The Roles of Aid in Politics Putting China in Perspective

The aid policies of the five countries are expressions of humane internationalism. This is the main conclusion, although the policy varies somewhat from country to country and from one policy dimension to another within the same country.

There is a general trend in all five countries towards liberal internationalism. This orientation started during the second half of the 1970s.

The Canadian aid policy has basically reflected humane internationalism. The features of liberal internationalism have been strongly pronounced throughout and have been growing during the 1980s, with, increasingly, some traces of international realism, too. Predominantly humanitarian motives have been combined with a desire to promote Canadian economic interests and influences abroad. Although opinion surveys have shown that most Canadians were not willing to sacrifice development effectiveness on the altar of commercial benefits, many authors have considered the commercial interests of Canadian business of major influence in questions of foreign aid policy. However, if self-interest had been the prime determinant, Canadian aid policy would have had very different features. Aid is supported, in the first place, because it is considered an international public good.⁶⁷

The balance between self-interest and altruism tips more to the latter in the Danish case than in the Canadian. Business interests were at an early stage granted their share of the aid cake (one quarter) in the form of tied financial assistance. This balance has been maintained since the late 1960s – although increasingly allowing for the use of part of the credits for local purchases. As indicated by the recently proposed action plan for DANIDA, however, the efforts to adapt bilateral aid to Danish business interests are continued. Danish aid policy basically reflects humane internationalism. It contains features of reform internationalism. Features of liberal internationalism have always been present, with traces of realist internationalism.

The Dutch aid policy is basically a reflection of humane internationalism. However, features of realist internationalism are also discernible. ODA has been used as a means to maintain good relations with former colonies and dependencies once they became independent, a patter which fits into the realist tradition. This feature was a dominant one during the early years of Dutch aid. It has remained throughout, but decreased in importance during the 1970s and 1980s. During the mid-1970s, Dutch aid policy – under Social Democratic leadership – had features of reform internationalism, especially if assessed on the basis of declared policy. It was adapted to demands from Third World governments for reforms in the existing international economic and political system. During these years, Dutch aid policy transcended the NIEO demands by focusing on redistribution aspects of the recipients’ domestic policies too, with the aim of stimulating reforms oriented towards social and economic growth. During the late 1970s and the 1980s, these policy features were gradually weakened (by successive Centre-Right governments) and increasingly replaced by a trend towards liberal internationalism.

Norwegian aid policy also reflects humane internationalism, with the inclusion, since the early 1970s, of elements of reform internationalism, particularly if assessed on the basis of declared policy. During the mid-1970s, the Norwegian government – together with the Dutch – was most active, within the group of Western industrialized countries, in pressing for reforms in the international economic system in favor of the Third World. This drive was pursued into the 1980s, when the North-South dialogue hardly appeared on the international agenda. As in the Dutch case, aid policy was also oriented towards reforms at the national level, in the way the poverty orientation was defined. From the early 1970s, a few fragments of radical internationalism have also been manifested, particularly in the support for southern African liberation movements. Since 1976, some dimensions of the aid policy, in particular the commercialization drive, have increasingly reflected liberal internationalism. The protectionist aspects of this drive, in particular the introduction of tied aid, represents small traces of realist internationalism.

The Swedish aid pattern has been very similar to the Norwegian, although with some differences in emphasis. Basically, the policy reflects humane internationalism. Several elements have, from the very start, reflected reform internationalism, especially in terms of motives for providing aid. Elements of radical internationalism can also be identified, more strongly articulated than in the Norwegian case and especially related to the support for African liberation movements and the selection of recipients for bilateral aid. From the mid-1970s, the policy has increasingly reflected liberal internationalism, too, with small traces of realist internationalism.

The aid policies of the five countries reflect, for most dimensions, the dominant socio-political values of the domestic environments. These are, according to the point departure of this study, the main determinants of most dimensions of aid policy. However, systemic and private sector interests have also influenced these countries’ aid policies, as have their systemic interests related to the international common good, particularly the quest for international peace and stability. Some influence has also been exerted by international organizations and even by the recipients.

The relative influence of these determinants varies from country to country and also, within each of the five countries, from one dimension of the aid policy to another, as noted above. In some of the five countries, such variations have also been dependent on the political color of the government of the day and, in general, on the prevailing parliamentary situation.

The dominant socio-political values referred to have had the strongest impact on the aid policy of the Scandinavian countries and the Netherlands. Different values have exerted the strongest influence on the various dimensions of aid policy. The values connected with the welfare state, in particular social justice, have been most strongly expressed in the Norwegian and Swedish aid policies and, during the mid-1970s, in Dutch aid policy too, as assessed from the declared policies. The prime expression of this is the poverty orientation of the stated aid policy, involving poor countries as the main recipients, the poor as the major target group and the expectation of a policy of equity and social justice on the part of the recipient governments. Human rights concerns, including the concern for democracy, have had a more or less strong impact on the stated policy of the five countries, but have also occasionally exerted a decisive influence on aid relations.

The private sector and systemic interest in export promotion has had the strongest impact on the Canadian aid policy. It has also influenced the aid policy of the other four countries, but to a lesser degree. Its strongest impact has been on the dimensions of aid policy where business interests had the most direct stake. Even here, their influence has been circumscribed – as, in the Danish case, where procurement tying was restricted to bilateral financial assistance and, in the Norwegian case, where the financial frames for the various mechanism designed to ensure an increased return flow were quite limited.⁶⁸ However, the influence of the combined systemic and business interest in export promotion increased during the late 1970s and 1980s.

A common feature of the five countries is the strong impact of their (systemic) interest, as small and middle powers, in peace and international stability and an international system to pursue and maintain these objectives. This is expressed, in the first place, through their large aid contributions through the multilateral aid agencies. The five countries differ somewhat on this account, too. Systemic interests related to foreign policy concerns have also occasionally influenced some aspects of aid policy, in particular the selection of recipients. The more particular interests of the administrative structures have also had their impact, both on the main policies, such as the large multilateral aid components, and on the structure of aid, including its forms and guidelines for co-operation.

It is difficult to assess the influence which the international organizations have exerted on the national policies outlined below. At an early stage, international norms certainly had some impact, in particular those established for the volume of aid. Since the early 1970s the four European countries have pursued aid policies ahead of these norms. In the case of Canada, international norms have exerted some influence both with regard to the poverty orientation and the volume of aid.

Major changes in the international environment have affect aid policies. The international recession, contrary to our expectations, had only a marginal impact on the ODA volume performance – although some temporary setbacks were caused. Again contrary to expectations, its impact on the financial terms of aid was even less. In fact, these terms improved after 1975. However, the strained economic situation, resulting in high unemployment rates in some of the five countries, facilitated the increased commercialization of aid which took place in all five countries during these years.

The ideological reorientation towards Liberalist orthodoxy, which occurred during the late 1970s and early 1980s in some of the major governments of the Western world, worked in the same general direction. It influenced several dimensions of aid policy, and spurred on the drive towards commercialization of aid which had gained momentum at an earlier stage. It also had an impact on the trend, in the late 1980s, towards increased privatization of aid – including the enhanced role of NGOs as aid and development agents, although these were motivated by other concerns as well.

The changed conditions in the Third World – the desperate economic crises involving soaring debt burdens, balance-of-payments deficits and low productivity as well as famine caused by politics and natural disasters – affected, in particular, the volume, the financial terms and the forms of the five countries’ aid. The humanitarian response to the deteriorating economic situation of so many developing counties probably offset the negative effects on the volume and financial terms of aid, caused by the strained economic situation of the donors during the recession. It led, too, to forms of aid, such as balance-of-payments support, which were adapted to the foreign currency needs of the recipients. However, these forms of aid were also easily adapted to the commercialization drive.

There exists a strikingly high degree of national consensus between the major political parties of the five countries on most aid issues. This is not because aid policy is considered of minor importance in the national political arena, as is the case in several other OECD countries.⁶⁹ Aid policy has attracted considerable attention.⁷⁰ This does not necessarily imply that an aid issue has much likelihood of toppling a government. However, it is indicative of the importance of this policy area that, in the Scandinavian setting, one major political party (the Liberals of Sweden) made a strong pro-aid stance one of its top issues to profile the party in consecutive general election campaigns.

Although the high degree of consensus is the predominant feature, we have also identified, at the level of national politics, several disagreements between the main political parties, save for Canada, where conflicts between the two major parties on aid issues have been fairly rare. Although positions have been shifting from one policy dimension to another, the picture that emerges contains an element of Right-Left conflict, although this pattern is blurred in the Scandinavian countries by the strong pro-aid positions of the Liberals and the Christian Democrats. These parties, which hold a central position on a Left-Right axis, have, together with the parties to the Left (Left Socialists/People’s Socialists, Communists), outflanked the Social Democrats in the core issues, such as the volume of aid (they favour an increase) and the question of commercialization (by and large, they take a more purist view). However, participation in coalition governments – and policy adaptations in order to make such alliances credible – have blurred this pattern at times, in particular when parties belonging to the political centre have found themselves in a government coalition with the Conservatives. Participation in such government coalitions – or even the intention of forming such an alliance – has also affected the policy positions of the Conservatives and contributed to the national consensus on aid issues. Liberalist political parties aiming at reduced public spending and less intervention by the state (in Denmark and Norway) have attacked the very idea of development assistance.

The major political parties have actively sought consensus on aid issues. The main motive has been to ‘protect’ aid and to promote it as a national concern of major importance. One strategy to this end has been to create domestic alliances by combining interests. This has been the case in Denmark, where a balance was struck between the different forces from the very start. The ODA programme was equally divided between grants and development credits, in order to accommodate different interests: the multilateral component constituted the tribute of a small state to an international system and was a way of reaching a large number of recipients; the tied bilateral credits represented a recognition of Danish business interests and an attempt to enlist its support; and the grants were a tribute to the specific Danish aid objectives in order to accommodate the altruistic friends of aid. The selection of main recipients for bilateral grant aid represents a balancing of Right-Left interests: the four priority countries pursue different development policies.⁷¹

In the Norwegian case, a similar balancing has occurred in the selection of priority countries: ‘Left’ recipients are balanced by ‘Right’, that is Socialist Tanzania is balanced by market-economy Kenya, as is Mozambique by Sri Lanka. At the regional level, India was balanced by Pakistan, and later on Bangladesh by Pakistan – where foreign policy (diplomatic) considerations also had some impact. However, the consensus between the political parties has been broken in other cases, such as the aid programme to Nicaragua, where East-West considerations have had some impact, thus reinforcing the conflict between Right and Left. The 1984 White Paper of the non-Socialist coalition government illustrates another type of trade-off between Conservatives, who obtained the inclusion of mechanisms supportive of export promotion, and the Christian Democrats, who obtained the inclusion of a poverty orientation and the maintenance of a high ODA volume. The main political parties, especially the Social Democrats, have actively sought consensus on aid issues. As a result, issues are seldom pressed through Parliament by a majority against strong objections from a major opposition party: compromises are the most common outcome. The minor parties to the Right (Liberalists) and the Left have not always taken part in this consensus seeking, especially the Liberalists.

Svendsen, Knud Erik (1989), “Danish Aid: Old Bottles,” 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. 91-116, Uppsala, Sweden: The Scandinavian Institute of African Studies.

It is now time to attempt to draw a general conclusion on the strength of the various determinants tested in recent years with respect to the most debated aid issues in Denmark.

First, a short list of the issues and the corresponding tests:

1. 
   Aid Objectives: The poverty orientation has been confirmed but not legislated on. A large majority is in favor of keeping the compromise formulation in the Act.
   
2. 
   Aid Volume: After one cut in the volume and further attempts to cut it, followed by a few years of zero growth, a political decision has been taken to reach a figure of 1 per cent of GNP by 1992, but on the basis of a slight majority.
   
3. 
   Multilateral/bilateral aid: The 50-50 division has been confirmed, despite efforts to reduce the share of multilateral aid.
   
4. 
   Allocations to international organizations: A freeze on contributions to UNDP has been lifted, but efforts to prevent the EEC share from growing were not successful.
   
5. 
   Choice of recipient countries: No change in the list of four, but political agreement on more aid for southern Africa and the Sahel. Nicaragua is a special case.
   
6. 
   Tied aid: The number of eligible countries has been expanded by raising the limit expressed in terms of average income; loans to LLDCs have been changed to grants, and it was emphasized that the use of this aid is governed by the general aid objectives.
   
7. 
   Evaluation activities: Some modest expansion, but far from spectacular progress.
   
8. 
   Support for private capital transfers: The development objectives of state-supported joint venture have been stressed, and the reservation of aid funds for matching (flexible mixed credits) was prevented.
   

At the same time, it is obvious that the balance of forces behind the aid programme is a very fine one. This, combined with the fact that aid has become a permanent part of Danish political life, makes it necessary to speculate on possible changes in the aid profile, if there are changes in parliamentary power.

It should be added that in no other policy area have there been such efforts to test public support through opinion polls on a regular basis as for the aid programme. The polls were begun in 1960 and at that time they showed that 40-45 per cent were in favor. Since then, there has been a significant increase in this indicator, peaking at 71 per cent in 1984 in the midst of a massive ‘Hunger in Africa’ fund campaign. In 1985, the polls showed that approximately two-thirds of the population (68 per cent) were backing a 1 per cent target for Danish development assistance. This basic fact of steady and large support imposes, of course, certain constraints on the controversies in the political system.

Future Changes in Aid?

It has been the central argument that the aid profile reflects the distribution of political power, which has not given either the Conservative/Liberal bloc or the Social Democrats (and the parties to their left) a stable majority in Parliament. This has led to basic compromises in the aid programme, which, together with the existence of special groups of aid supporters in almost all parties, have protected the aid programme from the influence of the economic crisis.

If the Conservative/Liberal bloc should gain a majority of their own, without needing the support for the RV, it is not very likely that there would be major changes in the aid profile. This bloc would probably care more for the business interests (expand the list of countries eligible for tied aid, introduce matching funds, etc.), but the existence of aid-positive forces in the bloc, including a small Christian Party, would exclude a major degradation of aid. A shift in the country priorities for Danish aid is highly unlikely, that is the low-income countries will continue to receive top priority.

The situation would be different if the Social Democrats gained a majority, together with the parties to their left. Such a new coalition would have to reach an agreement on a long list of issues, based on a number of compromises not tried before. It is reasonable to expect that the aid programme would be a part of such a new deal, given the interest of the left-wing parties in aid, and that it would be easier for the Social Democrats to yield in this area than in other fields of policy.

If this reasoning is correct, one would expect the objectives of aid to be made more precise, possibly through a change in the legislation. Furthermore, a more transparent implementation of the aid programme in accordance with the poverty orientation should also be expected, meaning greater emphasis on the monitoring and evaluation of aid activities. Such greater evaluation efforts would also be directed towards the multilateral aid, especially the funds channeled through the EEC. With regard to the choice of countries, one would expect a closer scrutiny of development policies and their implementation in the major recipient countries and special arrangements for aid to Nicaragua. The latter initiative might in fact be the major symbol of a new direction in the aid effort. Otherwise, one would expect a reduction in the present large spread of Danish aid, that is a higher degree of concentration. Finally, an agreement on the gradual reduction of the share of bilateral tied aid might also be expected. This might, however, run into some opposition from a few trade unions.

This cautious assessment of the changes in the aid programme to be expected from a move to the left by the Danish political forces does not point to any large-scale, radical reform. Such changes would have an important impact on Danish aid principles and practice, and they would meet resistance from the Conservative/Liberal bloc, but they still could not in my view be called radical. This is not so surprising, given the present nature of the Danish aid programme and the absence of an implementable alternative to this programme.

The major ‘alternative’ in the aid debate in Denmark in recent years has been the programme for a New International Economic Order (NIED). The problem with this approach, however, is that it does not produce an alternative aid programme. It rather tends to reduce the importance of aid as such, making other North-South relations more important than aid. As experience has show that very little has come out of these efforts to change the economic world order, and as it has been necessary to make a more realistic assessment of the balance of economic power in the world, the intellectual and popular appeal of the whole concept of a new order has been drastically reduced.

It may be said that the various documents describing the demands for a new economic world order also included some broad proposals for changes in foreign aid and that these issues were taken up later, for example, by the Brandt Commission. In this sense, the concept of a new world order does not exclude concessional transfers of resources to the Third World. The old slogan of ‘trade, not aid’ does not apply to this approach, which is rather ‘trade and aid’.

These broad ideas for fundamental changes in the procedures (and volume) of aid transfers, that is automaticity, general financing, no conditions attached to the use of funds, etc., have never caught on in the Danish aid debate. Only one small left-wing party has argued for the ‘sovereign’ use of Danish aid funds by the recipient countries (which should therefore include only countries with an acceptable development policy).

The general trend in the aid debate in Denmark has meant a stronger interest in the use of aid funds, to the poor groups received the benefits of this aid. This has again meant more thorough planning of the use of aid funds – in cooperation with the authorities of the recipient countries, but still in conformity with Danish aid objectives. This has promoted a broader understanding of the aid relationship as being an agreement between two sovereign states, and Denmark has over the years become clearer in its dialogues with recipients about its aid objectives, as defined politically in Denmark.

This has meant stronger signals to the recipient countries about the Danish interest in assisting the poor population groups – most recently, a demonstrated concern from the Danish side for aid dimensions like the situation of women and the natural environment in the Third World.

This ‘concerned participation’, as it has been called in the international aid jargon, has been extended from questions of specific aid uses (project identification, etc.) to general policy issues, produced by the economic hardships in the form of fiscal crises and payments deficits in some recipient countries.

Thus, in many ways, the general aid ideology in Denmark has moved away from the aid ideas in the programme for a new economic world order, with the possible exception of the greater use of multi-year frameworks for untied transfers to the major recipient countries (the rolling five-year plans mentioned above).

Political changes in Denmark might – as argued above – induce adjustments in the Danish aid profile, and no great political shift would be required to push aid in another direction (only 5-6 per cent of the votes).

But compared with the basic aid features of most other OECD countries, the changes will not be very significant. It is a fairly safe prediction that Danish aid will continue at a relatively high level, that the public will be concerned with its effects on poverty, that aid will be given primarily to low-income countries, with an emphasis on eastern and southern Africa, and that the international organizations will continue to receive a large share of Danish aid.