In the 1970s, the work of AID became oriented around the basic human needs approach to development, emphasizing that aid should be directed to poor populations and focus on areas such as education, health, population planning, and food security. Though the basic needs concept continued to underlie AID’s approach to development in subsequent decades, the agency’s development priorities also evolved with changes in the agency’s leadership. Under Peter McPherson’s long tenure as AID administrator in the Reagan administration, the agency increasingly focused on private sector development and investing in agricultural production to enhance recipient economic growth prospects, while the emphasis on the agricultural sector declined during the Clinton presidency.48 In attempting to defend its own budget and implement programs promoting its development priorities, AID faces numerous obstacles. In addition to the constraints imposed by more powerful actors within the executive branch, the agency is at a natural disadvantage compared to other government departments that have operations in congressional districts across the country because development funding can easily be perceived as a government expenditure that does not provide a direct financial return domestically.49 To make matters worse, the development NGO community, a domestic constituency that might be expected to be a reliable base of support for the agency in the budgetary process, has not always fulfilled that role.50 In congressional testimony addressing the possible restructuring of the aid administration in 1997, for instance, Interaction’s president revealed one of the NGO community’s key criticisms of the agency: AID has increasingly relied on large contracting mechanisms, which require more administrative oversight and often exclude the grassroots organizations best suited to carry out a given project. For AID truly to change the way it does business, layers of bureaucracy, as well as statutory and regulatory burdens, need to be lifted. (Taft 1997: 55)

US aid politics 165 The NGO community has sought to secure the place of NGOs within the US aid program, a goal that is not necessarily consonant with preserving AID’s ability to steer the aid program, even if NGOs and AID share the common objective of reducing global poverty. The United States Department of Agriculture The USDA has a reliable domestic constituency to support its continuing role within the US foreign aid program. This constituency includes NGOs that distribute commodity support as well as agricultural producers. The USDA’s primary responsibilities in the aid arena relate to the management of food assistance provided under Public Law 480 (PL 480). PL 480 covers several types of food aid programs, including concessional loans for the purchase of US agricultural commodities, direct transfers to recipient governments, and aid disbursed via relief NGOs and international organizations such as the World Food Program. The USDA shares responsibility for PL 480 with USAID, which implements Titles II and III of the PL 480 program, dealing with emergency assistance and commodities support used to contribute to efforts to improve local agricultural production and food security (US House of Representatives 1986). The USDA serves as the lead coordinating agency on food assistance questions and prepares the budget for food aid submitted to the Office of Management and Budget (OMB) and the Congress. The USDA does not have clear preferences regarding where its portion of food aid allocations are sent, so its allocations tend to be influenced by solicitations made by PVOs as well as by the priorities of the State Department and USAID.51 Food assistance is widely considered to be a popular component of the US foreign assistance program (Martin 2000; Lancaster 2007). Stated simply, food aid is perceived to represent a win-win situation: agricultural producers can obtain outlets for surplus commodities while alleviating the suffering of the world’s hungry.52 However, the perception of mutual benefit to the suppliers and recipients of food aid only represents a partial explanation for congressional willingness to fund food assistance programs. The particular coalition of domestic interests that supports food aid contains associations such as the American Farm Bureau Federation, the National Association of Wheat Growers, and the National Corn Growers Association, which have a presence across many states and congressional districts, particularly in the farm states that are overrepresented in the American political system. Together with a group of leading NGOs, these associations comprise a broad coalition with disproportionate access to the policymaking process. Although food assistance is not discussed in detail below in the analysis of policy choices through time, the popularity of this element of the aid program illuminates why aid commitments may be higher in some cases than others. The program has support both from an NGO constituency and a constituency of more resource-rich producer groups benefiting from privileged access to key decision-makers.

166 US aid politics The Millennium Challenge Corporation Near the end of the period examined in this study, a new agency was added to the aid landscape in the United States. First proposed in 2002, established by law in 2003, and formally created in 2004, the purpose of the Millennium Challenge Corporation (MCC) was to provide development assistance “in a manner that promotes economic growth and the elimination of extreme poverty and strengthens good governance, economic freedom, and investments in people.”53 The agency’s mandate was inspired by aid effectiveness research underlining that aid works best when it is injected into countries with favorable economic policy climates (Burnside and Dollar 2000). While the developmental goals of the new agency were similar to the goals promoted by USAID, the creation of the MCC was intended to chart a new course in the US aid program by setting out transparent selection criteria for aid recipients measuring the quality of governance, the levels of support for education and health care programs, and the commitment to economic freedom in recipient countries. The announcement of the establishment of this new agency carried a pledge to considerably increase aid funding: the Millennium Challenge Account was slated at the time of its creation to receive $5 billion in development assistance, which would provide for a 50 percent increase in overall aid funding in comparison to 2002 levels and represent an even larger increase in development-oriented aid outlays (Radelet 2003b). From the time of its creation, the MCC enjoyed one key advantage over USAID because its authorizing legislation was designed to insulate the new agency from congressional micromanagement. Nevertheless, the MCC’s work would be overseen by a board composed of the heads of other executive agencies, notably the State and Treasury Departments, which could potentially influence country selection (Radelet 2003b).54 Although the overall mission of the MCC suggests that it would support increasing the poverty reduction orientation of US aid flows, in adding a new player to the mix of development policy actors, the agency’s creation presented a potential challenge to USAID’s ability to shape the terms of the development debate and to attract additional funding. The Congress In the American system of divided government, the Congress shares authority in the foreign and domestic policy spheres with the executive branch. Among the key foreign policy powers of the legislative branch stipulated in the US Constitution are its exclusive right to declare war and its responsibility for regulating foreign commerce (Fisher 1988). While the Congress has historically yielded to the presidency in the domain of ‘high politics’ (Lindsay 1992–3), allowing presidents to dominate national security policy formulation, the central place of the Congress in shaping foreign economic policy choices has been well-documented, particularly with respect to the politics of international trade (Goldstein 1988; Lohmann and O’Halloran 1994; Nollen and Quinn 1994; Bailey 2001). The Congress has several responsibilities in the aid arena: it approves the legislation that provides

US aid politics 167 the framework for how aid is administered, it sets the level of appropriations for aid programs, and it also exercises oversight of the federal agencies involved in aid implementation. The US Congress is not a unitary actor. It is composed of two chambers: the 435 members of the House of Representatives are elected to two-year terms and represent districts with roughly equal populations, whereas the 100 members of the US Senate are elected to six-year terms and represent state-wide constituencies that vary greatly in size and population. The range and scope of policy issues the Congress addresses create demands for legislative specialization. As a result, the congressional committee system plays a central role in the preparation of legislation, the determination of spending levels, and oversight of the executive branch (Oleszek 1983). Committees act as agenda-setters in their areas of emphasis and promote a concentration of policy expertise (Shepsle and Weingast 1987). The concentration of responsibility for specific issues makes committees a focal point of interest group influence efforts. Given the diverse channels of policymaking and budgeting that combine to form the overall foreign assistance budget, numerous committees have some responsibility for overseeing parts of the aid program. For example, food assistance programs fall under the purview of agricultural committees, while the review of US policy toward multilateral development banks is relegated to banking committees. For interest groups seeking influence over bilateral aid decisions, the key committees are the Senate Foreign Relations Committee and the House Committee on International Relations, the committees that produce the authorizing legislation for aid programs, and the Appropriations committees in both houses that determine the level of funding for programs proposed by the executive branch. The committee system serves to restrict the number of highly influential legislators on a given issue. At the same time, the large size of the Congress means that these sub-groupings contain more than a small handful of legislators. Around 50 representatives sit on the House International Relations Committee, while some 20 senators are represented on the Senate Foreign Relations Committee. The Appropriations committees in both houses are even larger, though the Foreign Operations subcommittees that deal most directly with aid financing questions have no more than 15 members.55 Even though the division of congressional labor by committee offers interest groups a narrow field of prime targets, budgets must ultimately be approved by the broader legislative body and aid advocates must therefore gain the support of a congressional majority to maintain desired funding levels. It is commonly understood that legislators are inclined to act in a manner that increases their re-election prospects, especially by being responsive to their constituents. While responsiveness to constituents’ demands does not always mean securing funds to redistribute to one’s legislative district—providing constituent services or voting in line with constituents’ interests may also do the trick (Alvarez and Saving 1997)—in voting on decisions about how to allocate resources, members of Congress can be expected to attempt to ensure that federal funds bolster their electoral fortunes.

168 US aid politics The politics of the pork barrel is one extension of this logic. The scale of pork barrel spending, relating to projects where funding is earmarked for a specific purpose and a targeted beneficiary, is often overstated (Lee 2003). Nevertheless, congressional earmarking can serve as an important means of building supporting coalitions for potentially unpopular legislation (Evans 1994; Lee 2000, 2003). Aid spending has been especially vulnerable to earmarking. As an example, a review of aid programs prepared by the Congressional Research Service in 1988 noted that earmarks in that year affected 81 percent of USAID’s operating budget, reflecting a rising trend in the use of earmarks in the course of the 1980s (Nowels 1989b). The appeal of earmarking is understandable given the characteristics of the aid issue area and the incentives legislators respond to in a system of representation where they are bound to defend parochial interests. On the one hand, the low salience of the issue suggests that legislators will not face scrutiny from voters for directing aid funding toward the pet projects of special interest groups. On the other hand, earmarking lowers the prospect that aid spending will be directed solely to a foreign constituency that can contribute little to enhancing congressional electoral fortunes. Reflecting the need to appeal to members of Congress, USAID has made a point of emphasizing the aid program’s benefits to domestic constituencies. In informational materials, the agency has, for example, stressed that 80 percent of AID funding returns to American firms and NGOs (USAID n.d.). Even with this winnowing down of the net transfer to aid recipients, the Congress has often been a source of attacks on aid as a drain on taxpayer resources. North Carolina Senator Jesse Helms, as chairman of the Senate Foreign Relations Committee in the 1990s, was one of the most outspoken congressional opponents of aid spending. In pushing for legislation that would eliminate USAID in the mid-1990s, Helms used his position to campaign against what he considered to be a wasteful and overly bureaucratized part of the federal budget. On this issue, Helms claimed to represent the view of the broad public, noting that Americans “do not want to keep the fat bureaucracy in place. They do not want to continue to spend billions upon billions of dollars on foreign aid in corrupt countries” (US Senate 1995b). In their study of the link between public and governmental attitudes on foreign aid, Kull and Destler (1999) suggest that many members of Congress share this perception, though public opinion research indicates that a majority of Americans actually support aid spending. This gap between a congressional perception that the public opposes aid and polling indicating that Americans support it is likely attributable to how members of Congress assess the importance of issues to their constituents. The low priority Americans attach to aid issues relative to other concerns can easily be perceived as an absence of concern. The challenge of NGOs and other interest groups active in this policy area is to demonstrate to members of Congress that there is indeed a domestic constituency supportive of aid spending. In sum, the United States provides an example of a highly fragmented aid policymaking system. Though there are numerous executive agencies with a hand

US aid politics 169 in managing the development assistance budget, the greatest contributor to the fragmentation of aid policymaking in the United States is the role that individual legislators can play not only in approving the aid budget, but also in directing funds toward very specific aims.

The evolution of policy choices In tracing aid policymaking in the United States from 1980 to 2005, the steady downward trend in aid outlays from the beginning of the 1980s onward and the stagnancy of aid flows in the 1990s are two key outcomes that must be explained in order to present a compelling account of why US aid commitments have taken the form they have. The central fault line in the aid arena in the 1980s and 1990s was drawn between the Congress and the executive branch. Over time, the increasing assertiveness of the Congress in foreign affairs that followed from disappointment with the ‘Imperial Presidency’ of the Vietnam and Watergate era (Cronin 1980; Destler 1981) extended to aid politics as well, with friction over US policy toward Central America and Southern Africa reducing congressional willingness to provide aid to support the Reagan administration’s foreign policy agenda. Congressional assertiveness in challenging Reagan’s foreign policy preferences was also driven by economic factors. Though the US economy performed well during most of the period this study covers, the accumulation of debt and persistence of budgetary shortfalls drove the Congress to attempt to rein in executive spending, and aid funding represented an easy target for cutbacks. Hopes for a peace dividend in the aftermath of the Cold War were largely dashed in the 1990s. With the fall of communism in the Soviet Union and Eastern Europe, the justification for providing aid to compete with the global Soviet threat lost its luster. At the same time, the justification for reducing aid to improve the federal budget’s health became more appealing, and Democrats and Republicans alike favored cutbacks to restrain government spending. USAID, a structurally weak governmental actor, found itself in a particularly difficult position in the 1990s, when forces within the Congress and in the administration threatened not just to reduce the agency’s funding but to eliminate it. The long-term decline in US aid commitments halted as a result of an exogenous stimulus for a change in course. Following the attacks of September 11, 2001, executive preferences changed to support greater aid investments. A Republicancontrolled Congress became more acquiescent to presidential demands as a result of the attacks, allowing a reinvigoration of the foreign assistance program to take place. The account that follows draws particular attention to the relations between the Congress and the executive branch, recognizing that the influence of societal interests in the aid process should be reflected in the positions taken by the Congress, which served as the primary vehicle for the expression of interest group demands in the American political system. By the start of the 1980s, the Carter presidency had created a significant legacy in the US aid program due to a foreign policy triumph. The negotiation of the Camp David Peace Accords sought to stabilize the relationship between Egypt and

170 US aid politics Israel and prevent future conflicts from erupting between them (Quandt 1986). To encourage Egypt and Israel to accept this agreement, the US had provided substantial aid to both countries in the lead-up to the peace negotiations, and the peace agreement cemented the status of both countries as leading aid recipients. Although Carter emphasized the need to adhere to moral principles in US foreign policymaking, notably by drawing attention to the question of human rights, patterns of aid allocation under his presidency reflected the dominance of the strategic concerns that preoccupied his predecessors and successors alike (US Department of State 1980; Lebovic 1988). While a humanitarian motivation underlay proposed increases in development assistance and food aid spending in particular, these humanitarian motives were couched firmly in the logic of Cold War competition. Though the overall aid budget experienced a sharp drop in 1981, this reflected the irregular patterns of US replenishments to multilateral development banks rather than a shift in bilateral aid allocation patterns, which were otherwise stable in the late 1970s and early 1980s (OECD 1982). In 1981, Ronald Reagan replaced Carter in the White House and helped to put the Senate in Republican hands, a notable change because it was the first time in 26 years that Republicans had gained control of a house of Congress (Davidson and Oleszek 1984). The absence of fully divided government in the aftermath of the 1980 elections proved instrumental in allowing the new administration to push its budgetary priorities through the Congress in 1981. The Reagan administration proposed dramatic changes in US economic policy by promoting wide-ranging tax cuts as well as public expenditure reductions, reflecting the administration’s belief that big government was responsible for the country’s economic problems (Leloup 1982; Comiskey 1987). In spite of government spending reductions on domestic programs, these policies resulted in budget deficits and a larger national debt (Bergsten 1981). This tendency was reinforced by the administration’s simultaneous emphasis on increasing national defense spending. From the beginning of his term, President Reagan promoted the largest US military build-up since the Korean War in the early 1950s (Posen and Van Evera 1983). Thus, for the Reagan administration, foreign affairs spending and domestic spending followed two different logics. New resources were needed to maintain an assertive international posture in the face of continued military competition with the Soviet Union, while reduced domestic expenditures were viewed as a means of addressing domestic economic difficulties. Ultimately, the imbalance between the administration’s foreign and domestic policy priorities generated tension with the Congress, both because it signaled a reassertion of executive power in foreign relations and because it imposed constraints on the ability of members of Congress to protect funding for their constituencies. An early sign that the Congress, even with a Republican majority in the Senate, would not allow the Reagan administration’s foreign policy priorities to go unchallenged was the passage of the Boland Amendment in 1982. This legislation sought to prohibit US military involvement in Nicaragua, where a rebel group known as the Contras was fighting an insurgency against the Sandinista government

US aid politics 171 which was considered to have Marxist leanings (Scott 1997). Though the Boland Amendment and its successor Boland II (passed in 1984) were designed to restrict military support channeled through the Central Intelligence Agency (CIA) and Department of Defense, the conflict between the presidency and the Congress reflected in these amendments also had implications for development policy. To finance its policy toward Central America, the administration required budgetary approval from the Congress. The security or military focus of the administration was evident in its funding requests, which privileged securitypromoting assistance through the ESF and via grant military aid. In 1983, the Congress called this emphasis on security-supporting assistance into question in hearings on economic and security assistance to Latin America. In opening remarks to these hearings, Democratic Representative Michael Barnes, the chairman of the House Foreign Affairs Committee’s Subcommittee on Western Hemisphere Affairs, noted that “these rather drastic shifts in the budget, as budget shifts go, clearly indicate the administration’s priorities . . . I think those priorities demonstrate a fundamental misperception of what our problems are in Latin America” (US House of Representatives 1983: 2). For Barnes, these problems were predominantly of an economic rather than a military nature and hence the appropriate policy response would be to invest more in aid than in military assistance. Barnes ultimately succeeded in pushing for larger developmentoriented investments, amending authorizing legislation to offset reductions in military spending with increases in development aid accounts. The early 1980s were marked by a certain level of stability in the aid budget. While the Congress was skeptical about allowing aid to service military objectives and constrained presidential aid prerogatives, overall aid levels were not affected by disputes over the balance of aid instruments. While the Reagan administration clearly favored the use of aid resources for diplomatic and strategic purposes, USAID also maintained steady support in this period, in part because it adapted to the Reagan policy agenda under the leadership of AID administrator Peter McPherson. McPherson proposed four pillars that would serve to guide the agency’s work. These pillars related to (1) policy dialogue and reform; (2) institutional development, favoring decentralization and reliance on private development partners; (3) technology transfer in areas such as agriculture and family planning; and (4) increased emphasis on the role of the private sector in development (US House of Representatives 1984b). In emphasizing private sector development in particular, the agency’s mission aligned with the administration’s broader ambition to reduce the role of the state in economic planning. At the same time, the agency devoted more attention to agricultural development, while continuing to address social issues such as family planning, health care, and education, which had been a focus of its work since the 1970s. Within the development assistance account, separate from the ESF, investments in agriculture represented more than half of aid expenditures throughout the 1980s (Nowels 1989a). A parallel development during this period was the increasing organization of the US development NGO community, which coalesced to form Interaction in 1984 on the heels of collaborative efforts between two other coalitions, the

172 US aid politics American Council of Voluntary Agencies for Foreign Service and Private Agencies in International Development (PAID), in an attempt to convince the government in the early 1980s that the close coupling of security and economic assistance was a mistake (Ruttan 1996). As Figure 6.6 suggests, this increased coordination was not associated with increasing financial resources in the NGO sector at that time. Instead, NGOs were likely driven by external pressures for mobilization, including the challenge that the emphasis on private sector development presented to a community that had traditionally emphasized social development investments and the challenge associated with the redefinition of the relationship between NGOs and AID following from the agency’s evolving agenda (Ruttan 1996). In the wake of the highly publicized African famine of 1985, the increasing policy engagement of the NGO community was manifest in the elaboration of a concept paper that proposed new directions for US assistance to Africa, components of which found resonance in legislation that created a Development Fund for Africa later in the decade (US House of Representatives 1990). After its creation in the mid-1980s, Interaction regularly provided testimony presenting the view of the development NGO community on aid issues. One NGO that had a noticeable impact on US foreign policy in the mid-1980s was the organization TransAfrica, the Black American foreign policy lobby for Africa and the Caribbean. On aid issues, TransAfrica lobbied specifically for aid increases to Africa and echoed the theme of better balancing investments in economic assistance with security assistance provided to the region. In testimony before the House Foreign Affairs Subcommittee on Africa, TransAfrica’s president Randall Robinson lamented the low priority given to the African continent, noting that “economic justification could not be the overriding factor in light of the fact that Israel, with its $4,500 per capita income, is slated to receive $2.5 billion in total assistance while drought-stricken Chad, for example, with a $120 per capita income and hundreds of thousands threatened with starvation, is earmarked for $9.3 million in total assistance” (US House of Representatives 1984a: 5). TransAfrica’s foreign policy lobbying had its most visible effect outside of the aid arena on the question of South African apartheid, however. The Reagan administration had pursued a policy of ‘constructive engagement’ with the white minority government, arguing that reform of the regime could be encouraged by maintaining a dialogue with the South African government rather than contributing to its international isolation (Klotz 1995). This policy reflected the administration’s security agenda, as Southern Africa was considered a region of strategic concern (US House of Representatives 1984a). Following pressure from TransAfrica and its ally the Congressional Black Caucus, the Congress passed the Comprehensive Anti-Apartheid Act of 1986 over a presidential veto, providing another example of the willingness of the legislative branch to challenge the executive branch on foreign policy matters. The overall foreign affairs budget itself came under increasing pressure in the years that followed as the Congress grappled with the problem of how to confront the fiscal problems generated by deficit spending and the government’s accumulation of an ever larger debt. In 1985, the Congress had passed the

US aid politics 173 Gramm-Rudman-Hollings Act, a bipartisan proposal. This act attempted to impose limitations on growth in the federal deficit by introducing procedures that would set deficit-reduction targets and institute automatic spending cuts across a range of government programs if the targets were not met (West 1988). Thus, future administration funding requests for the international affairs budget would occur against a constrained budgetary backdrop. Speaking before the Senate Budget Committee in February 1986, Secretary of State George Schulz encouraged the Congress to limit foreign affairs spending reductions, including the aid budget, since “further reductions would compound our risks, weaken our friends, and add to our dangers. Foreign assistance is a kind of insurance, shoring up our security” (US Department of State 1986). While this statement further emphasizes the security rationale underlying the administration’s support for foreign aid, it also highlights the conflict between an administration interested in maintaining more robust foreign affairs funding levels and a Congress more inclined to view this domain as a fertile area for spending reductions. The role of the Congress in aid funding decisions was not limited to the determination of overall spending levels. Due to earmarking, Congress had enacted numerous constraints on the types of development programs that AID in particular could carry out. Responding to the tendency toward congressional micromanagement of development assistance funding through this channel, AID proposed the creation of a Development Fund for Africa (DFA) in 1987. The DFA emerged not only from AID but also as a product of interagency reflection within the executive branch on how to make aid to Africa more effective (US House of Representatives 1987). As noted above, development NGOs also provided input in attempting to increase the priority assigned to addressing poverty in Africa. The DFA’s basic logic was to insulate aid funding for Africa from legislative pressures to allow greater flexibility in programming within AID and to permit multiyear resource planning. In outlining the key elements of the DFA before Congress, AID administrator Peter McPherson made the case for greater autonomy from congressional mandates: “restrictions or earmarks will limit our ability to respond to evolving situations without disturbing ongoing negotiations for other activities” (US House of Representatives 1987: 163). The Congress agreed to accept the DFA and limitations on congressional intervention in this corner of the aid program in exchange for assurances by AID that there would be regular dialogue with the Congress concerning the results of initiatives funded under this envelope.56 Managed by AID’s Africa Bureau, the DFA allowed the agency to pursue innovative programming centered on developmental goals. As one retired aid official noted, with the DFA “we were able to develop a decision on what to do with the money that was based on country-specific requirements of need, rather than along a congressional perspective on what should be done. So that was a tremendous move forward.”57 By eliminating earmarks in this area, AID was able to better steer the funding it was allocated toward poverty reduction goals. In its final years, the Reagan administration continued to face difficulty in obtaining desired funding levels for international affairs accounts. While recognizing congressional difficulties in making the budgetary tradeoffs necessary for

174 US aid politics restoring discipline in public finances, Secretary of State Schulz indicated in 1987 that “over the past 2 years, Congress has reduced the foreign affairs budget far too drastically. Unless we take action now to reverse current trends, many foreign policy gains we have made in recent years could be wiped out” (US Department of State 1987). This reversal did not occur as the decade came to a close. With the Cold War in its death throes, aid funding reached a historic low in 1989, amounting to just 0.15 percent of GNI. Under the new administration of George H.W. Bush, the executive branch continued to demand funding increases for a foreign affairs budget that had been languishing. The administration’s funding requests displayed great continuity with the priorities of the Reagan administration, putting aid to Israel and Egypt and assistance to countries such as Greece, Turkey, and the Philippines, where the US held base rights, and to other ‘regional friends’ ahead of commitments to development-focused accounts (US Department of State 1989). Reflecting the perception that the global context was rapidly changing, the House Committee on Foreign Affairs set up a task force in 1988 to review foreign assistance programs. The conclusions of this task force were presented in February 1989 and contained themes that would persist in deliberations on foreign aid in the following decade. Among the main improvements recommended in this process were proposals to elevate poverty alleviation as a guiding objective of development assistance efforts, to create a high-level position to coordinate foreign aid programs, and to reduce congressional earmarks (US House of Representatives 1989). The impulse for reform had also reached the Senate by that point, with Nancy Kassebaum, a Republican senator, unsuccessfully proposing a bill that sought to eliminate earmarks and to reform the Foreign Assistance Act, the framework for US aid policy dating back to 1961. On the need for reforming the aid program, Kassebaum remarked in 1989 that the program was “ham strung by too many conflicting objectives, legislative conditions, earmarks and bureaucratic red tape” (US House of Representatives 1991b). If such introspection was spurred in part by the changing international context, it also reflected the recognition that, in an era of constrained budgetary resources, the government would need to demonstrate that its aid programs were efficient in order to better justify continued funding. Aid funding stabilized under George H.W. Bush’s presidency, responding to the administration’s desire to manage and consolidate the process of democratic transition in countries leaving the shadow of communist rule. Foreign assistance to the former Soviet Union became a key area for debate between the administration and the Congress, with members of Congress eventually substantively influencing the content of post-Soviet aid provided under the umbrella of the Freedom Support Act (Tarnoff 2004). Although the Bush administration was interested in maintaining funding levels for aid in general, bilateral assistance directed toward development objectives did not become a higher priority: the administration’s foreign affairs budget request for 1992 favored increases in foreign military financing and the ESF as well as in aid to Central and Eastern Europe, but proposed the same funding level for the development account as it had in the previous year (Baker 1991).

US aid politics 175 The lack of real initiative in the area of development-oriented aid on the part of the Bush administration could be attributed to the dominance of the First Gulf War in late 1990 and early 1991 on its foreign policy agenda. In testimony before Congress on the subject of aid funding requests for the 1992 fiscal year, AID administrator Ronald Roskens hinted that any movement within the administration to address aid reform issues that the House of Representatives had raised was not something that AID could freely determine alone, indicating that the State Department’s preoccupation with the Gulf War would hamper AID’s ability to present a timeline for preparing foreign assistance reform legislation (US House of Representatives 1991a). Events external to the aid policy process itself were influential in determining the preferences of governmental actors toward aid policy. In this case, the administration’s focus on maintaining an international coalition to defeat Saddam Hussein’s Iraq diminished the attention given to adapting the aid program to the new world order envisaged by the administration. The end of the Bush administration did see a slight increase in aid to Africa and to LDCs, reflecting humanitarian relief efforts in the Horn of Africa in particular. The 1992 elections brought an opportunity for a change in direction in US development assistance policy, as the Democratic party came to control both the executive and legislative branches of government. One early sign that the Clinton administration would make strides in reforming the aid administration, reform advocated since the late 1980s but never realized, came in AID administrator Brian Atwood’s testimony to Congress at the start of his tenure. Atwood commented that we need to straighten out AID . . . We want to streamline it. We want to focus on the effectiveness of our programs, because only then can we make the case to the American people and the Congress that this is money worth spending. (US House of Representatives 1993: 73) Shortly thereafter, Secretary of State Warren Christopher took his turn testifying in front of the House Foreign Affairs Committee, outlining the central foreign policy priorities that the Clinton administration had formulated following the elections that would shape foreign policy and aid decisions. These goals included prioritizing global and national economic growth, adapting security arrangements to new threats, and promoting democracy and free markets overseas. Even though the new administration proposed modest increases in development aid funding for the coming fiscal year, the continuing budgetary difficulties that the government faced did not augur well for aid increases (US House of Representatives 1993). Addressing domestic economic problems was a central priority for the administration itself. After all, the recession that began in 1991 had helped to defeat the incumbent administration (Lipset 1993). In the Clinton administration’s view, part of the solution to national budgetary woes and to popular disenchantment with the federal government lay in a process of bureaucratic reform. In September 1993, Vice President Al Gore presented a performance review of the

176 US aid politics federal government to the president, issuing recommendations intended to “create a government that works better and costs less” (Gore 1994: 317). AID was one of the first federal agencies to be targeted as part of the general government reform initiative, making the agency a ‘reinvention lab’ of sorts (US House of Representatives 1994: 5). Administrative streamlining within the agency had already started by that point, with staff reductions and the closing of numerous field missions representing key elements of the agency’s internal reorganization efforts.58 Early in 1994, the administration proposed its Peace, Prosperity, and Democracy Act, hailed by the State Department as “an effort not only to update and rationalize our foreign assistance authorities, but also to put those authorities in a framework that ties our overseas programs to the President’s goals for the nation” (US House of Representatives 1994: 161). These goals included promoting business opportunities and democratic transitions, and responding to security challenges. Tellingly, the reform proposal was designed to ensure that aid programs “will be organized in a way that demonstrates our recognition that the American public is demanding a foreign policy that serves the US domestic agenda” (161). The aid preferences of the Clinton administration could be distinguished from the preferences of previous administrations in that a growing emphasis was placed on commercial expansion alongside a more traditional emphasis on security considerations. For AID, the proposed reform would reduce the number of goals the agency was authorized to address, provide greater freedom of maneuver by reducing the practice of earmarking, and attempt to ensure greater consistency in the agency’s work with other administrative units with aid responsibilities by enhancing the coordinating role of the Secretary of State in this domain. The overall designs of the administration to have AID conform closely to its foreign policy agenda while defending domestic economic interests constrained any added investments in programs directly targeted toward the world’s poorest regions or poor populations. Presenting the administration’s budget for 1995 to the Congress, Secretary of State Warren Christopher reflected the administration’s key preoccupations, noting that, in times of austerity, proposed foreign spending should serve to promote US security interests and the interests of the American public more broadly (US House of Representatives 1994). His statement highlighted the limited weight that poverty reduction goals had in the aid budgets proposed by the administration and illustrated the dominance of the State Department in articulating the central goals of aid provision. Ultimately, the Peace, Prosperity, and Democracy Act stalled in the Congress during an important election year. The window that seemingly existed not only to push through a substantial reform in how aid would be administered but also to elevate the status of development as a foreign policy goal in its own right had closed very quickly. Because the administration itself identified a tradeoff between development assistance funding and the management of domestic economic problems and tied aid funding to foreign policy objectives that were not primarily development-oriented, its initiatives fed into the momentum against giving greater US government priority to poverty alleviation concerns.

US aid politics 177 The 1994 congressional elections helped to cement the anti-aid climate in the United States during the 1990s. These elections produced a stunning victory for the Republican party, which gained control of both houses of Congress. The ‘Republican Revolution’ brought a reform agenda emphasizing issues such as balancing the federal budget, reducing the size of government, cutting taxes, and reforming social welfare programs (Ornstein and Schenkenberg 1995). While House Republicans were the leaders of the domestic reform agenda, the Senate became the main forum for deliberations on the reform of the US foreign assistance program, a notable change because earlier aid reform efforts had been centered in the House. If AID as an agency had already come under the knife in the first years of the Clinton administration, it faced growing pressures as the decade developed. By the time the Republican majority came to power, AID had just fended off an initiative proposed by the Secretary of State to fold the agency into the State Department.59 However, Republican control of the Senate brought a change in leadership in its Foreign Relations Committee that renewed calls for the agency’s dismantling and raised doubts about the utility of aid spending more generally. Under the chairmanship of Senator Jesse Helms, the Foreign Relations Committee presented the Foreign Relations Revitalization Act of 1995. This act sought to abolish AID along with two other specialized agencies (the Arms Control and Disarmament Agency, and the US Information Agency), to encourage aid cutbacks, and to give the State Department greater authority in coordinating aid programs (US Senate 1995b). In presenting related authorizing legislation through the Foreign Aid Reduction Act of 1995, the committee offered numerous grounds for limiting aid expenditures, suggesting for example that aid fostered dependency, that it was detrimental to the growth of free markets, that it did not stimulate US export growth, and that it also did not even serve the purpose of buying votes at the UN. Wholesale criticism of the aid program, such as the statement that “what began as a temporary effort to help rebuild war-torn Europe has become an ‘entitlement program’ that shovels billions of dollars each year to nearly every developing nation on Earth,” abounds in the committee’s reports on the future of aid (US Senate 1995a: 12). For Senator Helms, spending federal dollars on aid was simply not something the US government could afford given the size of the federal debt and the presumed lack of impact of previous aid investments. Helms may have been the most vocal and the most powerful critic of aid in the Senate at the time, but he was by no means the only legislator ready to achieve savings by cutting the aid budget. Discussing planned appropriations for the 1996 fiscal year, Vermont Democrat Patrick Leahy remarked that “we have a time . . . when many of our fellow Senators, both Republicans and Democrats, favor cutting aid even further than it has already been cut in recent years” (US Senate 1995c). In spite of the overall antipathy toward aid spending prevailing in the Congress during this period, one of the striking features of the aid budget during the 1990s was that the sectoral allocation of aid seemingly displayed an increasing poverty reduction orientation in these years. As Figure 6.5 illustrates, investments in social

178 US aid politics infrastructure and services came to occupy a much more prominent position in the aid program. While the average share of aid devoted to social sectors represented around 15 percent of bilateral aid flows between 1980 and 1992, from 1993 to 2005 the average topped 40 percent. These commitments to social development goals in the context of overall funding reductions reflected support for Child Survival programs, aimed at improving the well-being of mothers and children through immunization, nutrition, oral rehydration, education, and water and sanitation programs. When the House presented its Balanced Budget Downpayment Act in 1996, Child Survival programs were actually allotted additional funding, while other development programs were subject to cutbacks (US House of Representatives 1996). The fate of Child Survival programs during this period, like the overall budgetary cutbacks, reflected congressional control over the aid spending agenda. The creation of a Child Survival Account separate from the Development Assistance Account was the equivalent of a large congressional earmark, fencing off a specific portion of the aid budget for child and maternal health-related provisions. Speaking in support of the creation of the separate account, Republican congressman Christopher Smith laid out the logic distinguishing the Child Survival program from the broader development assistance budget, noting that skepticism regarding foreign aid was not linked to vaccinating children or feeding the hungry but rather to the prospect that aid landed in the hands of corrupt politicians (US House of Representatives 1995). The separation and protection of the Child Survival Account from the Development Assistance Account also served another purpose. In addition to giving Congress more control over aid spending, fencing off this budget line was beneficial for NGOs, as interventions associated with the Child Survival program were primarily implemented by NGOs with an advantage in service provision at the community level (USAID 2007). Considering the benefits that increasing funding for child survival would bring to US development NGOs, it seems reasonable to infer that they were supportive of congressional efforts to prioritize that part of the aid budget, even if this congressional priority gave AID less freedom of action to determine how aid funds could be used. This episode illustrates that while development NGOs have seemingly been unable to claim victories at the macro-level with respect to obtaining overall development funding increases, they have been successful in micro-level politics, exploiting access to members of Congress to attract funding for their own work directed toward poverty reduction goals without necessarily increasing the capacity of the government to contribute to achieving these goals. As the government worked to address budgetary problems that had accumulated over the previous decades, the American economy was enjoying a period of sustained economic growth and dropping unemployment. The priority that the administration and the Congress attached to reducing budget deficits had also produced returns, and in the midst of falling deficits an agreement was reached in 1996 to balance the federal budget by the 2002 fiscal year (OECD 1997b). The aid budget did not benefit from these economic gains, however, highlighting the fact that favorable structural conditions by themselves do not produce policy

US aid politics 179 changes in this issue area. Rather, it is the governmental actors responsible for managing economic policy and other domestic public policy areas that determine whether economic gains lead to benefits for particular constituencies. The priority across branches of government to restore the health of public finances dampened impulses for increasing aid funding. In response to the efforts to pare down aid outlays significantly during this period, aid supporters increased their mobilization efforts against further reductions. As noted earlier, one manifestation of mobilization against aid reductions was the creation of the US Global Leadership Campaign in 1995, bringing a broad coalition of private organizations together to stem the tide of continuing cutbacks. Reflecting the climate for aid funding at the time, this coalition’s political aims focused on the preservation of existing funding levels for the International Affairs Account rather than demands for increased spending.60 For development NGOs dependent on government funding, cutbacks represented a direct threat to existing programs, and pushing back more successfully required devoting increased attention to their advocacy efforts.61 Perhaps driven by a need to seek out new funding sources in a period of stagnant public aid funding, private backing for development NGOs increased considerably from the end of the 1990s onward (see Figure 6.6). During the Clinton years, the foreign assistance program and AID as an agency endured hard times. The difficult position that aid advocates experienced was alluded to by AID administrator Brian Atwood as he prepared to leave his post. Atwood reportedly expressed “regret that we not only had to battle the traditional opponents of foreign aid in Congress but also administration colleagues who should have known better.”62 Clearly, promoting international development via aid had not been one of the administration’s top foreign policy priorities, and congressional opposition to funding increases further contributed to the marginalization of development aid in the 1990s. In his speech at the Millennium Summit in 2000, President Clinton focused his remarks on peacekeeping rather than poverty alleviation, providing one indication of where he believed the achievements of his administration in the foreign policy realm were most apparent.63 In January 2001, George W. Bush assumed the presidency. One of his first acts as president was to reinstate an executive measure, first enacted by Reagan and suspended by Clinton, which prohibited any private organizations using their own funds to provide abortions from receiving funding from the US government.64 Apart from this decision, however, there were few signs in the early months of the Bush presidency that development assistance policy would fundamentally change course under Bush’s leadership. A proposal made by Jesse Helms at the start of 2001 to scrap AID and provide foreign assistance primarily through private channels was acknowledged but ultimately not taken up by the administration.65 In short, in the aftermath of this power transition, it did not seem likely that the preferences of the executive regarding the importance of aid would substantively change. The events of September 11, 2001 provided an exogenous stimulus for change in US development assistance policy, producing two notable consequences

180 US aid politics that would favor aid increases. First, the preferences of the Bush administration changed to reflect an increasing preoccupation with the developing world, considered to be a source of terrorism and a haven of undemocratic values. Second, the power of the president to pursue his desired foreign policy agenda increased, as the Congress deferred to presidential judgment on foreign policy matters. By early October 2001, the United States had initiated its War on Terror with a military intervention in Afghanistan. Foreign aid accompanied the military intervention in the region: in the fall of 2001, the Bush administration set aside $1 billion to provide emergency assistance to Afghanistan and to bolster support for US intervention among neighboring countries.66 AID became an integral player in managing relief and reconstruction efforts in Afghanistan, to the extent that in the fall of 2001 AID administrator Andrew Natsios reportedly spent nearly 80 percent of his time on issues related to development and famine relief problems in the war-torn country.67 Early in 2002, one manifestation of the administration’s increasing prioritization of aid was the proposal to create the Millennium Challenge Account, intended to bring a 50 percent increase in development assistance funding over three years aimed at promoting economic growth in countries adhering to certain standards of good governance (Radelet 2003a). The ability of the administration to push through legislation establishing the Millennium Challenge Corporation was noteworthy because the Congress had previously served as a key source of criticism of an overly bureaucratic aid administration, yet responded to this appeal to create an additional aid agency without linking its creation to any broader reform of AID. The greater priority given to development on the administration’s foreign policy agenda was underlined in the new National Security Strategy of the United States, made public in September 2002. This document noted that a world where some live in comfort and plenty, while half of the human race lives on less than $2 a day, is neither just nor stable. Including all of the world’s poor in an expanding circle of development—and opportunity—is a moral imperative and one of the top priorities of US international policy. (White House 2002) To address the problem of global poverty, the Strategy argued for increased aid investments, results-oriented management of aid programs to enhance effectiveness, and greater attention to public health and education concerns. The elevated profile of development in the foreign policy portfolio of the Bush administration was not an unqualified blessing for aid advocates. Between 2000 and 2005, US development assistance tripled from close to $7.5 billion in 2000 to more than $25 billion in 2005 (OECD 2007a). However, a large portion of these aid increases directly accompanied the administration’s democracy promotion agenda in the Middle East, the centerpiece of which was the invasion of Iraq, which began in March 2003. Aid directed toward relief and reconstruction efforts as well as a major debt relief initiative made Iraq a major recipient of continuing aid increases: in 2003, the country received $1.5 billion in aid. In 2004, that figure

US aid politics 181 had climbed to more than $3 billion, while more than $11 billion in aid went to Iraq in 2005. Aid to the African continent also benefited from budgetary increases in this period, with US bilateral assistance to Africa increasing almost threefold between 2000 and 2004. Aid to Africa remained modest in relation to aid to the Middle East, however: in 2004 the continent attracted $4.3 billion through US bilateral channels, equivalent to about one-twentieth of the aid per capita given to Iraq in the previous year (Radelet and Siddiqi 2005). The increasing resources directed at development also brought renewed attempts by governmental actors outside of USAID, notably the State Department, to assert greater control over the aid program.68 In January 2006, Secretary of State Condoleezza Rice announced plans to reform the US foreign assistance system. The crux of the proposed reform was to ensure better coordination between the State Department and AID, and a key element of the reformed aid apparatus would be the role assigned to the AID administrator, who became the ‘Director of Foreign Assistance,’ responsible for overseeing all US foreign assistance programs (US Department of State 2006). While on the surface this change might have appeared to give AID a central coordinating role in the aid system, in making the AID administrator a deputy to the secretary of state, the reform process effectively gave the State Department and its leader more direct control over how aid resources could be used to promote the department’s ‘transformational diplomacy’ agenda. Thus these proposed reforms were similar to previous efforts on the part of the State Department to gain greater control over the geographical and sectoral allocation of aid.

Alternative explanations The two leading rival explanations for patterns of aid provision center on how the quality of a state’s welfare regime and the partisan composition of a government shape its giving patterns. The United States is generally understood to have a considerably less generous system of social welfare protection than many other industrialized countries (Alesina et al. 2001). Even when different rates of taxation on social benefits are taken into consideration, the claim that the American welfare state is modest in relation to other advanced welfare states can be tempered but not rejected (Howard 2003). Using a conventional measure of welfare state effort, social expenditures as a percentage of GDP, the US is a below average performer in comparison to other DAC member states. Between 1980 and 1999, for example, the average social expenditure to GDP ratio in the US was around 14 percent, while in the DAC donor community as a whole social expenditure averaged more than 21 percent of GDP during this period (OECD 2001b). The general trend in US welfare spending appears to provide support for the claim that there is a link between the nature of donor welfare commitments and aid commitments. However, the temporal trend in social spending in the United States yields a different conclusion. After edging up slightly in the early 1980s, social expenditures stabilized at around 13 percent of GDP through the 1980s and then rose in the 1990s, topping 15 percent of GDP between 1992 and 1996 (OECD

182 US aid politics 2001b). Consistent with Pierson’s (1996) argument that the US welfare state has been resilient in the face of increasing budgetary difficulties, social spending figures suggest that while specific social programs may have suffered from cutbacks, overall commitments to domestic social protection in the United States have been remarkably stable through time. The resilience of social expenditures contrasts with the steady reductions in aid funding through the 1980s and 1990s, reflecting the greater ease with which foreign transfers can become targets for budgetary savings. Aid commitments do not seem to reflect trends in welfare provision when attention is focused on comparing aid funding to the evolution of social spending patterns. Extending the argument that welfare regime-type shapes aid choices to the American case is also problematic. For Esping-Andersen (1990), the US welfare state provides an archetypal example of a liberal welfare regime, where an essential feature of the system is that social transfers are directed to the lowest income earners. In addition, liberal welfare states are considered to be less generous in the benefits they provide as a general rule. This second feature of the liberal welfare regime coheres with the portrait of the US as a less than generous donor. The first feature of the welfare regime, its means-tested orientation, is more difficult to reconcile with American patterns of giving, however. As the discussion at the beginning of this chapter made clear, the world’s poorest countries have not been privileged US aid recipients. Rather, middle-income and high-income developing countries have benefited disproportionately from American assistance. In this respect, the logic of international redistribution does not follow the logic of domestic redistribution. Evidence from this study also suggests that aid policy in the United States does not follow a strictly partisan logic. Both of the main political parties can claim credit for the steadily dropping aid commitments for much of the period under consideration, but just as importantly, aid advocates within the government have also cut across the partisan spectrum. Neither major party has political ownership of development assistance as an issue. In the 1980s, Reagan’s Republican administration faced congressional opposition to its foreign policy agenda and the use of aid to support security objectives in Central America in particular. With respect to the aid budget, congressional Democrats pushed for increasing the development orientation of US aid spending, although ultimately both the Democraticcontrolled House and the Republican-led Senate favored aid cutbacks amid growing concern about the deficit spending produced by the administration’s preferences for increasing spending in the realm of foreign affairs. Congressional attention to deficit reduction carried through to the presidential term of George H.W. Bush, when a Democratic Congress focused on the issue of foreign assistance reform rather than acting as an advocate for increased aid funding. When the Clinton administration took office, the legislative branch was also controlled by Democrats; however, this constellation of power did not lead to aid increases either. The low priority that the Clinton White House attached to aid and intensified Republican opposition to aid in the mid- to late 1990s contributed to stagnation in aid spending. In contrast, the aid budget

US aid politics 183 increased dramatically under a Republican president and a Republican Congress in the aftermath of the September 11 attacks. In an examination of the partisan effect on aid provided to Africa, Goldstein and Moss (2005) report that the partisan affiliation of the president by itself does not account for aid volumes to Africa, but that the nature of partisan divisions between the president and the Congress can influence aid expenditures. Interestingly, Goldstein and Moss note that aid levels have tended to be higher under a Republican presidency when at least one house of Congress has also been under Republican control.69 Consistency across the executive and legislative branches in terms of their partisan composition can influence policy choices by increasing the ability of the president to push a given policy agenda through the Congress. In this sense, it is not the nature of the party but rather the effect that partisan composition of the legislature has on the power of the president that may serve to influence aid choices. Close observers of the US aid policy process also acknowledge the non-partisan or bipartisan character of the issue area. It suffices to note that there have been champions of aid and development on both sides of the aisle.70 As one example, the McGovern–Dole International Food for Education and Child Nutrition Program, a popular school feeding and food security program managed by the USDA, bears the names of two senators, George McGovern and Bob Dole, a liberal Democrat and conservative Republican, respectively, both of whom represented farm states and served as leading advocates for addressing global hunger problems.

Summary This chapter has sought to explain US aid giving patterns between 1980 and 2005. Key features of the American aid program include low overall aid volumes and a preference for giving to countries in higher income categories. The low priority that the US government has assigned to poverty reduction as reflected in its aid commitments is somewhat puzzling given that private backing for development NGOs is stronger in the United States than in many other donor countries. The broad range of religious and secular organizations engaged in development and humanitarian relief work is a testament to the concern that many Americans have for global poverty. In spite of their societal bases of support, however, development NGOs have faced numerous challenges in serving as a forceful advocate for increased national commitments to global poverty reduction. For one, the heterogeneity in the NGO community itself has hindered collective mobilization. Many NGOs pursue narrow organizational objectives rather than channeling their resources toward the common aim of increasing resources for poverty alleviation efforts. The institutional setting in which aid policymaking occurs also presents a challenge to resource-poor interest organizations. There is extensive fragmentation in the American political system, with several executive agencies and the Congress sharing responsibilities for formulating aid policy. The primary arena for interest

184 US aid politics groups to influence resource allocation decisions is the US Congress, a large body where legislators are themselves constrained by limitations on their time and the panoply of interest groups and constituents vying for their attention. Interest groups that have bases across congressional districts or have the resources to contribute to re-election campaigns have more opportunities to gain access to legislators. These determinants of access place development NGOs at a natural disadvantage. One means that NGOs have at their disposal to overcome their general weaknesses owing to limited resources is to form coalitions with other interest groups that do not operate under the same resource constraints. Although there may be competition between NGOs and business groups over funding priorities, ultimately NGOs and economic interest groups engaged in the aid area share a common goal in increasing the resources directed toward development. An example of a coalition-building effort is the US Global Leadership Campaign, which has brought NGOs, development contractors, and a variety of other private sector actors together to promote international affairs spending. The USGLC’s work shows that the creation of a broad coalition can offset the disadvantages associated with a diffuse policymaking system. The fragmentation in the US aid policy system not only influences patterns of interest group activity, but also shapes the dynamics of the interactions between the governmental actors that make aid decisions. Within the executive branch, the main advocate for development and poverty reduction has been USAID. AID has itself rarely been in a strong position to lobby for aid increases. It occupies a subordinate position in the governmental hierarchy, regularly dominated by the State Department in particular. The State Department’s power in the aid policy area stems from its competencies in managing US relations with the rest of the world and its close relationship with the president and the National Security Council. The preferences of the executive branch regarding aid allocation issues have largely reflected the diplomatic and security interests of the State Department and the National Security Council. The executive branch has not been able to pursue an aid agenda purely of its own choosing, though, due to the responsibilities that the US Congress holds in formulating general guidelines for aid policy, approving budgets, and conducting oversight of the administration’s activities. Between 1980 and 2005, the Congress acted as a brake on aid funding. In the 1980s, congressional efforts to challenge the executive’s preferences on aid policy reflected a growing assertiveness by the Congress in foreign affairs. By the end of that decade, however, congressional reluctance to support aid investments became more closely tied with the body’s increasing focus on introducing discipline in public finances. Given the preoccupation of members of Congress with addressing the needs of their domestic constituents, aid represented an easy target for budgetary trimming. As the 1990s progressed, the administration and Congress alike made deficit reduction a top priority and aid funding languished. The September 11 attacks jolted the US government back into action on the development aid front, increasing the level of presidential attention given to the developing world while enhancing the power of the president vis-à-vis the

US aid politics 185 Congress. Renewed disunity between the Congress and the executive branch does not bode well for an increase in the resources directed toward global poverty reduction efforts. More substantial pressure from societal actors to encourage decision-makers to elevate the priority afforded development concerns at the national level may contribute to future gains in this area. However, as this chapter illustrates, the challenges confronting aid advocates are great in the American system, and overcoming the system’s natural constraints will require a more concerted effort on the part of those advocates than has typically characterized their political action.

7

Concluding considerations for development advocates

The preceding chapters have examined aid policymaking dynamics within individual donor countries. In this concluding chapter, aid politics in Denmark, Switzerland, France, and the United States are compared more explicitly in order to draw more general lessons about the determinants of aid choices. The chapter begins by briefly reviewing the key dimensions along which the cases will be compared and then focuses the comparisons by placing particular emphasis on the differences between Denmark and Switzerland, on the one hand, and between France and the United States, on the other, summarizing information presented in previous chapters. Following these direct country comparisons, the chapter reviews the main explanatory variables at the heart of the analysis and outlines key lessons for development advocates.

Summary of the approach The theoretical framework guiding this book indicated that the characteristics of actors engaged in the aid arena and the qualities of the institutional setting in which aid decisions are made represent key determinants of aid choices. At the societal level, the resource base and cohesiveness of development NGOs and the preferences and unity of the business community were identified as determinants of the nature of the demand for or against pro-poor aid transfers. At the level of the state, the institutions regulating the access of societal groups to the policymaking process and the dispersion of decision-making authority in the aid issue area were introduced to identify the channels through which societal actors can influence the positions of governmental actors and how the preferences of governmental actors may shape aid decisions. The position of development agencies in relation to other governmental actors was emphasized to suggest that the authority of an aid agency in the policy system could shape a donor’s poverty reduction emphasis. This combination of societal-level and state-level variables provides leverage for understanding aid choices across countries that a study of either actors or institutions in isolation cannot produce. Two brief comparisons underscore this point. The NGO community in Switzerland is stronger than the Danish NGO community in terms of its private resource base and political cohesiveness, yet Danish aid commitments have significantly outpaced Swiss aid commitments. In

Concluding considerations 187 comparison to the United States, French NGO access to the policymaking process is more restricted and yet France has long directed a larger share of its national income toward aid. A framework that accommodates both societal-level and statelevel variables can indicate why policy choices do not simply reflect the comparative strength of societal actors seeking similar goals across different national contexts and can account for how the preferences of governmental actors shape policy decisions in the presence or absence of pressure from societal interest organizations.

Cross-national comparisons A closer comparison of aid politics in Denmark and Switzerland on the one hand and France and the United States on the other illustrates the utility in incorporating both societal-level and state-level variables into a framework for understanding aid choices. Denmark and Switzerland are both small states, which should make them a good testing ground for the assessment of the domestic determinants of foreign policy choices because small states are presumed to operate under greater international constraints than larger powers (Elman 1995). Hoadley (1980) suggests that several traits distinguish small state aid giving patterns from those of larger countries. According to his account, small states are more generous in their overall giving, they direct more aid to poor countries, and they distribute aid on more concessional terms than large countries do. The fact that the most consistently generous donors over the past two decades have been small states seems to lend further support to this claim. Yet many small states have not come close to performing as well as the Nordic countries or the Netherlands in terms of mobilizing development resources. Indeed, roughly half of DAC member states might be classified as small states. Within this group, stellar performers such as Norway and Denmark are balanced out by countries such as Austria and Switzerland that have historically provided much less assistance. Both Denmark and Switzerland adhere to this general depiction of small state giving patterns on certain counts. While Denmark has provided higher levels of aid as well as more funding for less developed countries and social and agricultural sectors, both countries have emphasized poverty reduction objectives in their aid programming and indicated at the level of strategic planning that poor countries should be privileged aid recipients. Another parallel between the two countries is that the aid agencies that have had the primary responsibility for implementing development programs (Danida in Denmark and the SDC in Switzerland) relied heavily on the expertise of NGOs as the agencies developed the capacity to conduct development work on their own. In both countries, NGOs have acted as an important base of societal pressure for the adoption of policies addressing the needs of poor populations around the globe. However, the Danish and Swiss development NGO communities differ on at least two main counts. For one, Danish NGOs have had lower levels of financial support from private sources than their Swiss counterparts. In addition, Swiss NGOs have developed an organization for concerted political action on aid issues

188 Concluding considerations at the national level in Alliance Sud, whereas Danish NGOs have not maintained an NGO platform to advance commonly held positions. While it would be erroneous to suggest that the two NGO communities lie at opposite extremes in terms of their level of internal cohesiveness—Danish NGOs often collaborate on an ad hoc basis and the Swiss coalition of development organizations does not represent the entire Swiss NGO community—the differences among these groups suggest that NGO resources alone do not account for differences in commitments to global poverty reduction. When the nature of competition among societal actors in the aid arena and the qualities of the institutional setting are taken into account, the differences between Denmark and Switzerland with respect to aid choices are easier to comprehend. At the societal level in Denmark, the aid constituency extends beyond the development NGO community. Leading economic interest organizations have expressed support for aid, encouraging Danish decision-makers to maintain high levels of assistance. The direct incorporation of economic interest groups in aid policymaking through their participation on the Board for International Development Cooperation and other consultative committees as well as the provision of a direct return to business made it possible for the aid administration to demonstrate that a generous aid program carried broad benefits for domestic actors within Denmark. Over time, the participation of the business community in the aid system alongside development NGOs contributed to an evolution in thinking among Danish business interests, as the business community grew increasingly supportive of demand-driven development interventions. In contrast, Swiss development NGOs have not benefited from the presence of a broader pro-aid domestic constituency. Economiesuisse, a powerful interest organization representing export-oriented industries, has long emphasized the importance of maintaining discipline in public finances. The organization’s opposition to aid increases is an extension of this concern and has therefore represented an indirect source of pressure on the expansion of the aid budget. More recently, Economiesuisse’s opposition to aid has become more overt, offering a potent challenge to NGOs, which in spite of their cohesiveness and comparatively strong organizational resources do not have the possibilities for influence that Economiesuisse, as the representative of many leading Swiss corporations, enjoys. The different nature of the relationship between NGO and business communities in Denmark and Switzerland itself reflects differences in the qualities of the institutional setting in which aid policy is made. In Denmark, NGOs and economic interest organizations have been similarly integrated into the aid system, with NGOs and other interest organizations being represented on a board and other consultative organs that provide a direct point of entry to the policy process, which affords them an opportunity to oversee the work of the aid administration and contribute to the preparation of aid strategies. Through these channels, Danish NGOs played a key role in contributing to the development of the Danish aid administration’s civil society strategy, for instance, while business groups contributed to the development of private sector aid programs. Apart from offering these interest organizations an institutionalized voice vis-à-vis the administration,

Concluding considerations 189 the consultative organs also provide forums for dialogue among societal groups with potentially divergent views on aid issues and serve a consensus-building function. The more direct integration of Danish development NGOs into the aid policymaking system has given them an advantage over their Swiss counterparts. The status that Danish NGOs have enjoyed in corporatist bodies where they share policymaking responsibilities with economic interest organizations offsets the natural resource disadvantages that NGOs are likely to have in any donor country. Although NGOs and business organizations are also represented on a consultative commission that advises the Swiss aid administration, this commission meets more infrequently and has a more limited mandate than its Danish counterpart. NGO influence efforts in the Swiss aid system focus on two main points of contact: the aid administration and the parliament. Due to the long tradition of NGOs acting as implementing partners of the SDC, there has historically been a dialogue between the aid agency and the NGO community that has ensured that the SDC has promoted a development agenda consistent with the concerns of the NGO community. In determining the geographical and sectoral priorities of Swiss aid, the SDC has also faced relatively limited pressure from other departments in the Swiss Federal Administration and has not been subject to parliamentary pressure on substantive policy questions. While the relative autonomy of the leading aid agency has produced an aid program prioritizing poverty alleviation concerns, this agency has also been subject to general budgetary constraints limiting the progression of the overall aid budget. One additional disadvantage that aid advocates face in Switzerland is that they operate in a less centralized policymaking system than in Denmark. In Switzerland, demands for increased financial resources must first pass through the Federal Council, where the interests of all government ministries are represented, and then pass to a parliament that is itself less unified in structure than the Danish parliament as a result of its militia system and weak party cohesion. In short, if the characteristics of the NGO communities in Denmark and Switzerland might lead one to expect that a commitment to poverty reduction would be higher in Switzerland, in examining the nature of interest group competition and the institutional setting it is clear that Danish aid advocates have faced fewer obstacles than Swiss development advocacy organizations. The main advantages of the Danish system are the direct incorporation of NGOs into the policy formulation process, the support for aid coming from other interest organizations, and the compact nature of its policymaking system, where the aid administration occupies a central position and implements the political program of a government that takes its cues from a unitary parliament. A parallel can be drawn between the comparison of Denmark and Switzerland on the one hand and France and the United States on the other because, for the pair of larger states as well, the resources and cohesiveness of the development NGO community in each country viewed alone would lead one to predict that the United States rather than France would be the country with higher aid commitments. France and the United States are both large donors and have been at the

190 Concluding considerations top of the donor pack in terms of the absolute volumes of aid provided. For both countries, aid has been a foreign policy instrument that has been shaped by the objective of serving diplomatic or strategic interests, with poverty alleviation representing a subsidiary goal. During the Cold War, each country viewed aid as a means of protecting its position in the global system, the United States by providing aid to ensure that countries would not be sympathetic toward its communist superpower rival, France by aiding former colonies in order to maintain a sphere of influence that could support a claim to world power status. The observation that aid has serviced the broader political ambitions of both countries raises the question of why France has been a more generous donor than the US. France was, after all, only a regional hegemon, protecting a sphere of influence on the African continent, while America’s struggle against communist expansion was a global one. The main explanation for why French aid commitments have generally surpassed US aid commitments lies in the nature of the differences in the domestic political structures of these two countries. The key distinction between them is that while the French executive has had more or less exclusive authority in the area of foreign affairs, the American executive has had to share authority with the legislative branch. The aid policymaking system in France displays a higher level of centralization, while the aid policymaking system in the United States is more fragmented. The predominance of the French president in aid decision-making meant that even as France faced a difficult domestic economic climate in the 1980s, the presidency could maintain high levels of aid funding to support an agenda focused on maintaining the stability of friendly regimes. Though the Reagan administration in the United States sought to provide aid during the same period to promote its global security agenda, it could not conduct a foreign policy entirely of its own choosing. As Reagan’s tenure unfolded, the Congress grew increasingly assertive in challenging the president’s foreign policy agenda, illustrated by restrictions imposed on the administration’s policy toward Central America and South Africa. In both countries, aid provision reached its highest levels when the president was least constrained by other actors sharing foreign policy decision-making authority. In France, President Mitterrand’s preferred policy course toward Africa was challenged after a period of cohabitation beginning in 1993, when Prime Minister Balladur ushered in a period of reform via the devaluation of the CFA franc. Balladur’s main political preoccupation at the time was to put France’s financial house in order. American presidents encountered a similar form of opposition to aid spending from the US Congress, which from the 1980s onward tended to support aid cutbacks in order to deal with persistent budgetary deficits. In contrast, aid increases in the United States were possible after the Congress adopted a more acquiescent stance with respect to presidential foreign affairs requests and allowed the administration of George W. Bush to pursue a foreign policy agenda with limited legislative interference. In both France and the United States, bureaucracies whose primary missions do not relate to international development have been dominant players in the aid arena. In France, the managed transition from colonialism to development

Concluding considerations 191 cooperation produced a division of responsibilities in aid provision among several bureaucratic actors with separate geographical and functional fields of competence. As the most powerful bureaucratic actors, the Ministry of Foreign Affairs and the Ministry of Finance held the greatest sway in determining aid orientations, for example by ensuring that aid would help to promote the French language and French exports. At the same time, the main development-oriented agencies, the Ministry of Cooperation and the Agence Française de Développement, occupied a subordinate position in the policy system, limiting their imprint on the overall contours of aid policy. In contrast to the dominant role played by the Ministry of Finance in the French aid system, the US Department of the Treasury has not played a central role in making determinations about how bilateral aid should be allocated, leaving the State Department as the lead bureaucracy in this arena. In the United States, the main governmental actor with an exclusive development mandate, the United States Agency for International Development, has, like the French development bureaucracies, held a subordinate position in the aid policy system. Although USAID has managed a majority share of the aid budget, its freedom to determine how aid resources are used has been constrained by the State Department’s priorities regarding geographical aid allocation and by congressional mandates that circumscribe the agency’s autonomy. From the standpoint of designing policies to address the needs of poor populations, congressional micromanagement of the aid budget is fundamentally problematic. It limits the extent to which the knowledge of local conditions and needs serves as the basis for determining appropriate interventions and instead promotes a supply-driven approach to development. Of all the countries studied in this analysis, the United States can be distinguished by the high level of legislative influence over aid decisions, which extends beyond approval of the general budgetary framework for aid to making more specific determinations regarding policy content. The importance of the US Congress in aid politics provides a potential advantage to societal groups such as NGOs that seek to shape aid decisions, since interest groups have an opportunity to influence US aid policy via their contacts with individual legislators. While legislative involvement in the aid arena may provide a diverse set of interest groups an entry point into the policymaking system, because there are many legislators this system encourages groups with limited resources to advance their policy demands through the small number of legislators they may have more ready access to. The fragmented policymaking system can therefore foster the pursuit of narrow organizational objectives over broader goals shared with other organizations. More concretely, NGOs have incentives to use congressional contacts to obtain funding for their own projects rather than to call for overall increases in the aid budget. Though the development NGO community in the United States has since the early 1980s undertaken a form of concerted action via its umbrella organization Interaction, the advocacy work carried out by this association takes place alongside legislative affairs work conducted by member organizations. Rather than providing a multiplier effect in terms of pressure directed at the government, the limited

192 Concluding considerations coordination in legislative affairs work creates competition among NGOs, even if individual organizations may not intentionally seek to undermine the efforts of other NGOs or the umbrella organization with which they are affiliated. The fragmented policymaking system in the United States can for this reason serve to impair collective action efforts, even if the need to apply pressure across a broad decision-making field makes collective action, particularly among resource-poor organizations, more imperative. French NGOs should have an advantage over American NGOs in that authority over aid decisions has been more concentrated. If there are fewer key governmental actors for NGOs to influence, however, French NGOs have not really benefited from this situation because they have had a low level of access to the policymaking system. In part, this low level of access reflects the limited resources of the NGO community itself, among the most resource poor in the donor community. Yet it is also a reflection of the closed and elite-driven character of the policymaking system, illustrated most vividly by the central position historically reserved for the president’s African cell of advisors. France’s aid policy system has experienced significant changes through time, though, and NGOs have seen their possibilities for engaging with policymakers increase, even if their voice in the policymaking process continues to be that of an outsider. French business interests have in contrast had more direct access to the aid policymaking system and have supported aid as a means of accompanying private investments to the African countries where French firms have enjoyed a privileged position. In the United States, the place of business groups in the aid arena is more ambiguous, reflecting the heterogeneous quality of the business community itself. While groups such as agricultural producer organizations and for-profit contractors have long been important participants in the aid policy system, the mobilization of the broader business community benefiting from the aid program in support of more generous foreign affairs funding is a relatively recent development, reflected in the rise of the US Global Leadership Campaign since the mid-1990s.

Societal interests, institutions, and governmental politics This section discusses the general lessons to be learned from this book relating to the role of societal interests, institutions, and governmental politics in shaping aid choices. The preceding chapters often placed greater emphasis on the institutional and governmental determinants of aid giving than on societal pressures for instituting policy changes. This emphasis is justifiable on the grounds that the scope of government extends beyond any single policy field and is the arena where the arbitration between the political demands of all societal groups seeking influence over resource allocation decisions takes place. Societal interests often possess fewer organizational resources than governmental bureaucracies and their engagement in the public policy arena represents a small part of their work. Nevertheless, societal interests can provide an important source of pressure on governmental actors whose power in a democratic system depends to some degree on their support.

Concluding considerations 193 Societal interests Development NGOs often serve as a source of demand for poverty-oriented aid. Evaluating the quality of their political engagement and the nature of their relations with governmental actors illuminates how aid policymaking systems function and why the preferences of governmental actors tend to influence aid decisions more strongly. To take one example, identifying the limited ability of the French NGO community to press for policy change underlines the centrality of intragovernmental interests and politics as a determinant of French aid choices. This study was partly motivated by the observation that although there are development NGOs across the donor community with seemingly similar policy views, donors have varied widely in making policy choices that are consistent with the demands articulated by these organizations, particularly with respect to providing generous development assistance and ensuring that aid is directed to the needs of poor populations. One explanation for the existence of divergent national policy choices given the presence of the same type of domestic constituency is simply that societal actors differ across countries in terms of the resources that they are able to devote to influencing the policymaking process, which can include their financial backing and their capacity for collective mobilization. Of the factors considered to influence the nature of national aid commitments, however, NGO resources by themselves seem to offer limited purchase in explaining aid choices. The resource-rich and well-coordinated Swiss NGO community has not been able to push its government to move the wealthy country out of the middle of the donor pack and into the ranks of highly generous donors, while the Danish NGO community has seen the government adopt a strong poverty reduction focus in aid programming as well as a substantial financial investment in addressing poverty reduction goals. This book does not provide strong evidence that NGO resources have fundamentally driven aid decisions through time. For example, the 1990s represented a period of growth in the private resource base of the French development NGO community, yet the same period was marked by a slump in the aid provided to developing countries. In the United States, the advent of more concerted action within the NGO community in the mid-1980s was followed by a period of steady decreases in aid funding. The difficulty in presenting NGO resources as an explanation for aid choices underlines the constraints that NGOs face in attempting to influence policy. While there is variation across the donor community in terms of the private resources development NGOs have access to, even where NGOs are relatively well off these organizations cannot translate their funding strength directly into political influence. Directing most of their organizational resources toward operational work limits the funds available for conducting advocacy at home. NGOs are also constrained by their dependence on external funding. The need to appeal to private contributors encourages organizations to engage in work that can produce tangible results: the construction of a school in a poor community may be much more marketable than a statement that an organization contributed to reaching a specific ODA target. Because NGOs are also dependent on public financing to fund a

194 Concluding considerations portion of their activities, they may need to be careful to avoid the appearance that public funds are being directed toward pressuring the government and also cautious in adopting a critical posture toward a government that contributes to their own organizational survival. Funding pressures add to the challenges of collective mobilization among NGOs, even if they share similar policy goals. This study tends to reinforce critical portraits of NGO communities with respect to their ability to coordinate political action. Within the cases studied, the Swiss NGO community represents an exception in terms of its high capacity to deal with a collective action problem among like-minded groups. Swiss NGOs face the same pressures to maintain an independent profile and base of private contributions as NGOs in other donor countries, but have recognized that by combining their organizational resources by contributing to a lobbying organization at the national level, they are able to have a coherent political voice and develop a division of labor that ensures that common goals are addressed and competition among groups moderated. The more general coordination that takes place among Swiss NGOs through participation in the Zewo organization, a voluntary organization regulating the NGO fundraising market, suggests that coordination can also enhance the fundraising abilities of these organizations. By managing competition within their community, NGOs can potentially increase both their prospects for political influence and their financial fortunes. One of the key conclusions of this book is that, as domestic political actors, NGOs face an additional set of constraints on their ability to influence policy that derives from the qualities of the institutional setting in which they operate. This finding underlines the need to consider the variations in the opportunities and barriers for influence that NGOs encounter even within OECD countries. Taking the institutional context for NGO advocacy into consideration would likely be especially beneficial in studies of foreign policy that aspire to determine why states might adopt progressive standards of conduct that NGOs are often associated with promoting. The evidence presented in this book indicates that support or opposition from within the business community in a donor country can shape the nature of its aid commitments. While business groups are associated with aid having a commercial orientation that aims to increase exports or purchases of capital goods, this study suggests that the engagement of business interests in the aid policy arena can contribute to building broader support for an aid program that leads to overall aid increases that benefit development-oriented investments as well. It is clear that support from the Danish business community depended, in the aid program’s early decades, on the agreement that there would be a set ‘return percent’ within the aid budget that meant that one-half of Denmark’s bilateral aid allocations, or onefourth of total aid, would be tied to purchases within Denmark. Since tied aid reduces the value of a total aid transfer (Jepma 1991), the return percent diminished the overall aid commitment. However, this handout to the Danish business community had the additional effect of giving the aid program a solid societal basis. The direct benefits provided to Danish firms appealed not only to the firms

Concluding considerations 195 themselves but also to Danish labor unions, which viewed these credits as a means of protecting Danish jobs. With major societal interests accommodated within the aid program, the substantial investments Denmark provided to low-income countries were not seriously challenged for most of the period this study covers due to a broad political consensus favoring generous aid outlays, even as Denmark coped with economic problems at home. In the United States, the business community as a whole has historically not been very vocal on aid matters, though agricultural producer organizations have supported the food assistance program and broader mobilization of the internationally-oriented business community has emerged since the mid-1990s. In France, firms with ties to the African continent represented an important constituency for commercially-motivated aid to former French colonies, and business– government ties in this domain were especially close in the 1980s. Switzerland is the only country studied where overt opposition from the business community helped to put a brake on aid increases. The analysis in this book suggests that development advocates should consider how to encourage business actors to adopt a stronger development orientation in order to generate additional domestic support for global poverty reduction goals. Within the OECD donor community, there is currently a renewed interest in engaging with private sector actors, who can contribute their own financial resources to development initiatives in addition to fulfilling an advocacy role influencing governmental priorities (Davies 2011). As an example, the United Kingdom’s Department for International Development (DFID) has recently sought to increase the role of the private sector as a development actor in the UK aid program, viewing business both as an important stimulus for wealth creation in developing countries and as a source of innovative ideas at the level of policy formulation (DFID 2011). Expanding the pro-development business constituency carries implications for three key current policy challenges: the continuing effort to improve policy coherence for development, the formulation of a successor framework to the development reference system in the Millennium Development Goals (MDGs), and the persistent need to mobilize additional financing for development. The policy coherence for development agenda recognizes that numerous policy fields in donor countries apart from development assistance policy can influence the achievement of global development goals. The trade and agricultural arenas are examples of issue areas where policy adjustments informed by a developmental lens can contribute to increasing opportunities for the world’s poor (OECD 2012b). Given that development advocates face numerous constraints in attempting to influence even aid policy, a relatively narrow policy field where development NGOs may have informational advantages and privileged access to key governmental actors, in higher salience policy fields with implications for developing countries obstacles to influence are likely to be even greater. Cultivating alliances with a broad range of domestic actors whose economic weight enhances their political voice represents one avenue for development advocates to boost the domestic demand for an increase in the coherence of

196 Concluding considerations externally-oriented policies to support development goals. The weight of business as a political force in policy fields outside of the area of development assistance policy provides an incentive for aid advocates to attempt to shape the preferences of business actors through direct engagement. The set of policy priorities outlined in the Millennium Development Goals have provided an important reference point for development policy in the last two decades. One of the perceived advantages of the MDG framework has been its contribution to mobilizing support for global poverty reduction (Bourgignon et al. 2008). The question of how the character of the development goals included in a possible post-2015 development reference system can attract broad support should therefore be a central issue for deliberation about the successor to the MDG agenda. As the analysis in this book suggests, development NGOs have clear limitations in seeking more substantial public resource commitments for global development. Mobilizing broader support for poverty reduction with the assistance of a development policy reference framework likely requires that the social development goals favored by development NGOs that are emphasized in the MDG agenda be balanced with goals such as increasing support for productive sectors as a stimulus for economic growth and poverty reduction that would appeal to other domestic constituencies. If the post-MDG agenda reflects an approach to development that encompasses priorities with which a variety of actors beyond the traditional development advocacy community can identify, there may be greater potential for sustained public resource mobilization to support the achievement of the development goals outlined in any MDG successor framework. Attempting to expand the development constituency through increased engagement with private sector actors is also relevant beyond the realm of public resource mobilization, as the private sector can potentially contribute significant resources for development on its own. The OECD reported that firms in DAC member states provided some $164 billion in foreign direct investment to developing economies in 2011, while DAC governments contributed approximately $134 billion in development assistance in the same year (OECD 2012a). Beyond providing additional resources, foreign firms can have a developmental impact through the quality of their investments and the nature of business practice. Development advocates should therefore strengthen strategies to sensitize foreign investors to global development challenges and enlist their support in contributing to poverty reduction goals through core business activities. Institutions Institutions do much of the heavy lifting in this book. Their central place is attributable to the dual function that they serve. On the one hand, institutions determine the way that societal interests are incorporated into the policymaking process, both by providing channels of access to governmental actors with decision-making authority and by determining how many prime targets of influence exist in a given political system. On the other hand, institutions structure the nature of competition between governmental actors by determining

Concluding considerations 197 how policymaking authority is distributed among them. These qualities make institutions fundamental components of any attempt to understand how the preferences of societal and governmental actors combine to produce policy choices. Ultimately, however, institutions do not present arguments for adapting policies to meet new challenges, they do not prepare the strategic planning documents that outline policy priorities, and they do not approve budgets. These tasks are left to individuals and groups of individuals operating within a particular institutional setting. This underlines the importance of incorporating actors as well as institutions into a framework explaining policy choices. One of the central challenges facing research examining the impact of institutions on political outcomes is the difficulty in relying on institutions to explain policy changes through time, given that institutional arrangements tend to display a high level of stability. Indeed, much of the change that is documented in this study is incremental in nature and occurs without changes even in lowerorder institutions, such as the legislative frameworks regulating aid policy. The solution this book proposes to understanding policy change through time is to emphasize how the changing power and preferences of actors operating within a given institutional setting can serve as forces for policy change. Clearly, disentangling the power and preferences of actors from the institutional setting represents a challenge on its own because institutions may serve as a source of power for actors, endowing certain governmental or societal actors with a stronger ability to shape policy choices than others, and may in addition color their preferences. Yet part of the way out of this tangled mess is to recognize that actors have sources of power and preferences that are also external to the institutional setting in which policymaking takes place. For societal actors, financial support from private sources represents an exogenous source of power; for bureaucracies, organizational culture represents one source of preferences that can be considered independent of the rules that divide authority among governmental actors. The French case draws particular attention to some of the difficulties associated with understanding change through time as a function of the institutional setting in which policymaking occurs. The reform process in the aid policymaking system that was initiated at the beginning of the 1990s and concluded at the end of the decade resulted in a new division of responsibilities among governmental actors, the creation of a forum to enhance dialogue between them, and the creation of a new consultative organ for societal actors. The outcome of the reform process was determined by the varying power and preferences of governmental actors with a stake in the aid system. In the short term, any institutional reform that emerges from such political contests between actors will reflect the political conditions that made such an institutional reform possible. While moments of institutional change might seem to represent ideal testing grounds for the argument that institutions matter, this discussion highlights that examining institutional effects requires giving careful attention to the processes driving institutional changes and to the specification of when institutions develop a capacity for influence that is independent of the conditions that give rise to them.

198 Concluding considerations Studying the effects of institutions generally requires adopting a standard or policy outcome that can be used to evaluate the performance of a given set of institutional arrangements (Weaver and Rockman 1993). This study has chosen national commitments to poverty reduction via aid as this common standard and suggested that higher aid commitments tend to emerge in countries with centralized policymaking systems where NGOs have a high level of access to policymakers. Identifying these characteristics of the institutional setting as conducive to greater investments in global poverty reduction efforts does not necessarily suggest that wide-ranging institutional reforms are the only way that states will be able to adopt more generous aid commitments in the future. Changing the American political system, or even its aid policymaking system, to resemble Denmark’s would clearly represent a difficult transformation, given the very diverse nature of the societies and geographies that the two countries’ institutions are designed to govern. Even without reinventing the institutions regulating aid policymaking, the chance that the poverty reduction orientation of an aid program might increase could follow from seemingly minor adjustments that would push aid systems toward a higher level of centralization or greater openness to input from constituencies concerned with poverty reduction. For example, abandoning the practice of earmarking funds in the US Congress would diminish the degree of fragmentation in aid policy formulation without depriving the legislative body of the budgeting and oversight powers central to the separation of powers system. This reform would likely increase the ability of USAID to work toward poverty reduction goals and deliver aid more efficiently. The formalization of consultation between the Agence Française de Développement and the French NGO community could lead the agency to better integrate social development concerns into its development cooperation portfolio. Governmental politics This study is an example of research in comparative foreign policy analysis and illustrates how the examination of intra-governmental politics can illuminate foreign policy decision-making. Governmental politics can usefully be integrated into the study of foreign policy across national settings by viewing intra-governmental policymaking dynamics as a partial consequence of the domestic structures that distribute authority between executive and legislative bodies and among executive agencies. The insights from the governmental politics approach in this study also provide an important lesson for the study of aid effectiveness. While practices within aid agencies themselves may hamper the effective implementation of poverty-oriented aid (Easterly and Pfutze 2008), this study underlines that aid agencies at times operate under difficult political constraints. Their effective ability to steer the aid program in a manner that promotes poverty reduction goals may be impaired by the domestic political context in which these agencies are situated. Research on aid effectiveness can benefit from paying more attention to how the various actors

Concluding considerations 199 within donor countries that have a hand in producing policy choices contribute to problems of coordination and inefficiency in aid implementation. Given bureaucratic inertia, it may be unreasonable to expect that crossgovernmental coordination can be improved with a quick redesign of the institutional set-up for formulating and administering development assistance. However, the fragmentation of responsibilities in the development cooperation arena undoubtedly creates inefficiencies in the use of resources and generates challenges related to the consistency of the externally-oriented policies implemented by a single government. These inefficiencies create a demand for strengthened mechanisms for coordination among bureaucracies. For governmental development advocates, a more important question than defending bureaucratic turf in attempting to maintain the independence of a development agency may be securing a strong voice for global development concerns at the level of cross-governmental coordination. This will become especially important as various line ministries within OECD countries increasingly globalize and assume a greater role in managing resources directed toward developing countries.

Aid politics beyond the DAC While the applicability of the theoretical framework presented in this book across the four countries studied suggests that it is relevant to assessing aid choices beyond the countries and time period examined, ultimately the portability of the framework can only be judged through exposure to other cases not considered in the present study, including both DAC donors and non-DAC development assistance providers such as Brazil, China, and India. The analysis of individual components of the framework may yield valuable insights into NGO–state relations, interest group politics, the preferences of private sector actors in the development sphere, and the influence of bureaucratic actors over foreign policy choices in a variety of national settings. The development cooperation activities of actors beyond the DAC have attracted growing interest in recent years due not only to the increasing volume of resources that non-DAC development assistance providers contribute but also to the prospect that their approach to development cooperation may challenge norms of aid provision promoted by traditional donors. Heightened engagement in global development by major emerging economies has, for example, raised concerns about whether their investments undermine the promotion of governance reforms in partner countries or too transparently serve strategic and commercial interests to the detriment of development goals (Zimmermann and Smith 2011). This book provides two key lessons for the study of development cooperation beyond the DAC and its implications for traditional donors. First, the book suggests that the analysis of choices concerning official development finance requires the consideration of the domestic demands and institutional structures that give rise to national preferences. Assessing the societal and bureaucratic interests behind the development cooperation approaches of non-DAC aid providers can help development advocates to identify and support actors that can provide points

200 Concluding considerations of leverage in promoting investments that contribute to poverty reduction efforts within the decision-making systems of emerging powers. Although the political systems of emerging powers in some respects differ significantly from those of OECD donors, in examining questions of bureaucratic competition in OECD countries non-DAC aid providers may nevertheless be able to derive lessons from OECD donors on the challenges of rationalizing external assistance structures and potentially adapt their nascent organizational set-ups to avoid the fragmentation that has characterized the development cooperation programs of some DAC donors. A second basic lesson for development cooperation beyond the DAC is that development assistance from OECD donors has for many years served a mixed set of interests. Aid from DAC members has reflected diplomatic or commercial goals as well as poverty reduction concerns. While there has been variation among states in terms of their poverty reduction orientation, the examination of aid politics across countries and over time underlines that DAC and non-DAC donors face many common challenges. Chief among these is the challenge of ensuring that development cooperation that serves the interests of aid providers simultaneously benefits aid recipients. Though principles of partnership or mutual benefit guide the development cooperation efforts of DAC and non-DAC alike, all kinds of development assistance providers should continue to reflect on how they can create genuine ‘win-win’ situations in their cooperation programs. Ongoing knowledge exchange across the donor community on how to reconcile domestic interest accommodation with responsiveness to the development needs of recipient populations can further this objective.

Conclusion The “abject and dehumanizing conditions of extreme poverty” referenced in the Millennium Declaration continue to affect a large part of the world’s population. While official development assistance represents only one of numerous public and private means to address the persisting problem of global poverty, it remains an important instrument that wealthy states can use to reallocate resources in the global political economy. The OECD donor countries that have provided the bulk of the world’s development assistance have varied both in terms of how much aid they have provided and with respect to the priorities they have established within their aid programs determining how aid resources should be spent. This book has accounted for this variation through an examination of the attributes of domestic constituencies engaged in the aid arena, the qualities of the institutions that regulate the aid policymaking process, and the nature of intra-governmental politics in four donor countries. In so doing, it has highlighted many obstacles that development advocates face in promoting global poverty reduction goals. Nevertheless, the book also reveals some room for optimism, as development advocates may find allies in the form of untapped domestic constituencies in favor of benign global engagement or political leaders who against expectations recognize the value of investing in global development.

Notes

1 Development aid as a policy instrument 1 For examples of arguments lauding foreign aid’s contribution to development, see for example Millikan and Rostow (1957) and Sachs (2005). There is an extensive literature on aid effectiveness. Scholars such as Boone (1996) and Easterly (2003) have challenged the notion that aid supports economic growth, while Dollar and Pritchett (1998), Burnside and Dollar (2000), and Collier and Dollar (2004) suggest that aid may be an effective development instrument, depending on the environment it is injected into. Tarp (2000) provides a useful overview of aid and the many questions surrounding its use. 2 The growing prominence of China and India as development assistance providers has attracted special attention in development cooperation recently, with Brazilian and South African development contributions providing additional examples of the diversifying development cooperation landscape (Grimm et al. 2009). A number of Eastern European countries, Israel, Kuwait, Mexico, Saudi Arabia, Turkey, and the United Arab Emirates are also non-DAC donor countries (OECD 2006a). 3 In 2005, the Development Assistance Committee included the following states as members: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States. The European Commission is also a DAC member. In 2010, South Korea became the twenty-fourth member of the DAC. 4 Drawing on OECD statistics, the British NGO ActionAid estimated that $37 billion of the $79 billion provided in aid by DAC member countries in 2004 could be considered ‘phantom aid,’ or aid that was not destined to fight poverty in developing countries. Double-counted debt relief, excessively costly technical assistance, tied aid, money lost to poor coordination among donors, and money spent on refugees from developing countries contributed to inflated aid figures (ActionAid 2005). 5 Focusing on the Swedish aid administration, Gibson et al. (2005) draw a link between the properties of aid programs and aid effectiveness, noting that the perverse incentives invoked to explain aid ineffectiveness often have roots in the character of the donor apparatus for administering aid. Aid from a single donor that is administered through multiple channels because it addresses a multitude of goals can diminish accountability on the recipient side. The multiplicity of donors within a given recipient country can generate additional complications by creating competition for local talent (Knack and Rahman 2004), increasing the administrative burden on recipient governments, and leading to a duplication of labor among donors (OECD 2005a). 6 The welfare state argument also assumes a level of coherence across policy areas that may not always exist. As an example, donor trade and agricultural policies have the potential to work at cross purposes with aid policy if protectionist measures enacted in donor countries limit economic development prospects in the developing world.

202 Notes 7 Though NGOs and business groups have been the most prominent societal actors in aid policy processes, other groups such as ethnic interest groups and labor organizations may also take an interest in aid policy. 8 Restricting the indicators used to identify a donor’s poverty reduction orientation can be problematic, given that recipient perceptions of ‘development needs’ can vary and that a variety of forms of aid may be directed toward poverty reduction. For instance, investments in private sector development can create jobs that provide the poor with income. Aid directed toward poor countries and investments in social infrastructure and agricultural development provide a basic yardstick to facilitate the comparison of donor aid policies in terms of their poverty reduction orientation. In the discussion of individual cases, the qualities of aid programs and the poverty reduction orientation of donors are analyzed in a more holistic manner. The Center for Global Development and the Brookings Institution recently developed an alternative way of assessing donor contributions to poverty reduction. The Quality of Official Development Assistance (QUODA) measure compares aid agencies’ performance on indicators related to Paris Declaration principles such as increasing efficiency, supporting recipient institutional development, reducing the administrative burden on recipients, and promoting transparency and learning (Birdsall and Kharas 2010). 9 An additional indicator of the poverty orientation of an aid program might relate to efficiency criteria for allocating aid. Donors became increasingly selective in their aid allocations in the 1990s due to a growing recognition that aid investments have a better chance of producing desired outcomes when they are placed into a good policy environment (Dollar and Levin 2006). Discussing a poverty-efficient aid allocation approach, Collier and Dollar note simply that “to maximize the reduction of poverty, aid should be allocated to countries that have large amounts of poverty and good policy” (2002: 1482). The use of income categories as an allocation guide for assistance is a subject of ongoing debate in development cooperation, particularly as donors face the question of how to engage with major emerging economies such as China and India where many of the world’s poor live (see Sumner 2010). 10 The discussion of selection bias in comparative politics has focused on problems associated with studying relatively rare phenomena such as social revolutions. One problem that naturally occurs in the study of these phenomena is that it may be difficult to identify a set of ‘negative’ cases from a large universe of cases to contrast with the ‘positive’ cases the researcher is especially interested in explaining (Mahoney and Goertz 2004, 2006). This dilemma is not an issue in this study since the dependent variable is continuous and represents a repeated occurrence in many countries. 11 The interview research that is presented in this book took place in 2006 and therefore reflects perceptions of aid policymaking dynamics at the end of the period under study. Nevertheless, because many interview partners had extensive experience in the policy field, the interviews were useful in improving the researcher’s grasp of how policy dynamics unfolded through time in the respective countries. 12 In 2008, Mellemfolkeligt Samvirke began a process of integrating its work with ActionAid International and became a full-fledged member of the organization in 2010. 2 Aid and domestic politics 1

This typology of issue areas was developed with reference to the American political system. Distributive policies are understood to relate to the politics of the pork barrel, where individual legislators have opportunities to directly earmark funds toward specific purposes. In other political systems, the ability of legislators to make decisions that create narrowly targeted gains without consideration for the overall budget may well be more limited. The central distinction between redistributive and regulatory policies is likely to be less problematic when applied across diverse national settings, however.

Notes 203 2

3 4

5

Because many donors use a numeric target of aid as a percentage of GNP for budgeting purposes, economic growth can lead to an automatic expansion of the size of the aid budget in real terms. Economic growth may then actually inhibit growth in the aid-toGNP ratio. Adhering to an aid-to-GNP ratio in a period of robust economic growth can therefore be politically contentious, since growth could increase the share of the total budget allocated toward foreign aid in relation to other policy areas that do not follow a budgeting principle based on a spending-to-GNP ratio. The terms interest groups, interest associations, organized interests, and interest organizations are used interchangeably in this book. It is worth noting in this context that David Truman’s The Governmental Process, viewed as a representative work in the pluralist tradition, includes a substantial discussion of how the governmental structure of the United States influenced the possibilities for interest groups to participate in the political process (Truman 1951). Grant (2001) and Binderkrantz (2005a) note that the distinction between outsider and insider strategies may be overstated, since interest groups tend to seek to use a variety of tactics. However, the ability to pursue strategies that cross these lines may itself reflect the level of access to the decision-making process: groups with high access to decision makers have a larger set of influence strategies at their disposal than groups with low access.

3 Consensus and aid generosity in Denmark 1 Friis-Bach et al. (2008) provide an excellent Danish-language survey of the history of Danish development cooperation, covering the period 1945 to 2005. 2 Bekendtgørelse af Lov om Internationalt Udviklingssamarbejde. From the homepage of the Danish Ministry of Foreign Affairs: http://147.29.40.90/_GETDOCM_/ACCN/ A19980054129-REGL (accessed July 8, 2007). 3 Interview DKO2, Copenhagen, May 2006. Author’s translation. 4 When the volume of NGO grants divided by GNI is averaged over the period 1980 to 2005, Ireland, Norway, the Netherlands, Switzerland, Germany, Canada, the United States, Sweden, Australia, the United Kingdom, New Zealand, Luxembourg, Belgium, and Austria all have higher levels of private giving to development than Denmark; Spain, Finland, France, Japan, Greece, Italy, and Portugal have lower levels of private giving. At one end of the spectrum, Ireland’s NGO grants averaged 0.1 percent of GNI while at the other end Portugal’s averaged 0.003 percent (OECD 2007a). 5 Interviews DKNG1, DKNG2, DKNG4, DKNG5, DKNG6, and DKNG7, Copenhagen, May and June, 2006. 6 Interview DKNG5, Copenhagen, June 2006. Author’s translation. 7 Interviews DKNG1, DKNG2, and DKNG5, Copenhagen, May and June 2006. 8 The homepage of 92 Gruppen can be found at http://www.92grp.dk/. 9 Interviews DKNG1, DKNG2, and DKNG6, Copenhagen, May and June 2006. 10 Interview DKNG7, Copenhagen, June 2006. 11 Interview DKNG1, Copenhagen, May 2006. Author’s translation. 12 Interviews DKNG2 and DKNG4, Copenhagen, May and June 2006. 13 See the Confederation of Danish Industry’s homepage: http://www.di.dk/. 14 Interview DKNG3, Copenhagen, June 2006. 15 The web address for Landbrugsrådet is http://www.landbrugsraadet.dk. 16 Interview DKNG9, Copenhagen, June 2006. 17 LO’s web address is http://www.lo.dk. 18 Interviews DKNG3 and DKNG8, Copenhagen, June 2006. 19 This translates to “The Labor Movement’s Developing Country Secretariat.” The organization has been known as U-Landssekretariatet or simply LO/FTF Council since 1998. See http://www.ulandssekretariatet.dk/.

204 Notes 20 Interview DKO1, Copenhagen, May 2006. In 2004, the balance of representation on the Board was adjusted in favor of economic interest groups, as LO took a spot traditionally reserved for NGOs and an organization representing small and mediumsized enterprises (Håndværksrådet) was given a Board seat. 21 Using exchange rate figures for the end of 2003, DKK 5 million equaled roughly $850,000. Grants in excess of DKK 30 million required approval from the parliament’s finance committee as well. 22 Interview DKO1, Copenhagen, May 2006. 23 Interview DKGOV1, Copenhagen, May 2006. Author’s translation. 24 Interview DKNG1, Copenhagen, May 2006. Author’s translation. 25 Interview DKNG8, Copenhagen, June 2006. Author’s translation. 26 From the homepage of the Danish Ministry of Foreign Affairs: http://www.um.dk/. 27 Interviews DKGOV1 and DKGOV3, Copenhagen, May and June 2006. 28 Interviews DKNG2, DKNG5, DKNG6, and DKNG7, Copenhagen, May and June 2006. 29 Interview DKNG6, Copenhagen, June 2006. Author’s translation. 30 Interview DKNG9, Copenhagen, June 2006. 31 Interview DKGOV6, Copenhagen, June 2006. 32 Interview DKO2, Copenhagen, May 2006. 33 Interview DKNG1, Copenhagen, May 2006. Author’s translation. 34 Interview DKNG3, Copenhagen, June 2006. Author’s translation. 35 Interviews DKNG9 and DKNG1, Copenhagen, May and June 2006. 36 Though there is currently a development minister, this portfolio has in the past also been managed by the minister of foreign affairs. 37 Interview DKNG9, Copenhagen, June 2006. 38 Interviews DKNG6 and DKNG2, Copenhagen, June and May 2006. 39 Interview DKNG8, Copenhagen, June 2006. 40 Interviews DKNG4 and DKNG7, Copenhagen, May and June 2006. 41 Interview DKNG2, Copenhagen, May 2006. 42 Interpellation refers to the process where a question is directed to a government minister about an issue that a party or parliamentarian would like to debate publicly in the parliament; the minister to which the question is directed is called on to defend the government’s position in the parliamentary debate. 43 Interview DKGOV2, Copenhagen, June 2006. Author’s translation. 44 Interview DKGOV2, Copenhagen, June 2006. 45 Interview DKGOV5, Copenhagen, June 2006. 46 Interview DKGOV5, Copenhagen, June 2006. Author’s translation. 47 Interview DKGOV1, Copenhagen, May 2006. Author’s translation. 48 In 2009, a further reform of the Ministry of Foreign Affairs led to the disappearance of the North and South Group pillars and the creation of 11 centers having geographical or thematic emphases. Within this integrated structure, the Center for Development Policy assumed responsibility for the overall coordination of development policy and humanitarian assistance (OECD 2011a). 49 Interview DKO1, Copenhagen, May 2006. 50 Interviews DKGOV1 and DKGOV3, Copenhagen, May and June 2006. 51 Indeed, in defending the governing coalition’s position on the proposal, Foreign Minister Uffe Ellemann-Jensen emphasized the government’s commitment to maintaining and increasing the aid budget, and also noted that before the conservative coalition came to power in 1982, the Social Democrats had “specific plans to reduce the aid ratio to .7 percent as a part of some cost-cutting measures” (Ellemann-Jensen 1986a: 411, author’s translation). 52 As Friis-Bach et al. (2008) highlight, however, the funding increases of the 1990s were not entirely uncontroversial. One expression of reluctance was the government’s decision in 1998 to change the target date for achieving the additional aid goal from 2002 to 2005.

Notes 205 53 Interview DKNG3, Copenhagen, June 2006. 54 The strategy also advocated a commitment to ‘active multilateralism’ in the context of Danish multilateral aid, which traditionally represented about half of the aid budget. The spirit of active multilateralism was to leverage Danish contributions to and participation in international organizations to advance an agenda consistent with the principles guiding bilateral assistance. This would notably involve promoting issues such as the role of women in development within the EU and lobbying for a greater integration of poverty reduction considerations in the World Bank and IMF (EngbergPedersen 1994). 55 Interview DKGOV1, Copenhagen, May 2006. Author’s translation. 56 Interview DKGOV4, Copenhagen, June 2006. 57 Interview DKO2, Copenhagen, May 2006. Author’s translation. 58 Interview DKGOV2, Copenhagen, June 2006. Author’s translation. 59 Interview DKO1, Copenhagen, May 2006. 60 Within the NGO community, reductions in funding for specific organizations were considered to be politically motivated, rather than part of an effort to use aid more efficiently. As an example, the LO/FTF Council (U-Landssekretariatet), affiliated with the largest labor unions, saw its framework agreement with the government abandoned in 2003 as a consequence of an agreement made between the Danish People’s Party and the governing coalition (U-Landssekretariatet 2004). 61 Interview DKO1, Copenhagen, May 2006. Author’s translation. 62 Ibid. 4 The cautious humanitarian: aid politics in Switzerland 1 Adolf Ogi en chantre de l’adhésion à l’ONU. Le Temps (September 9, 2000). Switzerland was thus not a UN member when the General Assembly endorsed the 0.7 percent aid target and as a consequence the Swiss government has not considered itself to be committed to that target. 2 The observation that Switzerland is a land of contradictions is hardly new. Freymond (1952) labeled Switzerland a “living, challenging paradox” due to its comfortable juxtaposition of ethnic diversity and political stability, its simultaneous embrace of modernity and preservation of tradition, and its great wealth in spite of a paucity of natural resources. 3 See Schümperli (2007) for a comprehensive French-language treatment of the history and substance of Swiss development cooperation. 4 The diminishing share of aid directed to LDCs reflects two trends. One is the increase in the share of aid unallocated by income group, which includes funds that are allocated in accordance with poverty criteria. A second trend is the increasing volume of aid provided for humanitarian assistance within Europe in the course of the 1990s. Though humanitarian assistance funding accounted for an increasing share of the aid budget, funds for these purposes have been additional to existing commitments to the poorest developing countries (OECD 2001c). The declining share of aid to LDCs should thus be viewed in the context of an aid budget that experienced increases in real terms. 5 The limited funding allocated directly to social and agricultural sectors in the 1990s in spite of an overarching commitment to poverty reduction can be understood with reference to several aspects of Swiss aid policy. One is the government’s increasing emphasis on understanding global development problems in terms of broad foreign policy objectives. The responsiveness of Swiss aid policy to recipient needs may also lead to a dispersion of sectoral priorities (OECD 2005b). Finally, the Swiss Development Agency’s view of social development is encompassing, not only focusing on direct interventions in the areas of education and health, but also considering the empowerment of local populations and broader improvements in the political context as means for reducing poverty (OECD 2001c).

206 Notes 6 This estimate includes organizations that do not implement development projects abroad. Richard Gerster cites a lower estimate of the size of the development NGO community, suggesting that there are over 200 such organizations in Switzerland (Gerster 2006). Much of the discrepancy is likely attributable to the presence of many small organizations in the first estimate. 7 Notable exceptions are the Swiss affiliate of Doctors without Borders, an organization of French origin, and World Vision Switzerland, an affiliate of US-based World Vision International. The private generosity of the Swiss population makes Switzerland an attractive fundraising market for international NGOs. The arrival of international NGO branches has raised concerns within Switzerland because these organizations may increase competition among NGOs for resources and also diminish the volume of resources directed to NGOs that are interested in promoting changes in Swiss policies toward developing countries in addition to funding their own development programs. 8 Interview CHNG7, Bern, August 2006. 9 Interview CHNG5, Zürich, July 2006. 10 Interviews CHNG2, Bern, and CHNG5, Zürich, July 2006. 11 Ibid. 12 The coalition was formerly known as the Arbeitsgemeinschaft der schweizerischen Hilfswerke/Communauté de Travail des Oeuvres d’Entraide, or as the Swiss Coalition of Development Organizations. 13 This discussion of the relationship between Alliance Sud and its member organizations draws on a number of interviews with NGO representatives: Interview CHNG1, Bern, July 2006; Interview CHNG4, Zürich, July 2006; Interview CHNG6, Lucerne, July 2006; Interview CHNG7, Bern, August 2006; Interview CHNG9, Bern, August 2006. 14 This statement is based on a review of the NGO platform’s annual development policy positions from 1981 to 2004. 15 Interview CHNG7, Bern, August 2006. Author’s translation. 16 Interview CHGOV7, Bern, August 2006. The new NGO strategy signaled a shifting relationship between the SDC and NGOs. The strategy suggested that NGO collaboration should be viewed in the context of the donor harmonization agenda. 17 While the Gewerbeverband and Bauernverband have been politically active on development policy issues such as trade policy and agricultural policy, these organizations have been minimally active on aid questions. Interestingly, there has been collaboration between the Bauernverband and Swiss NGOs on agricultural policy given a common interest in defending agricultural protection in the context of international trade negotiations. Interview CHNG1, Bern, July 2006; Interview CHNG5, Zürich, July 2006. 18 Economiesuisse ist gegen höhere Entwicklungshilfe: Auch die Einführung einer Quote sei nicht geboten, findet der Verband. Basler Allgemeine Zeitung (June 15, 2005). 19 Interview CHO1, Geneva, July 2006. 20 Calling for a referendum generally requires the collection of 100,000 signatures (Linder 2005). 21 Parliamentarians are as a general rule not represented on extra-parliamentary committees in Switzerland, so the composition of this advisory committee is atypical. 22 Interview CHNG2, Bern, July 2006. 23 Interview CHNG8, Zürich, August 2006. 24 Interviews CHGOV1, CHGOV2, and CHGOV3, Bern, July 2006. 25 Interview CHGOV7, Bern, August 2006. 26 Interview CHNG4, Zürich, July 2006. 27 Interview CHGOV1, Bern, July 2006. 28 Interview CHNG2, Bern, July 2006. 29 Ibid. 30 Interviews CHNG1 and CHNG9, Bern, July and August 2006.

Notes 207 31 Interview CHNG2, Bern, July 2006. Given that there are 246 members of parliament in Switzerland’s two chambers, the 10–20 parliamentarians would represent somewhere between 4 and 8 percent of the legislature. 32 The seven Swiss ministries are the Federal Department of Foreign Affairs, the Federal Department of Home Affairs, the Federal Department of Justice and Police, the Federal Department of Defense, Civil Protection, and Sports, the Federal Department of Finance, the Federal Department of Economic Affairs, and the Federal Department of Environment, Transport, Energy, and Communications. 33 The names of these departments have changed since 1977. They are referred to by their current labels throughout this chapter. 34 Other ministries administered the remaining share of the aid program. Expenses managed by other ministries included aid to asylum seekers, money for conflict management administered by the Political Affairs division of the Ministry of Foreign Affairs, and resources managed by the Federal Department of Defense used for peace and security promotion and supplying material for humanitarian purposes. 35 Interview CHO2, Bern, August 2006. 36 Interview CHGOV1, Bern, July 2006. 37 SECO is shorthand for the State Secretariat for Economic Affairs, but it is also commonly used to refer to the Secretariat’s Economic Cooperation and Development Division, which is the part of the Secretariat that deals with development assistance. 38 Interview CHGOV2, Bern, July 2006. SECO’s aid allocation logic shares similarities with the selectivity agenda suggesting that aid should be allocated where a recipient’s policy environment is most conducive to economic growth. 39 Interview CHGOV2, Bern, July 2006. 40 Because of its role in managing relations with the World Bank and the IMF, the Finance Ministry is a third ministry that could favor aid increases, for instance by calling for increased bilateral assistance to the countries that support Switzerland’s position on the executive board of those institutions. However, the overall mission of the Finance Ministry to manage the national budget neutralizes this impulse. Interview CHGOV5, Bern, August 2006. 41 Interview FRAIG2, Paris, March 2006. 42 Interview CHGOV3, Bern, July 2006. 43 The GDP per capita figure (reported in constant 2000 US dollars) is from the World Development Indicators Online (World Bank 2007). 44 As Martin (1984) notes, the aid budget was more vulnerable to austerity measures than other parts of the federal budget such as indexed wages or pension benefits, which increase automatically. Reductions in the aid budget would affect projects not yet implemented whose beneficiaries lived in distant places and could not influence Swiss elections. 45 From a total population of 6.5 million in 1983, the number of signatures represented about 3 percent of the Swiss population. 46 In responding to official letters from the development NGO community, the leading aid agencies (SDC and SECO) regularly include a reference to their appreciation for the efforts of the NGO community to support the administration’s development cooperation work and emphasize the importance of NGOs in promoting greater public awareness of development issues. Such statements can be viewed as underlining the shared goals of the NGO community and the aid administration. At the same time, they hint at the constraints that the agencies face in promoting increased aid commitments within the government. 47 The Confederation provided a total envelope of 700 million Swiss francs as requested, with 300 million going toward environmental assistance. 48 Stuber, Andreas. 1994. Hilfswerke gehen in die Offensive: “Keine Demontage.” Der Bund (April 20), p. 13.

208 Notes 49 Anonymous. 1994. Kredit für Entwicklungshilfe gekürzt. Basler Zeitung (September 28). 50 Ironically, aid channeled through NGOs is one force limiting the concentration of aid resources (OECD 1996b). Providing aid to NGOs has been justified because it allows donors to have a presence in countries where they might not otherwise be able to work. 51 Interviews CHGOV4, Bern, August 2006, and CHO2, Bern, August 2006. 52 Graffenreid, Valérie de. 2003. Aide au Développement: Crédit-Cadre pour 2004–2007 Moins Ambitieux que Prévu. Le Temps (May 30). 53 Anonymous. 2003. Kredit für Entwicklungshilfe gekürzt. Tages-Anzeiger (December 16). 54 Interview CHGOV1, Bern, July 2006. 5 The long shadow of the past: aid politics in France 1 An important part of France’s multilateral aid has been allocated to the European Community (EC), where France historically sought to leverage its influence to ensure the maintenance of its special ties to Africa (Whiteman 1998). France provided just over half of its multilateral aid to the EC on average between 1980 and 2005 (OECD 2007a). If France has taken a keen interest in shaping EC development policy, though, the extent of coordination between the bilateral program and the EC’s development policy is considered to be minimal and does not represent a strong independent influence on bilateral aid choices. Interviews FRAGOV2 and FRAGOV12, Paris, March 2006. 2 New Caledonia and French Polynesia were removed from the list of Part I aid recipients in 2000. These territories have been among France’s leading aid recipients; their removal from the recipient list was expected to reduce France’s total ODA to national income ratio by 0.07 percent in the following year (OECD 2001a). 3 Because of the high share of aid provided to African countries, French development assistance policy is closely linked to French policy toward Africa. 4 Critical accounts of French aid policy have suggested that the poverty reduction orientation of the aid program has been minimal. Brunel (1993), citing a figure from the UNDP, indicates that just 5 percent of French aid went toward reducing poverty. François-Xavier Verschave (1999) suggests that the figure may be even lower. These low estimates of the poverty reduction orientation of French aid have been contested, notably by the DAC, the source of the statistics on which the calculations were based (Cyrille 1995). 5 Interview FRAGOV7, Paris, March 2006. 6 The weakness of society in relation to the state is evident when the focus is on the development NGO community; however, this claim is difficult to sustain when one considers the engagement of business interests in this issue area. The French business community cannot be considered to be weak or unorganized. 7 Homepage of Médécins du Monde: http://www.medecinsdumonde.org. 8 This inventory is limited to organizations fitting criteria relating to the age of an NGO, its budget, membership size, whether there is government co-financing, and whether it has a national presence. In addition, the inventory only includes organizations fulfilling these criteria that responded to the questionnaire. Thus this number can be considered a low estimate of the number of associations involved in international development in France, though it covers all major organizations. 9 Interview FRANG2, Paris, March 2006. 10 Fagnau (2004) notes that these four organizations alone accounted for more than a third of the total of NGO resources in France. 11 Part of this debate was a more politicized discussion on the effectiveness of humanitarian and development work. In particular, concerns were raised that aid in emergencies, such as conflicts, could prolong the conflicts; development aid managed

Notes 209

12 13

14 15

16

17 18 19 20 21 22 23 24 25 26 27

28 29 30 31 32 33 34

by NGOs that drew inspiration from tiers-mondisme (viewed as leftist in orientation) was derided as ideologically motivated. Parangaux, Roland Pierre. 1990. Charités en Question: Pour qui, Pourquoi, Où et Comment? Le Monde (February 2). Anonymous. 1991. L’Aide au Développement, du Romantisme au Réalisme. Le Monde (January 22). Author’s translation. The declining relevance of the previous ‘emergency v. development’ cleavage in the NGO community was reflected in a new preference for NGO self-identification as international solidarity organizations, a term that could apply equally to organizations engaged in humanitarian and development work. Piot, Olivier. 1992. La Solidarité Internationale à l’Étroit dans l’Humanitaire: Les ONG se Regroupent sous la Bannière de la Solidarité et Veulent Donner Leur Avis sur la Politique de Coopération. Le Monde (November 13). The new umbrella organization Coordination Sud incorporated the two themes in its title. ‘Sud’ (also ‘south’ in French) stands for solidarité, urgence, and développement: solidarity, emergency relief, and development respectively. Interview FRANG2, Paris, March 2006. Author’s translation. Homepage of Coordination Sud: http://www.coordinationsud.org (the figure on members is current as of December 3, 2011). Apart from Coordination Sud and its member platforms, the Comité de la Charte sets standards for NGOs that conduct public collection campaigns. This association was founded in 1989 and establishes procedures for ensuring transparency in accounting and collections; it does not serve a larger coordinating function. See the association’s homepage: http://www.comitecharte.org. Neither the French Red Cross nor MSF, the two largest organizations with programs in the developing world, are members of Coordination Sud. However, other leading organizations in the field such as ACF, Médécins du Monde, Handicap International, and the CCFD are active in the organization. Interview FRANG1, Paris, March 2006. Ibid. Interview FRANG5, Paris, March 2006. Ibid. Author’s translation. Interview FRAGOV6, Paris, March 2006. Author’s translation. Rotivel, Agnès. 1997. Action Humanitaire (IV): L’humanitaire a Perdu en Romantisme mais Gagné en Professionnalisme. La Croix (December 4). Though the organization still uses the CIAN acronym, it has changed its name to Le Conseil Français des Investisseurs en Afrique (the French Council of Investors in Africa), reflecting a broadened geographical orientation. Homepage of CIAN: http://www.cian.asso.fr (accessed December 3, 2011). Nicaud, Gérard. 1997. Le Rapport du Conseil des Investisseurs Français en Afrique: la Nécessité d’une Politique Commerciale. Le Figaro (January 21). Prouteau, Jean Pierre, and Eric Fottorino. 1990. Un Entretien avec M. Jean Pierre Prouteau. Le Monde (April 9). Highlighting the political and economic interdependence of France and Africa, Bongo once reportedly noted that “Africa without France is a car without a driver. France without Africa is a car without gas,” quoted in Verschave (1999), p. 135, author’s translation. Reed (1987) labeled Gabon a neo-colonial enclave due to the heavy French influence in the economic, political, and military spheres within the country. Anonymous. 1996. Pompe and Circumstance. The Economist (November 15), p. 71. Betts, Paul. 2006. France Goes Back to Nuclear Future. Financial Times (June 13), p. 14. Private correspondence, March 2006. Author’s translation. Anonymous. 2005. Le “Top Ten” des VIP des Milieux d’Affaires de Jacques Chirac à Madagascar. La Lettre du Continent (July 21). Private correspondence from current aid official, March 2006. Private correspondence from retired aid official, March 2006. The COFACE was privatized in 1994, though it continued to manage export credits provided by the state. COFACE drew criticism from NGOs because of its role in

210 Notes

35 36 37 38 39

40

41 42

43

44

45 46 47

48 49 50 51

generating public debt from developing countries, which has been cancelled and counted as ODA, to the detriment of providing fresh aid (Coordination Sud 2005). Interview FRAGOV4, Paris, March 2006. In December 2007, a decision was taken to replace the HCCI with a ‘Strategic Council on ODA’ that was intended to support civil society engagement in development debates (OECD 2008). Interview FRANG1, Paris, March 2006. Interview FRANG1, Paris, March 2006. The purpose of the LOLF reform was to increase transparency in public budgeting and strengthen parliamentary oversight. The law enabling this reform was promulgated in 2001, and the first budget to be submitted under the law was for the year 2006 (Mantay 2006). Even though the law entered into force only after the end of the period covered in this study, the reform process promoted change within governmental agencies in the years between 2001 and 2006; thus its relevance to aid policymaking in this period cannot be dismissed entirely. It is interesting to note that the majority of MPs signing the proposal were from the Gaullist RPR party and the center-right UDF (246 and 136 respectively), rightist parties that had won a major victory in the 1993 parliamentary elections. The Communist Party (with 23 signatories) was the third largest party represented among the signers; only 7 socialist deputies supported the proposal (Verschave 1999). Interview FRANG1, Paris, March 2006. Kessler (1999) notes that the notion of a reserved domain for the president is not explicitly identified in the French Constitution; however, the primacy of the president in foreign policymaking is established through provisions identifying the president as the guarantor of national independence, territorial integrity, and treaties. With the notable exception of Algeria, the move toward independence in France’s African colonies was in general not driven by rebellion but instead represented a type of negotiated transition. The relatively peaceful decolonization process can be interpreted as a consequence of the difficult situation in Algeria and France’s need to gain acceptance for its continued effort to exercise more complete control there. Interview FRAGOV8, Paris, March 2006. French government ministries are often referred to by the street or building in Paris where they are located. While these ministries are mostly referenced by their actual names in this chapter, ‘the Quai’ is used as shorthand for the Ministry of Foreign Affairs throughout the chapter. Private correspondence with aid official, March 2006. Interview FRAGOV8, Paris, March 2006. The champ was also known as the pré-carré or a chasse gardée. All of these terms connote a privileged domain of intervention. This area, which initially included only France’s former colonies south of the Sahara, was progressively expanded to incorporate former Belgian colonies in 1966, small former Portuguese colonies, Equatorial Guinea, Djibouti, the Comoros, and the Seychelles in the late 1970s, and Angola and Mozambique in 1988 (Ministère de la Coopération 1994). This ministry is currently the Ministry of Finances, the Economy, and Industry. It is referred to simply as the Ministry of Finance or by its acronym MINEFI in this chapter. Interview FRAGOV5, Paris, March 2006. This monetary aspect of French development cooperation is unique in the donor community. Interview FRAGOV5, Paris, March 2006. As one longtime aid official observed, coherence between the actions of the Finance Ministry and other parts of the French government was not always assured. Due to its exclusive representation in the international financial institutions, the Finance Ministry could engage in “lines of conduct and discourse that were not necessarily coherent with, at times even contradictory to, those employed elsewhere at the geopolitical level by the head of state,

Notes 211

52

53 54

55 56 57 58

59 60 61

62 63 64 65

66 67 68

69 70

the Ministry of Foreign Affairs, and the Ministry of Cooperation.” Interview FRAGOV8, Paris, March 2006. Author’s translation. The two key missions of the Finance Ministry in the development assistance sphere (financial assistance for purposes of economic support and development and export promotion) were managed by two distinct offices within the ministry. The Direction du Trésor was responsible for the first task, the DREE for the second. These departments were combined into the Direction Générale du Trésor et de la Politique Économique (DGTPE) in 2004. Interview FRAGOV5, Paris, March 2006. Interview FRAGOV10, Paris, March 2006. The Agence Française de Développement was previously known as the Caisse Française de Développement (1992–8), the Caisse Centrale de Coopération Économique (1958–92), the Caisse Centrale de l’Outremer (1944–58), and the Caisse Centrale de la France Libre (1941–4). Interview FRAGOV9, Paris, March 2006. Ibid. Author’s translation. Ibid. Interview FRAGOV5, Paris, March 2006. In French, the AFD was a ministry ‘sous la tutelle’ of the Ministry of Finance, which implies a role of supervision but also of protection. Following recent reforms in the French aid system, the AFD is now under the joint ‘tutelle’ of the Ministry of Finance and the Ministry of Foreign Affairs. Interview FRAGOV6, Paris, March 2006. In the run-up to the election, the socialist party had criticized the increasing commercial orientation of aid policy under Giscard d’Estaing’s presidency, indicating that aid should be directed toward development needs in recipient countries (Chipman 1989). The willingness of Cot’s ministry to receive opposition figures from countries such as Gabon and the Central African Republic and thereby to encourage moderation in authoritarian rule was one notable point of contention between African leaders and the Presidency on the one hand and Cot on the other (Bayart 1984). It is often noted that Penne did not have extensive experience in African affairs prior to his appointment as Mitterrand’s special advisor on African issues (Whiteman 1983). Jean-Christophe Mitterrand succeeded Penne in 1986 as head of the African cell. Mitterrand also stressed in his speech that France did not intend to interfere in the internal affairs of African states, which might be interpreted as contradictory to the rhetoric of democracy promotion. France’s budget deficit in 1993 amounted to close to 6 percent of GDP by comparison (OECD 1993). This cost could be explained primarily by the significant price drops in primary commodities beginning in the early 1980s. While monetary cooperation with the franc zone had previously benefited the French Treasury, increasing balance of payments problems placed a burden on the Treasury to cover these deficits. Interview FRAGOV8, Paris, March 2006. Piot, Olivier. 1992. La Rencontre à Paris des Ministres de la Zone Franc: La France Reste Hostile à une Dévaluation du Franc CFA. Le Monde (September 21); Anonymous. 1992. En Bref: Maintien de la Parité du Franc CFA. Le Monde (August 3). De Grandi, Michel. 1994. Zone Franc: Selon un Mémorandum du CIAN—Entreprises Françaises: Beaucoup de Problèmes Demeurent en Suspens. Les Echos (June 29). Interview FRAGOV8, Paris, March 2006. Military advisors borrowed from the Ministry of Defense were included among the coopérants overseen by the Ministry of Cooperation. This military connection likely helps to account for why shortcomings in French military policy hurt the standing of the ministry. Juppé had been foreign minister in Balladur’s government and his efforts to reform the aid system represented a continuation of work begun before Chirac became president. Cornu, Francis. 1995. L’Annonce d’une Réorganisation du Ministère Cause un Certain Embarras. Le Monde (September 4); Ficatier, Julia. 1995. France-Afrique: “Vive la

212 Notes

71 72 73 74

75

76 77 78 79

80 81

Maison Commune.” Entretien. La Croix (September 30); Anonymous. 1995. Chirac Rassure le Lobby Africain. La Lettre du Continent (December 14). Quotations have been translated by the author. Cornu, Francis. 1996. La Réforme de la Coopération se Traduit par la Création d’un Comité Interministeriel: M. Juppé se Contente d’une Simple Coordination de l’Aide au Développement au Lieu d’une Réorganisation. Le Monde (February 6). Perhaps the most notable policy failure was France’s support for Mobutu’s regime in Zaire until its successful ousting in 1997. The DGRCST was the department responsible for the promotion of French language and culture abroad. As a small concession to Chirac, a minister of cooperation was maintained, though the minister would be a ‘delegated minister’ under the supervision of the Minister of Foreign Affairs. Moreover, the minister of cooperation would not have any budgetary control and would not have a department to manage. Stern, Babette. 1998. Le Gouvernement Français Présente la Réforme de la Coopération: Le Secrétariat d’État Va Être Integré au Ministère des Affaires Étrangères. Le Monde (February 5). While these reforms suggest a more consolidated aid apparatus, in practice a complete rationalization of the aid administration was not accomplished, since it left structures associated with the presidency (i.e. the African cell) untouched. The new forum for interministerial dialogue, the CICID, also met rarely in its first years of existence (Bergamaschi 2005). Mens, Yann. 1999. La France Sélectionne les Pays Pauvres. La Croix (February 15). Interview FRAGOV6, Paris, March 2006. Interview FRAGOV10, Paris, March 2006. Coordination Sud characterized these increases in aid outlays as trompe l’oeil (an optical illusion), especially since a substantial share of this aid went toward debt cancellation, which is not considered to provide fresh development resources. The dependence on debt cancellation to achieve aid increases raised concerns that it would be difficult for France to adhere to its aid targets (Coordination Sud 2005). See Lumsdaine (1993: 86, 164). Interview FRAGOV9, Paris, March 2006.

6 Fragmentation and micromanagement: US aid politics 1 The average for the MADCT category was 20 percent between 1980 and 1996, when aid figures for Israel were still included in that income category. 2 By contrast, Mexico, one of the few developing countries to share a land border with a DAC member, attracted only 0.4 percent of US development assistance in the same period. 3 The 2003 invasion of Iraq made that country a primary US aid recipient. In 2003, aid to Iraq amounted to 10 percent of total US aid. In 2004 that figure climbed to 19 percent, and the figure climbed further still in 2005 due to a major debt relief package, with aid to Iraq representing approximately 43 percent of all US aid flows. 4 Food aid has been a controversial component of the US aid program. While proponents argue that it can contribute to poverty reduction, for example by relieving hunger and contributing to growth in local agricultural markets, food aid has also been considered a means of disposing of agricultural surplus or promoting agricultural exports (Hopkins 1992; Barrett 1998). 5 US aid policy can also be distinguished by the nature of the general aid budgeting framework, which has not incorporated an aid-to-GNI ratio in aid budgeting (OECD 1995c). ODA as reported to the DAC represents an accumulation of many individual lines within the federal budget that are mostly found within the International Affairs Account, covering development assistance as well as military assistance and export subsidies. As a result of the absence of a consolidated development assistance budget,

Notes 213

6

7

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

24 25 26

27

the total amount of development aid funds has been difficult to forecast in any given year (OECD 1995c). This was the US PVO count as of December 31, 2011 (http://pvo.usaid.gov/usaid/ pvocount.asp). NGOs must be US-based, receive funding from the general public, have charity status (a 501c3 under US tax law), and carry out activities abroad to be included in this registry. See http://pvo.usaid.gov/usaid/index.html. The PVO category distinguishes these organizations from for-profit entities that may also receive USAID funding. The high overall volume of US NGO development contributions has been invoked to suggest that the US is a more generous donor than its low ODA contributions indicate (Adelman 2003). However, these additional NGO resources pale in comparison to the volume of official flows, and private aid flows in several donor countries (including Switzerland) have also been larger than US NGO contributions. Given the size and wealth of the United States, it is erroneous to suggest that the United States is among the most generous donor countries on this basis. Interview USGOV1, Washington, DC, November 2006. These development organizations are all members of the umbrella group Interaction. More information about them can be found via Interaction’s website: http://www. interaction.org. Interview USNG7, phone interview, December 2006. Bread for the World and other advocacy groups such as the One Campaign and Results are also members of Interaction. This count is current as of December 31, 2011. Interviews USNG11 and USNG13, Washington, DC, December 2006. Interview USNG13, Washington, DC, December 2006. Interview USNG7, phone interview, December 2006. On the Basic Education Coalition, see http://www.basiced.org; for information on the Millennium Water Alliance, see http://www.mwawater.org. These organizations may also have a general desire to contribute to development goals and would in this respect be similar to development NGOs receiving US government funding. Interview USNG2, Washington, DC, November 2006. More information about these firms can be found on their websites: Chemonics, http://www.chemonics.com; DAI, http://www.dai.com; RTI, http://www.rti.org; Louis Berger, http://louisberger.com. Interviews USNG10 and USNG12, Washington, DC, December 2006. Interview USNG10, Washington, DC, December 2006. The website of the Professional Services Council can be viewed at http://www.ps council.org. Interview USNG12, Washington, DC, December 2006. An example of this type of legislation is the Microenterprise Results and Accountability Act of 2004 (H.R. 3818), which excluded for-profit organizations from participating in the implementation of USAID-financed microenterprise programs (Professional Services Council 2005). Interview USNG10, Washington, DC, December 2006. Interview USNG3, Washington, DC, December 2006. Interview USNG1, Washington, DC, November 2006. Shipping interests have been part of the food aid constituency because of cargo preference provisions dating back to the 1950s ensuring that a certain percentage of agricultural commodities shipped overseas as food aid would have to be transported on US-bottomed ships. In 1985, the shipping lobby secured an increase in this percentage to 75 percent of food aid shipped from the US (Ruttan 1996). Interview USNG9, Washington, DC, December 2006.

214 Notes 28 “Making the Case for Aid to Israel.” From AIPAC homepage: http://www.aipac.org/ action (accessed December 2, 2006). On the role of AIPAC in US foreign policy, see Mearsheimer and Walt (2006). 29 Anonymous. 2000. Death of a Think Tank. Washington Post (November 10), p. A44; Anonymous. 2000. Overseas Development Council to End Operations after 30 Years. US Newswire (November 3). 30 The name of the organization has since changed to the US Global Leadership Coalition. See http://www.usglc.org for more information. 31 Interview USNG8, Washington, DC, December 2006. 32 Interview USNG10, Washington, DC, December 2006. 33 Interview USNG11, Washington, DC, December 2006. 34 Interview USGOV1, Washington, DC, November 2006. 35 Interview USNG7, phone interview, December 2006; USGOV1, Washington, DC, November 2006. According to the 2011 DAC Peer Review of the United States, the ACVFA forum was effectively deactivated in the first years of the Obama administration (OECD 2011b). 36 Interview USNG5, Washington, DC, December 2006. 37 Interviews USNG1, USNG5, and USNG10, Washington, DC, November and December 2006. 38 Interview USGOV6, Washington, DC, December 2006. 39 Interview USNG6, Washington, DC, December 2006. 40 The distribution of access to legislators is not equal across congressional constituencies. In his classic study of interest group politics, Truman (1951) highlights that the system of equal representation in the US Senate gives interest groups with a base in more sparsely populated states greater access to legislators than organized interests with a base in more densely populated states. 41 Interview USNG4, Washington, DC, December 2006. 42 Earmarking is associated with the practice of adding provisions to appropriations bills to fund projects favored by individual legislators at a late stage in the appropriations process when public review of the provisions is not possible (see Andres 1995). 43 Interview USNG2, Washington, DC, November 2006. 44 Ibid. 45 Interview USGOV3, Washington, DC, December 2006. 46 Interview FRAIG1, Paris, March 2006. 47 Interview USGOV2, Washington, DC, December 2006. 48 Interview USGOV3, Washington, DC, December 2006. 49 Interview USGOV2, Washington, DC, December 2006. The position of AID can be contrasted with the position of the Department of Defense, which can draw more ready support because there are military bases and defense contractors spread out across the country. 50 Interviews USGOV3 and USNG10, Washington, DC, December 2006. 51 Interview USGOV4, Washington, DC, December 2006. In a study of the motivations for food aid flows to Africa, Ball and Johnson (1996) find that the Title I portion of the food aid program (administered by the USDA) has been more strongly motivated by political concerns than Titles II or III (administered by USAID), likely reflecting the influence of the State Department over USDA food aid allocation decisions. 52 Interview USGOV4, Washington, DC, December 2006. 53 Title VI: Millennium Challenge Act of 2003. From http://www.mcc.gov/about/ reports/other/mcc_legislation.pdf. 54 The Office of the US Trade Representative, also represented on the MCC’s Board of Directors, could also place pressure on the MCC in the country selection and funding process. Interview USGOV6, Washington, DC, December 2006. 55 Homepages of the US House of Representatives and US Senate: http://www.house.gov; http://www.senate.gov.

Notes 215 56 Interview USGOV5, Washington, DC, December 2006. 57 Ibid. 58 The closing of field missions reflected AID’s new mandate to help spur democratic and market transitions in the former communist bloc, without funding increases for the agency. The field presence would be reduced in three categories of countries: (1) countries that had become able to borrow capital internationally, (2) countries labeled ‘non-performers’ due to declining growth, human rights abuses, or limited concern for democracy, and (3) small countries with costly field missions (US House of Representatives 1994). In contrast to other donors, US aid toward transition economies did not follow the logic of additionality and thus placed direct pressure on aid to poorer countries. 59 Carol Lancaster, who served as deputy AID administrator during this period, writes that pressure to pursue a direct merger of AID with the State Department was brought to bear by officials working in the Global Affairs Bureau at State, a bureau with limited budgetary resources of its own (see Lancaster 2007: 87). A parallel can be drawn between the State Department’s effort to absorb AID and the successful efforts of the French Ministry of Foreign Affairs to carry out a merger with the Ministry of Cooperation in the same period. One possible explanation for why an AID takeover was not realized was that AID was associated with a larger private domestic constituency than the Ministry of Cooperation could claim, given AID’s reliance on NGOs and private contractors as implementing agents. 60 The Global Leadership Campaign’s initial name was the “Campaign to Preserve the International Affairs Account.” Interview USNG8, Washington, DC, December 2006. It has since acted as an advocate for funding increases. 61 Bryant, Elizabeth. 1998. US Helping Hand Overseas Atrophied by Cuts, Bad Image. Cleveland Plain Dealer (March 6), p. 15A. 62 Hoagland, Jim. 1999. Rahs for Rubin, Boos for Atwood. Denver Post (July 8), p. 2B. 63 President Clinton’s remarks are accessible on the following website: http://www. un.org/millennium/webcast/indexe.htm. 64 Anonymous. 2001. Conflict and Accord at 1600. New York Times (January 24), p. A18. 65 The proposal Helms put forward was interesting because he combined the suggestion to eliminate AID with an appeal for aid spending increases, a notable departure from the senator’s previous position on funding; however, his belief that the aid administration as it existed should be dismantled remained consistent. Nichols, Bill, and Barbara Slavin. 2001. Foreign Aid Hike Pushed: Bush Considers Helms’ Call for Faith-Based Initiative. USA Today (February 28), p. 1A; Schmitt, Eric. 2001. Helms Urges Foreign Aid Be Handled by Charities. New York Times (January 12), p. A4. 66 Kiely, Kathy. 2001. Importance of Foreign Aid Is Hitting Home. USA Today (December 4), p. 11A. 67 Kaufman, Marc. 2001. For Natsios and USAID, a Singular Focus: Afghanistan Dominates Agency’s Efforts. Washington Post (December 18), p. A25. 68 Interview USGOV2, Washington, DC, December 2006. 69 Fleck and Kilby (2006), examining bilateral aid flows to 119 countries over the period 1960–97, present a conclusion at odds with the findings of Goldstein and Moss (2005), whose analysis covers the period 1960 to 2001 and is limited to African countries. Fleck and Kilby find that a more conservative Congress or president gives aid allocation patterns an increasingly commercial orientation, while a more liberal Congress or president favors development-oriented investments to a greater degree. While Fleck and Kilby evaluate the effect of the partisan orientations of the Congress and the president independently, Goldstein and Moss explicitly acknowledge the need to understand how the partisan orientations of the Congress and the president interact in producing policy outcomes. 70 Interview USNG6, Washington, DC, December 2006.

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Interviews

The list below indicates the organizational affiliations of individuals interviewed in the spring and fall of 2006. The names and titles of interviewees have not been included in order to protect the anonymity of the individuals who volunteered to participate. Where more than one individual participated in an interview, this is noted parenthetically. When sites are listed multiple times, this indicates that separate interviews were conducted with multiple individuals working for the same organization. Organizations are listed alphabetically by country to further protect the anonymity of interviewees, as the numbering system used to identify interviews in the empirical chapters is chronological. Individual interviews are referenced in the text with a marker indicating the country in which the interview was conducted (DK: Denmark, CH: Switzerland, FRA: France, US: United States) and a marker referencing the nature of the affiliation of the interview partner (NG: non-governmental actor, GOV: governmental actor, IG: inter-governmental actor, O: other). Denmark (Copenhagen, May and June 2006) CARE Denmark Center for African Studies, University of Copenhagen DanChurch Aid (2) Danish Confederation of Industry Danish Institute for International Studies Danish Red Cross Ibis Landbrugsrådet Landsorganisationen (LO) Mellemfolkeligt Samvirke Member of Parliament, Liberal Party (Venstre) Member of Parliament, Social Democratic Party Member of Parliament, Socialist People’s Party (SV) Ministry of Foreign Affairs, South Group, Africa Bureau Ministry of Foreign Affairs, South Group, Bilateral Cooperation Division Ministry of Foreign Affairs, South Group, Bureau for Business Instruments in Development Aid Red Barnet

Interviews 245 France (Paris, March 2006) ACFCI, Education Department ACFCI, French Association of Chambers of Commerce and Industry, International Affairs Division (2) Agence Française de Développement, Bureau of Strategy Agence Française de Développement (retired official) Comité Catholique Contre le Faim et Pour le Développement Coordination Sud Haut Conseil de la Coopération et du Développement (HCCI) Haut Conseil de la Coopération et du Développement (HCCI) Médécins du Monde Ministry of Cooperation (retired official) Ministry of Finance, Bureau of Monetary Cooperation Ministry of Finance, Bureau of Official Development Assistance and Multilateral Institutions Ministry of Foreign Affairs (DGCID) Ministry of Foreign Affairs (DGCID) Ministry of Foreign Affairs (DGCID) OECD Development Assistance Committee OECD Development Assistance Committee Switzerland (Bern, Geneva, Lucerne, Zürich, July and August 2006) Alliance Sud Bern Declaration Bread for All Caritas Economiesuisse Fédération Genevoise de Coopération Graduate Institute of Development Studies Helvetas Member of Parliament, FDP Member of Parliament, SP State Secretariat for Economic Affairs, Directorate for Economic Development Cooperation Swiss Agency for Development and Cooperation, Bilateral Aid Division Swiss Agency for Development and Cooperation, Development Policy Division Swiss Agency for Development and Cooperation, NGO Section Swissaid Swiss Catholic Lenten Fund Swiss Federal Finance Administration, IMF and International Finance Department (2) Tages-Anzeiger United States (Washington, DC, November and December 2006) Academy for Educational Development Bread for the World (2) Center for Global Development Chemonics

246 Interviews Development Associates Inc. Embassy of South Africa Food for the Hungry Interaction, American Council for Voluntary Action International Youth Foundation Land O’Lakes International Development Land O’Lakes International Development Millennium Challenge Corporation National Association of State Universities and Land Grant Colleges Partnership to Cut Hunger and Poverty in Africa Retired congressional staffer United States Department of Agriculture, Foreign Agricultural Service (2) USAID, Advisory Committee for Voluntary Foreign Assistance USAID, Bureau of Legislative Affairs USAID, retired official USAID, retired official

Index

ACFCI 119 Action Contre la Faim 114–16 Advisory Committee on International Development Cooperation 91, 93 Advisory Committee on Voluntary Foreign Aid 158 Afghanistan 37, 180 African cell 121–2, 125, 131, 132, 192 Agence Française de Développement 123, 128–30, 137, 142 Agir Ici 118 aid: and budgetary politics 22–3; and political parties 73–4, 104–5, 139–40, 182–3; and public opinion 23, 45–6, 82, 112–13, 148–50; and welfare state 4, 5–6, 73–74, 104, 139–41, 181–2, 201; as an issue area 21–4 aid effectiveness 3, 62, 89, 98, 166, 198, 201 Alliance for Food Aid 155 Alliance Sud 18, 85, 86–7, 91, 92, 98, 188 Allison, Graham 38 American Israel Public Affairs Committee (AIPAC) 156, 157, 160 Atwood, Brian 158, 175, 179 Balladur Doctrine 134 Balladur, Edouard 133–4, 135, 140, 142, 190 Bangladesh 65, 68 Bern Declaration 86 Bhutan 68 Board for International Food and Agricultural Development 158 Bolivia 95 Bongo, Omar 120, 131 Bread for All 18, 84, 86, 99, 100

Bread for the World 150, 153, 159 Bretton Woods Institutions 100–1, 118, 133, 134 Bureaucracies as budget maximizers 37 Burkina Faso 95 Bush, George H.W. 174–5, 182 Bush, George W. 179–81, 190 business associations 8, 28–30, 33, 194–6; in Denmark 53–5, 57, 58, 70; in France 119–21, 122, 134; in Switzerland 88–90, 91, 100, 102–3, 106; in the United States 155–7, 158, 165 Cameroon 120 Camp David Peace Accords 169–70 CARE 8, 49, 52, 150, 151, 157, 158, 159 Caritas 18, 84, 86, 100 case study methods 13–16 Catholic Relief Services 150, 151 Center for Global Development 156 CFA franc 127, 133–4, 137, 140 Child Survival Account 163–4, 178 China 199, 201, 202 Chirac, Jacques 132, 135–6, 139, 140, 143 Christopher, Warren 175, 176 CIAN 119–21, 122, 134 CICID 112, 137, 138 Clinton, Bill 161, 164, 175–7, 179, 182–3 COCODEV 122 COFACE 122, 128 COGEMA 120 Cohabitation 132, 133, 134, 135–6, 139, 140, 142 Comité Catholique Contre la Faim et pour le Développement 114, 118 Confederation of Danish Industry 54, 55, 65 Confederation of Danish Trade Unions 55, 65

248 Index Coordination Sud 28, 117–19, 123 Cot, Jean-Pierre 130–1 Côte d’Ivoire 120, 131 Council of International Development 57, 65 Cuba 96 DanChurch Aid 17, 26, 49, 51, 65 Danida 45, 49, 52, 62–3, 67, 68, 75 Danish Board for International Development Cooperation 56–7, 67, 75 Danish Parliament 59, 60–1, 63, 65, 66–7, 68, 70–2 Danish Red Cross 17, 49, 51, 53 debt relief 99–100, 111, 113, 145, 180 De Gaulle, Charles 124 development advocacy 7, 8, 23, 24–8, 30, 193–6; in Denmark 17, 48–53, 187–9; in France 19, 113–19, 192; in Switzerland 17–18, 82–8, 187–9; in the United States 150–4, 158–60, 168, 171–2, 179; see also NGOs development contractors 154–5 Development Fund for Africa 172, 173 Direction des Relations Économiques Extérieures 122, 128 donor interest versus recipient need framework 4 earthquake election 60 Economic Support Fund 162, 164, 171, 174 Economiesuisse 18, 88–90, 91, 102, 106, 188 Egypt 68, 147, 149, 162, 169–70, 174 Elf-Aquitaine 120 encompassing associations 30 executive-legislative relations 36 Federal Council 88, 94, 95, 99, 101, 103, 104–5 Federal Department of Defense 102 Federal Office for Migration 102 Fédération Genevoise de Coopération 85 Foccart, Jacques 131–2, 135 Fonds d’Aide et de Coopération 126 former Yugoslavia 101 four-leaf clover government 66–7 French Ministry of Cooperation 122, 126–7, 129–31, 135–9, 142 French Ministry of Finance 127–8, 129, 134, 136, 137–8, 142

French Ministry of Foreign Affairs 125–6, 129, 135–8, 139, 142, 191 French presidency 124–5, 126, 127, 129 Fust, Walter 102 French Overseas Departments and Territories 110, 111 French Polynesia 110, 112 Ghana 68 Giscard d’Estaing, Valéry 130 Gore, Al 175–6 governmental politics 36–8, 198–9 Greece 144, 174 Handicap International 114–16 HCCI 122 HEKS 18, 84, 86, 114 Helms, Jesse 168, 177, 179, 215 Helvetas 18, 82–3, 85, 86, 100, 114 Houphouët-Boigny, Felix 131 Horn of Africa 66, 175 Human Development Report 2, 9 India 65, 68, 95, 199 institutional change 41–2 institutions 25, 31–6, 38, 39–40, 41–2, 196–8 interaction 20, 28, 150, 153, 156, 164, 171, 172, 191 interest group definition 24 interest group politics 24–30, 31–4, 34–5 International Tax Justice Network 86 Iraq 37, 96, 145, 175, 180–1 Israel 147, 149, 156, 157, 162, 169–70, 174 issue salience 23–4 Jospin, Lionel 136, 140, 141 Juppé, Alain 135–7 Kassebaum, Nancy 174 Keck and Sikkink 7, 25, 26 Kenya 65, 68 Konkordanzdemokratie 90 La Baule Doctrine 132–3 Landbrugsrådet 54 Lancaster, Carol 7, 163, 164, 215 Leahy, Patrick 177 like-minded donors 4 LOLF 123 Lowi, Theodore J. 21–2 Lumsdaine, David H. 4–5, 103, 104

Index 249 magic formula 94, 105 McKinlay and Little 4, 146 McPherson, Peter 164, 171, 173 Marshall Plan 19, 44, 78 Médécins du Monde 114–16 Médécins Sans Frontières 114–16 MEDEF 119 Mellemfolkeligt Samvirke 17, 48, 49, 51, 53, 65, 202 Millennium Challenge Corporation 166, 180 Millennium Development Goals 103, 112, 113, 196 minority government 60, 76 Mitterrand, François 108, 122, 130–4, 140–1, 142 Mozambique 68, 95, 138 multidimensional poverty 9 National Association of State Universities and Land Grant Colleges 155 National Association of Wheat Growers 155, 165 National Security Council 161–2, 163 Natsios, Andrew 158, 180 neo-corporatism 31–2 Nepal 68 New Caledonia 110, 112 NGOs 7–8, 11, 24–8, 29, 30, 33, 34, 193–94; coordination 27–8, 52–3, 86–7, 116–19, 153–4; and public financing 26, 49, 67–8, 71, 84, 151, 179; in Denmark 17, 48–53, 55, 56–60, 64, 66, 67–8, 69, 70–2, 75–6; in France 19, 28, 114–19, 121, 122, 123, 141, 192; in Switzerland 17–18, 82–88, 91–3, 97–100, 101, 102, 105–7, 187–9; in the United States 20, 28, 150–4, 157, 158–60, 164, 165, 172, 178, 183–4, 191–2 Nicaragua 67, 95, 170 Niger 120–1 non-DAC development assistance providers 199–200 North Korea 96 North–South Guidelines 101 ODA definition 3 OECD Development Assistance Committee 2, 103, 196, 199–200; definitions 3, 10, 11; monitoring role 2 Overseas Development Council 156 Oxfam 8, 27, 151, 159

Peru 95 Philippines 174 pluralism 31–2, 203 policy coherence for development 195–6 pork barrel politics 168, 202 process-tracing 15 Professional Services Council 154–5, 156 PROPARCO 129 qualitative methods 13–16 Rasmussen, Anders Fogh 59, 62, 70–1, 72 Rasmussen, Poul Nyrup 43, 69 Reagan, Ronald 164, 170–4, 179, 182, 190 referendum 90–1 Republican Revolution 177 “return percent” 54, 55, 57, 194 Rice, Condoleezza 181 Senegal 120 South Africa 67, 138, 172, 190 South Group 62–3 Survie 123 Swiss Agency for Development and Cooperation (SDC) 92, 93, 94–6, 97, 99–100, 101, 102, 106 Swissaid 18, 85, 86, 100 Swiss Catholic Lenten Fund 18, 84, 85, 86, 99, 100 Swiss parliament 18, 92–3, 96, 97, 98, 103, 104, 106 Swiss Secretariat for Economic Affairs (SECO) 91, 94, 95–6, 97, 98–100, 102, 106 Tanzania 65, 68 Thailand 68 tied aid 3, 28, 57, 64, 70, 155, 176, 194, 201 Turkey 174 Uganda 68 UK Department for International Development 37, 195 US Congress 158–60, 166–9, 169–80, 182–3, 184, 191 United States Agency for International Development 19–20, 154–5, 158, 163–5, 168–9, 171, 173, 180–1; and administrative reform 176; attempt to abolish 177, 179

250 Index UN Millennium Summit 1, 43, 77, 179 US Department of Agriculture 155, 159, 165, 183 US Department of the Treasury 162–3, 166, 191 US Global Leadership Campaign 20, 157–8, 179, 184, 192, 215 US presidency 161–2, 166, 183 US State Department 162, 163, 175–7, 181, 184

Vernehmlassung 90, 93 veto players 34–5 Vietnam 95, 114, 162, 169 World Vision 150, 151, 206 Zewo Foundation 87, 194 Zimbabwe 68 Zone de Solidarité Prioritaire 138