Is there a future for political economy analysis in the European Commission?

At the end of June, the European Commission’s (EC) Capacity4Dev website posted a message saying that following a stock-taking of the lessons learned from their work on the development of a methodology for Political Economy Analysis and the testing of it over the past year in a number of countries, that concerns had arisen that understanding the political and economic reality in which they operate belongs among the core tasks of desk officers and staff in delegation and the EEAS.

Therefore, the method should make more use of the staff of the EC’s Development Directorate and the European External Action Service and avoid the use of external consultants. Secondly, they found there is an inherent political risk of pulling together detailed information on the political context into a single report.

These considerations led to the conclusion that the exercise under its present form should be discontinued. As a result the EU will not be initiating new political economy analysis exercises in the immediate future the message said. They indicated that they will be looking into how the work achieved so far can be put to use in future, particularly in training to enable staff to make use of political economy approaches in their work.

A few days later, Capacity4Dev editing this message to remove the bits about the inherent political risk of pulling together detailed information on the political context into a single report and that the exercise under its present form should be discontinued and the EU would not be initiating new political economy analysis exercises in the immediate future. They then removed the entire message.

ECDPM has been involved with the European Commission over the past several years in developing the EC’s work on Political Economy Analysis, elaborating with them aspects of the methodology and being involved in the country level practical analysis in Senegal all with a view to helping the EC have better cooperation and results.

In a Talking Points Audio interview, ECDPM’s Head of Strategy, Jean Bossuyt, outlines how Political Economy Analysis complements other governance analysis tools, and how it goes beyond politics to look much deeper also into the economic background, the incentives, structures of changes and reforms that make reform possible or impede it to understand why reforms succeed or why they often fail despite national plans, donor commitments and money.

Here is the full audio clip of Jean Bossuyt discussing Political Economy Analysis. Smaller clips of the interview are featured in each section of this blog and a full transcript will also be provided:

The EC’s Decision to Discontinue Political Economy Analysis is a Surprise

This is part one of the four part interview:

Bossuyt explains why he is “surprised and not surprised” that the EC’s management has decided to rethink the whole approach to Political Economy Analysis.

Political Economy Analysis is complex, he explains, and so there should be a systematic stock-taking of how the instrument works,  “but from there to immediately apparently say, let’s discontinue it – that was a bit for us a surprise”.

A surprise because the EC has only been developing this methodology and testing in six countries for three years and the earlier stock-staking was quite positive. And also surprising because of the growing need for this kind of analysis.

“We need to go deeper: deeper into understanding the local context, deeper into understanding the drivers of change, deeper into understanding the incentives that will push elites to reform”, he says.

The third element of surprise is that the EC say they can do Political Economy Analysis on their own. Yes of course its better, he says, but the reality is that there is less and less staff and they are very busy. The incentives to ensure staff can do it are not necessarily there to do the sophisticated analysis and the dynamics of reform requires capacity and time.

The EC’s Decision to Discontinue Political Economy Analysis is Also not a Surprise

This part two of the four part interview:

Bossuyt goes on to say why ECDPM is also not surprised that the EC management might discontinue Political Economy Analysis.

“Since decades the aid sector has been struggling to integrate the political dimension. Politics are more visible in cooperation, but donor agencies prefer apolitical technocratic approaches about development goals and they (find) it very difficult to fully integrate that political dimension because it changes fundamentally how you do your work and can be risky” he says.

He adds that Political Economy Analysis also “confronts donor agencies with their own Political Economy Analysis” meaning it acts like a mirror and shows the donors’ own interests, and incentives, as well as their inconsistencies and incoherencies.

This type of analysis can be “quite disturbing” for donors.

What’s Next for Political Economy Analysis in the EC?

This is part three of the four part interview:

Bossuyt further explains what the future might hold for Political Economy Analysis and what a discontinuation of the methodology might mean.

“It’s important to avoid a battle between believers and non-believers of Political Economy Analysis – that would not be very productive. This is a complex exercise, and it’s always good to take stock and to learn, but let’s learn collectively and see how this can be a good tool.”

“If you look at the realities in the field of cooperation in 2013, what do you see? If you like it or not, it is already becoming much more political. If you add up all the communications the Commission has issued in the last five years, they all go in the same direction. They want more political cooperation.” But the EC also needs the tools to be a political player.

“You badly need Political Economy Analysis, that should be the principle” he says, how Political Economy Analysis is done is not the issue.

“The essence is that the EU Delegations can really have the tools to properly read rapidly evolving political situations, so they can detect where there is traction in society, what are the real actors of change and that they can then tailor their cooperation accordingly. […] The worst for European cooperation credibility is that you go very far on the political road in terms of policy discourse, but you remain under equipped in terms of instruments.”

That would be a recipe for failure, says Bossuyt.

What Other Forms of Analysis Could Replace Political Economy Analysis?

This is part four of a four part series:

Bossuyt finishes the interview by explaining that there are other forms of analysis that could respond to the growing needs of the EU Delegations. The tools he believes are also useful include:

• Governance analysis tools
• The mappings of civil society actors
• Conflict analysis tools
• Budget support guidelines

It’s good to use a mix of tools, he says, but he remains convinced that Political Economy Analysis has a number of advantages, especially the link to the economy.

“All these tools indicate that the development sector is trying to better manage the political dimension. We can only hope this movement will continue.”

Politics will always remain a difficult element to integrate into cooperation, but we have already done part of journey. The next steps will also not be easy, but there are a growing number of constituencies that see the need for this. “So lets seize the opportunities that will arise in the next years to continue on that route. Without ever thinking it will be simple but it’s the way forward” concludes Bossuyt.

The views expressed here are those of the author, and may not necessarily represent those of ECDPM.

The full transcript is below:

Jean Bossuyt: Well as a Foundation, we have been involved with Devco in developing in the past years the work on political economy analysis as one of the tools the Commission wants to use more so we have been elaborating with them aspects of the methodology and then we had also the chance to be part of one of the practical exercises of political economy analysis at country level in Senegal at the request of the Delegation. So as a foundation you could say that we have been really privileged to be part of this adventure to see how political economy analysis can really help the EU to have better strategies, better response strategies, better cooperation and, above all, better results.

The EC’s Decision to Discontinue Political Economy Analysis is a Surprise

And so in this context we were a bit surprised then, and not surprised, to see a message on Capacity4Dev that management have decided to rethink the whole approach to political economy analysis. The communication was a bit difficult because in the beginning the message was ‘we will discontinue the political economy analysis approach as they set out until now’ but then the message changes so it’s not absolutely clear what is now the position of the management on this tool but it is clear that there are questions about political economy analysis and so in that context I think a good debate is always useful.

Because maybe the first point I would like to emphasise is that indeed, political economy analysis is a complex thing, so we should take stock systematically on how this instrument works, because let’s be honest, what are we trying to do with political economy analysis? It is an analysis that compliments existing tools of analysis, governance analysis, but goes much deeper into trying to understand why reforms succeed or why they often fail despite a lot of national plans, a lot of formal commitment of partner countries, despite a lot of money, European Union, that reforms don’t lead to real results, to real change. So the political economy analysis seeks to look behind the façade of the formal commitments, the formal institutions, the beautiful plans and to understand where change comes from, what are the actors that push for change, what are their incentives, what are the power relations that make reforms possible or not.

That’s what political economy analysis all about? Political analysis but also the economic background of all these changes and of reforms, so it’s a combination of political analysis and a look at the economic incentives, the economic structures that make reform possible or impede it. So yes, looking behind the façade is a delicate thing, you are not in a world where there are a lot of certainties, you see a lot of things, positive things, you also see negative things. These are troubled waters in which you then try to find your way and hence it’s certainly a good thing that the EC, and now that it is three years into trying to work out how it can use political economy analysis in its work, in delegations, that it looks back and takes stock, but from there to immediately, apparently say, ok, let’s discontinue it, that was a bit for us, a surprise. Why? Why was it a surprise? Well, first of all, because it’s quite recent, I mean it’s only three years that they have been developing this methodology, it has been tested in only six countries, and to my knowledge, because there was a stock taking seminar in the EC in March, each of the six test cases were positive, the delegations were satisfied with the results so it’s not very clear why they suddenly want to stop this while the first tests have certainly not been a bad experience, on the contrary. So it’s maybe good to extend a bit the debate and the stocktaking process and not limit it to the management but try to have a much broader discussion on what we really have learned from these six cases, involving the delegations who were part of it, involving also the units who participated in it. I think that would be a positive thing. Yes we’re thinking political economy analysis, but, the stocktaking, yes, let’s do it but let’s do it in a participatory way. This is too important an exercise maybe to be only done at the level of the management.

So that was the first element of surprise, why stop something that is so recent. The second element of surprise was a bit, the growing need for this kind of analysis. You cannot go to delegations now or to seminars, or you cannot read studies or evaluations and each time again this recommendation comes back. We need to go deeper, deeper into understanding the local context, deeper into understanding the drivers of change, deeper into understanding the incentives that will push elites to reform, we need to understand also what drives civil society, what drives local authorities, how all these actors relate to each other. We need to understand more the power relationships and if you don’t understand this, well our money and our plans and our reforms and our programmes may not land on fertile soil. So the cry for this kind of analysis is huge, everywhere you look, everything you read, so that’s the second element of surprise. How do you reconcile apparently the growing need of field people to understand in which arenas they move around, what they try to do and how they can really achieve results by integrating better these power and political dimensions. This is really what the frontline actors, especially the delegations, more and more want. And yet here it somehow seems to say, yea but we have to rethink it, maybe we have to discontinue it. So it’s a bit difficult to understand also here how they will then respond to the needs, the growing needs of practitioners in all possible fields of cooperation.

And the third element of surprise is certainly in the first communication that they issued, is that they say yea, yea but we will continue to do political economy analysis but that’s in fact the core business of the staff of the delegations so they can do it, they can be trained to do it, so we can do this internally. We don’t need external support for this. The issue of external support, of course if you can do it in-house that’s better, absolutely, I mean we all know the realities in which donor agencies work, they have less and less staff, that is also the case for the European Union. The workloads are very high, people have to spend a lot of time on administration and it’s very difficult if you are yourself 100% working day and night on cooperation issues to be detached to do this kind of analysis. So yes, the delegations can do it, but the incentives to really make sure that the staff can do it are not necessarily there. It’s not a question of competence, of course people know about the politics of a country, are interested in all these aspects, they work there, but it is a different exercise to go deep into trying to understand the dynamics of these different reform processes, that’s more sophisticated analysis, it requires time, it requires dialogue. So, can this be done at delegation level? It’s a surprise that it is assumed that the capacity and the time is there to do it internally, you could argue that this is not necessarily something taken for granted.

The EC’s Decision to Discontinue Political Economy Analysis is Also not a Surprise

Emily Baker: In this clip, ECDPM’s Head of Strategy, Jean Bossuyt, discusses why he was not surprised that the EU might discontinue political economy analysis.

Jean Bossuyt: These are the surprises, but on the other hand, as a foundation, we were also, in fact, not really surprised that there was some nervousity about political economy analysis and that management at a certain moment in time says, ok, let’s maybe stop, let’s maybe do it in a different way. We were not really surprised for two main reasons.

First of all, since decades the aid sector has been struggling to integrate the political dimension. Thomas Carothers, a Democracy Expert, has just written a book about this ‘Development Confronts Politics, an Almost Revolution’ and the whole book is about this, how can donors work in a more political way, do they really want to do this, are there incentives there to do it. His main thesis is that yes, politics is more and more visible now in cooperation but that at the end of the day they often, donor agencies, prefer apolitical technocratic approaches about development goals and they find it very difficult to fully integrate that political dimension because of course it changes quite fundamentally the way you do your work, you do your business and he explains that, for instance, there are of course all kinds of vested interests and that may not be so easy to reconciliate with a political approach to cooperation. You also have to spend a lot of money, and we have to disperse, we all have to disperse, so this is another disincentive to really integrate politics because if you really, for instance, after a political analysis conclude that a certain government is absolutely not willing to change, and you have this, independent analysis, sophisticated analysis, then of course it becomes much more difficult to grant this government large amounts of money, including in the form of general budget support, so it can also limit your scope of action, especially in terms of disbursement and there are many other reasons why politics, the integration of politics in development cooperation and makes agencies, donor agencies in general, and particularly the European Commission a bit nervous. That was, by the way, also clear in the communication Capacity4Dev on why they want to discontinue political economy analysis because it’s very risky. Yea of course it’s a risky thing to analyse and to work on the basis of these political dimensions. So there is a kind of disincentive to fully integrate this. That is a systemic problem that is not unique to the Commission but it’s there, donor agencies in general, and by the way, that’s why the MDGs, that’s the best example, the development mantra for more than decades, has been largely an apolitical thing, human rights are not mentioned, governance was indirectly mentioned. This is a good example of how the development community and politics is not an easy marriage. So that’s, in this sense it’s not a surprise to see that political economy analysis may be a short-lived experience in the EC at least in the form we knew it until now and the second reason is of course that political economy analysis also confronts donor agencies with their own political economy analysis. That was very visible in Senegal, all the actors that were interviewed in the framework of the political economy analysis said yes, yes, this is a very good idea, let’s together try to better understand why we reforms in this country systematically, don’t get to the results we all want to achieve, including donors. But then they all asked the question, but will you also look at the political economy of the donor agencies here or the interests of the lead donors, the interest of the European Union, all the aspects that drive us to do cooperation with these countries. So that’s also of course, not evident to integrate this in cooperation processes. Your own interests, your own incentives, your own incoherencies, inconsistencies which are all part of life, you know, it’s there, but to integrate this formally into your cooperation process is also something that donor agencies don’t necessarily like but it’s inevitable. The political economy analysis also looks at the interests of the European Union and the member states, so yea, that’s also sometimes the things that you prefer not to put too formally on the table. So that’s the second reason why we don’t believe it’s really a surprise that this type of exercise, political economy analysis, has a difficult start, it’s quite logical, it’s difficult anyway to recapitulate, it’s difficult anyway, it’s risky anyway, it confronts you with all kinds of dilemmas, it prevents you generally then to continue with the classical cooperation because you see it’s much more complicated to really support reforms, our illusions maybe also were a little bit less, that we can change things and that we can buy reform for instance. So in many ways, political economy analysis is looking into the mirror of what you are really doing in a given country so that kind of analysis can be quite disturbing. That is the aspect of why it was not so much a surprise that at least there was a kind of temporary re-cut maybe of this instrument.

What’s Next for Political Economy Analysis in the EC?

Emily Baker: In this clip, ECDPM’s Head of Strategy, Jean Bossuyt, discusses what the future might hold for political economy analysis and what discontinuation of the methodology might mean.

Jean Bossuyt: So a last point maybe that you would like to emphasize, so what next, what will happen now. Well I think it’s important to avoid a battle between believers and non-believers of political economy analysis, that would not be very productive. As I said, this is a complex exercise and it’s always good to take stock and to learn, but let’s learn collectively and see how this can be a good tool, and there are limitations of course. So it’s good to be prudent, but the important point is to jointly share experiences, and jointly, in a participatory way, see how this tool can be improved and to do it in an open and transparent way, I think that’s very important.

And then well maybe, what’s next, well I think that if you look at the realities in the field of cooperation in 2013, what do you see? You see that whether you like it or not, it is already becoming much more political. If you add up all the communications the Commission has issued the last five years, they all go in the same direction. We want more political cooperation, they emphasise more democracy governance and human rights, budget support will be linked to these political aspects, we want to work with civil society as actors of governance, we want to empower the local authorities. You name it, you cannot find one communication that is not full with these kinds of words. That it’s more political, we have to look at the actors, these actors have interests, we have to navigate in this political world and then push our own values, so in other words, all these communications are saying the job of cooperation is also a highly political job, that’s the reality.

And then, if you agree with this analysis, then of course you need also the tools to be a political player, it would be an absolute error to, on the one hand, emphasise in all the communications that for cooperation to be effective, for results to be achieved with all these millions of euros in a time of crisis, in difficult environments often that you need to be more political and if you say ‘a’ you also have to say ‘b’, and then you have to say ok, let’s equip ourselves with all the available tools that are there. And then you need, you badly need political economy analysis, that should be the principle, but how you do it? Of course you can discuss it if you prefer to change the modalities that are tested out now, if you want to work less or more with external consultants, that’s not the essence. The essence is that the delegations can really have the tools to properly read a rapidly evolving political situation to detect where there is traction in the society, what are the real actors of change and that they can then tailor their cooperation accordingly. That’s what political economy analysis is all about and there are other tools that can help with this. You really need this, how do you it, that’s another debate, that’s a question of modalities, but the worst would be for European cooperation credibility is that you go very far in the political road in terms of policy discourse and that you remain under-equipped in terms of instruments. That would be a recipe for failure and, to conclude maybe with the example of the recent court of auditors report on Egypt which concluded, with a methodology that one could discuss, that most of the European support was not useful and especially in terms of governance and human rights and that we should have done much more with the available resources, that remains to be seen. You can have a lot of arguments about the methodology used to arrive at these conclusions but it shows again that you are very vulnerable to these kinds of criticisms and evaluations if you cannot show that you have really tried to inject resources into an arena, a political arena, that you really know as far as possible. It can help even the Commission to protect itself against these kinds of accusations that everything has been ineffective and the leverage was not used, a political analysis is also very sobering in terms of telling you, but don’t expect change in five years, the forces that are there in front of you are very huge so even with a substantial amount of aid you will not arrive at the change, and I mean this is also an advantage of political economy analysis and that it can protect you against unrealistic expectations both from the Commission itself, but they know and they try to minimalise their own expectations because they know it’s so difficult, but especially from external stakeholders who come with eyes and sometimes with beliefs that reform is something that you can buy, that you can quickly get results. No, let’s forget it, it’s not possible. So political economy analysis is also a very good way to be much more realistic on what external actors, including a big one, with good people on the ground, with good be instruments, it could promise achieve, so it’s also in the interest of the European union to, almost, protect itself to mainstream this use of these kinds of instruments. But again, how you do it let’s discuss it; it can also be improved at the beginning of the story.

What Other Forms of Analysis Could Replace Political Economy Analysis?

Emily Baker: In this clip, ECDPM’s Head of Strategy, Jean Bossuyt, discusses the other forms of analysis that could respond to the growing needs of delegations.

Emily Baker: If they didn’t do political economy analysis any more, is there anything that can replace it?

Jean Bossuyt: That’s a very good question because the communication now of the management of the Commission is not fully clear what will happen with PEA as it was developed three years ago but that of course does not mean that other forms of analysis cannot also partly respond to the growing needs of EU delegations and that’s of course the good news, as I said, it should not be a war between believers and non-believers, modalities you can discuss. There are other tools, I remain convinced that this tool has a number of advantages, especially the link with the economy, the political economy factors, but there are other tools that are there since a long time that remain valid, for example you have the purely governance analysis tools which look at governance which focus then on the issue of governance and accountability, so it’s more a political analysis, it is there. The European Commission has developed a reference document even on how to do this: analyzing and addressing the governance in sectors, that’s a reference document.

Another example of an alternative, complementary tool is the mappings of civil society actors; the Commission has a long tradition of doing mappings of civil society actors and the current mappings are of the second generation and they are political mappings so in fact they try to see not only who is there, who are the actors, but to see how these actors relate with the government so these kinds of tools, they don’t call them political economy analysis tools but more and more they also open up the political box trying to understand how these arenas work, of civil society actors working with government ,trying to get accountability, trying to get a seat in public policy processes, so also these mappings can help the delegations a lot to understand, for instance in a sector of education, how can we get change here, what role can civil society play, so this is another tool.

Then you also have of course the conflict analysis tool that is also being developed by EEAS because the realize that if you are in a conflict situation you have to do the same kind of deeper analysis, you cannot just take a couple of international reports and say that’s it, everything is moving all the time so if you want to be a relevant player you have to understand always better what are the different elements that can drive or stop conflict. So conflict analysis is one of these other tools that the Commission has developed.

But they all go in the same direction; I think that’s the bottom line for me, if you want to be relevant development players we can no longer simply say ok, there is a national plan, reforms, the commitment of the government is formally there, that’s no longer enough, you really have to better understand what drives change, the actors behind it, the interests. And then you have a diversity of tools that are interesting and now.

To give another example, of another tool, the new budget support guidelines, if a country wants to have general budget support we convert it into good governance contracts. Then of course there will be an eligibility test to see whether or not democracy, human rights are ok in these countries because it’s seen that you cannot provide this kind of budget support if there is not a good performance on these fundamental elements of democracy governance human rights - this has to be assessed. I mean you cannot simply say yes or no so it has to be methodologically assessed so delegations and the Commission will have to take informed decisions. While there are also tools being developed now to do this, but that’s of course also very tricky, when is a democracy moving, when is it not moving, what is the speed of reform, what is good progress, what is limited progress. We are of course not in a rocket science world, but you can also not just do it intuitively so there also you need to find the right tools;

I think for me, the essence is that all these tools in the development sector, is trying, also the Commission, and it should be applauded for this, is trying to better manage the political damage and so it was encouraging to see three years ago that we have these different tools, including political economy analysis, being given an institutional space and a chance to develop. So we can only hope that this movement will continue, with the diversity of tools that they can use in different contexts, none of them is a panaecea, none of them is the bible but all of them can contribute something according to the situation in which you are in and it’s good that delegations have this mix of instruments out of which they can choose but the essence is always the same, if you don’t have a better understanding of t