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Political conditionality in the EU’s development cooperation – pointers for a broader debate

01-01-2012

Vanheukelom, J. 2012. Political conditionality in the EU’s development cooperation – pointers for a broader debate. GREAT Insights, Volume 1, Issue 2. March-April 2012

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There can be little doubt that the Arab Spring has pushed human rights and political governance higher on the policy agenda in the European Union (EU) and elsewhere. This has resulted in tougher talk about political conditionality in the aid component of the EU’s foreign relations. Are there any lessons to be drawn from the experiences and evidence in applying political aid conditionality for other dimensions of the EU external action? 

There is a long tradition of applying all sorts of conditionality in delivering aid, including political conditionality. Usually this takes the form of the European Commission (EC) and EU member states interrupting, stopping or re-directing bilateral aid flows. This has been in response to all sorts of violations of human rights, flawed election processes, military coups or mediatized corruption scandals. There are principally three reasons for donors to apply political conditionality in their aid relations. One is to respond to demands or pressures in donor countries not to provide aid to certain regimes. A second reason is to ensure that partner country governments cannot abuse aid to maintain the status quo. And a third reason is to create strong signals and incentive packages that favor or stimulate reform minded groups in power on their reform path. 

Political aid conditionality does not have a very good track record in terms of this third donor objective: it has not stopped authoritarian leaders from committing human rights violations, from rigging elections, or from capturing resources or grand scale corruption. Despite some good case studies (for example on budget support and political conditionality)(1) this arena has not been the subject of systematic research into what applications of political conditionality have actually worked, or what the effects have been. We can distil a few findings – “lessons’ would be a too optimistic choice of words here – that may be relevant for the ongoing efforts to lever political change, or promote “fundamental values” through applying political conditionality. 

First, the EC and EU member states have often not acted in unison when applying political conditionality in their bilateral aid with partner countries. They’ve found it very hard to agree on and identify among one another common conditions or cut-off points for their aid. They may differ in their assessment of the seriousness of a particular event or, the direction a particular political process is heading towards. Usually, domestic considerations in donor countries (the pressures from public opinion, or special interest groups, etc.) influence decisions and assessments. Such considerations may make it difficult to harmonise joint positions in partner countries. So in practice, it is highly unlikely for the EC and member states to identify clear-cut thresholds and agree with partner country governments on non-negotiable minimum standards for appropriate human rights performance. 

Secondly, political aid conditionality does not seem to deliver short-term political change in partner countries at all. Donor expectations tend to be over optimistic. Even in aid dependent countries, cutting off aid has not produced the envisaged effects on political actors. Even with aid modalities that are generally favored by partner country governments (such as budget support), withdrawing aid – or the threat thereof – has not substantially altered the course of political developments. Already in 2006, a Joint Evaluation of General Budget Support called for more realism among donors. Budget support “does not transform underlying political realities (it is unrealistic to expect any form of aid to do so)”.

Thirdly, a too narrow focus on aid conditionality – the on/off option – draws the attention away from what probably can be the most important added value of aid: the fact that it can help develop knowledge (about structural and historic factors, how these interact with social, political and economic dimensions in a particular context, and the margins of maneuver for reforms) and its potential to contribute to transformation and reform processes over time. Some donors have started to ask questions about why socio-political processes are as they are, which institutions and actors or coalitions shape political processes and development outcomes, and the potential to strengthen incentives or remove obstacles to reforms such as more inclusive development. Aid can be channeled to strengthen the demand side for reforms, and such reform coalitions – depending on the context – can be found both within the state and with civil society. Merely relying on a punitive conditionality framework that is not sufficiently owned or accepted by a partner country government most often results in isomorphic mimicry (a façade of compliance with donor preferences) – or a slate of hand rejection when donors call the shots

Yet, there are examples of effective forms of political conditionality. But these usually involve more than merely aid. Moreover, these conditionality measures are designed to be in sync with in-country reform dynamics and supportive of reform-minded coalitions or drivers of change. The incentive package for European countries that are candidate for joining the EU involves aid, financial and technical assistance, trade concessions and migration access. “In themselves, these measures don’t create political reform readiness such as respect for human rights, rule of law and more open access democracies, they merely contribute to tilting the balance and may – when cleverly applied – reinforce the hands of reformers over time”. Political aid conditionality does not need not be ruled out, but it only should be called upon in well-coordinated and solidly prepared contexts.

The EC is not your average donor. It has the means and the governance structures to create a different added value to the inputs of member states. So in the pursuit of supporting “fundamental values” the EC can act differently from a-political multilateral donors (such as the World Bank) and also from bilateral donors that are often politically constrained by domestic constituencies and politics. The EC also operates on a scale within the EU that allows it to become a knowledge hub about partner country social, economic and political processes. It can do so, partly by cleverly sampling existing politically informed assessments (a number of member states, but also the WB have embarked on political economy analyses). Moreover, it has a broad range of aid instruments at its disposal that can be adapted to the complexities of institutional and political reform processes in a longer time perspective. Beyond aid, the EU can combine other dimensions of its external action to create more coherent incentive packages in particular contexts where this can be conducive for reform minded coalitions. 

One burning question that begs for an answer, is why the EU does not use this potential more strategically to the advancement of both its interests and values. Part of the answer relates to the political economy of the EU itself. Its history, structures and institutions – with governance systems that have to accommodate diversity, including powerful vested interests – determine, influence and constrain decision-making processes. They set boundaries within which often well-sounding but ill-informed external policies are partially and incoherently implemented. More realism about such real life institutional and political constrains at home – but also about the real possibilities, soft and other power (including brain) and weight it has would help set more credible policies. A more principled curiosity in finding out what has worked in its neighborhood and other countries could help build the political savvines and the knowledge about change dynamics, coalitions and transformation to become more effective in the implementation.

Jan Vanheukelom is Senior Adviser Political Economy & Governance at ECDPM 

Footnote
1. Molenaers, N., Cepinskas, L., Jacobs, B. (2010), Budget Support and Policy/political dialogue. Donor practices in handling (political) crises, Institute of Development Policy and Management

This article was published in GREAT Insights, Volume 1, Issue 2

Economic Transformation and TradeStrengthening European External ActionEU Development Policy and PracticeTrade Policy and Economic Partnership AgreementsAid effectivenessEuropean Union (EU)Human rightsTrade