Can Foreign Aid Buy Cooperation?
External Funding and International Organizational
Adaptation
Julia Gray
Assistant Professor
University of Pennsylvania
November 12, 2013
Abstract
As international organizations endure, they often must adjust to changing circumstances.
Yet when organizations expand their scope or change their mandates, is this evidence of
useful adaptation or of overextension? Furthermore, is the motivation for those changes
coming from the needs of member states, or is it simply an effort on the part of the institutional bureaucracy to survive? This paper demonstrates, as some have suggested, that
many regional economic organizations (REOs) have expanded their scope and increased
their institutionalization in the past several years. But many have done so in a bid to
attract external financing, thereby prolonging the life of organizations that are sometimes
inefficient. These expansions are often infrequently implemented, and they may be more
reflective of donor interests than of member-state initiatives. This implies that organizational design, as it evolves, may stem less from the needs of member states and more
from the survival instincts of bureaucracies — thereby challenging the predominant view
that international organizations center on member-state bargains, and offering insight as
to why some organizations persist despite poor records of implementation.
Early Draft. Please do not cite without permission. Many thanks to Raymond Hicks for comments on
this version.
1
Introduction
How do international governmental organizations (IGOs) persist in the face of changing
circumstances? The classic theories of bureaucracy assume that organizations, once established, adapt in order to survive. They seek to expand their budgets (Tullock, 1965;
Niskanen, 1971); they will adapt or shift their mandates in the face of changing circumstances (Olson, 1984; Haas, 1990); and at times their adaptations may veer in unexpected
or suboptimal directions (Barnett and Finnemore, 1999; Pauly, 1999). But much of the
literature in international relations assumes that these changes emerge as the result of
bargains among member states, or at least that organizations evolve in ways that reflect
the interests of the member states.
Yet this assumption overlooks an important development in the landscape of IGOs:
namely, the presence — and, potentially, the influence — of external powers on the
programming, institutional design, and financing of those IGOs. Particularly in the developing world, which is long on IGOs but short on member-state funds to support them,
external actors — particularly from the EU, Japan, and various strains of development
assistance through national governments as well as the World Bank and the UN — have
bankrolled up to half of the operating budgets of many of the same IOs that we tend
to assume are the products of member-state interests. External donors have built secretariat buildings, established institutions such as courts and parliaments, and supported
various projects that often extend beyond the initial scope of the organization. But this
form of influence — which could potentially have big consequences for the ways that
IGOs work and their attendant impacts on international cooperation — has been largely
unacknowledged in the literature.
Accordingly, this paper argues that the evolutions and expansions of scope in some
international organizations frequently do not reflect the preferences or needs of member
states per se, in contrast to what the literature on rational design of institutions might
assert (Koremenos, Lipson and Snidal, 2001); rather, that they are merely evidence of
organizational adaptation in the face of budget constraints, and that the institutions that
1
form are less representative of member-state concerns and more of the concerns of external actors. Many organizations expand their scope in an effort to secure external funding
from donors outside the region. In recent years, the EU as well as many international
development agencies have provided international governmental organizations with funding and program input. This can result in IO overextension (Pauly, 1999; Eberwein and
Schemeil, 2010), as organizations sometimes take on projects or institutions that might
not be appropriate to the needs of their members (Cardenas, 2003; Dutton and Dukerich,
1991).
I demonstrate this proposition using data on donor funding of regional economic organizations (REOs) from 1980 to the present. REOs are a good test case because the
majority of them started out as economic agreements alone, but many of them over recent
years have both expanded their scope and added on features of deeper institutionalization.
I show that changes in the scope of those organizations often track external grant programs, using case illustrations of two economic agreements in Africa that expanded their
scope (by adding on peacekeeping) and institutionalization (by adding a court) — but
one was initiated on the behest of the most powerful member, while the other resulted
from an EU-funded initiative. The source of funding and design can have important
implications for the ultimate effectiveness of the design features of an agreements.
This goes against many of the conventional understandings of the design of international agreements as bargains that are negotiated among member states advocating for
their own interests. While this may be true at the initial stages of organization formation,1
over time, agreements that may for whatever reason not meet their initial purpose will
endeavor to survive through other means. This argument about institutional adaptation
is particularly germane in the study of international organizations in the less-developed
world. Many of the world’s oldest REOs, such as the Caribbean Community (CARICOM), the Association of Southeast Asian Nations (ASEAN), and the Common Market
for Eastern and Southern Africa (COMESA) were founded in the postcolonial era, at a
1
But see Johnson (2011) for an account of how international bureaucrats, not states, shape the design
of IOs.
2
time of optimism about the potential for regional as well as domestic markets to expand
through import-substituting industrialization. Most of these organizations were founded
with a secretariat, permanent staff, and operational budgets that hinged on the contribution of member states. But over time, with advances on the multilateral regime for
trade on the one hand and persistent low growth on the other, many countries began
to focus their economic attentions outside of their region. With the gains from trade
holding more potential at the multilateral level than at the regional level, and with many
countries in arrears of their budget obligations, many organizations faced the prospect
of extinction or reorientation. As international donors expressed preferences to channel
their funding through organizations already established on the ground (Dietrich, 2012),
some organizations were able to reorient to attract donor funding for specific projects or
for building infrastructure.
Furthermore, cooperation and utilization of various features of an agreement might
be less likely if the primary motivation for including those features stemmed not from
the preferences of member states per se, but rather reflected the interests of external
actors who fund those organizations. This phenomenon has been widely observed among
regional economic organizations. Just as some champion those organizations’ emulations
of various design features that seem to indicate deep institutionalization, others note that
those features are rarely implemented. For example, although the Andean Community’s
dispute settlement mechanism has been lauded for its similarity in structure to the EU
(Alter, Helfer and Guerzovich, 2009), others have noted that the court rarely sees cases
and that the legal principles are not implemented domestically (Phelan, 2013), perhaps
as a function of that organization’s mismatch with the needs of member states. Similarly,
between 1992 and 1994 alone, the European Commission initiated projects for increased
institutionalization of various regional economic organizations — most in its member
states’ former colonial orbits — worth 24 million Euros (Botto (2009), quoted in Lenz
(2012)). But Lenz (2012) shows that many of the institutional features of the South
African Development Community and Mercosur were undertaken at the behest of the
3
EU, even though different institutional forms might have been better suited for those
countries’ purposes. This implies that as the bureaucracies of organizations interact with
economic opportunities for expansion, they may undertake mandate changes that are
inappropriate or costly (Acemoglu, Ticchi and Vindigni, 2007).
This paper proceeds as follows. The next section situates this argument in the literature on the rational design of institutions as well as theories of organizational adaptation. I argue that we would expect high levels of donor funding to be associated with
higher levels of designed scope and institutionalization of these agreements, though there
is potential for endogeneity in that relationship. Section Three discusses the empirical
evidence on donor funding to regional economic organization and shows patterns of association that support the hypotheses. Section Four explores the potential endogeneity
of the relationship between scope and funding by examining two cases: SADC’s establishment of a Tribunal at the behest of EU funding, and ECOWAS’s initial peacekeeping
mission, which was initially conceived of and financed not by donors but by the largest
member-state, Nigeria. The final section concludes.
2
Organizational Adaptation
When do the shapes of organizations reflect members’ desires, and when do they reflect
their own bureaucratic culture? The literature on the rational design of institutions
(Koremenos, Lipson and Snidal, 2001) posits that members bargain over the the scope
and institutionalization of international organizations.2 This assumption underlies much
of the empirical work on economic agreements; work that examines the impact of the
design of, for example, preferential trading arrangements (Baccini and Dur, 2009; Kucik
and Reinhardt, 2008; Kucik, 2012) and its impacts on cooperation in practice. Much of
this work has centered on the political and economic determinants of agreement formation
(Mansfield and Milner, 1997; Mansfield, Milner and Pevehouse, 2008).
2
But see Johnson (2011); Urpelainen (2011) on the role of international bureaucrats in IO design.
4
But this literature does not explicitly address the ways in which organizations might
evolve over time, and how that evolution might reflect different interests and mechanisms
than simply the initial constellation of member-state bargaining. Yet this is a common
line of inquiry in the vast literature about institutional reforms over time, both in the
managerial tradition (Tullock, 1965; Niskanen, 1971; March, 1981; Haas, 1990; Weingast,
1996; Grief and Laitin, 2004) as well as in the literature on historical institutionalism
(Thelen, 2009; Mahoney and Thelen, 2010; Farrell and Newman, 2010; Fioretos, 2011).
This literature assumes that organizations, once formed, seek to maximize their budgets
and to survive by any means, and this can often take the form of adaptations that expand
the mandates of those organizations — expansions that are not always optimal for the
members in question.
While much research in international organizations does account for bureaucratic expansion of IOs (Mitrany, 1933; Keohane and Hoffmann, 1991), the sources of preference
for those expansions is usually assumed to be endogenous either to the bureaucracy itself3
or to the member states (Brusis, 2010). At the same time, however, others have noted
the influence of external actors on various aspects of state policies (Finnemore, 1996;
Cardenas, 2003).
Yet the links between external actors, international organizations, and mandate expansions have not been fully established. Some authors have noted that external actors
can influence regional organizations, usually implicitly through emulation of design practice (Boerzel and Risse, 2009b; Jo and Namgung, 2012; Jetschke and Lenz, 2013). But
others have noted that the influence may be more explicit, as external actors make monetary contributions to various forms of international organizations, particularly regional
ones. Research on this topic tends to focus on donor preferences (McLean, 2012) or the
efficiency of the aid structure (Dietrich, 2012). But none has systematically linked expansions of scope and institutionalization with external funding as a systematic pattern
among organizations.
3
See, for example, Babb (2003); Chwieroth (2010) on organizaitonal culture in the IMF and Weaver
(2008) on the World Bank
5
These changes have been noted in many types of international organizations, such as
the International Monetary Fund (IMF) (Chwieroth, 2010; Grabel, 2011) and the Bank
of International Settlements (Bernholz, 2009). But this phenomenon has not been systematically studied in the area of regional economic organizations (REOs), despite those
groups’ changes over time and their prominence in the study of economic cooperation.
Just as many scholars have noted the rise of regional economic organizations (Solingen,
2008; Mansfield and Milner, 1999) and argued as to their positive benefits for cooperation (Goertz and Powers, 2012), others have noted that REOs often do not live up to
their commitments (Haftel, 2012), and that these organizations tend to persist even if
they have outlived their original mandate (Gray, 2013). Member states often fail to pay
their membership dues to organizations, such that staff go without salary payments. Yet
at the same time, many REOs have expanded the scope of issue areas that they cover
(Goertz and Powers, 2012) and added features such as courts and parliaments that are
hallmarks of the stronger institutionalization that many associate with deep cooperation
(Alter, Helfer and Guerzovich, 2009).
If REOs often fail to fulfill their original mandates of trade promotion, why do they
add on even more areas of potential cooperation and building what look on their face to
be stronger institutions? That is, if cooperation failed to materialize under organizations’
original sets of goals, and if the original institutional setups proved lacking, why would
they add new ones? There are a few possible answers to this puzzle. One is that, having
struggled with meeting their initial goals, the organizations turn to new areas where they
might have more traction. This seems to be the case with the Economic Community of
West African States (ECOWAS); although it had a poor record of economic cooperation
(Hanink and Owusu, 1998), it subsequently reoriented toward the area of regional peacekeeping with notable success (Levitt, 1998). Yet others seem to add institutional features
only to abandon them; twelve years after it was founded, Mercosur (a trade agreement
among Brazil, Argentina, Uruguay, and Paraguay) established a parliament with the aim
of incorporating more involvement of member-state legislators (Lenz, 2012). However, the
6
parliament went from having 10 sessions in 2008 to one in 2011, and none at all in 2012
or 2013 (Lucci, 2012). Why bother to design and build institutions that are subsequently
abandoned, or not used for their original purpose? This example suggests a second possible answer: that changes in the scope and institutional arrangements of agreements might
be exogenously determined, by actors that are not part of the member-state configuration.
Indeed, just as many organizations have expanded their competencies, many of them
do so explicitly to attract external funding so that their bureaucracies can survive, and
in attempts to draw in development aid for their regions. For example, the Organization
for Eastern Caribbean States (OECS), an economic organization founded in 1981, had
long faced budgetary constraints, as many member states were in arrears of their membership dues.4 In 2010 it revised its treaty to deepen cooperation but also to establish a
parliamentary assembly and to strengthen the institutionalization of its secretariat. The
European Commission provided funding and design guidance on that institutionalization.
“We absolutely undertook these reforms in compliance with the EU. First of all, it is a
model that works ... but secondly it was necessary for them to view us as a partner that
they could continue to support and to work with,” said one OECS representative.5
This phenomenon is worth exploring, since external funding of some forms of international organization is a widespread and systematic occurrence. This is particularly
true in the area of regional economic organizations, most of which are in the developing
world, and many of which were established with buildings and employees but currently
face significant financing constraints. Many of them comprise member states that are
both relatively poor and that are also simultaneously members of many similar organizations with overlapping mandates; one study note that poor countries would have to
triple their income every ten years to fund their representation to all of the IOs to which
they belong (Shanks, Kaplan and Jacobson, 1996). This leads to budgetary shortfalls
in many organizations. For example, in the Economic Community for the Great Lakes
4
“Organization of Eastern Caribbean States issues communique,” Caribbean Media Corporation, May
26, 2007
5
Author interview, Beverly Best, OECS Head of Programs, 8 March 2012.
7
(CEPGL), an economic organization founded in 1976 and comprising Rwanda, Burundi
and Democratic Republic of Congo, in the past several years only Rwanda has made its
required membership contributions, leaving the organization falling short of 45 percent
of its over $3 million budget
6
In the face of those budget constraints, and with the intention of survival (Olson,
1984), the bureaucracies of many of these organizations have adapted their mandates in an
effort to attract external financing. One such organization is the Caribbean Community
(CARICOM), a regional integration initiative founded in 1972 that currently finances
almost 70 percent of its budget through donor contributions. Much of this is program
funding in the areas of health; the UN, the World Bank, the Bill and Melinda Gates
Foundation, and several bilateral donors have run HIV-AIDS awareness and prevention
programs through CARICOM since the early 2000s.7 But often those programs are finite
and must be discontinued once the funding dries up or if donor priorities shift elsewhere.
One official representative to CARICOM describes a program initiative to coordinate
central bankers in the region. “The program was a success, and we established very
good mechanisms [for cooperation] ... but once the program ran its course there was no
financing to continue the meetings and reports, so the whole initiative stopped as though
it had never happened.”8
While many have lauded the expansions of these organizations as proof of their effectiveness (Goertz and Powers, 2012), and signs that these international institutions
are positively impacting cooperation among their members, the motives for and appropriateness of those advances have not been systematically investigated. This also has
implications for the performance of those designs in terms of overall organizational effectiveness (Gutner and Thompson, 2010). We might anticipate that organizations that
undertake design measures at the behest of external actors would potentially have less
ability to fulfill their original mandate. If organizations were simply taking on new ini6
“Rwanda: Financial Woes Threaten CEPGL Operations.”
“Caribbean region urges continued funding for HIV/AIDS programmes,” BBC Monitoring, 30 April
2013.
8
Author interview, Dr. June Soomer, St Lucia Ministry of Foreign Affairs, 2 March 2012.
7
8
tiatives to fulfill a program requirement of external actors, those expansions might not
be fully implemented if the member states themselves were not on board.
Additionally, externally funded programs usually stem from the agendas of donors
themselves and may not coincide with, or at least may be complicated by, activities that
an organization is already undertaking. Anecdotal evidence supports this conjecture. An
official at CARICOM’s technology unit describes a situation when, following a donor
conference, CARICOM representatives “came back and set down a whole new agenda for
IT coordination that they had agreed on with donors. They just put it on my desk and
said, ‘this is what we’re doing now.’ But we already had several programs well underway
in the areas of IT that had different timelines and goals — but now we were supposed
to just stop all of that and redo everything according to the new agreement.”9 Situations
such as this one, when organizations must overlay or discard initiatives to keep apace
with donor funding prerogatives, would also lead to poor implementation in the long run.
Scholars of institutional design often discuss the various features of international agreements in terms of their scope (typically thought of as the number and variety of issue
areas covered by the agreement) as well as their institutionalization (the strength and autonomy of their bureaucracy, as well as the presence of mechanisms such as supranational
status, dispute-settlement mechanisms, or parliaments). However, many acknowledge
that there is frequently a gap between the designed scope and institutionalization, and
the degree to which those features are actually put into effect (?Boerzel, 2005; ?; Gray
and Slapin, 2011). Thus, it is important to conceptualize the implemented scope and
institutionalization as well as the way those features look on paper. We might expect
that, while external financing of IGOs would be associated with changes in the de jure
features of an agreement, those features might not have much of an impact de facto.10
9
Author interview, Jacqlyn Joseph, Executive Director of the Strategic Planning and Monitoring,
and Evaluation Sub-Programme of Information Communication Technology at CARICOM Secretariat,
7 March 2012.
10
This conjecture taps into a vast literature on the effectiveness of foreign aid; see, for example, Alesina
and Dollar, 2000; Meernik, Krueger, and Poe 1998; Schraeder, Hook, and Taylor, 1998; Svensson, 1999;
Wright, 2007; Bermeo, 2007; Dunning, 2004; Neumayer, 2003; Burnside and Dollar, 2000; Bearce and
Tirone, 2010.
9
We can express these ideas in the form of testable hypotheses:
• H1 : Organizations that receive more external program funding will be associated
with broader designed scope.
• H2 : Organizations that receive more external program funding will be associated
with higher levels of designed institutionalization.
• H3 Organizations that receive more external program funding will be associated
with lower levels of implemented scope and institutionalization.
Yet empirically, these relationships are tricky to untangle. First, it is difficult to
establish decisively the intent behind organizational expansions, as well as to unpack
the many factors that might make a reform successful or not. That is, even the bestintentioned reforms may be difficult to implement, if there are infrastructural or capacity
issues surrounding their implementation (Gray, 2014). Additionally, the donor funding
may be deployed with the intent of improving capacity in the organization as well as the
member states themselves. If we observe low implementation, it might be attributable
simply to the fundamental inability of many regional organizations to accomplish their
goals (Haftel, 2012), not necessarily to coordination failures on the part of donors.
Similarly, there is a potential endogenous relationship between donor funding and
levels of scope and institutionalization. It could be the case that donors target organizations that have at least the trappings of some institutional structure to carry out their
programs, or where program scopes are sufficiently broad that there might be some level
of competence to undertake the programs. If that were true, program scope would be the
main driver of funding and not the other way around. These concerns will be addressed
in the empirical sections, particularly in the case illustrations.
The next section describes the patterns of funding, across donors as well as recipients.
10
2.1
Patterns of External Funding
The most comprehensive source of data on funding of organizations comes from AidData,
which relies on self-reporting from 71 donors as to their projects over time. However,
those reports vary in terms of their quality and the consistency of their observations.
Additionally, many of the projects span multiple years, so the exact time stamp on them
is difficult to assess. The earliest observation is from 1955, though the majority of the
project activity began in the mid-1980s and picked up in the 2000s. These data are far
from exhaustive, but they are the most complete that are available.11 Nonetheless, they
serve as a first cut for establishing patterns of association between aid and agreement
effectiveness. Although the theories above could apply to many types of international
organizations, the empirics here focus on aid to regional economic organizations.
The big donors — the EU (as well as EU countries), the US, and Japan — have
differing foreign policy objectives, and their funding patterns reflect those objectives. The
EU in particular has a tendency to both grant funding to organizations in its members’
former colonies, and it also tends to encourage the structure of regional institutions that
look similar to its own (CARICOM and the Andean Community are particular examples
of this) (Jetschke and Lenz, 2013; Boerzel and Risse, 2009a; Lombaerde and Schulz,
2009). For its part, the US gives little infrastructural support and leans toward funding
of specific programs, many of which have nothing to do with trade promotion per se but
instead concentrate on development and security. By contrast, Japan invested heavily in
ASEAN so that it would secure a vertical integration network for its own foreign direct
investment (Baldwin, 2007; Manger, 2009), although its investments have both declined
in volume and shifted in scope, addressing terrorism, piracy, and other transnational
issues.(Hattori, 2007) Nonetheless, Japan still provides around 60% of project financing
to ASEAN (Kwon 2003), although it does not fund other parts of the world. China is
also beginning to fund regional economic organizations as well; in 2011 it contributed
11
Other data-collection options would be gathering project and funding data from every recipient, and
the organizations themselves keep extremely poor records.
11
$200 million to build a new headquarters for the African Union.12
Table 1 shows a breakdown of projects and other types of support in the AidData
system that are funded by donors and carried out by other IGOs.
TABLE 1 ABOUT HERE
Indicative of the imprecision of the data categories, the largest category is for uncategorized projects. We see, however, that most of the categorized projects have to do with
health, social or peacekeeping initiatives. This database reports five categories of funding
that directly relate to trade,13 totalling 48 projects at around $46 million — around $20
million less than program initiatives regarding HIV/AIDS that are channeled through
these economic agreements. This indicates that many agreements might be taking on
competencies that strayed far from their initial intent.
Table 2 shows a breakdown of organizations in the AidData system that are listed as
having received funding, by the amount over the years as well as the number of projects.
TABLE 2 ABOUT HERE
It is worth noting that some REOs receive no outside funding per se. For example, the
three members of NAFTA each cover the costs of day-to-day participation separately, with
no central secretariat but rather small sections in the respective trade ministry of each
country. Of those that do, however, the Organization of American States and the Andean
Community are among the organizations that has received the most funding (around $4
million each). The Andean Community is particularly worth noting because its high levels
of institutionalization and its dispute-settlement mechanism have caught the attention
of scholars (Alter, Helfer and Guerzovich, 2009). In Africa, ECOWAS and the East
African Community receive the majority of funding relative to other organizations in the
region. Of course, the sheer fact of its receiving funding does not on its face indicate the
effectiveness or ineffectiveness of the agreement; it could be the case that donors fund the
12
“African Union Faces Multiple Crises as Dlamini-Zuma Takes Over,” allAFrica.com, 20 July 2012
Multilateral trade negotiations; Trade facilitation; Regional trade agreements (rtas); Trade policy
and admin. management; Trade education/training
13
12
best or most effective organizations.
To examine preliminarily the relationships between funding and agreement design and
effectiveness, I use data from Haftel (2012), who codes regional economic organizations
in terms of both the design of their institutions as well as the implementation of that
design. He codes agreements in terms of the broadness of their scope and the depth of
their institutional commitments, on a scale of 1 to 23 for scope and 1 to 28 for institutionalization, with higher values indicating stronger de jure commitments. The mean values
of designed scope and institutionalization across agreements are 13 and 16, respectively,
with standard deviations of around 5 points for both. Haftel’s data are only coded in
five-year increments, and thus the exact moments of organizational change are difficult
to pinpoint; furthermore, Haftel’s data only tracks treaty revision, whereas many of the
expansions in scope to include new issue areas take place without a formal renegotiation;
thus, the changes in scope are actually more numerous than they appear in these data.14
However, as a preliminary look at the overall patterns among aid, design, and effectiveness, the figures below show the relationship between designed agreement variation and
external funding (logged to normalize the distribution and to ease in visualization).15
FIGURES 1, 2 AND 3 ABOUT HERE
As expected, and in preliminary support of Hypotheses One and Two, we see that
higher levels of outside funding tend to be associated with higher designed
levels of
institutionalization. As evidenced in Figure 1, except for the Indian Ocean Council
and the Bangkok Agreement (the latter of which has very little formal structure but
is heavily funded by China), external funding tracks higher levels of institutionalization
quite strongly. External funding also corresponds for the most part with changes in scope
as well as changes in institutionalization, as shown in Figures 2 and 3 — although, as
14
Data are currently being gathered that code in a more detailed manner initiatives to expand the scope
or institutionalization of organizations and the member-state ratifications of those amendments, as well
as on the number of meetings that mention or include donors, as a way of establishing the intentionality
behind these changes in scope.
15
For ease of visualization, the unit of analysis is at the REO level.
13
mentioned, Haftel’s dataset underreports the changes in scope that can arise as a function
of adding new issue areas to support externally funded projects. And of course, these
relationships do not indicate causality, merely association.
We would additionally want to know whether lending was associated with not only
changes in design, but also levels of implementation. Haftel codes implemented design
and scope for each agreement, and the scores for implementation are systematically lower
than those for design, indicating an “implementation gap” (Gray, 2014) across the majority of agreements. Average levels for implemented scope and institutionalization are 7
and 10 respectively, with standard deviations of around 5. Most agreements’ implementation levels score five points below their design values. Hypothesis Three indicated that
initiatives that stemmed largely from donor priorities and not from the needs of member
states would be less likely to be successfully implemented. Again, Haftel’s metrics cannot show the intentions behind a change in institutional design, but we can still gather
associations between those changes and levels of external funding.
FIGURES 4 AND 5 ABOUT HERE
A handful of organizations in the bottom right quadrant of the graph — including
ASEAN, the Southeast Asian Association for Regional Cooperation, and the Bangkok
Agreement — receive high amounts of external funding and maintain a good record of
implementation. But excluding these observations, consistent with Hypothesis Three,
we see that many organizations receive high levels of donor financing despite having a
significant gap between their stated goals and the implementation of those objectives. The
section below explores these dynamics in greater detail, positing that when organizations
undertake scope and institutionalization features at the urging of donors, they are more
likely to be infrequently implemented.
14
3
Two Examples of Mandate Expansions, With and
Without Donors
As mentioned previously, the above empirics do not decisively establish the direction of
causality in the relationship between donor funding and agreement scope and institutionalization. The cases below, however, detail the process through which two different
expansions of scope and institutionalization took place. The case of SADC illustrates
an example of an organization that was itself designed in part to attract and coordinate
development aid, but when one donor initiative of institutionalization directly conflicted
with member-state interest, it was actively dismantled. By contrast, the case of ECOWAS
— an organization that also receives a significant amount of donor aid — initially broadened its scope to undertake peace-keeping initiatives that were in line with member-state
interests. Those initiatives have subsequently been funded by external actors, but their
original intent sprung from member-state needs and not program objectives. This indicates that implementation of organizational goals might interact with the original suitability of the goal in the first place, along with external support when internal funding is
lacking.
3.1
The SADC Tribunal: Added by Donors, Overturned by
Members
The South African Development Community was originally put into place in part to
coordinate aid and to attract additional development funding (Mandaza, Tostensen and
Maphanyane, 1994), as well as to establish economic ties that excluded then-apartheid
South Africa. But throughout that organization’s existence, it has relied heavily on
donor financing.16 In SADC’s 2011 budget, for example, only $31 million was slated from
member states; the remaining $52 million came from external donors
16
17
. Furthermore,
SADC Executive Secretary, ‘Talking Notes for the Post-Council of Ministers Diplomats Briefing,’
February 2006
17
“Regional Integration Key - SADC Leaders,” The Herald (Harare), August 18, 2011
15
that official figure for member contributions fell far short of the realized totals: only
eight of the organization’s 14 members actually paid their contributions, to a total sum
of $5 million.18 Crucially for the illustration below, however, Zimbabwe is one of those
countries that has over the years consistently paid its $1.8 million annual member dues,
even despite several years of economic hardship and international sanctions.
SADC undertook several institutional reforms over the years, particularly encouraged
by the EU, which was hoping to develop institutions in its former colonies that not only
resembled the EU in structure, but also that would enable it to more easily conduct
negotiations for its Economic Partnership Agreements, the proposed successors to the
expiring colonial preference that had been granted under the GATT/WTO (Lenz, 2012).
According to a 2006 report by the Botswana Institute for Development Policy Analysis,
“Foreign donors remain a crucial source of funding for SADC and its operations ... External development finance and foreign donor agencies have played a critical role in the
evolution of SADC,” with the most prominent donors being the European Union, the
Nordic countries, Finland, the UK, Germany and Switzerland (Tjonneland, 2006).
Among those changes was the establishment of a tribunal, which was put into place
in 2005 thanks to funding from the Commission. The Tribunal was intended for memberstate disputes, but none was ever brought to the court. Individuals, however, could bring
cases to the tribunal, and in 2007 the court’s second-ever ruling was cast in favor of a white
farmer, in a case brought against the Zimbabwean government.19 After the land reform
in Zimbabwe that nationalized property owned primarily by whites, the court ruled that
the Zimbabwean government had discriminated against the plaintiff on the basis of race,
as well as inadequately compensating for the land and denying proper access to domestic
courts. The court further declared that the government’s actions had infringed on the
rule of law as well as of human rights (Hulse, 2012). After this ruling, 78 additional white
farmers brought cases of their own to the court on the same grounds.
Zimbabwe immediately contested the initial ruling and declared it was not bound by
18
19
Ibid.
“Zimbabwe: White Farmers Appeal to SADC,” Zimbabwe Independent October 12, 2007
16
the court’s jurisdiction, since it had not ratified the treaty establishing the tribunal.20
Meanwhile, the court continued to hear the additional cases, and after making similar
rulings in three similar ones, SADC halted the hearings while an independent review of
the legality of the court was conducted — a review that was itself funded by an external
actor, Germany.21 After the report found that the Tribunal’s establishment was in keeping
with legal principles, SADC suspended the tribunal — under pressure from Zimbabwe
and with implicit consent from South Africa, which was not eager to have its own humanrights record open for investigation.22 Other heads of state agreed; Tanzanian President
Jakaya Kikwete stated at a SADC summit discussing the tribunal, “We have created a
monster that will devour us all,” (quoted in Christie 2011).
External funding was directly implicated in this discussions. “The European Union
and other donors (funded) the SADC Tribunal. This is why (the SADC) Secretariat
was eager to make the Tribunal stand. It was all to please someone,” Zimbabwe’s Justice
Minister Patrick Chinamasa was quoted as saying. “In Swapokmund [Namibia, in a SADC
meeting May 2011] we all agreed with the position but suddenly the (SADC) Executive
Secretary said, ‘what will the European Union say?’ ... This has been the problem as in
all meetings we have had on the SADC Tribunal: donors would be following and being
in the corridors asking what we would have deliberated on.”
23
The five judges were also
widely disparaged as being coopted by funders, with one article charging that they had
“found succour and funding from Germany.”24 .
Although some appealed for the revival of the court — and the EU halted its funding
of the tribunal until the body was reinstated according to its original tenents25 —- the
form of tribunal that many proscribed seemed not in keeping with international law. One
paper called on any court to be “people-friendly and sealing any loopholes so that a new
20
“Southern Africa: Nation Wants SADC Tribunal Rulings Nullified,” All Africa, 19 May 2011.
The review was conducted by WTI Advisors Ltd, an affiliate of the World Trade Institute, through
a German Technical Cooperation Programme towards Governance Reform Effectiveness of SADC Structures.
22
“Zuma handed ‘poisoned chalice’ by EU on Zimbabwe,” Business Day, 23 July 2013
23
“SADC should put its money where its mouth is,” The Southern Times, 31 August 2012
24
“Regional Integration Key - SADC Leaders,” The Herald (Harare) August 18, 2011
25
“Help revive SADC court, EU told,” The Witness, 28 Sep 2012
21
17
tribunal is not again amenable to infiltration and abuse by imperialists. SADC ... not in
[the] future hold out a begging bowl to proverbial ‘sleeping dogs,’ but dig deep into the
regional organisation’s own coffers, however meagre these might be, as seed money for
any regional institution the organization might wish to set up in future. At least none
but themselves will claim ownership of that body and use it to fulfill the aspirations of
the people of the region.”26
This example illustrates the tension between the efficacy of donor projects and their
legitimacy in the eyes of member states, particularly when those initiatives run counter
to member-state interests. Zimbabwe — which continued to secure its influence in SADC
by keeping abreast of its annual dues — particularly objected to the tribunal, but it was
clearly not in the interest of any of the other member states to override those objections,
since they would have also been potentially compromised by such a court’s future rulings.
Thus, this example is indicative of the origin of an institutional reform that was conceived
as well as funded by donors — and this expansion subsequently proved illegitimate in the
eyes of member states. The SADC case was rare in that it was actually disbanded, but
other EU institutional initiatives have met quieter but similar fates; as mentioned above,
the EU-funded Mercosur parliament went from meeting 10 times the year of its founding
to not at all in the past two years. This indicates that institutional initiatives that are
conceived and funded solely by donors will have little chance of effectiveness.
3.2
ECOWAS’s Peacekeeping Expansions of Scope: Initiated
by Members
This case illustrates the start of an initiative that expanded the initial scope of an economic agreement — an expansion that was subsequently supported by external funding.
ECOWAS continues to receive a large portion of its budget from donors,27 largely for
peacekeeping, election monitoring and human rights interventions (Levitt, 1998; Donno,
26
27
“Zimbabwe: Solidarity Call As SADC Kangaroo is Killed,” Africa News. May 29, 2011
“ECOWAS Raises Funds for Guinea Bissau Elections,” BBC Monitoring, November 24, 2012
18
2010). ECOWAS has revised its treaty significantly since its founding in 1975 and now
has a broad scope of competencies and a high amount of institutionalization (in Haftel’s dataset, it scores among the highest in terms of design on both fronts). But those
programs have consistently been funded by donors, due to ECOWAS’s “unendingly dire
financial circumstances” (Bamfo, 2013), and UN peacekeeping forces tend to supplement
the regional ones.28
ECOWAS was initially established as a trade agreement among 15 western African
states, but due to factor similarities, it did not on its own produce much intraregional
trade (Hanink and Owusu, 1998). But what started out as a purely economic agreement
has turned into a far broader endeavor, with regional security cooperation as its primary
function. It also includes a court designed after — and funded by — the European Court
of Justice (Alter, Helfer and McAllister, 2013; Voeten, 2010), established in 1991 but
enacted in 1996, and subsequently expanded in 2004.29 Since its inception, ECOWAS
has expanded its scope three times, first in 1993 to include provisions for cooperation on
a broader set of issue areas, including cultural and social affairs, women, and the press
(Robert, 2004) along with security, as will be discussed below. In 2007 its secretariat
changed into a Commission, in the style of the EU, and added six more competencies
— Human Resources Management; Education, Science and Culture; Energy and Mines;
Telecommunications and IT; Industry and Private Sector Promotion; and Finance and
Administration — as well as sports and an annual beauty pageant.30
On its surface this might appear to be overextension of organizational competencies,
and each provision would have to be examined in turn to establish its effectiveness as
well as its ideological origin. But this section investigates the origin of ECOWAS’s first
expansion into regional peacekeeping, and argues that a prominent state in the group was
the one responsible for that initial mandate enlargement. Although donors subsequently
stepped in to fill the financing gaps, the initial expansion were conceived of and funded
28
“EU, Sweden provide N17.9bn grant to ECOWAS, BBC Monitoring, April 9,2013
“Council of Ministers expand powers of ECOWAS Court,” PANA, 20 July 2004
30
“I Am Desperate to Touch Lives - MBGN Universe,” Leadership (Abuja), August 16, 2013; “A West
African beauty pageant: Miss ECOWAS 2010,” The Economist, 28 Nov 2010
29
19
by the member states themselves, which had an impact on their effectiveness and their
legitimacy.
The initial incident that prompted the development of peacekeeping in the region was
the civil war in Liberia, following a coup in 1980 of Samuel Doe’s military regime and a
subsequent incursion in 1989 from Charles Taylor’s National Patriotic Front of Liberia
(NPFL). At the time, ECOWAS had no mandate at all for peacekeeping, aside from a
1978 Protocol for Nonagression.31 In fact, ECOWAS members Burkina Faso and the
Ivory Coast had provided support for Taylor, including military training for his forces.
But the largest member of ECOWAS, Nigeria, was strongly in favor of intervention.
Nigeria’s GDP is larger than that of all the other ECOWAS countries combined, and it
contributes the majority of the annual ECOWAS budget (31%, with the Ivory Coast as
the second-highest contributor at 12.6%).32 Nigeria’s then-President Ibrahim Babangida
had a personal relationship with Doe, who had even named a road and a school in Liberia
after him. Nigeria had also wanted to establish a role as a regional power in ECOWAS;
additionally, Babangida decided that unilateral intervention would be politically unacceptable both domestically and abroad, and that “the legitimizing umbrella of ECOWAS”
would be a more palatable way to intervene (Ofuatey-Kodjoe, 1994).
In August 1990, ECOWAS dispatched a 3,000-man Military Observer Group (ECOMOG) to Liberia. The intervention was by most accounts underfunded, with Nigeria
putting forward the majority of the soldiers as well as financing, at $12 billion. But the
intervention did prevent Taylor from seizing Monrovia as well as settling the war through
negotiations and elections. One report noted that member-state soldiers from Nigeria
were the most active participants in the early stages of peacekeeping, including supplying
the worse-funded troops, like those from Sierra Leone, with financing and supplies.33
Based on this initial success, ECOWAS’s peacekeeping efforts were subsequently sup31
“ECOWAS and the Subregional Peacekeeping in Liberia,” 28 Sept 1995
“ECOWAS Imperative for Nigeria, Nigeria Development and Finance Forum,” 12 August 1995
33
“The Nigerians were the hard men of the Ecomog force. On checkpoint duty they were considered
rude and arrogant, but when there was fighting to be done they were usually the ones who did it, even
if they were not too fussy about the finer points of their peace-keeping mandate.” Quoted from “The
perils of Liberian peacekeeping,” BBC 4 August, 2003.
32
20
ported almost entirely by external funding, with the UN and the EU contributing the
majority. The external financing is somewhat controversial in the region.34 But it proved
to be the cornerstone for further expansion of ECOWAS’s mandate, and peacekeeping
remains one of the more successful of the initiatives of all the African regional integration
agreements (Soderbaum, 2005). This expansion of scope was initially put forward and
financed by Nigeria, which might have made a difference in terms of the legitimacy of the
expansion for the member states as well as for subsequent implementation.
This example offers some insight as to the mechanisms behind agreement scope and
implementation. When member-states initiate the changes, they might be more likely to
be successful, since they arise directly from the needs of the countries in an organization.
However, the duration of this effect is unclear, since donor funding may subsequently
shift the scope expansions in a way that is not optimal for member states.
4
Conclusion and Continuing Research
The role of external actors in shaping the institutional structure of international organizations is an area that has been largely underexplored. Yet outside funding from the
EU, the United States, the Scandinavian donors, and Japan — and, increasingly, China
— has been a key source of financing, and possibly influence, in many of the IGOs across
the world. These actors often provide not only funding but also inspiration — direct and
indirect — for the structure of the institutions, the language of treaties, and the shape
of program activities. External funding is often specifically linked to the development of
certain competencies or the emphasis of a certain type of institutional structure. Furthermore, when external funding is renewed without an emphasis on the performance
of a given agreement, it may change the incentives of member states in terms of the
administrative resources that they themselves spend on those organizations.
34
One report writes“Another solution to the problem of meagre resources is to raise funds from outside
the region. ... There is always the danger that the entire operation could be controlled by the outside
powers that are paying for it. ... However, there does not seem to have been any choice.” Ofuatey-Kodjoe
(1994).
21
This phenomenon has been largely left out of most accounts of comparative institutional design and effectiveness. This paper attempts to fill this gap by making two key
arguments. First, I address variation in the supply side of outside funding to REOs.
I argue that outside funders of regional organizations are driven primarily for internal
political reasons that may not center on the effectiveness of the organizations themselves.
We can expect these different motivations to lead to differing performance of the REOs
under study.
Overlooking the role of these forces on the character and composition of regional
agreements is detrimental to our understanding of how those agreements work. We risk
misattributing, for example, a thick institutional design to a show of will and commitment on the part of member states, when in fact that design may be simply a function
of some EU directive, where funding is conditional on the formation of a certain type
of (EU-like) institution. This omission also overlooks the role of power politics in the
shape of international cooperation today. Many describe the predominance of regional
organizations as evidence of a globalized, multipolar, post-hegemonic world, in which
myriad and discrete spheres of influence prevail over one central core. But if these organizations are bankrolled and shaped by a few dominant actors, the world does not look
so different from the classic makeup of traditional power politics. Thus, any evaluation
of REO performance Gutner and Thompson (2010) should take external actors in REOs
into account.
This has implications for the literature on international cooperation and institutional
design more generally. Many tout regional organizations as potentially the more effective
forms of international organization in a variety of issue areas, including development banks
(Desai and Vreeland, 2011), democratization (Pevehouse, 2002; Donno, 2010), and peacekeeping (Barnett, N.d.). Investigating the motivation for these organizations’ changes in
design, and acknowledging the role of external financing in those changes, will complicate
our expectations of the effectiveness of those agreements.
Donors have different funding priorities, and we can imagine that variation in these
22
funding strategies might lead to variance in the structure efficiencies in regional economic
organizations. In the case of blanket infrastructural funding, such as what the EU provides, member states of a given REO would have no incentive to make the agreement
run effectively. If the EU, for its own strategic or ideational reasons (including the promotion of its own model beyond its borders), will fund agreements regardless of how well
they work in terms of trade-generation, the agreements will tend to be mere bureaucratic
structures. Member states would have no incentive to extend resources in making these
agreements work, since they will be funded unconditionally. Similarly, in the case of pure
programmatic funding, such as what the EU provides, we might expect that the organizations will become less and less focused on trade promotion and will increasingly stray
from their initial missions.
It is also worth looking at how variance in funding patterns by programs corresponds to
variance in both the effectiveness of the agreements but also in the influence of external
actors in those agreements. An organization for whom the bulk of their funding goes
into program activities (such as COMESA and Mercosur) might work differently than
organizations that receive their main support in the form of infrastructural funding to
the secretariats (such as the Andean Community and CARICOM). In the case of blanket
infrastructural funding, such as what the EU provides, we can imagine that member states
of a given REO would have no incentive to make the agreement run effectively. If the
EU, for its own strategic or ideational reasons (including the promotion of its own model
beyond its borders), will fund agreements regardless of how well they work in terms of
trade-generation, the agreements may tend to be mere bureaucratic structures with little
chance of effectiveness.
23
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30
Table 1: External Funding of REOs, by Purpose
Purpose
Commitment Amount (USD)
No. of Projects
6,600,000,000
464
Public sector policy and adm. management
13,300,000
39
Civilian peace
28,300,000
26
Multisector aid
8,845,084
26
Democratic participation and civil society
11,100,000
17
Std control including hiv/aids
74,000,000
17
Regional trade agreements (rtas)
21,200,000
14
Education policy, admin. management
9,246,333
13
Environmental policy and admin. mgmt
16,800,000
11
Promotion of development awareness
2,794,810
10
Trade facilitation
7,854,822
10
729,073
9
Business support services, institutions
3,095,346
9
Human rights
5,051,827
9
Trade policy and admin. management
6,569,104
9
Biodiversity
5,719,996
8
Health policy, admin. management
3,017,843
8
Public finance management
1,219,895
8
813,310
8
Agricultural policy
2,944,893
7
Multilateral trade negotiations
9,360,158
7
757,297
6
Security system management and reform
4,211,616
6
SME development
4,376,608
6
Other
Administrative costs
Trade education/training
Sectors not specified
31
Biosphere protection
6,673,658
5
176,716
5
1,301,555
5
408,696
4
Elections
2,981,280
4
Employment policy and admin. mgmt.
9,779,987
4
Energy policy and admin. management
11,100,000
4
Environmental research
3,175,285
4
Narcotics control
2,541,967
4
Population policy and admin. mgmt
754,812
4
Water resources policy/admin. mgmt
8,232,582
4
Emergency/distress relief
419,300
3
Information and communication technology
353,629
3
Land mine clearance
1,857,289
3
Water transport
3,805,336
3
Agricultural education/training
2,937,731
2
Anticorruption
1,132,687
2
Basic life skills for youth, adults
2,142,465
2
Culture and recreation
1,319,285
2
Educ./trng in transport, storage
506,893
2
Environmental education/training
191,973
2
Food crop production
69,700,000
2
Infectious disease control
1,033,562
2
433,554
2
1,983,635
2
Multisector education/training
23,302
2
Research/scientific institutions
97,829
2
4,316,948
2
Early childhood education
Higher education
Disaster prevention and preparedness
Legal and judicial development
Livestock/veterinary services
Site preservation
32
Social/welfare services
3,202,508
2
Support to international ngos
179,573
2
Urban development and management
714,899
2
Women’s equality organisations and institutions
306,364
2
Agricultural co
445,146
1
1,076,460
1
1,886
1
Decentralisation and support to subnational govt.
278,513
1
Education facilities and training
41,777
1
Emergency food aid
881,510
1
1,179,214
1
4,874
1
569,250
1
8,355,383
1
Forestry research
716,743
1
General budget support
390,625
1
Industrial crops/export crops
373,856
1
Informal/semiformal financial intermediation
100,000
1
Legislatures and political parties
974,795
1
Malaria control
696,282
1
Medical research
267,257
1
Medical services
33,830
1
Mineral/mining policy, admin. mgmt
114,201
1
Monetary institutions
2,026,764
1
Power generation/renewable sources
9,747,946
1
Primary education
92,837
1
Reintegration and salw control
417,769
1
Reproductive health care
139,256
1
Agricultural development
Agricultural water resources
Flood prevention/control
Food security programmes/food aid
Forestry development
Forestry policy, admin. management
33
Rural development
4,151,675
1
Solar energy
946,943
1
Teacher training
389,918
1
Vocational training
13,926
1
Water supply, sanit.
1,000,000
1
Table 2: External Funding of REOs, by Donor
Organization
Commitment amount
No. of Projects
OAS
390,000,000
86
ANCOM
382,000,000
35
IOC
340,000,000
7
CEMAC
217,000,000
7
ECOWAS
205,000,000
74
EAC
199,000,000
41
BA
119,000,000
24
GCC
100,000,000
17
WAEMU
96,400,000
22
MERCOSUR
70,000,000
21
SADC
67,600,000
58
CIS
60,000,000
23
CARICOM
56,000,000
72
SAARC
35,000,000
6
EURASEC
26,000,000
11
CACM
25,000,000
7
PIF
20,400,000
105
IGAD
15,000,000
12
APEC
14,700,000
19
34
OECS
14,200,000
43
ALBA
11,000,000
1
SICA
8,355,383
18
COMESA
5,660,000
7
MRU
5,000,000
3
ASEAN
4,177,691
74
ECCAS
2,500,000
4
SELA
977,000
5
CEPGL
660,000
1
CAFTA
655,380
4
SCO
500,000
1
CEFTA
215,023
2
LAIA
71,000
1
AMU
34,864
2
35
Figure 1: Institutionalization Associated with Funding
Figure 2: Changes in Institutionalization Associated with Funding
Figure 3: Changes in Scope Associated with Funding
36
Figure 4: Funding Does Not Improve Implementation of Institutionalization
Figure 5: Funding Does Not Improve Implementation of Scope
37