Sogge, David (2002), “SEVEN: When Money Talks, What Does It Tell Us?,” in Sogge, David, Give and Take: What’s the Matter with Foreign Aid?, pp. 140-165, London & New York: Zed Books.
When wealthy foreign donors come calling, recipients are not supposed to squirm in their chairs and put off accepting any money. Yet in the USA, officials of major universities have shown just that kind of uneasiness towards some big donors from abroad. Governments, business foundations and wealthy individuals from Taiwan, Korea, Singapore, Mexico, Turkey – donors not known as resolute defends of academic freedom – are offering millions to promote research and teaching about their respective lands. Academics may welcome the money, but they face serious misgivings about the benefactors and their motives. One seasons US professor of East Asian studies said bluntly: ‘They are out to get over their point of view. They are paying to win support for their government.’2
Americans object because they fear the agendas driving those monies will close off genuine inquiry. They can mount opposition, however, with few risks to themselves or others; indeed, they may gain status by standing up for scholarly autonomy. When institutions prostitute themselves – think of many universities getting handsome payments for research results favoring the products of pharmaceutical firms – there is no reason for serious alarm. Alongside such big and dangerous domestic pay-offs, those foreign millions look like minor threats to intellectual integrity.
How analogous, but how different are the vulnerabilities in countries of the South and East. There, policy agendas of big donors and lenders, once plucked of their rhetorical feathers, are also unmistakable. But to challenge them is to run serious risks. Too much is at stake. Virtually every aid offer is one that cannot be refused, especially if it comes from Washington, DC. After decades of aid given only on condition that aid providers’ ideas are accepted, refusal is no longer an option – except perhaps from a few dissenters, who can be easily quashed. Where ideas are run towards goals under aid sponsorship, the playing fields are anything but level.
Ideology has long been at the heart for foreign aid. Producing and transmitting policies and discourse, and filtering out and delegitimizing others, are essential vocations of aid’s most powerful players. It is not by caprice that the World Bank is positioning itself as the world’s mightiest think-tank. As the leading producer of doctrine and knowledge about how the planet should develop, it aims to achieve the supreme instrument of power – power to define the alternatives.3
Those at the top of the aid system faithfully transmit the dominant ideas of business and political elites, but they also routinely research and develop their own. They often roam about plundering ideas of rivals and critics. In the 1990s, aid-speak at the top became saturated with terms such as ‘sustainability’, ‘civil society’ and ‘empowerment’. These ideas sprang from the emancipator camp of social movements, but they found themselves cast in supporting role in market fundamentalist scripts.
This chapter suggests that the aid system’s most important instruments and outcomes are in the realm of ideas. In the hands of sophisticated users, aid-driven ideas have leveraged change far out of proportion to the monies applied. The World Bank, the endowed foundations, think-tanks and policy activist NGOs all know this. Surprisingly, only a few private aid agencies have begun to go beyond the charity micro-project to engage in battles of ideas. […]
By concerning and shrewdly backing the production, transmission and legitimation of knowledge and ideas, an elite corps of agencies – some endowed foundations, the World Bank, and a few UN and bilateral bodies – have made a little money go a long way. For decades, those investments have shaped paradigms, the public policies nested in them, and the debates about those policies. And that was the intention. As one of the economists present at the 1944 Bretton Woods meeting said, ‘One of the most important functions of a development assistance institution is to influence the politics and strategies of aid recipient countries.’43 This is deliberate, but it is not high conspiracy. There is no control room steering the flow of ideas from a secret location. Yet what a Harvard professor wrote about his own branch of area studies suggests the limits to freedom in the marketplace of idea:
Hence, as always, the main drive comes from Washington itself and from the shift in the way which policymakers view America’s role in international affairs. As always, major shifts of this type work their way through the system with remarkable speed, soon causing the heads of federal agencies, private grant-making foundations and university presidents to all speak with one voice.44
Sorenson, David S. (1979), “Food for Peace – or Defense and Profit? The Role of P.L. 480, 1963-73,” in Social Science Quarterly, Vol. 60, No. 1, pp. 62-71.
In summary, only partial confirmation of the national security model resulted from the two tests employed here. On the one hand, the expected relationship between arms transfers and P.L. 480 aid did not materialize. Yet border distinctions did correlate with food assistance, thereby lending at least some credibility to the “containment” hypothesis. However tenuous this argument, it is sounder than the “need” explanation, which collapsed with the discovery that nutrition level correlated positively with food aid. Clearly the location of a country is more critical than its level of nutrition in determining food assistance policy. Finally, though there were real shifts in P.L. 480 policy that indicated a market development strategy , there is insufficient evidence to suggest shifts in P.L. 480 allocations are used to open the door for more profitable returns on American food shipments abroad.6
Students of American foreign aid policy will not be startled by these findings. But they have provided partial confirm as well as refutation of several lingering justifications of food aid policy through the use of a multi-model approach. 7 However, no hypothesis generated here receives strong confirmation. This in itself is interesting, given the implication that whatever the policy intentions have been, P.L. 480 outcomes have not succeeded all that well in meeting them.
It must also be realized that recent changes in Food for Peace policy alter these findings and the above conclusions were this study to be conducted five or 10 years from now. The 1975 congressional requirement that 70% of P.L. 480 shipments must go to “most seriously affected” (by food shortage) nations seems to indicate a trend in the direction of the humanitarian explanation. Finally President Carter’s recent decision to grant a small amount of P.L. 490 to communist Laos, where serious food deficits exist, may portend a real shift in emphasis from the period of time focused upon by this research.
Stokke, Olav, (ed.) (1989), Western Middle Powers and Global Poverty: The Determinants of the Aid Policies of Canada, Denmark, the Netherlands, Norway and Sweden, Uppsala, Sweden: The Scandinavian Institute of African Studies.
Stokke, Olav (1989), “The Determinants of Aid Policies: General Introduction,” in Stokke, Olav (ed.), Western Middle Powers and Global Poverty: The Determinants of the Aid Policies of Canada, Denmark, the Netherlands, Norway and Sweden, pp. 9-32, Uppsala, Sweden: The Scandinavian Institute of African Studies.
Foreign aid is an integral part of the foreign policy of a nation. Aid for development may be conceived of as a foreign policy objective in its own right or as an instrument to achieve other objectives. As is the case with most foreign policy objectives, the roots are to be found in domestic politics. Aid policy is part of a cluster of domestic policies which emerge from the same or related traditions. Likewise in the foreign policies which emerge from the same or related traditions. Likewise in the foreign policy setting, aid policy is merged into foreign policy traditions and objectives. Aid policy, therefore, is molded in a setting in which traditions, norms and interests of both the domestic and external environment influence the outcome. Such determinants vary from one system to another. […]
The broader North-South perspectives
This study, which is limited to the aid policies of these five nations, is part of a project that focuses on their North-South relations.2 The project aims at identifying the main features of these relations and the main determinants of the various dimensions of their North-South policies. A core question in this regard is the following: to what extent can these policies be explained with reference to the ideologies and basic values predominant in the countries in question?
The project started out with the assumption that the predominant political philosophy and values of the countries would have a strong bearing on their North-South policies. Basic philosophy and values do not normally change easily. Still, even these adapt to important changes in the external and domestic environment. Since the early 1970s, three changes in particular are assumed to have the potential to influence their political philosophy and basic values with a bearing on their North-South policies: the economic recession in the Western world, which started in the early 1970s; the ideological change as far as political and economic doctrines were concerned, which took place at government level in some major Western powers (United States, United Kingdom) during the late 1970s and early 1980s; and the crises which, during the late 1970s and early 1980s, hit most developing countries more forcefully than ever before – involving their external and internal economy, their ecology and in many cases the very survival of people in exposed regions.
The framework selected as a point of departure for our analysis is that of humanitarian internationalism.3 The core of humane internationalism is an acceptance of the principle that citizens of the industrial nations have moral obligations towards peoples and events beyond their borders; it implies a sensitivity to cosmopolitan values, such as the obligation to refrain from the use of force in the pursuit of national interests and the respect for human rights.
In the context of the theme of this volume, which focuses on development assistance, this implies a responsiveness to the needs of the Third World as regards social and economic development. The moral thrust of this responsiveness is combined with, and considered to be instrumental for, the promotion of the more long-term, overall interests and values of the rich countries. The responsiveness of Third World development needs represents an extension of internationally predominant socio-political values at home, as reflected in the five countries’ national social welfare policy, broadly defined, although the commitment to Third World needs is less extensive than to their own citizens. We do not suggest, however, that the forces underpinning humane internationalism are the predominant determinants of the foreign policies of these countries, as more traditional determinants – economic, political and strategic concerns – frequently have the upper hand.
Humane internationalism thus defined implies (i) the acceptance of an obligation to alleviate global poverty and to promote social and economic development in the Third World; (ii) a conviction that a more equitable world would be in the best long-term interests of the Western, industrial nations; and (iii) the assumption that meeting these international responsibilities is compatible with the maintenance of a socially responsible national economic and social welfare policy.
Humane internationalism, accordingly, is associated with a set of objectives, viz. to promote economic and social growth and economic, social and political human rights in the Third World and to alleviate human suffering. It is based on humanitarian values and ethics, including respect for the dignity of man, and is motivated, in the first place, by compassion – the moral obligation to alleviate humane [sic] suffering and meet humane needs across national, political and cultural border. However, self-interest is part of the motivation, too; this includes broader national interests related to objectives of mutual benefit across borders, and narrower interests related to, inter alia, employment or an expansion of trade and investment opportunities.
Humane internationalism stands in strong contrast to realist internationalism, which his based on the world view of anarchic international relations, in which states pursue, and should pursue, only their own national interests.
In the 1960s, humane internationalism was reflected in the Pearson Report,4 which expressed the view that expanded trade, investments and aid would set off self-generating, social and economic development in the Third World before the turn of the century and that international agreements and institutions would be conducive to the creating of peace, equity and stability.
By the mid-1970s, however, the contour of a different, less optimistic world had emerged, in which the gap between rich and poor countries had grown wider and the prospects for the future much bleaker. Even so, the main thrust of the NIEO programme – formulated in the mid-1970s and supported, with a few reservations, by the Scandinavian governments and the Dutch government, though to a varying degree – struck an optimistic chord, namely that the industrially developed countries should adapt themselves to the developmental needs of the Third World through structural adjustments. However, very little came out of the NIEO efforts. Since then, the development paradigms of the Western, industrialized countries and their attitudes to cooperation with the Third World have changed dramatically. In the 1980s, the industrial world, including to a large extent even the five countries included in this study, have insisted that the poor countries should adapt their policies to the needs of the rich world.
In response to these developments – a reflection of the increasing predominance of realist internationalism – three clusters of related ideas and attitudes, which had all along been part of humane internationalism, came more distinctly to the fore: reform internationalism, liberal internationalism and radical internationalism.
Both reform internationalism and liberal internationalism tend to be system oriented, concentrating on what the governments and international agencies should achieve in the South. Each acknowledges that rich countries have an obligation to alleviate poverty in the Third World, considers that fair North-South relations are in the best, long-term interest of the North and shares the conviction that the primary obligation governments is to their own nationals.
Reform internationalism is associated with a set of objectives much in line with mainstream humane internationalism, viz. improved equity and social and economic justice, both within and between nations, and the promotion of human rights. Its basis and motivation, too, are in line with mainstream humane internationalism, though with an explicit international ethic that goes further: the existing global distribution of resources and incomes is considered morally indefensible and the international economic system is considered unfair to the poor. Hence, like humane internationalism, it supports transfers of resources to promote development in the Third World. But it goes further by asking for reforms – both reforms within Third World countries for the benefit of poor social groups, and reform of the international political and economic system for the benefit of the South. Like humane internationalism, it is not exclusively altruistic, in so far as fair North-South relations are considered to be in the best interests of the rich countries.
In contrast to liberal internationalism, reform internationalism does not consider the market to be the most efficient instrument to determine production priorities or to settle income distribution. Hence, although basically belonging to a liberal tradition, it favors state and inter-state intervention in order to pursue the objectives identified. It is gradualist in its approach. It works through the existing aid channels – the multilateral and bilateral aid agencies – which are considered to be useful instruments for the correction of global inequalities. However, it also strives for the improvement of these agencies so that they can do a better job in pursuing the objectives defined. It is in favor of channeling aid through NGOs, too.
Who, then, are the main champions of reform internationalism? They may be differently situated in our five countries, but are generally associated with Social Democrats and to a large extent also with the Scandinavian Christian Democrats and Liberals.
Liberal internationalism combines the core component of humane internationalism with a strong commitment to an open, multilateral trading system. It shares with realist internationalism the conviction that states should pursue immediate and long-term economic and political self-interest. However, unlike realist internationalism, it acknowledges a responsibility for development in the South. Its objectives include economic growth in the South. This is to be achieved by pursuing genuine common interests between rich and poor countries. Liberal internationalism is motivated by a humanitarian tradition in combination with an enlightened self-interest emerging from the increased North-South interdependence and the new opportunities opened up by the integration of the Third World into the Western market economy.
Liberal internationalism is basically against state and inter-state intervention, although it favors general rules that can create equal opportunities and reduce discriminatory practices and protectionism. Its attitude towards major channels for aid – the bilateral and international aid agencies – depends on their degree interference and discrimination. Thus, it is skeptical towards economic growth, by means of mobilizing, in particular, the private sector to increase production and trade. It is also skeptical towards those agencies which pursue extensive procurement tying, and favors, in particular, the international development finance agencies and also the multilateral aid agencies within the UN system which practice open bidding. Liberal internationalism favors the mobilization of the private sector in development efforts, including the mobilization of industrial and business enterprises of the North, and the use of ODA for this purpose.
Who, then, are the main champions of liberal internationalism? They, too, may be differently distributed in the five countries, depending upon the economic structure of each country, but everywhere competitive transnational corporations would figure prominently.
The core of radical internationalism is, in contrast, an acceptance of the obligation to show solidarity with the poor and oppressed in other countries, even at the sacrifice of narrower interests in one’s own country. It is associated with a set of objectives, viz. the attainment of full economic, social and political equity, and increasingly coupled with ecological concerns, too. Ideologically, it confronts the exploitive and oppressive economic and political structures at work within and between states. Radical internationalism, is rooted in ideologies professing equity of man and solidarity within and across national boundaries. It insists that the dire need which prevails in the Third World should be given predominance over narrow self-interests at home, given the differences in terms of economic and social levels, provided that aid is directed to meet these needs by creating or supporting structures for self-reliant, sustainable economic and social growth. It considers it to be of crucial importance that the recipient of aid pursues a policy to this end, be it a government or a social movement (NGO). It is skeptical to civilian and military bourgeois elites in control of the majority of Third World countries and reluctant about, if not against, the provision of state-to-state aid to countries ruled by such elites.
Radical internationalism strongly favors state and inter-state intervention if such interventions are oriented towards the objectives outlined above. It would be just as strongly against interventions by exploiting or repressive structures, whether a Third World government or an international organization, and the Bretton Woods institutions are included in this category. However, radical internationalism also includes some non-authoritarian, anarchist elements that would be against any strong, intervening sate. It prefers to channel aid via non-governmental solidarity movements. It looks upon the major established aid channels, the bilateral and multilateral aid agencies, with basic skepticism, but tends to differentiate between the according to their performance vis-à-vis the objectives outlined above and the policy of recipients chosen. In the case of multilateral aid, it is against providing aid through international development finance agencies, particularly the Bretton Woods institutions, because of their development philosophy and the orientation of their aid. They are not considered instruments for securing genuine advantages for the Third World, but rather as instruments in the service of donor interests, in particular those of the United States. It is more favor of the global aid agencies (the United Nations system) because Third World governments are ensured a greater influence here (although many Third World governments are pursuing policies deemed contrary to the objectives set out above).
The above represents the main features of the analytical concept. Who are the champions of radical internationalism in the domestic setting of the five countries? A few examples may serve as descriptive illustrations. Some solidarity movements have this orientation. These are, generally speaking, politically to the Left, but in some of the countries they even include organizations belonging to the political centre (especially youth branches) and some Christian NGOs. Other protagonists include movements for an alternative future, environmental activists and political parties to the Left of the Social Democrats, and, for some aspects, even left-wing Social Democrats.
To what extent can the aid policies of the five countries chosen for this study be explained with reference to humane internationalism and its offshoots as sketched above? A brief presentation of some major features of their aid policy may serve as a basis on which this core question may be further explored and refined.
Major features of aid policies
Several, though not all, dimensions of the aid policies of the five countries are similar. And in most aspects, their policies differ from the mainstream patter of Western countries. This may be illustrated by their performance in five major policy dimensions: the volume of ODA, the magnitude of the multilateral aid component, the choice of main recipients for bilateral aid, the financial conditions of aid and the degree of tying of aid.
The volume performances are shown in Table 1. The patterns during the 1960s reflect the low level of their previous relations with Third World counties, except in the case of the Netherlands which was a colonial power. For the rest, the aid activity evolved to a large extent as a result of their active participation in, and strong commitment to, the United Nations (UN). Here, development assistance emerged as an issue during the late 1940s. Third World development increasingly attracted attention as a key question, as the membership structure of the UN drastically changed during the 1950s and early 1960s. By 1970, the four non-colonial countries had caught up with the average aid assistance (as a percentage of GNP) of the member countries of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD)), which by then had declined from 0.5 per cent in the period 1960-65 to 0.34 per cent. At that point in time, the Netherlands was clearly ahead (0.62 per cent).
By 1975, all five countries had passed the 0.5 per cent of GNP mark, with Sweden and the Netherlands ahead (0.78 and 0.74 per cent) and Norway in a middle position. During the following years, the performances stagnated; in the period 1979-83, it even declined below 0.5 per cent of GNP. Danish ODA climbed to the 0.7 per cent level in 1978 and further to 0.89 per cent of GNP in 1986. Dutch aid increased to reach 0.8 per cent in 1976, 0.94 per cent in 1979 and 1.07 per cent in 1981, but declined somewhat during the subsequent years to reach 1.01 per cent in 1986. Norwegian ODA increased to 0.84 per cent in 1977, 0.95 per cent in 1979 and 1.1 per cent in 1983, declined somewhat the following two years and reached the peak level of 1.2 per cent of GNP in 1986. And the Swedish ODA increased to 0.95 per cent in 1977 and – after a decline during the subsequent years – to 1.02 per cent in 1982. Then it declined to 0.8 per cent in 1984, before it increased again somewhat, to 0.85 per cent of GNP in 1986.
During this period, the DAC average – which included the aid given by the five – stagnated, varying around 0.35 per cent of GNP. The performances of the four ‘front-runners’ were, in relative terms, two to three times that of the DAC average, and Canada’s performance was also clearly above this average.
Another indication of the relative importance of the development assistance is given in Table 2, which shows ODA appropriations as a percentage of the central government budget expenditures. For all the five counties, the level is high, compared with that of the United States. On this account too, the trends in the five countries differ. Canada shows a slightly declining trend, while ODA takes up an increasing share of the budgets of the four others up to 1980, when it stagnates or slightly declines.
All five countries are channeling much development assistance through the multilateral aid agencies. Different measures of their multilateral commitments are given in Tables 3-4. Their multilateral aid as a percentage of total ODA is given in Table 3, where aid channeled through the European Community (EC) is included for the EC members (Denmark and the Netherlands). The multilateral share is high for all five countries, though both the level and the trends differ. After 1975, Denmark and Norway maintained the largest multilateral component, on average 46 per cent in the case of Denmark and 44 per cent in the case of Norway. The Canadian average was around 40 per cent, the Swedish 33 per cent and the Dutch 29 per cent, while the DAC average was 31 per cent.
This picture is supplemented by the data on multilateral contributions in terms of USD (current prices) and as a share of GNP; the latter indicate the burden-sharing. As shown, the five countries contribute more to the multilateral aid agencies as a percentage of their GNP than the DAC average. Norway, which comes out at the top, has since 1976 contributed almost four times as much as the DAC average. Compared with the performance of the United States, their performances are even more distinct – both with regard to the level and the trends.
Another aspect is presented in Table 4, which shows how their multilateral aid is distributed between the international aid agencies. All five countries give strong support to the UN system according to this indicator, in particular the Scandinavian. However, the share is declining. Still, by 1985 the UN agencies received about half – or more than half – of the multilateral aid of the three Scandinavian countries, around 40 per cent of the Canadian and more than 30 per cent of the Dutch. The share of the multilateral finance institutions – the World Bank (mainly the International Development Association (IDA)) and the regional development banks – has been increasing for all five countries, in particular the Netherlands. However, the levels differ, with Canada at the top, followed, in 1985 by the Netherlands and Sweden. Denmark and the Netherlands channeled fairly large sums through the European Community. Even on this account, the profiles of the five countries differ from the DAC average, in which the UN agencies receive a smaller share and the financial aid agencies a larger.
A large share of the bilateral aid of the five countries is concentrated on a few main recipients, as show in Table 5, which includes countries that received more than 2 per cent of total ODA in 1970-71, 1982-83 or 1985-86. To a large extent, they have also chosen the same recipients – all have included India, Bangladesh, Tanzania and Kenya among their main recipients; at an early stage, four have also included Pakistan. The regional concentration of bilateral aid to the Indian sub-continent and eastern and southern Africa is also striking. According to this indicator, the trend is towards decreased geographical concentration in the cases of Denmark and Sweden, while Norway has maintained the concentration at the same level. Another trend is the shift from Asian to eastern and southern Africa. The stability in aid relations is manifest for all five counties, although the degrees of stability differ.
The generosity with which aid is given is reflected in the financial terms of the ODA. Three dimensions of this aspect are shown in Tables 6-8. The proportion provided as grants is the most clear-cut indicator (Table 6). The patterns of the five countries differ, with Norway and Sweden providing aid on the most favorable terms: since 1975, almost all of their ODA has been given as grants. Canada, Denmark and the Netherlands started out at lower grant-loan rations, and these were improved by 1985 to around 95 per cent in the case of Canada, 90 per cent for the Netherlands and 80 per cent for Denmark. The performances of the five countries were clearly ahead of the DAC average (81 per cent in 1985). A similar picture emerges from Table 7 on the basis of the calculated grant element of aid, although difference between Norway/Sweden and the other three become less, according to this indicator. The grant element of aid to the least developed countries (LLDCs) has been fairly high for all five countries (Table 8).
A series of mechanisms have been established with the main purpose of ensuring a high return flow of aid; some of these formal, others informal. One of these mechanisms is the tying of aid. On this account (Table 9), performances differ among the five. Canada consistently ties a large proportion of its total aid. The Canadian figures suggest that tied aid as a proportion of the country’s total aid has declined sharply during the last three years. Denmark has been tying its bilateral development credits (about half of the bilateral ODA), but the proportion of tied aid declined after 1975 to 24 per cent in 1986. Dutch tying of aid started at a higher level but later on showed a strongly declining trend, according to DAC data (below 10 per cent after 1985). However, this trend is contested in the study on Dutch aid policy which follows. Norwegian and Swedish ODA has been tied at a relatively low and stable level (largely below 20 per cent). Also on this account, the five countries differ from the DAC average, which varied between 45 and 32 per cent: the three Scandinavian countries and the Netherlands with a lower level of aid-tying, Canada with a much higher level.
This brief survey reveals several common features but also some differences in the aid policies of the five countries. This makes it interesting to explore to what extent the same or similar determinants have been forming the policies. The fact that the aid policies of all five countries – and in particular those of the Netherlands and the Scandinavian countries – differ from the mainstream OECD policies on most dimensions of aid policy makes such a comparison all the more interesting. […]