Radboud Centrum Sociale Wetenschappen

Opleiders in Mens en Maatschappij

“No-strings-attached aid”: Untying development aid

Inclusive language for more equitable power dynamics?

Some reformists suggested[1] using the terms “development cooperation” instead of “foreign aid”, and “partners” instead of “donors and recipients” in a commendable attempt to obliterate unequal power relationships that the conventional appellations might insinuate. But, to what extent, if at all, would the usage of a more seemingly “inclusive” terminology alleviate all shapes and forms of unequal dynamism surrounding aid in its dualist complexion?

Development aid, be it bilateral or multilateral, involves two chief parties: Donors and recipients. Donors allocate money towards supporting recipient countries in development-related issues, and recipients manage the money in that it is to be ultimately allocated towards the same issues donors had dispensed money towards. But that is not it! It is, unfortunately, not this straight-forward at all times. Notably if we realize that the world’s intertwined international relations, with all of what soft and smart powers implies in today’s political settings, makes it a bit of a truism to stress that there is nothing for free grabs! As long as the political interest of both parties is relevant —and it is the case— aid cannot be altruistic at its heart. We take note of this when we zoom-in on the concept of conditionality surrounding most of aid and this is what this article wishes to discuss.

In this article, we limit aid in its various forms as we understand it, to being an operation of disbursing monetary or technical assistance with the fundamental goal being to foster the wellbeing of the humans receiving it. Development aid has been around since the Second World War (WW2) and has known many changes ever since. It has then progressed and metamorphosed throughout the time, swinging from a state-led approach in the 1950s and 1960s, to basic human needs in the 1970s to a macroeconomic approach leaning towards free and open market in the 1980s and early 1990s, to finally become more focused on reforming and engaging state institutions in the mid-1990s.[2]

A spaghetti web: The interconnectedness of development aid relations

With globalization coming along, aid relations became more complex[3]. With bilateral and multilateral agencies, OECD-DAC countries, and so-called “non-traditional” donors all playing a role in the aid receiving countries.

To put this into perspective, the infographic below displays how interconnected and entangled these aid relations can become[4]. This infographic was designed to answer the (simple) question on how aid money travels to curb migration in Nigeria. It displays the multitude of stakeholders that are involved and the complex interconnections between donor countries, multilateral agencies, and recipient country Nigeria. This “migration-spaghetti”, as the authors of The Correspondent have termed it, is exemplary for the way aid is organized more broadly. Imagine how this would look around the world, with donor countries pouring money into multiple recipient countries and/or the other way around!

Click on the image for the interactive graph. Image from: https://thecorrespondent.com/154/europe-spends-billions-stopping-migration-good-luck-figuring-out-where-the-money-actually-goes/20366228498-b2c9baad

Underlying this complex web of interconnections —displaying money flows from and to the various actors— are bargained aid policies. These are upheld by conditioned agreements, and are shaped by the interests of the two (or more) parties involved to eventually determine how aid is distributed.[5]

While donor agencies often prefer to control the expenditure of aid money in recipient countries, they have limited oversight and power over the eventual whereabouts of aid money. Budget aid is one of the trickiest aid types to be traced, enforced or monitored. Particularly, when it is untied. Conditioned or not, budget aid can free up a recipient’s national financial plan, allowing it to work around previously earmarked sectoral budgets, slashing and shuffling money as it pleases. This goes to illustrate how budget aid can be redirected and funneled into other pools different than what it has been agreed to be supported, a phenomenon that is referred to as “aid fungibility.” When asked to define the latter, the World Bank’s chief economist said: “It's when we think we're financing a power plant, and we're really financing a brothel.” [6]

On the other hand, recipient countries are constrained by aid’s unpredictability. For instance, a new ambassador can come in and change aid priorities. Aid budgets can be suspended in times of crisis taking lieu in recipient countries, but also fluctuates according to (in)stability levels in donor countries. It only makes sense that recipient countries insist, passionately, on receiving total aid amount first handedly.

“To tie, or not to tie”: Conditioning aid

The measure of conditionality —defined as one solution to countering the principal-agent issue that donor-recipient relations lack due to the absence of direct oversight as well as minimal lines of accountability within the loop— has by its turn evolved. It has varied between formal and informal arrangements, involving but not exclusive to: service and products procurements, influencing policy reforms such as total or partial privatization of certain sectors, and advantageous trade deals in favor of the donor country.[7]

Conditionality was introduced as a remedy due to lack of oversight and imperfect accountability since constituents in recipient countries cannot hold donors accountable, including when development fails. Moreover, recipient countries are sovereign states that can very much refuse to take on aid, but donors, on the other hand, have a professional motivation to keep spending money, for all of the influence it allows.

But even if the conditioned development does not fail, conditionality, in and by itself presents a grey area that is hugely contested. It is, in many cases, inefficient in that it incurs a lot of sunk costs associated with uncalled-for administrative and logistical operations. For example in the case of tied food aid, it is common for the benefiting recipient country to be required to procuring the products from the donor country instead of buying it from a neighboring country.

In other cases, conditionality is claimed to have a positive externality. Proponents of this measure claim that it could incentivize the recipient country to embrace the process of development as a homegrown operation, propelling ownership and enhancing accountability of recipient leadership to their constituents. Nevertheless, whether we can operationalize the positive externality remains debatable, unlike the sunk costs that are noticeable and could be easily measured.

New modalities to untied aid?: South-South cooperation 

Most of the so-called “emerging donors” are moving away from the conventional hierarchical donor-recipient metaphor.[8] They are not keen on using terminology such as ‘aid’ or ‘assistance’ and prefer to focus instead on horizontal cooperation, equality, mutual respect, cooperation, partnerships, and shared interests. The whole South-South cooperation rationale rests on focusing on non-tied aid and upholding national sovereignty of the involved states, and seems to be less conditional. It thereby claims to introduce a possible alternative to the more hierarchical North-South aid relations.

Mainly through untied economic aid, South-South cooperation claims to free up recipient countries from the conventional North-South associated social and political conditions they are conventionally bound to uphold, which allows them to develop domestically-driven agendas, and subsequently foster home ownership. Nonetheless, these new unorthodox South-South partnerships stirred a lot of debate. Many claim that not even this ambitious new set up of development cooperation had escaped political gains and states’ personal profit. Many of the South-South partnerships are said to (also) prioritise the promotion of their own trade and commercial interests, and pose procurement of their labour and materials (also) as conditionality for developing infrastructure projects. Moreover, it has been posited that China, a pioneer of South-South aid modalities, had been accused of concealing its prospective political interests through the no-strings-attached aid it prides itself on[9].

On ways to move forward

Although transforming language around aid is a conscious and noble attempt to obliterating unequal power relationships, this article discusses how this does not necessarily alleviate underlying conditionalities and self-interest present in all types of aid, whether that is in North-South or South-South modalities. On the other hand, there is no one-size-fits-all solution to how the unequal dynamism surrounding aid in its dualist complexion should be addressed. Because of the complex diversity of aid relationships and conditionalities, strategies to untying aid cannot be inspired from standard blueprints laying in someone’s drawer, but can only be drafted with respect to the context at hand. Ultimately, moving beyond conditionalities and ensuring the sustainability of aid delivery mechanisms does not (only) require transformative language, but rather requires mutual trust and genuine commitments and accountability from both donor and recipient side.[10] And this is where the international community should place their attention. Maybe if recipient countries develop ownership over development as a wholesome process and donors genuinely took interest in true lasting development with both acting towards the ultimate goal of fostering this by addressing inequalities, it can be the start of untying aid complexities and eliminating aid conditionalities. 

---

[1] Bissio, R. (2013). Chapter 17: The Paris Declaration on Aid Effectiveness. In Realizing the Right to Development (pp. 233–248). New York and Geneva: United Nations. Retrieved from: https://www.ohchr.org/Documents/Issues/Development/RTDBook/PartIIIChapter17.pdf.

[2] Radelet, S. (2006). A Primer on Foreign Aid. SSRN Electronic Journal, 13–14. doi: 10.2139/ssrn.983122

[3] Foreign Aid - Globalization's impact on foreign aid. (n.d.). Retrieved March 3, 2020, from https://www.americanforeignrelations.com/E-N/Foreign-Aid-Globalization-s-impact-on-foreign-aid.html.

[4] Vermeulen, M., Amzat, A., & Zandonini, G. (2019, December 9). Europe spends billions stopping migration. Good luck figuring out where the money actually goes. The Correspondent. Retrieved from https://useruploads.cdn-thecorrespondent.com/document/c747b1252a32438fabf0a8ba4425b149.pdf.

[5]  Swedlund, H.J. (2017). Chapters 1 & 2  “The Development Dance” and “It Takes Two to Tango: Aid Policy Bargaining”. In The Development Dance: How Donors and Recipients Negotiate the Delivery of Foreign Aid. (pp. 1-35). Cornell University Press. 

[6] As cited in Swedlund, 2017, p. 9.

[7] Radelet, S. (2006). A Primer on Foreign Aid. SSRN Electronic Journal, 14–14. doi: 10.2139/ssrn.983122

[8] Quadir, F. (2013). ‘Rising Donors and the New Narrative of “South–South” Cooperation: What Prospects for Changing the Landscape of Development Assistance Programmes?’, Third World Quarterly 34: 2, 321–38.

[9]  Quadir, F. (2013). ‘Rising Donors and the New Narrative of “South–South” Cooperation: What Prospects for Changing the Landscape of Development Assistance Programmes?’, Third World Quarterly 34: 2, 321–38.

[10] Swedlund, H.J. (2017). Chapters 1 & 2  “The Development Dance” and “It Takes Two to Tango: Aid Policy Bargaining”. In The Development Dance: How Donors and Recipients Negotiate the Delivery of Foreign Aid. (pp. 1-35). Cornell University Press. 

 

This blog is written by Nidhal Lamraoui (NIMD) and Wendy Flikweert (Solidaridad) on the lecture by Haley Swedlund on (Inter)governmental Donors