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by Chad DeWaard B.A., University of Northern Iowa, 1991 M.A., University of Northern Iowa, 1994
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Doctor of Philosophy
Department of Political Science in the Graduate School Southern Illinois University Carbondale May 2006
UMI Number: 3215020
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OFFICIAL DEVELOPMENT ASSISTANCE UNMASKED: THEORETICAL MODELS OF INTERNATIONAL RELATIONS AND THE DETERMINANTS OF AMERICAN, GERMAN, AND SWEDISH AID
By Chad DeWaard
A Dissertation Submitted in Partial Fulfillment of the Requirements for the Degree of Doctor of Philosophy in the field of Political Science
Approved by: William Turley, Chair Stephen Shulman James Allen Jason Barabas Edward Schatz
Graduate School Southern Illinois University Carbondale June 23, 2005
AN ABSTRACT OF THE DISSERTATION OF
Chad DeWaard, for the Doctor of Philosophy degree in Political Science, presented on June 23, 2005, at Southern Illinois University Carbondale. TITLE: Official Development Assistance Unmasked: Theoretical Models of International Relations and the Determinants of American, German and Swedish Aid MAJOR PROFESSOR: Dr. William Turley The extensive and outwardly comprehensive foreign aid literature implies that few stones are left unturned. Yet there is an on-going debate among politicians, aid administrators, and the general public who struggle to define the proper role of bilateral Official Development Assistance (ODA) as an instrument of Western foreign policy in an ever-changing post-Cold War international environment. Much of the difficulty results from two persistent shortcomings in the literature: (1) incomplete scholarly appreciation for the motivating factors that have driven the establishment and perpetuation of Western aid programs and (2) the failure, by and large, among scholars to take greater advantage of theoretical models of international relations (IR) to identify the state attributes that determine the distribution of Western ODA. This cross-national, exploratory study seeks to identify the state attributes that define the “attractive” or “appropriate” aid recipient during and after the Cold War. Hypotheses generated from assumptions associated with leading IR schools of thought— realism, neorealism, idealism, neoliberalism, and neo-Marxism—are tested on the
distribution of American, German, and Swedish ODA for the years 1980, 1985, 1995, and 2000. The passing of the Cold War offers IR scholars an exceptional opportunity to evaluate the explanatory power of their models in a fluid international environment by applying them to an important, if controversial, component of Western foreign policy— the distribution of ODA. Results from probit and regression analyses indicate that the end of the Cold War had a relatively minor impact on the distribution of ODA. Results also indicate that the aid patterns of all three donors more consistently reflect neoliberal and idealist assumptions than either realist, neorealist, or neo-Marxist assumptions. Further, the findings suggest that bureaucratic politics and social constructivist models may add additional clarity to the ODA picture.
I gratefully acknowledge the members of my dissertation committee—James Allen, Jason Barabas, Ed Schatz, Stephen Shulman, and William Turley. I was fortunate to have had access to the wealth of knowledge, character, and experience these gentlemen possess. It is my hope that the pages that follow do justice to their collective expertise, constructive comments, professional attitude, encouragement, and patience. More specifically, I am indebted to my principal advisor, Dr. Turley, whose guidance throughout my entire graduate career is genuinely appreciated. In addition to his countless valuable insights regarding foreign aid, methodology, and theoretical application, Dr. Turley provided both the structure and the latitude necessary to bring this project to fruition. He is a true professional. I thank Professors Barabas and Schatz for their willingness to enthusiastically undertake this project without the benefit of prior exposure to my graduate coursework. I extend special thanks to Dr. Barabas for his expertise and collegial attitude regarding a number of methodological issues encountered along the way. His deep knowledge of quantitative methods is surpassed only by his friendly, approachable demeanor. From a theoretical standpoint, I owe Dr. Schatz much praise. He, in an assuming manner, alerted me to a number of specific nuances concerning the current state of international relations theory and its potential application to the extension of foreign aid. He also played an important role by setting realistic standards of doctoral scholarship.
This work benefited immensely from Dr. Shulman’s involvement. While a diligent taskmaster, he was also a strong advocate. Always seeking to refine my presentation, arguments, and conclusions, Dr. Shulman is responsible for several important revisions that significantly improved the overall product. I extend my deepest appreciation and respect to Dr. Allen, who contributed substantially to the historical dimension of the dissertation. Unwilling to separate context from “causation,” Dr. Allen is the consummate social scientist. If I have any regrets upon finishing this aspect of the dissertation, I regret that our collaboration comes to an end. Others have graciously contributed to this dissertation. I am grateful to Joe Wilson and Chris Budzisz for their pearls of wisdom, moral support, and friendship. I owe special thanks to Valerie Losen for her editorial and technical support. Finally, in a project such as this, errors are virtually unavoidable and are the sole responsibility of the author. While I have committed words to paper, this remains a work in progress on several levels and it is my hope that any errors are minimal and do not inconvenience the reader.
To my parents, Cheri and Marv, and to my sister Alisa, whose unconditional love and support is a source of wonder and strength and affirm the truly important things in life; and to Erin, Noah, and Steve, whose steadfast encouragement and timely wisdom is sincerely appreciated.
TABLE OF CONTENTS ABSTRACT………………………….………………………………….................. ACKNOWLEDGMENTS…………………………………………………………. DEDICATION………………….………………………………………………….. LIST OF TABLES…………….…………………………………………………… LIST OF FIGURES……………….……………………………………………….. Chapter 1. INTRODUCTION…………………………………………………………. PART I: SETTING THE STAGE 2. THE AID LITERATURE: ROOM FOR IMPROVEMENT………………. 9 i iii v viii x
3. THE HISTORICAL ANTECEDENTS AND EVOLUTION OF WESTERN AID……………………………………………………….. 4. NATIONAL INTEREST AND WESTERN POSTWAR DEVELOPMENT ASSISTANCE…………………………………………. PART II: RESEARCH STRATEGY 5. VARIABLES AND HYPOTHESES………………………………………. 6. THEORY AND METHODS………………………………………………. PART III: RESULTS 7. FINDINGS…………………………………………………………………. 8. FINAL THOUGHTS: ALTERNATIVE AVENUES OF COMPARATIVE AID RESEARCH………………………………………………………….. WORKS CITED……………………………………………………………………
LIST OF TABLES Table 1. Decision and Flow of Bilateral ODA Based on IR Theory.…………………... 2. Import Reliance in 1980 for Selected Critical Materials, Expressed as the Percentage of Domestic Consumption*…….……….................................... 3. Annual Production and Reserve Base of Several African Nations as of 1985 for Selected Strategic Materials*…………………………………….. 4. U.S. Army War College Index of the Most Strategic Defense and Industry Related Materials for the U.S…………………………………….. 5. Political Risk (Vulnerability) of Selected Materials to Germany……………... 6. A Sample of the American Decision and Flow of ODA, 1980…...................... Page 120
152 152 193
7. Top Fifteen Recipients of American, German, and Swedish Net ODA in Millions of 1999 USD....………………………………………………... 197-98 8. State Attributes and the Direction of German ODA (Probit Results)…………. 9. State Attributes and the (LN) Volume of German ODA (Regression Results)……………………………………………………….. 10. Mean Predicted Levels of Funding for Allied and Nonallied States………….. 11. Mean Predicted Percentages/Mean Predicted Levels of Funding for States at Low, Lower-Middle, and High Income Categories.…………………….. 12. State Attributes and the Direction of Swedish ODA (Probit Results)………… 13. Mean Predicted Percentages for Military Presence..………………………….. 14. State Attributes and the (LN) Volume of Swedish ODA (Regression Results)……………………………………………………….. 15. Mean Predicted Percentages/Mean Predicted Levels of Funding for States at Low, Lower-Middle, and High Income Categories……………………... 223
229 231 232
16. State Attributes and the Direction of American ODA (Probit Results)……….. 17. Mean Predicted Percentages for Military Presence…………………………… 18. State Attributes and the (LN) Volume of American ODA (Regression Results)……………………………………………………….. 19. Mean Predicted Levels of Funding for High and Low Scores in Recipient Democraticness………………………………………………….. 20. Mean Predicted Percentages/Mean Predicted Levels of Funding for States at Low, Lower-Middle, and High Income Categories……………………... 21. Percentage of American, German, and Swedish ODA Given to Various Types of States……………………………………………………………... 22. Breakdown of the Distribution of ODA from Germany, Sweden, and the U.S. by Variable Headings……………………………………………... 23. Relationships that Significantly Changed between 1985 and 1995…………… 24. Direction of German ODA to States below OECD Threshold of High Income Country……………………………………………………………. 25. Direction of Swedish ODA to States below OECD Threshold of High Income Country………………………………………................................. 26. Direction of American ODA to States below OECD Threshold of High Income Country…………………………………………………………….
LIST OF FIGURES Figure 1. Total Net Bilateral Development Assistance Committee ODA through 2000 in Billions of Current U.S. Dollars (USD)…………………………… 2. Total Net Bilateral and Multilateral ODA from 1960 to 2000 in Billions of Current USD………………………………………………………………... 3. Geographical Distribution of Net German Bilateral ODA in Constant 1999 U.S. Millions……………………………………………………………….. 4. Total Net German Bilateral ODA in Constant 1999 U.S. Millions…………... 5. Geographical Distribution of Net Swedish Bilateral ODA in Constant 1999 U.S. Millions…………………………….…………………………………. 6. Total Net Swedish Bilateral ODA in Constant 1999 U.S. Millions………..… 7. Geographical Distribution of Net American Bilateral ODA in Constant 1999 U.S. Millions……………………………………………………………….. 8. Total Net American Bilateral ODA in Constant 1999 U.S. Millions……..…. Page
The Western aid regime, to the astonishment of some, has survived the Cold War and has recently entered its fifth decade. As Figure 1 illustrates, annual levels in net disbursements of Western bilateral Official Development Assistance (ODA) have grown, for the most part incrementally, from ODA’s inception in 1960 of roughly $4 billion to a historical high of $43.2 billion in 1991 to a more modest level of $36 billion in 2000 (Organization for Economic Cooperation and Development 2002; hereafter OECD). All told, as Nicholas Eberstadt reflects, Western sources have, allowing for inflation, "definitely" provided at least $1.5 trillion and may have actually provided over $2 trillion in net financial flows, both commercial and charitable, to aid-receiving countries from the early 1950s to the mid-1980s (1988, 6). Yet despite the fact that aid volume and the number of participants in the global aid network have increased over the last forty years, aid has suffered countless assaults from various official and nonofficial sources in the industrialized North who have denounced it as an ineffective and wasteful use of public resources. Critics in donor and recipient countries alike have lamented what they perceive as the self-serving motives driving the provision of Western foreign assistance. At one extreme, aid has been characterized as a neo-imperialist Trojan horse and thus assailed as a disingenuous attempt by Western governments to influence recipient countries.
FIGURE 1 TOTAL NET BILATERAL DEVELOPMENT ASSISTANCE COMMITTEE ODA THROUGH 2000 IN BILLIONS OF CURRENT U.S. DOLLARS (USD)
48000 36000 24000 12000 0 1964 1969 1974 1979 Year
Source: OECD, International Development Statistics (Paris: OECD, 2002).
Contrary to the rather favorable attitude toward Western aid that is common among elites in the developing countries, doubts are prevalent within the Western industrialized democracies regarding the utility of foreign assistance. In today's postCold War environment, these doubts have facilitated significant cuts in aid transfers from some donors, most notably from the United States. Meanwhile, other donor governments have been compelled to reexamine their aid programs and to reevaluate the priorities they attach to the provision of foreign aid. Long noted for its comparably strong humanitarian quality, the Swedish aid program, for instance, has increasingly come under pressure to conform to domestic economic interests (Schraeder, Hook, and Taylor 1998). The literature on Western foreign aid is voluminous. That aid is fertile ground for scholarly research is hardly surprising considering the longevity of the Western aid regime, the sheer volume of aid, and the often-controversial and uncertain role aid plays as an instrument of foreign policy. The extensive and outwardly comprehensive nature of
the literature would seem to indicate that few stones are left unturned. Yet important questions remain unanswered. This is reflected in an on-going aid debate among politicians, aid administrators, and the general public who struggle to define the proper role of aid as an instrument of foreign policy in an ever-changing post-Cold War international environment. Some of the difficulty in assigning aid an appropriate place on the foreign policy agendas of the industrialized democracies results from five notable shortcomings in the foreign aid literature at large: (1) the limited empirical, comparative aid research which evaluates the impact of the end of the Cold War on Western aid distribution; (2) the tendency in post-Cold War aid studies to disregard the historical and international context in which formal Western aid programs were founded; (3) the relatively slight scholarly attention given to the motivating factors that account for the establishment and the perpetuation of Western foreign aid, especially from a crossnational perspective; (4) the failure, by and large, of scholars to more fully incorporate theoretical models of international relations (IR) into their analyses of Western bilateral aid distribution; and finally (5) the willingness to accept and perpetuate outdated, sometimes erroneous, perceptions regarding the character of some Western aid programs well into the post-Cold War era. In some respects, the foreign aid literature appears to have come to somewhat of an intellectual standstill. While the literature is replete with normative critiques, comprehensive, comparative empirical research is relatively scarce. Aside from a few exceptional works (e.g., Hook 1995; Schraeder, Hook, and Taylor 1998), existing empirical scholarship has been largely limited to individual case studies (e.g., Meernik, Krueger, and Poe 1998; Poe 1992) or studies focusing on the recipient side of the aid
equation. Also few in number are studies that attempt to bridge the gap between quantitative and qualitative research. This study is intended as a partial and exploratory step toward addressing these deficiencies in the literature. It focuses on one aspect of foreign aid—ODA. Accordingly, unless otherwise indicated, all references to aid are synonymous with ODA. It is not an easy task to make sense of the foreign aid landscape, particularly when it comes to grasping how donors allocate funds among prospective recipients. Many studies of bilateral aid have taken on the challenge and sought to introduce greater clarity to the aid picture, only to be frustrated by the inability to discern patterns in aid distribution—aside from somewhat primitive ones, such as colonial ties and smallcountry bias (Wood 1996). To many observers, Western bilateral aid programs often appear to lack coherence or integrity, and are driven more by knee-jerk reactions to international crises and vocal domestic constituencies, rather than by an underlying logic consistently applied. Expressing some disappointment in this apparent state of affairs, one student of Western bilateral aid was forced to declare that “it is impossible to discern the slightest rhyme or reason to the way in which funds have been distributed among countries” (Uri 1976, 36). This study attempts to introduce some semblance of rhyme and reason to the distribution of Western bilateral development aid by (1) framing the establishment and the perpetuation of national ODA programs and their concomitant embodiment in a Western aid regime in the appropriate historical and international context and by (2) utilizing several IR schools of thought to identify state attributes that are statistically related to the distribution of ODA from three prominent Western donors during and after
the Cold War. In addition, this work seeks to dispel specific Cold War images of American, German, and Swedish bilateral ODA that have outlived their usefulness. In many ways, this study is inspired by and serves as a rejoinder to elements within the literature that associate American bilateral ODA with strategic concerns, German bilateral ODA with commercial interests, and Swedish bilateral ODA with humanitarian principles. This work contends that these associations are overstated and simplistic, Cold War or no. Moreover, to the extent which geopolitical goals informed the conception of a Western aid regime, the study suggests that the Western aid regime has evolved farther from its Cold War origins than scholars have acknowledged, as evidenced by the aid patterns of Germany, Sweden, and the U.S. Finally, because the U.S. is frequently cited as the focal point of the Western aid regime, and because its aid agenda is often associated with geopolitical interests, the realist paradigm is given greater emphasis in identifying the “appropriate” state attributes. Meanwhile, the state attributes drawn from other models of IR thought are more generally grouped.
Organization To review the historical foundation of foreign aid, to better understand the proliferation of Western aid programs, and to account for the distribution of ODA by three prominent donors before and after the Cold War, this study is divided into three parts and eight chapters. Part One sets the historical context of the work by reviewing the evolution of Western foreign aid and the arguments that purport to explain its appeal as an instrument of Western foreign policy. Part Two outlines the methodological aspects of the study, including the hypotheses tested and the quantitative models employed. Part Three includes the results of the quantitative models as well as several alternative
approaches that may further “clarify the aid puzzle” (Schraeder, Hook, and Taylor 1998). The second chapter introduces and frames the subject in its relevant scholarly niche. More specifically, chapter two suggests how this piece seeks to redress some of the more notable shortcomings in the development aid literature. Chapter two also serves to outline the scope and flavor of the study. Finally, the chapter includes discussions regarding development aid and the peace dividend and development aid and foreign policy. The third chapter traces in some detail the historical foundation of Western foreign aid and the international climate in which the Western aid regime was conceived. Its primary purpose is to acknowledge that Western foreign aid, namely ODA, did not appear out-of-thin-air following World War II, but was the culmination of a series of remarkable historical events. A number of precursors were instrumental in the formal establishment of Western aid programs and paved the way for the institutionalization and proliferation of the Western aid regime. Absent this perspective, it is difficult to fully appreciate contemporary aid patterns and the presence of Western aid well into the postCold War era. Chapter four considers why foreign aid, as a foreign policy tool, has become a universal element of foreign policy among all of the Western industrialized democracies. With an eye toward the United States, Germany, and Sweden, the chapter explores the motives or policy interests (based on the literature) that ostensibly drive the extension of American, German, and Swedish ODA. Documentary evidence is further utilized to understand the policy priorities that each donor assigns to its aid program and whether those priorities have changed with the end of the Cold War.
The fifth chapter presents a series of hypotheses based on assumptions generated from leading IR schools of thought. The hypotheses emphasize several state attributes that conceivably act as determinants of the direction and flow of American, German, and Swedish bilateral ODA. The hypotheses are constructed in such a manner as to evaluate the relevance of competing IR perspectives in explaining the distribution of ODA from three prominent donors during and after the Cold War. Chapter six details the quantitative methodology of the study. The methodological limitations of the study are also considered, as well as a number of qualifications to the data-gathering process. It is this chapter that considers what the implications of the expected findings indicate for leading theories of international relations. Overall, the methodological plan undertaken by this study is designed to identify the significant determinants of American, German, and Swedish bilateral ODA before and after the end of the Cold War. The findings are provided in table form and interpreted in chapter seven. Chapter seven also includes discussions regarding two important domestic variables which add breadth to the quantitative findings. Taken together, the statistical results based on the state-attributes hypotheses and the qualitative review of the domestic variables are meant to better explain the distribution of American, German, and Swedish development assistance and account for any post-Cold War shifts in aid distribution. The study concludes (chapter eight) by discussing a number of alternative approaches that may further improve the resolution of the aid picture.
PART I SETTING THE STAGE
CHAPTER 2 THE AID LITERATURE: ROOM FOR IMPROVEMENT
It has become axiomatic in the foreign aid literature to ascribe donor self-interests to Western aid calculations. Few studies, however, have attempted in a systematic manner to empirically examine which of the many possible self-interests act as determinants of bilateral aid. Rarer still are comprehensive, cross-national analyses that empirically evaluate the power of leading theoretical models of IR to account for the direction and flow of Western foreign aid before and after the Cold War (Schraeder, Hook, and Taylor 1998). It is curious that this would be the case for two primary reasons. First, students of IR invariably hold a priori assumptions regarding the interstate behavior of nation-states. Second, the end of Cold War presents scholars with what seems to be a singular opportunity to assess the impact of this profound international event on the power of major theoretical models to explain the direction and flow of Western aid. As to the former, assumptions regarding IR are informed by competing theoretical paradigms, including realism, neorealism, idealism, neoliberalism, and neo-Marxism. Of course, other models of IR are potentially helpful in understanding the distribution of Western development assistance. Social constructivist and bureaucratic-politics models, for instance, offer additional insights into Western aid patterns. Nevertheless, social constructivism is given little attention in this study, primarily because its subjective
precepts are neither firmly established nor universally recognized by its adherents. According to a 1998 article by John Ruggie, “no general theory of the social construction of reality is available to be borrowed from other fields and international relations constructivists have not as yet managed to formulate a full-fledged theory on their own” (856). Constructivists view states as social actors whose behavior is driven by domestic or international norms, rules, identities, and institutions (Ta-hua Mo 2006). Problematic is the constructivist emphasis on the public perceptions of national or international values that guide the formulation of policy—at least in so far as the methodological framework of this study is concerned. Moreover, social constructivism assumes a high level of representative government. Its assumption that public policy accurately reflects (consensual) public attitudes overstates the ability of most governments to effectively translate public values into public policy. Meanwhile, the bureaucratic-politics model (and its derivatives) is likewise not explicitly incorporated into the quantitative analyses. The quantitative methods do, however, implicitly test many of the assumptions associated with this perspective, particularly the notion that aid is on “auto-pilot” and that its objectives are firmly established and largely insulated from the political “winds of change.” Indeed, the findings in the pages that follow suggest that the bureaucraticpolitics model has an important role to play in understanding the distribution of American, German, and Swedish ODA over time. Throughout the Cold War, the realist approach supplied the dominant conceptual lens through which nearly all inter-state relations were viewed. It is surprising that aid scholars would not invest more effort in evaluating a possible "Cold War conditionality" of realist assumptions and whether that conditionality is at play in current Western aid
calculations. According to the realist viewpoint, nation-states exist in a Hobbesian state of nature in which survival is the primary objective of international relations. As such, realists put a premium on security and assume therefore that foreign aid serves the strategic interests of the donor. Realists associate national security (i.e., survival) with relative advantages in military power and opportunistic alliances (high politics); they minimize or dismiss the economic, political, or humanitarian motives driving the provision of aid (low politics). Whereas adherents of the classical realist model emphasize the geostrategic value of aid recipients, neo-realists also recognize the economic dimension of national security. Aid can be used as a tool to enhance the economic capability of the donor, thus increasing its overall security. In this sense, then, neorealist theory considers the economic potential of recipients in determining the distribution of aid. In contrast to realist scholars, those operating within the idealist paradigm and its neo-idealist spin-offs view international relations as a much more cooperative endeavor. They are critical of the realist assumption that interstate behavior is characterized by competition and the relentless pursuit of security, which they see as fueling a selffulfilling prophecy of international conflict. In terms of foreign aid, idealists argue that the provision of assistance is motivated largely by humanitarian concerns. In this context, aid is utilized to promote economic development and to reduce poverty in the Third World. Neoliberalism is a prominent political-economic philosophy which, at its core, contends that free trade and market economics promote economic development and progress, as well as reduce social inequities. Advocates seek to eliminate the economic
inefficiencies that restrict free-market forces and impede international commerce. Consequently, they generally dismiss the notion of positive government involvement in the economy and reject protectionism as impediments to free trade and free-market forces. Proper aid policy, from the neoliberal perspective, is one that encourages developing nations to open their markets to the outside, focus on exports, reduce regulations which hinder the free flow of capital, goods, and services, and privatize staterun corporations (Wikipedia 2004). Although neoliberal thought begins with many of the same assumptions associated with the realist school, supporters (especially the neoliberal institutionalist variant) suggest that realists overstate the potential for international conflict and underestimate the positive role that international institutions play in regulating state behavior, shaping expectations, and facilitating international cooperation (IR Theory Knowledge Base 2004). They also suggest that political and economic interdependence—a byproduct of free trade, global capitalism, international regimes, and some level of global governance—reduces international conflict, or at least deters states from resolving disputes with military force (for greater elaboration of the neoliberal movement, see Kegley 1995; Keohane and Nye 1989). Finally, the neo-Marxist model—which includes classical Marxist, dependency, and world systems theories—emphasizes the primacy of economic interests in the distribution of Western aid. Adherents to neo-Marxist thought regard aid as nothing less than a thinly-veiled, neoimperialist tool utilized by capitalist elites in both the North and the South to strengthen their economic position. Neo-Marxist scholars argue that the highly exploitative nature of Western aid serves to either solidify or broaden the economic gap between the rich and poor countries (Schraeder, Hook, and Taylor 1998).
In the case of foreign aid, these approaches to the study of international relations suggest which of many national interests donors seek to enhance through the extension of development assistance. In the case of the United States, Cold War ODA is routinely portrayed in the literature (especially the case-study literature) as serving the security interests of the U.S. At face value, this would seem to validate realist assumptions. What is lacking in the literature, however, are thorough empirical analyses which examine the degree to which realist assumptions (or assumptions based on the other models) are generalizable to other Western donors and the degree to which those assumptions remain valid in the post-Cold War international system. These are important questions, for in an age in which the role of aid as an instrument of donor foreign policy is in question, scholarly understanding of the determinants of aid is significant. If we understand the motivating factors driving Western aid programs we are not only in a better position to evaluate the past record of Western development assistance, but we also find ourselves in a better position to predict the future of development aid.
Outlining the Case for Further Research “Foreign assistance,” “aid”, “resource transfers,” “development assistance,” “international,” “overseas,” or “official development assistance” (ODA) are used interchangeably throughout this project to denote “gifts and concessional loans of economic resources, such as finance and technology, employed for economic purposes” provided directly to less developed countries by the governments of the economically advanced democracies (Lumsdaine 1993, 33). In this case, “economically advanced democracies” comprise members of the DAC/OECD. Current DAC signatories include Australia and Austria, Belgium, Canada, Denmark, Finland, France, Germany and
Greece, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, the United Kingdom, and the United States. These countries will also be referred to as “DAC” or “OECD” donors. For reasons indicated, only bilateral “gifts and concessional loans of economic resources” are examined. Thus, commercial or near-commercial loans or transactions by multilateral organizations such as the World Bank or the IMF, as well as transfers by private institutions, are given limited consideration. Excluded from analysis are military aid, export credits, and other varieties of assistance not strictly incorporated within DAC bilateral ODA, although occasional reference may be made to such instruments. The reader may recall that this work is a three country-case study (the United States, Germany, and Sweden), and will therefore emphasize those country cases, ignoring to a large extent the efforts of other specific DAC donors. Assistance from the former Soviet bloc and the Organization of the Petroleum Exporting Countries (OPEC) countries receives no attention other than for the sake of periodic contrast. Finally, this is a study designed to document and explain motives driving ODA to the “developing” world and whether those motives have changed with the end of the Cold War. It does not seek to explain Marshall Plan aid to Europe, for example. The role the United States played in establishing a formal Western aid regime and the motivations that purportedly explain the American desire to institute such a regime have been thoroughly documented (Conteh-Morgan 1990; Krueger 1993; Krueger, Michalopoulos, and Ruttan 1989; Lumsdaine 1993). Further, the American foreign aid program has been effectively dissected by a number of observers who have explored the various components of U.S. aid and the national goals that each component ostensibly
promotes (Conteh-Morgan 1990; Guess 1987; Krueger, Michalopoulos, and Ruttan 1989; Raffer and Singer 1996; Zimmerman 1993). Existing cross-national studies, such as those by Bruce Dinwiddy (1973), Kunibert Raffer and H.W. Singer (1996), David Halloran Lumsdaine (1993), Olav Stokke (1989), and Eugene R. Wittkopf (1972), although valuable contributions to comparative aid research in their own right, often fail to systematically account for the types of states that are likely to attract aid from different Western donors. In addition, existing cross-national studies often fail to statistically test the impact of the end of the Cold War on aid distribution and tell us little about the continued salience of competing theoretical models of IR in the post-Cold War era. What is missing from the literature are comprehensive, cross-national longitudinal studies of foreign aid that take into account the impact the end of the Cold War has had on the distribution of foreign aid. Also in short supply, as indicated above, is empirical scholarship that incorporates leading theoretical models of IR in an attempt to identify the primary determinants of the direction and flow of Western bilateral aid. In other words, which of many potential state attributes (respect for human rights, an extensive trade relationship with the donor, for example) are most likely to make a country an attractive aid recipient? Assumptions based on realism, neorealism, idealism, neoliberalism, and neo-Marxism suggest which state attributes act as determinants (or motivating factors) of Western development assistance. What is in need of clarification is the extent to which these models are reflected in the priorities that different national aid programs attach to assistance. Moreover, the extent to which the models accurately define the attractive aid recipient before and after the disintegration of the Soviet Union requires careful examination. Many observers of American aid during the Cold War years have noted the
primacy of the realist approach in determining "appropriate" aid recipients. The tenacity of the realist approach in the post-Cold War era would not only suggest the types of countries that are likely to receive aid, but might also suggest a rather static quality of American ODA. Finally, to the extent that realist thought accurately accounts for the establishment of the Western aid regime, its relevance throughout the regime’s existence—as reflected by American, German, and Swedish aid patterns—indicates the degree to which the regime has evolved. This comparative, empirical study examines the Cold War and post-Cold War bilateral ODA patterns of three prominent Western donors: the United States, (West) Germany (hereafter just Germany, unless otherwise indicated), and Sweden. Germany, Sweden, and the U.S. were chosen as case studies for several important reasons, which are as follows and not listed in any particular order of importance. First, as mentioned, the foreign aid literature is replete with single-case studies. By and large, these countryspecific studies are quite informative and contributed substantially to the foundation of this particular piece, but the findings produced by such works are by nature relatively narrow in scope and are not easily applicable to Western foreign aid in general. By definition, a cross-national survey such as this offers greater scope and thus, at least theoretically, a more accurate perspective of the donor interests which underlie the provision of Western development assistance more generally. One of the many positive byproducts of this comparative approach is a greater sense of how three different donors prioritize their distribution of assistance. To be sure, Germany, Sweden, and the U.S. are similar in a number of important aspects. They are each wealthy, industrialized democracies and share, for the most part, a common cultural heritage. Nevertheless, they
do occupy varying positions in the international hierarchy of military and economic strength, for instance, and must respond to a number of domestic aid constituencies that are uniquely their own. We would intuitively anticipate them to follow different aid agendas. In other words, it would be natural to expect the distribution of American, German, and Swedish aid to reflect this. Indeed, much of the foreign aid literature seems to confirm that donors prioritize their distribution of aid differently. Taken in the aggregate, the foreign aid literature (particularly the case-study literature) has encouraged enduring images of American, German, and Swedish foreign aid that are based ostensibly on the particular national interests that each donor attaches to the provision of its development aid. As a result, each donor has a reputation for targeting states that potentially enhance the donors’ specific foreign policy objectives. Overall, Germany is known for incorporating commercial and geopolitical interests into its aid calculations, while Sweden has the reputation for an altruistic and apolitical approach to the provision of aid. Meanwhile, the American aid program is associated with protecting the security interests of the United States. Admittedly, these characterizations originated in the Cold War era, but they have persisted well into the post-Cold War period. Each of the three donors continues to be saddled with the public perception that aid donors approach ODA with a narrow outlook. Yet characterizing the American, German, or Swedish aid programs as one-dimensional is an oversimplification and I suspect that the extent the three donors differ in prioritizing their aid allocations (i.e., determining the appropriate aid recipients) is often overstated. This seems to be especially true in the case of the Sweden and the United States. For a number of reasons that become more apparent in later discussions, it is difficult to accept the notion that American aid is driven
exclusively by geopolitical concerns, or that Swedish assistance is entirely benevolent. Second, Germany, Sweden, and the U.S. are not typically considered colonial powers in the traditional sense of say Britain or France. Germany’s colonial interests were extinguished with the end of the World Wars, never again to be reignited. The end of Sweden’s colonial aspirations predates that of Germany. Of the three, only the U.S. continues to hold overseas territories, but these territorial possessions do not qualify the U.S. as a traditional colonial power. Moreover, the formal establishment of Western national aid programs is a postwar phenomenon and since Germany, Sweden, and the U.S. were largely free of colonial interests during this time, it does not seem particularly worthwhile to pursue a potential post-colonial relationship in the distribution of their aid. To assume that post-colonial ties are absent from American, German, and Swedish aid calculations allows for the exclusion of an important cultural variable that is typically included in analyses of French or British assistance. Third, a combination of convenience and practicality also figured prominently in the decision to examine the Cold War and post-Cold War aid patterns of Germany, Sweden, and the United States. Research and data collection were facilitated by the substantial scholarly attention each of the three aid programs has received over the years, especially the American program. In addition to the multitude of resources available, access to some of those resources was considerably enhanced by foreign-language skills. Fourth, and finally, while I am reasonably certain that the three selected cases adequately satisfy the theoretical and methodological parameters of the study and also serve its exploratory purposes, I acknowledge that the selection of these cases is somewhat self-serving. Nevertheless, I believe that the case selection is a fairly
representative cross-section of all Western donors. Moreover, I also believe that the hypotheses soon to be discussed are suitably comprehensive in a theoretical sense to meaningfully account for a significant portion of the distribution of American, German, and Swedish aid during and after the Cold War. While I recognize that donors often behave differently in so far as the distribution of aid is concerned, these differences are possibly more peripheral than substantive. That is not to say, however, that donors are essentially interchangeable when it comes to an examination of Western aid patterns; substituting Japan for Sweden, for example, would most likely produce findings that reflect Japan’s particular attitude toward development assistance. It is precisely because Germany, Sweden, and the U.S. are commonly thought to utilize aid for fundamentally different purposes that their aid patterns were chosen for examination. Indeed, much of the foreign aid literature is prone to emphasize how Germany, Sweden, and the U.S. differ in their respective aid agendas. The theoretical and methodological approach undertaken by this study is designed to illuminate the extent the three donors differ in the types of states they target with development aid. The study’s chief aim is to ascertain the state attributes that act as the primary determinants of American, German, and Swedish development assistance. More specifically, this study uses a series of hypotheses generated from major theoretical models of IR to identify the state attributes that determine the direction (recipient) and flow (amount) of development assistance. The hypotheses not only identify potential determinants of ODA, but indicate the relevance of theoretical models in explaining the distribution of ODA as well. In many respects, then, this study attempts to identify which of many potential state attributes make certain countries attractive aid recipients to the
U.S., Germany, and Sweden. An attractive country is indicated by the extension of ODA, of course, and the flow or amount of ODA a country receives. It stands to reason that the more attractive the country, the more ODA it can expect to receive. In sum, this study explores the notion that certain state attributes act as determinants of ODA direction and flow and that these attributes are consistent with assumptions associated with IR theory. Moreover, this study is designed to compare and contrast the value the three donors attach to various state attributes and to illuminate the impact of the Cold War on each of the three national ODA programs. It does so by employing quantitative methods to assess the importance of specific state attributes in determining the Cold War and postCold War distribution of ODA. In addition, by exploring the historical context of the Western aid regime and the types of states that are more likely to receive funding and greater amounts of funding during and after the Cold War, the work reveals how, or if, the Western aid regime has evolved over the years. The end of the Cold War offers scholars the unique opportunity to empirically assess whether the absence of superpower competition in the developing world has altered the determinants of ODA as reflected in the distribution of aid. In addition, this study uses the distribution of ODA as a surrogate measure of the explanatory power of leading theoretical approaches to international relations, namely realism, neorealism, idealism (and its various offshoots), neoliberalism, and neo-Marxism. In doing so, it evaluates the impact of the Cold War on the veracity of the assumptions these models generate and considers the degree to which these paradigmatic assumptions can be generalized to other Western aid programs. The study takes as its temporal domain the years 1980, 1985, 1995, and 2000. In
essence, then, the aid patterns for four years in a twenty-year period are under review. Admittedly, the best test of the hypotheses would be a longitudinal approach that examines the annual distribution of ODA for the 40-plus years of its existence. While such an approach is unquestionably more comprehensive, it is problematic and, moreover, not absolutely necessary. It is problematic because relevant data, such as human rights' records, are not readily available before the 1970s. Moreover, a more comprehensive, longitudinal approach is not absolutely necessary because according to ODA statistics there appears to be little turnover in ODA recipients since the 1960s. This seemingly static quality of ODA recipients implies what might be called a "donor division of labor" and suggests the salience of particular state attributes in determining the direction and flow of American, German, and Swedish aid. That the list of ODA recipients in the 1960s would virtually be the same in the 1990s also suggests—to the chagrin of many aid enthusiasts—that ODA alone is an insufficient instrument of economic development, as relatively few countries have “graduated” from development assistance. A cursory glance at per capita gross domestic product (GDP) among ODA recipients for the years under consideration here suggests less than spectacular levels of economic growth for many recipients. Indeed, after decades of development assistance to the least developed countries (LDCs), the relationship between ODA and development remains ambiguous. Findings produced from statistical studies are regularly contradictory and open to interpretation (Wood 1996). Even the Development Assistance Committee (DAC) reluctantly admitted in 1980 that it had found “no rigorous scientific proof” that ODA thus far has had “an identifiable, assignable, positive and cost-effective impact on Third World development.” That assumes, of course, that economic
development is the primary objective of ODA and that per capita GDP is an appropriate measure of such development. Official pronouncements emanating from donor governments and the DAC of the Organization for Economic Cooperation and Development (OECD) would seemingly make this a reasonable assumption. Moreover, many observers of aid, including Erhard Eppler, would have us believe that such is the case (1972). Yet forty-odd years of ODA have yielded no solid conclusions about the relationship between ODA and development. Perhaps this is because assessing “development” is tricky business, as development is a relative concept and the result of intricate processes involving the interaction of many complex variables. At any rate, there are certain instances where a country "graduates" from ODA or qualifies as a recipient for a time and then is removed from the recipient list. Such cases, including Portugal and South Vietnam in the American case, respectively, are relatively few in number and their possible omission from analysis does not in any way jeopardize the integrity of the study, nor compromise its findings. This examination of the distribution of American, German, and Swedish ODA for the years 1980, 1985, 1995, and 2000 is a methodological compromise between a longitudinal approach and a snapshot approach. This compromise approach creates a greater number of observations over a longer time period than a snapshot approach, thus increasing the study's capacity to record trends or shifts in the distribution of ODA that would be more readily recorded by a longitudinal approach. One supposes, nevertheless, that a persuasive argument could be made in favor of a two-year snapshot. The years 1985 and 1995, as a rather natural example, arguably satisfy the scholarly requirements of the study in at least two important respects. In the first place, the selection of 1985 and
1995 takes into account both the presence and the absence of Cold War considerations that the donors may have included in their respective aid calculations. Secondly, if the same countries routinely receive American, German, and Swedish assistance, then the temporal domain is perhaps of little consequence as the state attributes that donors find appealing in prospective recipients would be the same from year to year. In such a scenario, ODA recipients in 1960 (the first official year of ODA) would theoretically reflect the same foreign policy priorities of the donors as the ODA recipients of the year 2000. While it is tempting to draw a close connection between the recipients of ODA and the state attributes that potentially determine the provision of ODA, one should avoid overstating this relationship. Whereas the list of countries that receive American, German, and Swedish ODA appears to remain fairly static from year to year, the state attributes that recipients exhibit are not necessarily so. Furthermore, the state attributes that the donors find worthy of greater amounts of ODA are likewise not necessarily static, nor are they necessarily universal among the donors. Over time, recipients may experience regime changes, enter into economic or security agreements with donors, or adopt measures to improve human rights' conditions, all of which may make them more or less appealing aid recipients. These changes in recipient attributes, as well as domestic factors in donor nations and significant international events, such as the end of the Cold War, presumably figure into the ODA equation. For these reasons, a two-year, snapshot approach that examines only the direction of ODA—that is to say, the state attributes of recipients—is likely to produce a rather incomplete picture of the primary determinants of ODA. To better evaluate the value that donors have attached to specific state attributes,
the flow, or amount, of bilateral assistance a country receives (measured in millions of 1999 U.S. dollars) is statistically analyzed. It stands to reason, as indicated by theoretical models of IR, that particular state attributes determine not only which countries will receive aid (direction), but also how much aid a country will receive (flow). The importance donors assign to certain state attributes is reflected in the amount of assistance a country receives. To put it simply, specific state attributes make for a more or less attractive recipient of American, German, or Swedish ODA. The more attractive the aid recipient, the more likely that country is to receive greater levels of assistance. The attractive recipient is a country that exhibits the state attributes most consistent with the foreign policy agendas, or the national interests, donors seek to promote through the extension of development aid. As such, state attributes act as a measuring stick by which donors determine how ODA is to be distributed. Donors may thus employ ODA as a foreign policy tool to award or reward prospective recipients that display particular attributes. As an instrument of foreign policy, ODA reflects the various national interests that governments seek to protect and enhance. A relatively thorough four-year analysis of development assistance over the twenty-year period from 1980 to 2000 should indicate not only the national objectives that various American, German, and Swedish governments have attached to aid, but also should suggest the foreign policy priorities that ostensibly drive the distribution of that assistance. To that end, this study employs several quantitative models to ascertain the state attributes that are significantly related to the direction and volume of development assistance. More specifically, several hypotheses will be tested in an attempt to illustrate variations in national aid programs
and to reveal the state attributes (strategic materials, regime type, and economic openness, for example) that make countries more or less attractive aid targets. Moreover, the hypotheses take into account the end of the Cold war and the extent to which this fundamental international event has altered the importance that donors attach to specific attributes. Additionally, it is important to provide the appropriate historical context for this study and its findings. Accordingly, much attention is devoted to the evolution of Western aid in general and the American, German, and Swedish aid programs in particular. Finally, this study is constructed in such a theoretical and methodological manner as to both evaluate the power of competing IR schools of thought to explain the distribution of American, German, or Swedish assistance and the extent that the Western aid regime has evolved since its Cold War inception. Consequently, the study has the capability to produce not only important policy implications, but significant theoretical implications for international relations as well. In many respects, this study is a continuation and extension of the works by James Meernik, Eric Krueger, and Steven Poe (1998) and Peter J. Schraeder, Steven W. Hook, and Bruce Taylor (1998). To test the explanatory power of models of foreign policy in the post-Cold War era, Meernik and coauthors examine the state attributes of aid recipients that apparently determine the allocation of American foreign assistance during and after the Cold War. Schraeder and associates explore the primary determinants of American, French, Japanese, and Swedish ODA in the 1980s. Although much inspiration is taken from these two exceptional works, the present study differs from theirs in several important ways. First, Meernik and colleagues focus exclusively on the United States and its entire aid program. In contrast, this cross-national study emphasizes the
distribution of American, German, and Swedish ODA during and after the Cold War. It attempts to explain how the three donors prioritized their allocations of development assistance. Although Meernik and associates seek to evaluate the explanatory power of a number of models of international relations, their focus on the U.S. (the lone remaining superpower) perhaps paints an incomplete picture. A comparative study allows for a better test of the IR models. Second, in Meernik, Krueger, and Poe’s study only four to five years had elapsed since the end of the Cold War. This may have been an insufficient amount time to truly witness a post-Cold War shift in national priorities as reflected in the distribution of aid. Schraeder and coauthors’ analysis of the motivating factors driving several Western aid programs is limited to the distribution of ODA in the 1980s, thus the degree to which these motivating factors has been altered as a result of the end of the Cold War is unknown. Third, a fundamental difference between this study and the studies by Schraeder and associates and Meernik and associates is that this work includes the nonrecipients of ODA to determine the state attributes that influence the direction of American, German, and Swedish assistance. Fourth, I expand on their hypotheses by including Islamic fundamentalism, strategic materials, and population as possible indicators of German, Swedish, and U.S. aid distribution. Finally, domestic (donor) hypotheses are also incorporated into the analysis to help explain aid patterns.
Aid and the Peace Dividend In the United States, much has been written about a so-called “peace dividend” that became available with the end of the Cold War. Policy analysts have debated the potential impact the passing of the Cold War would have on U.S. policy in general, the distribution of foreign aid in particular (Allison and Beschel 1992; Clad and Stone 1993;
Diamond 1992; Hehir 1992; Meernik, Krueger, and Poe 1998). In their estimation, the end of the Cold War and its attendant peace dividend would enable the U.S. government to shift attention and resources from the pursuit of national security to the promotion of American ideological values, such as human rights and democracy (Meernik, Krueger, and Poe 1998). Accordingly, the United States, now free of Cold War baggage, could strengthen the humanitarian character of foreign assistance that had frequently been devalued throughout the Cold War years (Lumsdaine 1993). Echoing an interest in this peace dividend, a 1993 report by the OECD optimistically wrote that, “it was believed that the end of the Cold War would generate a ‘peace dividend’ that would free up more resources to assist the developing world” (Development Cooperation 1994, 4). Moreover, the OECD envisioned that the absence of East-West competition in the developing countries that followed the disintegration of the Eastern Bloc would allow assistance efforts “to be more closely tied to development and economic considerations and individual country performance—not only economic performance, but human rights, progress towards democracy, control of military expenditure, and attention to environmental sustainability” (Development Assistance Committee 1993, 4-5; hereafter DAC). No longer would the East-West rivalry compete for attention in building the agenda of the Western aid regime. In particular, in the post-Cold War environment, donors could finally focus their resources, that is to say, their assistance, on the countries in greatest need of foreign aid. In the United States, this meant that resources that had previously been committed to countering the spread of communism could now be diverted from geopolitical objectives to objectives of a more humanitarian nature. But does the distribution of aid from the three case studies reflect the absence of Cold War
antagonism? The extent to which the United States, Germany, and Sweden have utilized the peace dividend is among the central questions of this study. Other important questions have to do with the politicization of the three national aid programs and whether aid distribution can tell us anything about the continued relevance of leading theories of international relations. As far as the former is concerned, national aid programs have become highly politicized; the distribution of aid likely reflects this fact. Any explanation of the national variations in aid distribution must take into consideration the formal and informal aid constituencies involved in the aid dialogue. In each of the national aid programs, there are competing formal and informal interests that seek to influence not only the amount and quality of development assistance but also its direction. A careful examination of official policy statements, parliamentary/ congressional debates, and various other governmental and nongovernmental sources, offers insights into how aid is allocated. Moreover, such an approach incidentally illustrates the connection or the divergence between official rhetoric and the actual distribution of developmental assistance. In democratic societies, foreign assistance programs draw from finite resources and as such must be “sold” to the public. In the post-Cold War era, American foreign assistance, for instance, is often advertised in altruistic/humanitarian terms, or as an attempt to secure democratic principles abroad. Rarely do elected or appointed officials publicly discuss American aid as a useful strategic tool to thwart foreign enemies. In the Cold War environment, however, there was little doubt that American bilateral assistance was highly motivated by security concerns, as indicated by both official policy statements and the distribution of aid (Conteh-Morgan 1990). Does the post-Cold War distribution
of American development assistance reflect the change in official announcements? A preliminary review of early German assistance suggests a close link between official statements meant for “public consumption” and the actual direction of aid. Initially, the German aid program demonstrated a rather substantial inclination toward domestic commercial interests (arguably a strategic concern). The Germans have over the years indicated a high regard for economic development as their prime rationale for extending capital or technical assistance to the developing countries. Of course the Germans would not deny the inclusion of humanitarian concerns in their distribution of aid; they have, nevertheless, made it equally clear that German aid is not meant to be economic charity (Knusel 1968). According to John White, a German foreign assistance program could hardly be justified in any other way. As a result, much of German development assistance was unabashedly tied or involved export credits (White 1965). Tied development aid required that the goods and services associated with the assistance be purchased from the country giving the aid or from companies operating within that country. Over the years, German aid officials, responding to critics from home and abroad, have expressed their desire to separate domestic commercial interests from developmental assistance. It remains to be seen whether there has been a shift in aid distribution to reflect that desire, or if the end of the Cold War influenced that shift, or any other shift for that matter. While it is true that a much smaller percentage of current German aid is formally tied, this does not mean that German assistance no longer serves Germany’s commercial interests. An investigation of German aid patterns and the political process that informs that distribution may shed some light on this. Of the three national assistance programs under consideration, the Swedish aid
pattern, at first glance, seems to most closely approximate the officially stated goals of the program. From its formal inception, the Swedish national aid program has had a strong humanitarian element that was evident both in theory and in practice (DAC 1993, 1996; Radetzki 1973). This is not to say, however, that Cold War politics had no influence on the dispersal of Swedish assistance, or that the end of the Cold War had no impact on Swedish developmental assistance. (As a matter of fact, and admittedly this is somewhat of a stretch, in the post-Cold War era, we may witness a transition in Swedish development assistance that attempts to incorporate traditional security interests in the distribution of aid. After all, the demise of the Soviet Union makes American security guarantees less relevant.)
Aid and Foreign Policy While many authors have noted the foreign policy objectives reflected in the distribution of American assistance (e.g., Conteh-Morgan 1990; Eberstadt 1988; Decker and Sexton 1992; Krueger 1993; Lebovic 1988; Lumsdaine 1993; Maizels and Nissanke 1984; Poe and Meernik 1995; Wittkopf 1972; Zimmerman 1993), relatively few have sought to systematically explore the distribution of aid in a longitudinal and comparative manner (Dinwidddy 1973; Poe and Meernik 1995; Wittkopf 1972). Furthermore, few studies have statistically incorporated the end of the Cold War into their analyses of the distribution of American aid (Meernik, Krueger, and Poe 1998; Raffer and Singer 1996), much less into comparative analyses of foreign assistance patterns. The literature on U.S. aid has benefited significantly from many insightful Cold War and post-Cold War studies that have sought to explain how U.S. assistance is distributed and to identify the types of states that were likely to receive the most
American assistance. Robert F. Zimmerman, for example, examines the apparent national interests driving American ESF (1993), while Steven Poe and Meernik explore the distribution of U.S. military aid in the 1980s (1995). Other studies track the evolution and the relative success or failure of development assistance in a number of Western nations, as well as discuss the national objectives that ODA is intended to promote. Notable contributions to the literature on American ODA include works by Bruce Dinwiddy (1973), Anne O. Krueger (1993), Krueger, Constantine Michalopoulos, and Vernon W. Ruttan (1989), and Kunibert Raffer and H.W. Singer (1996). Development assistance is not limited to the United States; it is a foreign policy tool employed throughout the Western (and non-Western) world. As such, national ODA programs have received considerable scholarly attention within their respective countries. For the purposes of this study, the efforts of Erhard Eppler (1972), Karel Holbrik and Henry Allen Myers (1968), Jack Knusel (1968), Marian Radetzki 1973, Stokke (1989), and White (1965) were especially enlightening in regards to the internal workings of the German and Swedish aid programs, as well as the perceptions of the underlying objectives each of the two donors attached to ODA during the Cold War years. Finally, many scholars have attempted to ascertain the significance of specific national (donor) values that the provision of foreign assistance is intended to enhance. These values include, for example, security-strategic imperatives (e.g., Conteh-Morgan 1990; Poe and Meernik 1995; Zimmerman 1993), the promotion of human rights (e.g., Blanton 1994; Carleton and Stohl 1987; Cingranelli and Pasquarello 1985; Hehir 1992; Hofrenning 1990; McCormick and Mitchell 1988; Pasquarello 1988; Poe 1992; Poe et al. 1994; Radetzki 1973; Stohl and Carleton 1985), the promotion of democratic institutions
(Diamond 1992; Allison and Beschel 1992; Fossedal 1989; Peceny1995), and commercial interests (Cingranelli and Pasquarello 1985; Oye 1992; White 1965; Wittkopf 1972). Though the efficacy of foreign aid is subject to debate, architects of foreign policy have long utilized it to enhance perceived national interests. As such, foreign assistance—although generally a relatively small proportion of national foreign policy budgets—reflects the foreign policy agendas of donor nations. In the case of the United States, many commentators observed that American Cold War philosophy demanded that assistance could be supplied only if it strengthened the security of the U.S. (Browne 1990). While the American desire to contain communism unquestionably figured highly in its foreign assistance equation, donor nations are not motivated by geopolitical concerns alone. In Germany, a national foreign aid program was initially devised to enhance Germany’s relative international economic position. Rebuilding German economic strength after World War II and securing her future economic independence was a top priority of German foreign policy. Foreign aid could be a useful tool in realizing that objective. Aid offers an instrument through which Germany safeguards and further strengthens her economic health and stability. To Jack Knusel, raw materials, in particular, "are key items in the operation of the German industrial sector" (1968, 13). The capacity of the German economy would be severely diminished if access to those raw materials were to be denied. Since many of these crucial raw materials are located in the developing countries, it is of vital importance that Germany remains on good terms with these countries. Moreover, developing countries have provided growing markets for
German goods. For these (and other) reasons, it is critical to German national interests that political stability is maintained in the developing countries (Knusel 1968). In sum, foreign assistance, at least partially, is a means to that end. Sweden also has taken advantage of foreign assistance to advance what it considers to be national objectives. In contrast to the American and German assistance programs, Swedish aid appears be driven more by altruistic or humanitarian motives than by either geopolitical or commercial motives. It is possible that Sweden’s unique international position allows it to emphasize humanitarian concerns rather than geopolitical or commercial interests in its aid distribution. After all, Sweden is an affluent country that arguably enjoys the best of both worlds. It has a long tradition of neutrality, while, for all intents and purposes, it benefits from (some might say, free rides on) a Western alliance that at least tacitly recognizes it as an informal ally. In a similar vein, we might consider the case of the United States and the idea that with leadership come responsibilities. In playing the role of global superpower and the dominant power of the Western alliance, perhaps the hegemonic United States felt compelled to assign a higher value to geopolitical goals in distributing aid than either Germany or Sweden. As the self-proclaimed defender of the free world, should we be surprised that the United States often utilized aid as a supplement to containment? The above examples notwithstanding, national assistance programs are rarely the product of a single, easily identifiable national interest. They typically combine geostrategic, ideological, cultural, neocolonial, commercial, developmental, and humanitarian elements for example. Nevertheless, the prioritization of foreign policy goals (i.e., national interests) is often discernable in the distribution of resource transfers,
especially when we look at aid distribution over time. In the face of both real and imagined Soviet threats, American foreign assistance generally emphasized resource transfers that at least potentially enhanced U.S. security. In Germany’s case, commercial interests seem to have been an underlying theme in foreign assistance, while Sweden focused on issues that might be characterized as humanitarian in nature. Of particular interest is to what degree, if any, has the end of the Cold War altered those national interests and policy objectives (as reflected in development assistance)? It stands to reason that as—or if—national priorities change in the post-bipolar environment so too would foreign assistance patterns. If such a supposition were accurate then a careful examination of aid distribution among the three donor states over the two time periods would likely note these changes in foreign policy objectives. Moreover, such an examination explores a potential peace dividend, that is to say the restructuring of expenditures that reflect the current absence of East/West competition. In the case of development assistance, the peace dividend, at least theoretically, suggests a greater role for the nonmilitary aspects of assistance, as well as the redistribution of resources that seeks to identify and accommodate countries most in need of assistance, regardless of strategic importance. Finally, and of more than simply passing interest to me, are the anticipated findings and their practical and theoretical implications. For instance, of the three country cases, the literature suggests that the United States attaches greater value to security interests than either Germany or Sweden, as demonstrated in development assistance preferences (i.e., distribution among recipients). The extent to which American assistance can be explained by the realist model has serious policy implications. The American rhetorical commitment to
democratic principles abroad, for example, may be superficial at best, disingenuous at worst. In many respects, this examination of Cold War and post Cold War ODA patterns is also an assessment of theoretical models in post-Cold War international relations. For instance, if the findings were to indicate a strong role for security interests in the formulation of American development assistance both before and after the end of the Cold War, this could lend support to realist assumptions in general, assumptions associated with hegemonic stability theory in particular. If American, German, or Swedish development assistance is indeed driven by realist assumptions, then the countries of greatest strategic value (defined in traditional security-power terms) will continue to receive a disproportionate amount of aid in the post-Cold War era. Conversely, aid motivated by idealist assumptions would emphasize certain values and social institutions that transcend the nation-state, such as poverty, regime type, and human rights (Kegley 1995). Neoliberals would argue that ODA best serves the interests of donors and recipients alike when it is used to promote global capitalism and economic interdependence. Thus ODA should encourage open markets and trade and discourage barriers to free trade. If foreign aid were driven by neo-Marxist tenets then commercial interests would dominate the direction and flow of assistance. What all models may fail to adequately account for, however, is the potential delay in translating national objectives into the distribution of aid. Realist assumptions are particularly susceptible to this problem. To illustrate, it is possible that the end of the Cold War has indeed generated shifts in development assistance patterns. However, these shifts are perhaps unlikely to be immediately felt, and may have lagged behind the precipitating event by several years. Neither model satisfactorily explains how
bureaucratic inertia or entrenched aid constituencies might impede a transformation in the distribution of assistance. Consider a country like Egypt, for example, which has, off and on, received a considerable amount of American development assistance during the Cold War and is, in a traditional sense, strategically important to the United States. Realists would argue that Egypt, because it is important to American security interests, would continue to receive high levels of American assistance, even after the implosion of the Soviet Union. The fact that Egypt received 7.0% of the total American bilateral development assistance in 1994-95 (second only to Israel)—four years after the end of the Cold War—does not necessarily prove the relevance of realist assumptions in the post-Cold War era (DAC 1996). It is possible that after the demise of the Soviet Union American development assistance has become less motivated by security concerns, but that this change in attitude has taken time to implement. The bureaucratic-politics model may offer some valuable insights into these potential lags. While the bureaucraticpolitics model may be useful in understanding the delays that may arise between executive decisions and actual policy implementation, it less useful in understanding the executive decisions themselves (Kegley 1995).
CHAPTER 3 THE HISTORICAL ANTECEDENTS AND EVOLUTION OF WESTERN AID
This chapter establishes the historical foundation of the work that follows by discussing the evolution of Western development assistance. It begins with an overview of the historical antecedents of Western foreign aid and then proceeds to discuss the institutionalization and evolution of the Western aid regime. The goal of this chapter is to acknowledge that foreign aid did not arrive spontaneously on the international scene. National development aid programs among the Western industrialized democracies were the culmination of a series of remarkable events and historical developments, some of which predate the formal inception of Western ODA by decades, if not centuries. It is also important to stress that the advent of the Cold War was a crucial precipitating factor in the American decision to launch an aid regime. To a large degree, the Western aid regime was the byproduct of Cold War tension and rivalry. The formal establishment of foreign aid programs by many Western governments may indeed (and were probably likely to) have come about on their own without the perception of a Soviet “menace,” but it is unlikely that a Western aid regime would have arrived when it did without such a catalyst. A loose distinction exists between the decision by Western governments to establish national foreign aid programs and their decision to enter into an aid regime. One does not necessarily follow the other, although historically they go hand-in-hand.
It is difficult to separate Western foreign aid and the Western foreign aid regime into conceptually separate and analytically useful categories. This study employs theoretical models of international relations to identify the state attributes that act as determinants of the direction and volume of American, German, and Swedish ODA and whether the passing of the Cold War has altered the significance each of the three donors assigns to specific state attributes. Germany, Sweden, and the U.S. represent a cross-section of Western aid and their patterns of bilateral ODA reflect, to a large extent, the distribution of Western aid overall. Suffice to say, the line between Western aid and the Western aid regime has become quite blurred. One reason for this is that in common parlance “Western aid” is shorthand for bilateral or multilateral official development assistance, or ODA, distributed by the industrialized democracies. The Western aid regime, which over the years has become synonymous with the efforts of the DAC/OECD member states, is a loose organization of the industrialized democracies which utilize ODA as their primary instrument in socio-economically assisting developing nations. DAC member-states enjoy considerable latitude in determining how best to apply their foreign aid programs. Donor nations apply development assistance both bilaterally and multilaterally. In other words, membership in the Western aid regime, or the DAC/OECD, does not substantially limit the ability of member-states to determine the direction and flow of their bilateral or multilateral development aid. Bilateral development assistance naturally affords donor states far greater discretion in determining which countries are to receive assistance. Nevertheless, donors routinely set aside a portion of their annual aid budgets for multilateral use. The DAC documents the transfer of bilateral and multilateral development assistance from donors to recipients. The committee also makes
recommendations and sets objectives in an effort to enhance the effectiveness of bilateral development assistance. Member states may or may not follow the recommendations set forth by the committee.
Historical Antecedents A number of historical developments helped pave the way for the institutionalization and unprecedented expansion of foreign development assistance in the postwar era. The historical precursors discussed below do not represent an exhaustive list of the prerequisites of postwar development aid. Moreover, the discussion that follows is not intended to suggest that these prewar developments arose and evolved independently of one another. They are, nevertheless, treated separately below. Arguably the most significant historical antecedent to aid was the establishment of the Western welfare state, or perhaps more precisely, the motives that informed and theoretically defined its development. To Charles Funderburk and Robert G. Thobaben, the welfare state was established "to marshal economic resources to eliminate poverty and promote human development" (1994, 83). According to Eric Einhorn and John Logue, “Support for welfare programs in Western democracies rest on three basic motivations…altruism, an unselfish desire to help others,…self insurance,…[and] solidarity," which they see as a "willingness to tie one’s fate to that of others and…to share a sense of group identity" (1988, 140-42). In particular, the experience of the World Wars and the Great Depression combined to create a situation in which many recognized the necessity of a "universal national minimum." A pervasive sense of vulnerability underpinned the demand for the statutory provision of welfare for not only the deserving poor and the manual worker, but the population as a whole (Maier 1987).
Advocates of the welfare state acknowledged a sense of collective responsibility for those in states of dependency. Many observers, such as Myrdal and Robert Goodin, have long noted that these motives underlying the welfare state cleared the path for the extension of its logic outside national boundaries. Goodin, for example, suggests that the welfare state’s desire to protect the vulnerable justifies the concern for distressed areas of the world through the transfer of resources (1985). Thus, the rise of economic assistance, welfare, and central planning by the national state precipitated international economic assistance. Moreover, Myrdal argues that the notion that the rich nations should assist the poor nations through economic aid would simply have been impossible to conceive, much less practically apply, without the development of the domestic welfare state: Before World War II hardly anyone saw a common responsibility on the part of all developed nations to aid underdeveloped countries. Now such a responsibility is gradually becoming recognized as a general proposition. [The basis of which is] nothing else than the rapid spread over the globe of the old ideals of liberty, equality, and brotherhood, …increasingly…realized in the last two generations within the national Welfare States…of the Western World (1973, 47). The Western welfare state did not arrive spontaneously, nor was it inspired by purely selfless political motives. Nevertheless, upon closer inspection one discerns a number of humanitarian, charitable and religious roots, as well as the influence of labor movements in a number of European social-democratic parties. The humanitarian, charitable, and religious bases of the welfare state were essentially sparked by the industrial revolution. Indeed, Alfred Havighurst notes that by 1900 authorities in Victorian England generally recognized that “state action, on a national level, was necessary to cope with the social evils which had developed with industrialization” (1979, 14). An 1889 study had found that 30.7% of Londoners lived below subsistence level. Similar studies conducted in other major cities likewise reported a substantial
"destitute and miserable minority.” The London Times observed in 1909 that laissez-faire policies had produced multitudes of “badly born, badly taught, badly fed, and finally robbed of employment.” In the Times’ estimation, such outcomes required a “readjustment of values” (Lumsdaine 1993, 187). Such reports did not go unnoticed in Parliament. The United States, of course, did not remain insulated from the adverse social effects of industrialization. By the late 19th century, a wave of humanitarian concern had swept the country. Lumsdaine argues that humanitarian efforts to ameliorate poverty were not merely “palliative or remedial in their focus, but sought to change underlying social and political conditions” (1993, 188). He adds that the movement initiated in the 1880s to alleviate poverty was concerned with more than simply rehabilitating individuals; it also sought to change the social environment through fact-finding studies, program development, and an increased role for the national government. Moreover, Lumsdaine writes that (1993, 188) The deleterious effects of industrialization, rather than personal moral failures, were seen as the major cause of poverty; and changes in the social environment, rather than individual reform, were pushed as remedies for want—housing codes, child labor laws, legislation on women’s hours and wages, workmen’s insurance. Humanitarian movements at the turn of the century were assisted considerably by various charitable foundations, including the Rockefeller and Carnegie foundations. These foundations, equipped with considerable financial resources, attacked poverty with scientific research. Together, through their systematic efforts, the path was paved for the state administration of welfare programs.
Social Democracy and Internationalism The growth of Western domestic welfare programs and subsequent international welfare programs also owes much to the efforts of labor movements and socialdemocratic parties. The relative strength of labor and social-democratic parties was reflected in the rise of the Western welfare state throughout the twentieth century. In those countries where labor organizations were politically strong, social democracy took root and naturally facilitated the rise of the welfare state and international assistance (Goodin 1985; Myrdal 1970). Labor movements and their attendant social-democratic principles found political expression in, for example, the Scandinavian social-democratic parties, the British Labour party, and the U.S. Democratic party. The rights of the poor and disadvantaged and a belief in the international solidarity among workers provided a solid foundation upon which social democracy could flourish. Social democracy has been defined in a number of ways. William Patterson and Alastair Thomas, for instance, view social democracy as “a belief that social and economic reform designed to benefit the less privileged should be pursued within the framework of democracy, liberty and the parliamentary process” (1977, 12). Most scholars would agree that social democracy stresses the mixed economy, political liberalism, Keynesian economics, the welfare state, and a belief in equality (Lumsdaine 1993). Finally, Funderburk and Thobaben summarize the key elements of social democracy as including a "commitment to constitutional government and representative democracy, redistribution of property or incomes to promote economic as well as political equality, and a utopian vision of a new social order in which modern technology is used to create the leisure time needed for individual intellectual and moral development" (1994, 82).
The universal ideals of solidarity and equality naturally inclined social democratic parties toward internationalism. Scholars seem to largely agree, as suggested by James May, that there is “an inherent relationship between Socialism and internationalism,” as a result of “the universal relevance of its values and/or the universal applicability of its principles” (1977, 408-11). This preference for internationalism made it quite natural for labor unions to be sensitive to Third World concerns and supportive of foreign aid programs, past and present. The growth of internationalism in the hundred or so years before the formal inception of foreign aid also witnessed the increasingly popular sentiments that war was an unsatisfactory instrument of settling international disputes and that the people of the world comprise a single human family. Acknowledging this trend, Lumsdaine observes that (1993, 190): The growth of international consultation and international technical organizations, attempts at peace plans and the outlawing of war, the rise of internationalist thought, the creation of an international court and a League of Nations, the growth of international humanitarian movements and relief efforts, and forays by the churches, labor, and government into concern for poverty across borders all paved the way for the creation of foreign aid programs in the middle of the [last] century. The expansion of international humanitarian concern is historically reflected in a number of notable developments. The history of the Red Cross, for example, demonstrates how the evolution of international law, codes of war, and attempts to achieve peace were intertwined with international humanitarian efforts. On a trip to Italy in 1859, the founder of the Red Cross, a young Swiss doctor by the name of J. Henry Dunant, was appalled by human suffering left in the wake of the Battle of Solferino. Dunant was profoundly struck by “horror and pity” at the sight of soldiers lying on the field without medical attention days after the battle. He began to attend to the wounded himself and mobilized local women to assist in the effort. Dunant’s disturbing book, A
Memory of Solferino (1939), deeply affected “a public opinion…increasingly receptive to humanitarian concerns” (Lumsdaine 191, 1993). His efforts to create an international volunteer organization to aid wounded soldiers and for an international agreement to protect medics ultimately led to the creation of the Red Cross and the Geneva Convention (Lumsdaine 1993, 191). Since its founding, the Red Cross has defined its humanitarian concern much more inclusively to apply to the relief of suffering of all types, all the while showing minimal regard for national boundaries in responding to ever-changing world problems. The Red Cross evolved from an organization inspired by and designed to react in a relatively limited manner to “acute situations,” to that of global Good Samaritan, capable of “lengthy and large scale relief actions” (Lumsdaine 1993, 191). International humanitarian concern was likewise reflected by the increasing collective responsibility for refugees. In 1921, at the behest of the Red Cross, the League of Nations appointed Fridtjof Nansen Commissioner for Russian Refugees. Driven by his “active love of humanity,” Nansen worked selflessly to instill a sense of international responsibility toward the dispossessed (Lumsdaine 1993, 191). As Lord Curzon stated in 1923, Nansen’s tireless efforts made him the only man “to whom the doors of every Chancery in Europe were open” (Jones 1939, 273). Nansen died in 1931, but his work lives on. The Nansen Office and the Intergovernmental Committee for Refugees were founded in 1938 to continue Nansen’s humanitarian pursuits. Both later merged into the International Refugee Organization, which in turn was replaced by the by the United Nations High Commissioner for Refugees (UNHCR) in 1951. Over the years, the UNHCR has sought to broaden the definition of "refugee" and attempts to protect and resettle refugees throughout the world (Stebbins and Amoia 1970). While Nansen
demonstrated a singular commitment to the dispossessed, his success relied upon the good will of states to respond to his solicitations. Thus, in the view of UNHCR Poul Hartling, Nansen’s approach was unique and exemplary because it aroused “respect for the basic rights of every man” and enlisted “goodwill on a global scale” to meet the “urgent needs of refugees…and to seek durable solutions to their problems” (Lumsdaine 1993, 191-192; Zarjevsky 1988, 8, 17). The American foreign aid program might also trace its origin to institutionalized war relief efforts and private international philanthropic efforts. Early in the First World War, the Committee for Relief in Belgium was able to raise $52 million from private charities. In the winter of 1920-21, Herbert Hoover led a European Relief Council that raised $30 million. From approximately 1939 to 1941, several hundred American organizations sent around $90 million abroad for civilian and refugee relief, while Congress appropriated another $50 million for Red Cross distribution. The National War Fund raised $750 million, earmarking nearly half for overseas war relief. American volunteer organizations sent almost $500 million in goods and funds abroad to alleviate suffering between 1939 and 1945 (Lumsdaine 1993, 192). In the six years that followed the First World War, private philanthropy mobilized nearly $2 billion for overseas reconstruction and social services. According to Lumsdaine, private international philanthropic organizations “increased dramatically” in the seventy-five years preceding the inception of foreign aid and seem to foreshadow the later governmental programs (1993, 192). American philanthropy abroad has been traced back to earthquake assistance in 1793 and attempts to ease the impact of Irish and Russian famines in the nineteenth century. Similar philanthropic efforts, to name just a
couple, include the Rockefeller Foundation’s attempts to battle typhus abroad and the numerous efforts of early missionaries to improve educational and health facilities throughout the developing world. The two general, interrelated motives underlying American philanthropy are summed up best in Curti’s own words (1963, 625): One was related to Judeo-Christian teachings about the duty of compassion and charity…sometimes expressed in the doctrine…that the holder [of wealth] is only God’s steward and obligated to give to the poor, the distressed, and the needy. From many diaries, letters, and other evidence it is clear that this factor was a dominant one in a great deal of giving. A second motive was humanitarianism, embracing the same conception of the brotherhood of man and of the duty of those who can help the needy do so, but secular in nature. It reinforced and supplemented the closely related Hebraic-Christian values. The growing internationalist sentiment, as reflected in the rise of social democratic parties, labor movements, and various public and private efforts at the amelioration of suffering abroad, was consolidated in the 1930s and 1940s. Lumsdaine (1993) notes that the international order that emerged from the Second World War (one that included institutionalized foreign aid) was not simply a product of the new distribution of power or the internal needs and problems of the constituent states, but also the product of relatively new ideas about international and domestic politics and economics. The experiences of the interwar years influenced postwar policymakers to appreciate the importance of cooperative, public-minded policies in both domestic and international matters. The rapid political and economic postwar recovery of Western Europe seemed to vindicate and reinforce such policies. In the immediate postwar years, statesmen recognized that the political and economic instability that characterized the 1920s and 1930s facilitated the outbreak of a second war. Selfish national economic policies, such as beggar-thy-neighbor, and vindictive and unaccommodating attitudes toward war debts and reparations were
believed to have caused both domestic turmoil and international enmity, leading directly to armed hostility. Economic deterioration undermined fledgling European democracies, and the concomitant rise of aggressive nationalist political regimes with irredentist claims precipitated the conflagration that was to sweep the continent. Isolation, as in the case of the United States, and indifference, as in the Western powers’ acceptance of the infamous Munich Agreement, were regarded by postwar Western leaders as morally bankrupt and indefensible, as well as an abdication of responsibility that would embolden international aggression. The developments of the 1940s and 1950s contrasted with the 1920s and 1930s and reinforced the idea that the latter years offered useful in international relations. Moreover, Americans understandably took great pride in their wartime efforts, recognizing that American involvement in the war had been decisive in Allied victory. American wartime leadership had proven crucial and invoked a sense of optimism that its continuation after the Axis defeat could produce a more cooperative, friendly world. Such sentiment naturally facilitated an American-led aid regime designed to contain the spread of Communism. In the U.S., foreign aid was a logical extension of its selfdeclared responsibility (Marshall Plan-Truman Doctrine) in defeating Communism. The U.S. had assumed responsibility in defeating fascism and it was only natural, as the leading Western power, that it would now take responsibility in opposing Communism, a force that challenged its world view. After all, the U.S. had contributed $341 billion toward winning World War II, which to Truman was an investment in “world freedom and world peace” (Holbik and Myers 1968, 3). Moreover, only the United States possessed the economic and military capability to mount such an opposition. Foreign
aid, then, was one instrument by which to safeguard that investment and ensure that the sacrifices made by the United States in World War II were not in vain. At any rate, the United States and Great Britain had begun early in the Second World War to devise a benevolent peace, one that was to be based as much on strong military preparedness to confront aggression as on an open international economy and the reconstruction of democracy. The establishment of the United Nations (UN) as the general backdrop of the new international order, the Anglo-American attempts to (re)establish democracies in Germany and Japan, the institution of new economic measures at the Bretton Woods conference, the wartime founding of the Relief and Rehabilitation organization, and the distribution of Marshall Plan funds—“all were parts of a general outlook that saw peace and prosperity coming out of cooperation and a decent opportunity for the peoples of all lands” (Lumsdaine 1993, 199). The generally spectacular economic and political recovery of Europe so soon after the war seemed to validate the wisdom of the Americanled efforts to foster European cooperation and unity. Wartime and postwar collaboration among the Western Allies and collaboration with the defeated Fascist powers after the war set the stage for an era of unprecedented peace, prosperity, and unity for Europe. Ever mindful of the unpleasant experience of the interwar years in both domestic and international politics, the Western democracies resumed the trend toward social democracy in the immediate postwar era. The devastating impact of the Great Depression severely weakened faith in laissez-faire capitalism, while its memory simultaneously propelled the further institutionalization of the welfare state. Churchill’s replacement by a Labour government immediately after the war (despite his incredibly popular wartime leadership), reliance on Keynesian economic principles, heretofore
unseen egalitarian impulses in the United States, and a willingness even on the part of conservative parties in Europe to acknowledge the efficacy and political importance of social welfare measures, all seemed to confirm a general transformation in domestic and international politics. Rapid economic growth, increasing social surplus, and unprecedented peace and stability undoubtedly enhanced the positive postwar atmosphere in the West. The domestic and international policies associated with that environment enjoyed considerable legitimacy, even an “aura of common sense inevitability” (Lumsdaine 1989, 199). To summarize, liberal-democratic presumptions concerning domestic and international politics were reinforced by the mistakes of the twenties and thirties and also by both the Allied partnership against fascism and cooperative postwar measures aimed at reconstruction. It occurs to Lumsdaine that (1993, 200): The lesson seemed to be that cooperative and inclusive policies led to order and prosperity, and isolationism and intransigence alike, abroad, and abdication of social responsibility for the economy and for the needy at home led to chaos and breakdown. The experience and historical learning of the thirties and forties provided an atmosphere in which solutions based upon international cooperation and upon the promotion of prosperity and alleviation of poverty by government policy seemed plausible, natural ways of solving problems. As the Nobel Prize-winning economist Sir W.A. Lewis put it in 1949, the implementation of more direct and charitable measures of international assistance to the most needy nations was a sign that “we are beginning to learn some of the lessons” of the 1930s and 1940s (Lewis 1949, 200). Likewise, Harvard economist and Federal Reserve Board advisor Alvin H. Hansen argued in a 1942 pamphlet in favor of greater Western responsibility for the economic development of the world’s poorest countries. Although recognizing there
would be a financial burden to the United States, Hansen argued that such assistance was likely to contribute significantly to the nation’s economic and political security. Moreover, Hansen (1942, 27-32) suggested that foreign assistance was needed to avert new deep depressions and new world wars. That is something which we really cannot afford. In the past we have failed to recognize the greater responsibility which goes with vast power, political and economic. We must be prepared to make a contribution in both fields. We must recognize our political responsibilities for maintaining world peace; and equally we must recognize our economic responsibilities for achieving and maintaining world prosperity (Italics in the original.). Early efforts at international economic and social collaboration were embodied within the League of Nations, although the League was originally chartered to actively thwart aggression through the principle of collective security. The League’s budget allowed for a little more than half of its expenditures to be allocated toward social and economic fields. The League thus established a positive foundation upon which future programs of international economic cooperation and social justice could be built. Indeed, to many people, the League’s international mission and character initiated a sense of a global community and collective responsibility. Moreover, UN institutions modified and magnified…are in practically every case the direct and recognizable offspring of the those of the League [which in retrospection reminds us that] much of what is now taken for granted as the accepted and permanent background of international activities, is, historically speaking, the consequence of changes introduced by the provisions of the Covenant and by the practice of the Council and the Assembly (Lumsdaine 1993, 207).
The Marshall Plan and Point Four The European Recovery Program (ERP), commonly known as the Marshall Plan, was the first substantial foreign development assistance program and established the essential groundwork for future, more comprehensive (both in scope and scale) Western development aid programs, namely the provision of ODA. Although the Marshall Plan’s
first attempt at large-scale financial transfers was from the United States to Western Europe, it served as an institutional and practical lesson for subsequent large-scale transfers from developed Western nations to the underdeveloped world throughout the late forties and fifties. As Krueger, Michalopoulos, and Ruttan reflect, “The experience seemed to confirm the feasibility of accelerating economic growth through large-scale augmentation of international financial flows” (1989, 3). Development assistance (originally termed technical assistance) came on the heels of the Marshall Plan in 1949 and differed radically on several counts from past aid efforts (to be discussed below). Devised rather hastily in 1948 to reinvigorate the war-ravaged economies of Western Europe, the Marshall Plan furnished $13 billion ($60 billion in 1985 dollars) over a four-year period through the Organization for European Economic Cooperation (the OEEC is now the OECD) (Krueger, Michalopoulos, and Ruttan 1989, 1). Marshall Plan grants never exceeded more than a small fraction of recipients’ Gross National Product (GNP) and, in hindsight, “provided mostly a psychological boost and stimulus for integration” (Guess 1987, 33). At any rate, the plan was a smashing success by most standards (for a critical review, see Eberstadt 1988); by the early 1950s the recipient European economies had recorded significant advances, to the extent that they were able to maintain impressive rates of economic growth without American assistance. The Marshall Plan was hardly in its infancy when fundamental changes in the international arena caused the industrialized Western democracies to redirect their attention to issues of economic growth and political stability in the developing world. The polarization of the world into the two competing ideological camps of East and West, decolonization, national liberation movements in soon to be or newly independent
countries, and general political and economic instability (particularly in Southeast Asia), seemingly demanded Western efforts designed to alleviate or forestall economic and political upheaval in the developing countries of Asia, Africa, and Latin America (Krueger 1989). The Western concept of large-scale technical assistance to the developing world was first officially introduced as "Point Four" of President Harry S. Truman’s inaugural address to Congress on 20 January 1949. Point Four and the ensuing passage of the Act for International Development in June 1950 also mark the official American commitment to assist the development of underdeveloped countries. Truman’s fourth point called upon United States to institute “a bold new program” of technical assistance to the developing world in order to facilitate higher standards of living (Knusel 1968, 4; Lumsdaine 1993). Considering that Truman’s speech marked a break with traditional foreign policy practice, the fourth point deserves full quotation. Fourth, we must embark on a bold new program for making the benefits of our scientific advances and industrial progress available for the improvement and growth of underdeveloped areas. More than half the people of the world are living in conditions approaching misery. Their food is inadequate. They are victims of disease. Their economic life is primitive and stagnant. Their poverty is a handicap and a threat both to them and to more prosperous areas. For the first time in history, humanity possesses the knowledge and skill to relieve the suffering of these people. The United States is pre-eminent among nations in the development of industrial and scientific techniques. The material resources which we can afford to use for the assistance of other peoples are limited. But our imponderable resources in technical knowledge are constantly growing and are inexhaustible. I believe that we should make available to peace-loving peoples the benefits of our store of technical knowledge in order to help them realize their aspirations for a better life. And, in cooperation with other nations, we should foster capital investment in areas needing development. Our aim should be to help the free peoples of the world, through their own efforts, to produce more food, more clothing, more materials for housing and more mechanical power to lighten their burdens. We invite other countries to pool their technological resources in this undertaking. Their contributions will be warmly welcomed. This should be a cooperative enterprise in which all nations work together through the United
Nations and its specialized agencies wherever practical. It must be a worldwide effort for the achievement of peace, plenty, and freedom. With the cooperation of business, private capital, agriculture, and labor in this country, this program can greatly increase the industrial activity in other nations and can raise substantially their standards of living. Such new economic developments must be devised and controlled to benefit the peoples of the areas in which they are established. Guaranties to the investor must be balanced by guaranties in the interest of the people whose resources and whose labor go into these developments. The old imperialism—exploitation for foreign profit—has no place in our plans. What we envisage is a program of development based on concepts of democratic fair-dealing. All countries, including our own, will greatly benefit from a constructive program for the better use of the world’s human and natural resources. Experience shows that our commerce with other nations expands as they progress industrially and economically. Greater production is the key to prosperity and peace. And the key to greater production is a wider and more vigorous application of modern scientific and technical knowledge. Only by helping the least fortunate of its members to help themselves can the human family achieve the decent, satisfying life that is the right of all people. Democracy alone can supply the vitalizing force to stir the peoples of the world into triumphant action, not only against their human oppressors, but also against their ancient enemies—hunger, misery and despair (Lumsdaine 1993, 221-2). In many respects, Truman's Point Four was an extension of the Marshall Plan to the less prosperous countries of the world in the form of development or, "technical," assistance. Truman's speech not only indicated an official American commitment to development assistance; it also suggested the potential transfer of resources from the other industrialized Western powers to the poorer countries. Indeed, throughout the late 1950s and 1960s, foreign aid, or development assistance, was championed as the answer to the Third World’s problems. After all, it was believed that the Marshall Plan had effectively restored Western Europe after the devastation of World War II, so why not apply a similar instrument to the poor, post-colonial countries? Such an idea garners little support today. While foreign aid was hardly absent from the annals of diplomatic history, development assistance differed fundamentally from aid practices of the past. For
example, warring Greek city-states had sometimes financed allied governments to further the war effort against common enemies. This notion of foreign aid was certainly not unfamiliar to the United States, which had benefited from it during its own revolution and was moved to return the favor to revolutionary France. Moreover, foreign aid was clearly present between 1940 and 1945 in the form of the Lend-Lease program, when the U.S. "effected the greatest wartime transfer of goods and material that the world has ever seen" (Eberstadt 1988, 4). At current prices, the value of American materiel assistance to its military allies would easily surpass $200 billion (Eberstadt 1988, 4). The type of foreign aid envisioned by Truman's Point Four, however, was a radically new conception. Development assistance, unlike the Lend-Lease program and its distant relatives, was to be extended to countries at peace. Unlike disaster relief, development assistance was not primarily intended to be temporary emergency relief prompted by the occasional natural disaster. Development assistance was meant to be a long-term and potentially global program of charitable government-to-government resource transfers, funded and administered through official agencies. The provision of development assistance was also a voluntary enterprise, which differentiated it from other previous forms of government-to-government payments, such as war reparations that were based on indemnity. Significantly, unlike military or security assistance, ODA was not originally designed as an instrument to project American power to distant lands (Eberstadt 1988). In fact, development assistance was meant to target low-income countries and, regardless of its other intended benefits, its primary mission was to ease or eradicate the debilitating consequences of material poverty by raising living standards in recipient nations. This unique and noble mission was clearly articulated and openly
stressed in the early days of the American development assistance program (Eberstadt 1988; Lumsdaine 1993). The degree of conviction behind the original purpose of development assistance exhibited by Germany, Sweden, and the United States in more recent years remains to be seen.
Establishment and Expansion of the Western Aid Regime Concurrently with the American decision to extend aid to the developing world, the United Kingdom and the developed countries of the British Commonwealth (Australia, Canada, and New Zealand) enacted the Colombo Plan in Ceylon (Sri Lanka) in January 1950. The Colombo Plan obligated these commonwealth nations to foreign assistance, and initially assistance was granted only to the successor states of British India. Recipient nations in South and East Asia were subsequently included with the signing of the Plan by Japan and the United States (Krueger, Michalopoulos, and Ruttan 1989). Some observers have noted that the commitment to development assistance by the developed democracies was considerably more tentative than either the rhetoric of Truman’s fourth point or the language of the Colombo Plan had envisioned (Krueger, Michalopoulos, and Ruttan 1989, 2). Indeed, it was not until the early 1960s with the inauguration of the OECD that levels of assistance to the Third World approached the levels achieved under the Marshall Plan. In contrast to its recent performance in development assistance, throughout the 1950s the United States supplied well over half of the total volume of development assistance, with virtually all the rest furnished by four European countries—the United Kingdom, France, Belgium, and the Netherlands. The latter four transferred virtually all of their assistance to current or former colonial
possessions (Kreuger, Michalopoulos, and Ruttan 1989; OECD 2002). Late in the Second World War, several international institutions were constructed by the Allies to undertake postwar economic reconstruction and development. Indicative of the Allied desire to promote international economic interdependence, representatives of 44 nations met at Bretton Woods in July 1944 to establish the framework for a postwar monetary and financial system. Under U.S. leadership and excluding most of the Soviet bloc countries, the World Bank and IMF became the cornerstones of that new system and began operations in 1945. The primary role envisioned for the IMF was that of a support mechanism for the liberalization of trade and lending regimes. More specifically, the IMF was to act as the regulator of fixed exchange rates and to provide credits to countries with “temporary balance-of-payments deficits” (Bennet 1984, 224). The World Bank, drawing from its capital of ten billion dollars and its power to borrow, was empowered to make loans for postwar reconstruction and economic development. However, between 1945 and 1947, the European economies incurred sufficiently large balance-of-payments deficits to overwhelm the resources available to the IMF and World Bank. Other institutions were needed to rebuild the worn-torn European economies. The Marshall Plan and the United Nations Relief and Rehabilitation Administration (UNRRA), in particular, were explicitly devoted to reconstruction. In addition, membership in the World Bank was expanded to include the newly independent colonial states, thereby propelling the IBRD into a more vigorous role in economic development (Bennet 1984; Kreuger, Michalopoulos, and Ruttan 1989). As noted, the quantity and scope of bilateral assistance was severely limited throughout the late 1940s and 1950s, in that it was largely the domain of the United
States and a select few European countries, the latter typically infusing colonial interests into their aid targeting. In the late 1950s and early 1960s, however, a number of national and international developments ushered in a new era of expanded bilateral assistance programs. In addition to the perennial Western (i.e., American) fears associated with a “belligerent” Soviet Union, the late 1950s witnessed a period of ever-increasing security concerns on the part of the United States regarding the perceived threat of communist Chinese expansionism in Asia and the negative political implications of the Cuban revolution on the rest of Latin America. According to Kreuger and associates (1989, 2), the Kennedy administration believed that the security issues emanating from internal political and economic disorder in developing countries, namely in Latin America, “could be best addressed through faster development and the strengthening of economic and political institutions. Based on this premise, the United States launched in 1961 the Alliance for Progress in Latin America and increased economic aid worldwide.” The Alliance for Progress set ambitious goals, such as a minimum per capita income growth of 2.5% annually and a five-year increase in life expectancy by 1970. Ultimately, the Alliance was a disappointment (Bennet 1984). Nevertheless, it, along with the admission of a number of former colonies to the UN, did contribute to more extensive assistance programs by the United Kingdom, France, and Belgium. Similarly, after their economies had revived sufficiently from the devastating impact of the Second World War, West Germany, Italy, and Japan began to compete for overseas markets and also began financial and technical assistance programs (Kreuger, Michalopoulos, and Ruttan 1989). Foreign aid at least theoretically facilitated access to important and growing foreign markets. In Germany, it was recognized that the developing countries constituted the
“markets of tomorrow” (Eppler 1972, 76), especially for machinery and finished goods (Knusel 1968). Increased export trade, however, was not the sole motivating factor in the German decision to initiate a foreign aid program. The German development aid program was neither the result of “an internal revolution nor from a refined aid strategy but from outside impulses and a large element of chance” (Eppler 1972, 76). Truman’s announcement in 1949 of a four-point program to alleviate the economic despair and political instability rampant throughout the underdeveloped world—both of which invited communist takeovers—left little doubt that the U.S. expected members of the Western Alliance to share in this enterprise. European nations which owed at least a portion of their economic recovery to the Marshall Plan felt obligated to shoulder some of the development aid burden and to do their part in defending the free world. Throughout the 1950s, Germany took a number of tentative steps toward fulfilling its “obligation” in the form of technical training of foreign officials, export credits for financing capital development projects, and increasingly large contributions to multilateral financing agencies. But as John White reflects, “these gestures were piecemeal and confused, and the Germans themselves would not have pretended that they added up to a coherent aid programme” (1965, 17). To be fair, the West German government was still very much preoccupied with nation-building and economic reconstruction throughout much of the 1950s (Schulz 1995). By 1960, West Germany, now again prosperous and prepared to finally acquiesce to years of American prodding, was in a position to more meaningfully contribute to the costs of the Western Alliance and to launch an official and systematic aid program of its own. Important in the West German decision to establish a formal aid program was that
by 1960 reunifying Germany appeared to Bonn as an increasingly fruitless foreign policy objective. The Federal Republic found itself searching for ways to expand the scope of its foreign relations. One outcome of this search was the historic reconciliation with France. Another outcome was a comprehensive aid program (White 1965). Many Germans welcomed such a program, despite the inherent costs of implementation, as it brought “moral relief” to participate in a noble and progressive human endeavor (Eppler 1972, 76). Moreover, many Germans no doubt felt some satisfaction in the idea that they were now able to help others after having been helped themselves. More importantly, Germany’s membership into the Western aid regime signaled German resurgence and an important new role for the former pariah of Europe. Indeed, the Federal Republic initially approached development assistance with what has been described as a “crusading zeal” (White 1965, 17). After only one year, the annual volume of West German finance for the developing world was surpassed only by the United States and France. However much the West Germans might have felt morally redeemed by their foreign aid program, aid also served nationalistic and Western objectives. For example, the Federal Republic could use the prospect of development aid as a carrot and a stick to deter developing nations from recognizing East Germany (White 1965). While reunification was but a “distant dream,” the division of Germany remained a political reality of “hypnotic force” (White 1965, 16). As a demonstration of the political superiority of the West German regime over its East German counterpart (Radetzki 1973; White 1965), a non-recognition condition (i.e., the Hallstein Doctrine) to the provision of West German development assistance was enacted. This enhanced Bonn’s ability to keep
East Germany diplomatically ostracized by refusing to grant aid to any state that recognized the East German regime as legitimate. This was an important justification for the initiation of an official aid program offered by the Bonn government to the general public. Moreover, such a stance was also entirely consistent with Western interests, as defined by Washington. According to Brigitte Schulz, the Federal Republic’s early aid relations with the developing world were “totally entwined in its close alliance with the United States” (1995, 52). By the time the Federal Republic had initiated an aid program, the Bonn government was “deeply committed to, as well as integrated into, the policies of the West” (Schulz 1995, 52). Echoing Washington’s official position at the time, Bonn viewed the Soviet Union as a belligerent and expansionist power and its East German “ally” as nothing more than a cantankerous puppet-state. Like Washington, Bonn had instituted an aid program whose primary rhetorical goal was to check communist expansion. Schulz (1995) further suggests that from the beginning the Bonn government followed a Third World development assistance policy that was defined more by the position occupied by the Federal Republic in the Western Alliance than by any preconceived and perceptive strategy of economic development in the South. As such, West German development assistance was a reflection of both Bonn’s alliance policy and Bonn’s willingness to dutifully follow the role assigned to the Third World by the United States. Of course, West Germany was not unique among many Western donors in this regard. As much as the West German development aid program was modeled after the American program, Holbik and Myers contend that German officials have refused to “link their foreign-aid program as rigidly to Cold War strategy as their American
counterparts” (1968 46). They further note that in spite of this difference in Cold War attitude, the philosophical underpinnings of the German and American development aid programs are fundamentally similar in that both (as well as all Western aid programs) are based on “enlightened self interest” and “humanitarianism” (1968, 48). West Germany, naturally, was deeply concerned about the spread of communism and was committed to countering further Communist moves in the developing world. Its resolve to isolate East Germany diplomatically and to preserve West Berlin as an integral component of West Germany was the cornerstone of Bonn’s foreign policy. But because Bonn’s Cold War strategy was based primarily on opposing Soviet and East German intentions in Europe, it was less concerned with opposing Communist expansion in the Third World. Moreover, Germany did not carry the colonial “baggage” to the degree of Great Britain and France and thus did not feel compelled to distribute development assistance according to cultural or colonial interests. As a European power divided by Cold War antagonism and geographically located on the front lines, it is understandable that the Federal Republic would be preoccupied with European affairs and less fearful of Communist successes in the developing world. Whereas Washington seemed to immediately sense danger in any Communist-inspired erosion (real or imagined) of its sphere of influence (e.g., Greece, Korea, Cuba, Chile, Nicaragua, Vietnam, etc.), Communist threats in the developing countries lacked immediacy in Bonn and necessarily appeared more peripheral. For the most part, the Communist threat in the Third World did not constitute to Bonn a direct challenge to West German interests in the region, unless of course that threat was perceived to originate in East Germany. When it came to competing with East Germany for the future good will of developing nations, Bonn was much more inclined to adopt a
Cold War mentality. In practice, such competition was most evident in Africa and the Near East (Holbik and Myers 1968). Additionally, like most industrialized economies, the West German economy was and remains heavily dependent upon foreign sources of basic raw materials (see chapter 5). It would be severely weakened without access to such sources. Since most of these materials originate in the developing world, it is in the German interest to remain on good terms with the countries that supply these essential materials. Aid therefore offers the Germans the “means for maintaining and strengthening their own economic health and stability” (Knusel 1968, 13). Indeed, a 1973 study by Marian Radetzki notes that the “most privileged” recipients of West German development assistance often possess raw materials attractive to German business interests (38). As is true of the other Western democracies, Germany’s vital interests are best served by fostering political stability in the developing world, as well as fostering the overall well-being of the world at large (Knusel 1968). Yet the German development aid program from its inception differed from other Western aid programs in many ways. First, the Federal Republic emphasizes the importance of private enterprise (for both the donor and the recipient) in seeking solutions for underdevelopment. As such, German development assistance is not intended as charity and carries with it significant overtones of entrepreneurialism and the desire to provide developing countries “the opportunity to create their own miracle” through “hard work” (Knusel 1968, v). The Germans also stress the advantages of bilateral development aid promoting German private investments and other commercial ties with recipient nations (Radetzki 1973). Such an aiddevelopment philosophy in part explains the early West German emphasis on loans (often
“hard” loans) rather than on grants. It also in part explains the fairly common practice of tying West German assistance to West German goods and services. In 1963, for instance, only one-third of West German development aid was in the form of grants. For the same year, 55% of West German aid was tied. These numbers have contributed to the “tightfisted” reputation of West German aid that lingers to the present day (Knusel 1968). Like Germany, Sweden (as well as the other Nordic countries) entered the international community of donors largely without a preexisting colonial past and with fairly limited international political aspirations. Also like the German case, although probably to a greater extent, successive Swedish governments have expressed little enthusiasm for using development aid as means to diffuse domestic cultural values. Nor did the Swedes initiate a foreign aid program with domestic commercial interests in mind. At least throughout the sixties and into the early seventies, the distribution of Swedish aid indicates that aid officials were largely successful in separating development assistance from commercial interests at home. Whatever economic benefit that might accrue to Sweden through development assistance was proclaimed by Swedish officials to be an unintended benefit (Schraeder, Hook, and Taylor 1998). The degree to which Swedish aid has remained detached from domestic commercial interests over more recent years is a topic for later discussion. In any event, Sweden joined the international aid regime with little public regard for the self-serving motives that appeared to determine the aid distribution of many Western donors (Radetzki 1973). Indeed, in the early days of Swedish aid, government and aid officials occasionally voiced reservations about formal membership in a foreign aid regime that appeared corrupted by strategic, political, and economic donor self-interests. Accordingly, Sweden reluctantly entered the Western
aid regime and participated for many years with the official goal of reorienting development assistance toward recipient needs. Although Sweden arrived somewhat late to the Western foreign aid scene, since 1962 the country’s development assistance program has enjoyed the reputation at home and abroad as an enlightened and progressive humanitarian institution. Indeed, according to Bo Karre and Bengt Svensson, “The main reason that Sweden takes part in development cooperation is that solidarity with the underprivileged is regarded as a moral responsibility” (1989, 231). Among the primary objectives of Swedish aid, as indicated by an Act of Parliament in 1978, are the promotion of “(i) economic growth, (ii) economic and social equality, (iii) economic and political independence and (iv) the development of democracy in society” (Karre and Svensson 1989, 231). These objectives are, of course, not unique to Sweden. All Western donors profess, to a greater or lesser degree of enthusiasm, to such objectives. The rationale for pursuing these objectives, the conviction with which these objectives are pursued, and the means by which to achieve these objectives are what separate the donors in the Western aid community from one another and in large part explain why Sweden stands out. Sweden has often been characterized as a “forerunner” in reviews made by the DAC (Karre and Svensson 1989, 231). Particularly among aid purists in the West and socialist regimes in the Third World, the Swedish aid program has frequently been heralded as the model for Western aid programs. Whether the Swedish model is still deserving of such international acclaim is an issue that is discussed at a later point. At this juncture, it should be noted that it is not difficult to identify the features of the Swedish aid program that made it quite popular and respected in certain aid circles. It is
also important to point out that the features of Swedish aid highlighted below are only applicable to the Swedish aid program of the 1960s and 1970s (Radetzki 1973). First, the majority of bilateral Swedish aid was distributed in the form of grants, rather than loans. The high degree of concessionality associated with Swedish bilateral aid program is evidenced by the fact that throughout the 1960s and 1970s grants represented from 75 to 85% of Swedish aid commitments. For the same time period, the DAC average for aid in grant form was considerably lower—fluctuating between 55 and 65% of aid commitments. Swedish aid commitments were also allocated in the form of development loans. Yet by DAC standards, the terms of these loans were appreciably softer. In 1970, for example, the average terms for Swedish loan commitments were 1.5% interest and 35 years’ maturity, while the corresponding DAC average was 2.8% and 30 years (Radetzki 1973, 134). Second, Sweden was one of the most dedicated supporters of multilateral aid transfers. In fact, in 1962, Sweden earmarked 80% of its development assistance to multilateral organs. After 1962, the multilateral proportion in Swedish aid declined precipitously, although it remained throughout the 1960s and 1970s between 35 and 40%, as compared to an average of roughly 10% for other DAC donors (Radetzki 1973, 12829). Into the 1980s, Sweden maintained a comparatively high regard for multilaterals, channeling between 27 and 30% of its ODA through UN agencies and the World Bank group (Karre and Svensson 1989, 232). Sweden’s relative preference for multilateral aid are many, but can be succinctly summarized. As a relative newcomer to foreign assistance, Sweden quite frankly lacked the experience to carry out an aid program of its own. Multilateral contributions thus offered a practical solution to this problem. Why
Sweden continued to devote a substantially higher proportion of its aid to multilaterals than other Western donors well after it initiated a bilateral program is probably best explained by history, ideology, public opinion/influence, and practical necessity. First, Sweden’s early reliance on multilateral aid set a precedent for the continuation of relatively generous contributions. Secondly, in contrast to many Western donors, Sweden entered the international aid community absent the typical political, strategic, or other similar goals that had come to characterize many Western foreign aid programs. Without a preconceived, self-interested rationale for the establishment of a national development aid program, the motivation for Sweden to focus on a bilateral program was less pressing and less appealing. Multilateral organizations were thus a “natural fit” for Swedish aid because they too came (largely) unattached to traditional Western selfinterests and tended to distribute assistance according to recipient need and not according to national geopolitical, economic, or cultural interests. Recipient nations therefore preferred multilateral or Swedish (bilateral) aid because both came relatively free of conditions or “strings.” In sum, the development philosophies of many multilateral agencies and that of Sweden were quite similar in that both assumed the primary objective of aid was to unselfishly speed up economic and social development in recipient nations. All of this facilitated large Swedish contributions to multilaterals. Third, large contributions to multilaterals enjoyed considerable support from the Swedish populace. Public opinion favoring multilateral aid was likely strengthened by the important positions occupied by several Swedes—most notably perhaps, Dag Hammarskjold and Gunnar Myrdal—in various multilateral organizations. Moreover, favorable public opinion toward multilateral aid was likely further enhanced by a sense of
Swedish influence in the direction of multilateral aid. Despite its small size, Sweden’s concentration on multilateral aid made it a prominent contributor to a number of multilateral bodies. For instance, in 1968, 1969, and 1970, Sweden’s contributions to the United Nations Development Program (UNDP) were second only to the United States and accounted for nearly 10 % of that agency’s entire operating budget. As such, Sweden exerted at least an indirect influence on the direction of aid, thus ascribing to Swedish contributions an air of significance and purpose. Fourth, practical necessity demanded that a substantial proportion of Swedish aid be multilateral in form. Sweden had a shortage of suitably experienced personnel to oversee bilateral projects. The reason for this stems from the early reluctance of the Swedish government to expand the ranks of qualified individuals to administer bilateral aid projects. The third, and final, reason that accounts for the popularity of Swedish aid among some aid constituencies has to do with the direction of Swedish bilateral development assistance. Before 1965, Sweden had no strict policy guiding the choice of recipients for Swedish bilateral assistance. In that year, it was decided that the relatively small Swedish bilateral aid program would be more efficacious if it concentrated on a select few developing nations. Seven countries were selected to be the primary beneficiaries of Swedish aid: Ethiopia, India, Kenya, Pakistan, Sudan, Tanzania, and Tunisia. Zambia and a few other small African nations were later added to the original list. By and large, the selection of these countries had more to do with a preexisting aid relationship and the belief that other Western donors were not, to a greater or lesser degree, sufficiently interested in these nations than the result of any systematic political evaluation or economic analysis. It is important not to overstate the geographical emphasis of Swedish
aid. The geographical rules did not apply to all forms of Swedish bilateral aid. In the areas of humanitarian and family planning assistance, Sweden provided aid to some thirty countries without imposing geographical restrictions. Moreover, multilateral aid and assistance for family planning account for nearly half of all Swedish aid, neither one of which is obliged to follow geographical guidelines. Finally, late in 1960s, Sweden embarked on a controversial path, one that remained untraveled by other Western donors, namely the provision of aid to “progressive” socialist regimes in Cuba, North Vietnam, and Tanzania (Radetzki 1973, 130, 136). It was ultimately decided after heated debates in Sweden that bilateral assistance was essentially wasted in countries that did not follow or respect the socio-economic goals of development assistance espoused by Sweden. Consequently, Swedish aid officials decided to gradually shift bilateral assistance to “progressive” countries “whose governments pursue social and economic policies aimed at a structural change which forms the basis for a development process, characterized by economic and social equality” (Ministry of External Affairs 1970, 17; Radetzki 1973). Bertil Oden argues that the traditional Swedish model of development assistance has, generally speaking, the following attributes (Karre and Svensson 1989, 234): 1. A country-programming system aimed at reducing the inherent inequality between donor and recipient, by giving the latter a real opportunity to plan its own development, including the use of outside assistance. 2. A concentration of ODA to a limited number of recipients pursuing a development policy more or less in accordance with the established goals of Swedish development assistance. 3. An essential part of the assistance not tied to procurement in Sweden. 4. No policy limits with regard to the financing of local costs. 5. A certain flexibility, permitting funds to be transferred from one activity to another during the period of agreement. 6. A clear distinction between development assistance and export-financing. 7. A grant element close to 100 per cent.
Oden goes on to contrast the traditional Swedish model with what he considers to be the main attributes of the typical OECD (i.e., Western) model of development assistance (Karre and Svensson 1989, 234): 1. Loans constitute an essential part of the aid programmes. 2. If a country-programming system is in operation at all, the recipient’s influence is smaller than in the Swedish system. 3. A rather small part, if any, of the aid programmes may be used for local-cost financing. 4. Financing or recurrent costs may occur only in rare cases. 5. There is no clear difference between development aid and export-financing. On the contrary, the two types of transfer are often closely coordinated. The Swedish model, in contrast to the OECD model, is not only more charitable, it offers recipients a greater degree of autonomy in the application of funds and it imposes greater limits on the aid program to promote domestic economic interests. Nevertheless, Karre and Svensson (1989) go on to suggest that the progressive character of the Swedish aid program has eroded over recent years as Stockholm has adopted many of the selfinterested economic policies that are common among many Western donors. While this study is not designed to directly test this hypothesis, it is designed to examine the state attributes that apparently determine the direction and flow of Swedish bilateral ODA and, as such, indirectly tests the argument that Sweden’s aid program has moved closer to the typical Western model.
Further Institutionalization The growth of development assistance in the 1960s was made possible by the considerable institutional developments of the 1940s and 1950s. The UN, in particular, was responsible for much of this institutional setting. The 1945 UN charter committed its members to “employ international machinery for the promotion of economic and social
advancement of all peoples.” The UN commitment to improved living conditions in the developing world led to the establishment of a series of specialized agencies, including the UN Children’s Emergency Fund (UNCEF); the UN Food and Agriculture Organization (UNFAO); the UN Educational, Scientific and Cultural Organization (UNESCO); and the UN Expanded Program of Technical Assistance (UNEPTA), a precursor to the UNDP (Krueger, Michalopoulos, and Ruttan 1989; Stebbins and Amoia 1970). Another core American experience involving large-scale financial assistance seems to have resulted from development policy designed to foster economic and political stability in countries bordering the Communist bloc. As a key element of the Truman doctrine, this policy initiated a persistent linkage between development assistance and Western security. Financial support was directed toward Greece and Turkey, and shortly thereafter to Taiwan, South Korea, South Vietnam, and Laos. The track record of such assistance programs offers important insights into the relationship between security goals and development objectives, a relationship that is more closely examined in the pages that follow. Bilateral technical assistance can boast of a longer history of institutional growth than can bilateral financial assistance. Much of the former are transfers on a grant basis and include such things as training and/or supervision by foreign experts whose salaries, along with any capital equipment, are paid for by the donor. Technical assistance programs have traditionally focused upon infrastructure (e.g., dams, roads, power plants, etc.) and the improvement of living conditions (e.g., water supplies, education, sanitation, family planning, etc.) (Guess 1987). According to Kreuger, Michalopoulos, and Ruttan,
technical assistance was informed by primarily two sets of experiences: (1) the effort by colonial governments to develop their dependencies, that is, to make the colonies ‘pay’ or at least avoid the drain on metropolitan resources; and (2) the agricultural research and technology transfer capacity established by the major colonial powers in many of their colonies to support growth of commodity exports (1989, 3). Throughout the 1950s several colonial powers, especially the British and French, were extending technical assistance to their (former) colonies to help establish dependable institutions of governance and to conduct economic matters. After decolonization, these programs were ostensibly adapted to reflect the more cooperative, two-way relationship of development assistance that would at least theoretically and rhetorically characterize future resource transfers. In the United States, several official and unofficial agencies and organizations had acquired by the 1950s a fair amount of expertise in the international transfer of technical assistance. As noted, the official American commitment to major technical assistance to the underdeveloped world can be traced to Truman’s inaugural address (namely, the fourth point). In fact, earlier under the Marshall Plan, the United States had instituted a rather humble technical assistance effort. In addition, American knowledge regarding technical assistance was furthered by its interwar and wartime experience in technical aid to Latin America primarily, although it was extended in a very limited fashion to other regions. Consequently, a variety of official and unofficial agencies and organizations in the U.S. had acquired valuable experience in technical assistance by the 1950s. Moreover, in the fields of health, education, and agriculture a number of religious and private voluntary organizations had firmly established themselves as leaders in technical assistance. Thus, by the early 1960s, these relatively amateurish attempts at bilateral and
multilateral assistance had begun to form the practical and doctrinal foundation necessary to establish an official, coherent national development assistance program. The early and mid-1960s witnessed a greater institutionalization of development assistance that reflected both the generally growing concern among the developed democracies for the plight of the peoples of the developing world and the lessons drawn from past resource transfers. This expansion was also an attempt, most notably by the U.S., to strengthen the Western alliance vis-à-vis the Soviet Bloc and to reduce the American burden of shouldering the cost of that alliance (Conteh-Morgan 1990; Schulz 1995). Most notable of this growing institutionalization was the creation of the OECD in 1961. Headquartered in Paris, the OECD succeeded the OEEC. (The OEEC’s primary responsibility was the administration of the Marshall Plan and European recovery plans.) Among the principal objectives of the OECD are the development of the global economy, the promotion of economic growth in member and nonmember countries, enlargement of world trade on a nondiscriminatory basis, and finally the advancement of optimal economic conditions and financial security of its members (Bennet 1984). The OECD manages its various functions through more than two dozen committees and other auxiliary groups. Its sectors of interest include, for example, agriculture, development, energy, environment, fisheries, industry, science, and trade. Of those broad subject areas, most important to this study is development aid, of course. Development assistance is overseen by the DAC. Originally the Development Assistance Group (DAG), the DAC is composed of the most affluent OECD members, which are recognized as the world’s leading donors of development assistance (Bennet 1984). The OECD maintains close working relationships with a number of other
intergovernmental and nongovernmental organizations. Of particular interest, as far as development assistance is concerned, are the World Bank and its affiliated institutions. With the establishment of the International Finance Corporation (IFC) in 1956 and the International Development Association (IDA) in 1960, the World Bank augmented its ability to extend development assistance. The former increased the Bank’s capacity to provide capital to the private sectors in developing countries. The IDA essentially was intended to provide a so-called “soft loan” fund for the Bank. Donor contributions made up this fund. Resources from the fund were limited to developing countries whose stalled or fledgling economies were not strong enough to warrant commercial loans at market or near-market interest rates. Also by the mid-1960s three regional development banks had joined the efforts of the World Bank. The three regional banks—the Inter-American Development Bank (IDB), the African Development Bank (AfDB), and the Asian Development Bank (ADB)—were created to accommodate particular regional needs. Finally, the World Bank sought to enhance coordination between multilateral and bilateral assistance programs by organizing “associations” of donors for some major recipients (Krueger, Michalopoulos, and Ruttan 1989). By historical standards, the 1960s and, to a somewhat lesser extent the 1970s, marked unprecedented economic growth in the developing world. This growth seemed to vindicate the “great optimism” that characterized the 1960s about the likelihood of economic development (Krueger, Michalopoulos, and Ruttan 1989, 4). Academics and practitioners alike found common ground in the notion that large quantities of concessionary assistance targeted toward comprehensive development programs would over time “result in self-sustaining growth throughout the developing world” (Kreuger,
Michalopoulos, and Ruttan 1989, 4). The war in Vietnam initiated a decline in the U.S. commitment to development assistance, a decline that has persisted in real terms since the mid-1970s. Commitments by the other DAC members, by multilateral agencies, and OPEC, however, offset the American decline (DAC 1993). Nevertheless, the 1970s were characterized by serious reservations about ideas that were previously viewed in the 1960s as very encouraging approaches to development. Practitioners began to challenge what they perceived as an undue reliance on large-scale capital transfers. Further, those critics within the aid community itself charged that the policies of the 1960s and early 1970s, which had heavily favored capital-intensive industrialization in developing countries, had ultimately widened the gap between rich and poor. Consequently, DAC members and various intergovernmental agencies initiated programs intended to improve income distribution (Kreuger et al 1989). During the 1970s, national development assistance programs also increasingly found themselves under fire from outside the inner aid circle, namely from the political and academic elite. Under the implicit belief that aid was effective, the left emphasized the external factors associated with the North-South relationship, namely an international economic and political order dominated by the North, which constrained development in the Third World. At its extreme, the left also attacked assistance as a neo-imperialist tool (Guess 1987; Kreuger, Michalopoulos, and Ruttan 1989). Naturally, criticism of assistance from the right was of a different nature. First, conservatives denounced aid as politicizing economic activities in recipient countries and facilitating the expansion of an uncompetitive public sector. According to their
reasoning, foreign aid simply reinforced the dominance of central planning and control over the private sector. Thus, the “dole” served to disguise and perpetuate the poor economic performances of public enterprise. Second, critics on the right also assailed development assistance as wasteful and ineffective in achieving both the political objectives of the donors and the economic objectives of the developing countries (Conteh-Morgan 1990; Kreuger, Michalopoulos, and Ruttan 1989). Moreover, viewing aid as a stopgap measure (one that treated the symptoms but not the disease), conservatives alleged that weak political systems were likely to be destabilized by “exaggerated expectations” among the poor (Guess 1987, 2). In many respects, the arguments of the 1970s concerning the effectiveness of development aid were silenced by the worldwide recession of the mid-1980s. The economic downturn of the 1980s brought to an end twenty-five years of unprecedented economic growth in both the developed and developing worlds and profoundly influenced development thought and strategy. In the developing world, the impact of an adjusting world economy, compounded by (in many cases) heavy debt payments, global recession, decline in capital influx, and questionable domestic economic policies, all precipitated contractions in developing economies, if not outright decline in per capita income (Kreuger, Michalopoulos, and Ruttan 1989). Indeed, during the 1980s and early 1990s, DAC states—not to mention multilateral donors, like the IMF and the World Bank—have generally been preoccupied with dilemmas associated with growth and debt. As Krueger, Michalopoulos, and Ruttan (1989) observe, aid allocations declined in real terms during the 1980s, although official disbursements have far exceeded private flows to developing countries.
Not only have aid disbursements grown at a slower rate in the 1980s than the preceding decade (a trend that continues in some DAC donors to this day), but aid expenditures indicated a significant geographical shift in emphasis (DAC 1993). Developing countries, as a group, experienced a drastic reduction in total financial assistance. Much of this reduction is due to a precipitous decline in lending by commercial banks, plunging from $36.5 billion in 1982 to nearly zero in 1987 (Krueger, Michalopoulos, and Ruttan 1989, 7). In Africa, for instance, stagnant and failing economic conditions prompted a redirection in aid transfers from long-term development projects to short-term recovery plans or medium-term structural reforms designed to foster sustainable growth. When measured as a proportion of recipient GNP, however, aid transfers to the least developed countries (LDCs) rose sharply during the same period. In some DAC governments and their respective voting constituencies, “aid fatigue” seems to be the natural response to the global economic meltdown of the 1980s. Development assistance from the United States and the United Kingdom has declined since the 1970s. Public opinion surveys in those two countries indicated that public attitudes toward foreign aid were “increasingly critical” (Kreuger, Michalopoulos, and Ruttan 1989, 7; Lumsdaine 1993). Meanwhile, in contrast to Anglo-American aid fatigue, assistance levels in Japan and Italy increased in the 1980s. In summary, overall levels of Western ODA were essentially static, with decreases by some DAC members offset by increases by others. Under presidents Reagan and Bush, American levels of assistance continued to fall and as well as the American commitment to multilateral aid institutions. Moreover, American development assistance showed some signs of incorporating trade relations into its aid distribution. Under Margaret Thatcher, Britain
inauspiciously joined the U.S. as an aid laggard when it cut total aid disbursements by 30%. Swedish authorities likewise fell prey to international and domestic pressures to reduce its aid commitment, although its reduction was relatively slight. Nevertheless, like the U.S. and Britain, the Swedish government was compelled to factor in national economic interests into its aid agenda (Lumsdaine 1993, 249). Indeed, as Peter J. Schraeder and associates acknowledge, "the previously scorned practice of tying Swedish aid to the purchase of Swedish goods and services or to prescribed financing arrangements became more acceptable as an element of aid policy" in the 1980s (1998, 316-17). Overall, German assistance declined during the 1980s. In the early 1980s, German funding for ODA was relatively stable, hovering around 0.48% of GNP in the years 1981-83. By 1989, however, it had fallen rather considerably to 0.41% of GNP (DAC 1992, 175). Picking up the ODA tab, so to speak, were countries like Japan, France, Finland, Norway, and Italy, which to varying degrees, increased their volume of assistance, as well as often improving the quality of that assistance. Of particular interest is the increasing quantity and quality of Japanese development assistance. By the end of the 1980s, Japan had surpassed the United States as the largest single donor of ODA. The era of unchallenged American dominance in the distribution of ODA ended in 1988, when Japan marginally outspent the U.S. by approximately $300 thousand in total development assistance expenditures, thus initiating a trend that has continued through 2000 (DAC 1995, A15). By 1999, Japan had substantially increased its preponderance over the U.S. in total ODA disbursements, devoting $15.3 billion compared to the American effort of $9.1 billion (DAC 1999, 64-5). If gross disbursements were not
enough, Japan has also sought to improve the quality of its aid by reducing the tied element of its assistance (Lumsdaine 1993). Assistance patterns in the 1990s reveal a somewhat curious record, one characterized by fits and starts. From 1990 to 1994, the volume of development assistance remained fairly static at around $60 billion. In 1995, however, total DAC development assistance fell from its 1994 level of $59.2 to $53.6 billion. It is not surprising to a find that a rather mixed record of aid distribution from the 21 DAC states over a ten-year period. (Greece joined the DAC in December 1999. Member countries as of 2000 thus number 22). Naturally, donors have particular (or national) motives (chapter 4) driving their extension of ODA and have likewise attached differing levels of credence to the efficacy of foreign development assistance. Nevertheless, it seemed reasonable to anticipate the distribution and the levels of development assistance to clearly reflect the profound transformation of the international geopolitical environment with the passing of the Cold War. Expectations were high among many officials of the OECD in general, the DAC in particular, that the end of East-West competition in the developing world and its concomitant financial peace dividend would usher in unprecedented opportunities to meaningfully assist the socio-economic development of the world’s poorest countries. Not only could the quantity and quality of development assistance finally be increased, so the presumption went, but donors could also now focus their attention and resources on economic and development considerations. Moreover, aid could now be more closely tied to individual recipient performances. Taken in the aggregate, however, the levels of ODA did not support these expectations. To the extent that these expectations were
realistic, a financial peace dividend failed to materialize, at least as far as the early to mid-nineties is concerned. Indeed, by 1992 the OECD had actually identified the end of the Cold War as an “impediment to increased concessional [aid] flows” (Raffer and Singer 1996, 58). According to the DAC (1992, 5), the overall reduction in the volume of Western ODA was the result of: growing uncertainty as to the context and rationale for development assistance in the post-Cold War world. The search for this new rationale is most notable in countries like the United States, but to a considerable degree a re-examination is under way in most DAC-Member countries. Soon after the collapse of the Berlin Wall, the industrialized democracies were beset by a number of global challenges to development assistance that threatened to dampen the enthusiasm of the immediate post-Cold War years. Political dislocation and ethnic strife in Yugoslavia, Somalia, and the former Soviet republics forced to center stage such issues as peacekeeping, refugees, and immigration. In addition to assisting the formerly state-socialist societies to market economies, development assistance also confronted a host of complex environmental issues, such as deforestation, preserving a sustainable population of African elephants, and global warming. Removed from the traditional Cold War constraints, development aid found a new role combating aids and narcotics traffic, as well as promoting human rights, democratization, political pluralism, and managed population growth. Today, a new challenge threatens to further siphon away or dilute the resources available to ODA: combating international terrorism. These objectives now exist alongside the more traditional objectives we tend to associate with development assistance: facilitating bilateral security agreements, establishing overseas markets, and accommodating domestic ethnic constituencies (Wood 1996). The former Chairman of the DAC, Alexander R. Love, concluded that "these crises diverted attention
away from long-term development objectives and the progress occurring in many developing countries" (DAC 1993, 5). Furthermore, economic downturns in the industrialized democracies threatened to derail the progress made in the developing world by diverting attention away from the development needs of aid recipients to what were considered by many donors to be more pressing domestic concerns. Moreover, economic stagnation contributed to increased unemployment and budgetary deficits in several donor countries. All of this produced fiscal restraint and tighter budgets in donor nations, and in many cases, reduced allocations of ODA. Finally, these challenges served to both undermine support for development cooperation and encouraged further aid fatigue in several donor countries (DAC 1993). In the 1996 report of Development Cooperation (DAC 1996, 1), James H. Michel acting as Chair of the DAC succinctly summarized the first half of the 1990s by stating: The end of the Cold War had removed a traditional and well understood security rationale for development cooperation, while also creating new and largely unanticipated demands. As a result, increased opportunities for productive collaboration were being threatened by a reduced sense of urgency, manifested by a diminished commitment of both political will and related financial resources. Much of the 1990s was a difficult period for development cooperation between the donor countries and the less-developed countries. It was also a period of transition for DAC members. Members were compelled to adjust their development assistance priorities and policies to cope with an evolving and fluid post-Cold War era. Traditional developing countries now found themselves competing with new, nontraditional applicants (e.g., successor states to the Soviet Union and Yugoslavia) for everdiminishing Western resources. Nevertheless, despite the "sharp and general decline in the volume of official development assistance reported last year in the statistics for 1993
did not continue in 1994" (DAC 1995, 1-2). Be that as it may, "budget austerity" was the norm for a significant number of DAC nations (DAC 1996, 124). The distribution of ODA must thus be viewed in this context of fiscal restraint and ever-increasing demands on national foreign aid budgets. Measured in terms of the total transfer of development assistance, the first half of the 1990s was a disappointment to aid proponents. Many DAC members, however, introduced important institutional reforms in the administration of aid to improve the effectiveness and efficiency of their aid programs. Throughout the early 1990s, the primary focus of DAC states was policy coherence in their relations with the developing world. Donors identified such issues as good governance, environmentally sustainable development, the alleviation of poverty, and women and development as priorities in their aid agendas (DAC 1993). By the late 1990s there were encouraging signs that DAC development assistance was on the rebound. Indeed, in 1999, ODA increased by approximately 5% in real terms to $56 billion. After several years of general decline, this marked the second consecutive year of growth. Although encouraging, it is wise to consider these figures with caution; it remains to be seen whether they signal an emerging trend in ODA. Much of the increase in 1999 ODA was the result of the international effort to assist the dispossessed of Kosovo and the unique Japanese attempt to aid countries seriously affected by the Asian financial crisis (OECD 2000, 90). There are several less encouraging signs for the immediate future of ODA, however. For instance, as a percentage of GNP, the DAC countries managed to average only 0.39% in development assistance in 1999. This figure remains well below the UN target of 0.70%. Of our case countries, only Sweden matched the UN target in 1999.
The German and American efforts of the same year—0.26% and 0.10%, respectively— failed to even approximate 0.70% of GNP. Furthermore, once the largest DAC contributor of ODA in real terms, the U.S. appears intent on further reducing its aid commitment to the developing world, judging by annual aid volume (OECD 2002). Finally, and perhaps rather troubling to DAC officials, is the distribution of ODA to recipients grouped by income. In 1998, for example, nearly one-third of development assistance was channeled to middle-income countries, while only one-fifth went to the least developed ones (OECD 2000, 90). At first glance, this seems inconsistent with the officially stated goals of the DAC members which suggest a greater commitment to reducing the economic gap between North and South.
In Summary While the concept of foreign aid can boast a considerable diplomatic lineage, official development assistance is a Western postwar construction and is thus a fairly recent phenomenon in international relations. Western development assistance is the product of a series of remarkable historical events and evolving Western values and attitudes. A number of precursors contributed significantly to ODA’s formal inception, including the welfare state and the advent of the Cold War (to name just two). Now in its fifth decade, official development assistance has evolved substantially since the Marshall Plan and Truman’s Point Four and has survived longer than many would have expected (or desired, for that matter). To date, DAC membership has grown to include 22 of world’s most prosperous industrialized democracies. Furthermore, ODA enjoys the institutional support of numerous international organizations and national agencies and has achieved annual levels into the tens of billions of dollars throughout the 1990s.
Official development assistance remains the primary, if controversial, component of the Western foreign aid regime. In large part an American device conceived to thwart the spread of communism (Holbik and Myers 1968), ODA is frequently portrayed by students of international relations as the confluence of humanitarian and egalitarian principles, political and commercial interests, cultural ties, and security concerns. Such a portrayal is possibly premature as it is based on an over-reliance on official statements and the lack of systematic analyses of the state attributes that determine the direction and flow of aid. The Western aid regime has been lauded in some circles (e.g., Myrdal 1970; Lumsdaine 1993) as a profound departure from traditional interstate behavior in that it reflects a sense of collective responsibility among the “progressive” Western democracies for the welfare of the developing world (Holbik and Myers 1968, 1). If nothing else, the type of Western development aid to which observers have grown accustomed over the last several decades is a profound departure from the prewar European “development aid” in the sense that the latter assumed some sort of colonial relationship between mother country and recipient (Holbik and Myers 1968). And while it is true that the volume of Western development assistance has grown substantially since the formal inception of the DAC/OECD in September 1961, one should view this growth with some caution. As a case in point, consider the following. The net disbursements in ODA of the 19 DAC countries in 1960-1 totaled $4.70 billion (Kreuger, Michalopoulos, and Ruttan1989, 35). In 1980, that figure had climbed to $27.30 billion, and by 1990 it had reached $53 billion (DAC 1993, 160). To the casual observer, such sums seem quite impressive and ostensibly attest to a genuine commitment on the part of the industrialized Western democracies to assist in the socio-economic development of the world's least developed
countries. Yet ODA remains an imperfect device in bridging the economic divide between the North and South, and when one considers these totals in relative terms they are arguably less impressive. In terms of total ODA as a percentage of GNP, these numbers translate into roughly 0.52%, 0.37%, and 0.33%, respectively. One of the most common and enduring misconceptions regarding foreign assistance, especially in the United States, is the "tremendous" volume of resources drawn from the various DAC national budgets devoted to overseas development assistance. Moreover, if judged solely in terms of poverty relief (i.e., real annual growth in per capita GDP among recipient nations), the record of development assistance from its inception to present is at best mixed, at worst, an unmitigated failure. ODA’s lackluster success rate in “graduating” recipients notwithstanding, it continues as a universal foreign policy tool among all of the industrialized democracies. And for all of its shortcomings, there is little reason to expect the imminent demise of ODA. Naturally, the commitment to development assistance (in terms of quantity and quality) varies from donor to donor. But even in the U.S., where public aid fatigue is manifested in the declining volume of American ODA throughout the 1990s, few politicians suggest the abolishment of the American development aid program. For a number of reasons, ODA has simply become an established feature of international politics. There is, of course, the general expectation among many aid supporters that the affluent industrialized democracies should contribute to the socioeconomic development of the world’s poor, developing nations. Still, the persistence of the Western aid regime over the last half century is not solely attributable to normative, moralistic arguments regarding resource transfers from the rich to the poor. From a bureaucratic-politics standpoint, the patron-client aid relationship is not easily broken,
even in the face of profound changes in the international climate or when the relationship is shown to be static. Still, the perpetuation of ODA is more than the result of bureaucratic inertia; it is a relatively inexpensive, but visible, vehicle by which donors assert their foreign policy agendas. In a similar vein, aid can be used by donors to project a particular image in the international arena, thus enhancing the donor’s “soft power” (Nye 2003). In these respects, ODA is a useful foreign policy tool. The end of the Cold War promised what seemed to be an unprecedented opportunity to redress some of the more notable failings of development assistance. Optimism abounded in an era absent East-West rivalry in the Third World. Development assistance could now be utilized in a manner more consistent with its officially stated goals. The peace dividend that followed the collapse of the Soviet Union would allow Western donors to more fully invest their resources toward meaningfully aiding in the socio-economic development of the world’s underdeveloped nations. No longer, so the logic of the peace dividend went, would security concerns siphon funds from the humanitarian impulses of development assistance. But, as this chapter has indicated, the peace dividend has been slow to materialize. Perhaps Gebhard Schweigler is correct when he points out that “now that the constraints imposed by the requirements of the cold war have disappeared, domestic concerns will rightly claim priority attention” in the Western world (1992, 237). Consequently, many Western governments are likely to devote a greater percentage of their resources toward domestic issues, now that the international-security imperatives associated with the Cold War are in the past. Indeed, Joshua Muravchik echoes this perspective when he comments that the American peace dividend, although a “whopping” one at $350 billion, quietly came and went, quickly
consumed by the burgeoning cost of entitlements (1996, 10). Moreover, the passing of the Cold War has removed “a traditional and well understood security rationale” from the distribution of ODA (DAC 1996, 1), at least among those nations inclined to include geopolitical considerations into their aid calculations. In the U.S., the post-Cold War peace dividend, at least as it might conceivably apply to the impoverished nations of the world, receives little air time today. Should we be surprised that a substantial peace dividend has failed to materialize? Development assistance, after all, was a creature of the Cold War and now that the Cold War is over ODA has lost what was initially an important justification for its creation. In the case of the U.S., “Even those programs that we think of as relatively enlightened, such as Kennedy’s Alliance for Progress,” writes Howard J. Wiarda (1992, 23), “were ‘sold’ domestically and had as their rationales an anti-communist strategy.” Moreover, throughout the Cold War, various American governments expressed a “moral obligation” to provide aid. But, as Zimmerman is quick to remind us, “the moral arguments were also always linked to the national interest” (1993, 7-8). Of course, some Western donors were reluctant to incorporate Cold War security concerns into their foreign assistance policies. While one supposes that in these instances it is unlikely that a peace dividend, per se, would materialize, it is reasonable to expect that aid patterns reflect the passing of the Cold War. Nevertheless, one has to wonder if a genuine opportunity to reduce the gap between rich and poor was squandered or if the opportunity was ever really anything more than wishful thinking among aid enthusiasts. Yet for aid proponents, all is not lost. Development assistance and the Western aid regime (they are nearly one in the same) are here to stay, at least for the foreseeable future. Although primarily inspired by Cold War
calculations, the hodge-podge of Western aid programs has evolved into an international aid regime since their Cold War beginnings. As a result, ODA is sufficiently institutionalized and entrenched within the global political economy to guarantee its preservation for some time to come. The extent to which the provision of ODA is today considered an international norm is evidenced by the fact that the diminishing role of the United States over the last several years has had marginal impact on the aid regime (Wood 1996). We now turn to chapter four, where the foreign aid literature is scrutinized in an attempt to explain why ODA appeared as a more or less attractive component of foreign policy for the Western industrialized democracies at roughly the same time. It is also in the fourth chapter where the paper resumes consideration of what appear to be the underlying objectives of ODA and the extent to which the end of Cold War has altered those objectives.
CHAPTER 4 NATIONAL INTEREST AND WESTERN POSTWAR DEVELOPMENT ASSISTANCE
Beginning in the 1950s, many of the Western industrialized democracies began to establish development aid programs that in various and important ways were clearly both comparable to one another and in practice distinct from prewar international resource transfers. Today’s Western development aid programs have come to share several common features: (1) aid tends to be large-scale and provided on a regular basis; (2) distribution tends to be an open (i.e., transparent) process and is generally available to nearly all poor countries; (3) aid tends to be concessionally financed and untied; (4) and finally, aid policy is typically devised by technical experts and economists and is ostensibly geared toward the alleviation of poverty and the promotion of economic development (Lumsdaine 1993; Krueger 1993; Krueger, Michalopoulos, Ruttan 1989; Raffer and Singer 1996). In a study that examines the national priorities that three important donors attach to development assistance, it is important to first briefly review the arguments that purport to explain the institutionalization and evolution of Western development aid. In reviewing these arguments, it becomes clear that the literature is hard-pressed to identify universal motives that satisfactorily explain the generally simultaneous institutionalization of national aid programs among the industrialized Western
democracies and the subsequent expansion in the volume of Western foreign assistance. Indeed, development assistance has become a universal feature of foreign policy among all industrialized democracies. Furthermore, the literature, to a large extent, unsatisfactorily explains the direction and flow of bilateral development assistance from a number of donor states. Put more directly, scholars have, by and large, given insufficient attention to the relationship between theoretical models of international relations and the distribution of bilateral development assistance. One unfortunate byproduct of this is the lack of thorough scholarly and media attention to the state attributes that make certain countries appealing aid recipients to donor states, in particular, Germany, Sweden, and the United States. At any rate, development assistance is frequently rationalized by the DAC/OECD donors on a number of grounds—security, prestige, altruism, and common interests, for example. When considering foreign aid in its totality, these national interests frequently coincide. Yet donors, at particular times, and in association with certain recipients, often demonstrate an inclination toward a particular national interest— or state attributes—over others. To avoid getting ahead of ourselves, let us now turn our attention to some of the more prevalent explanations of the national motives driving foreign assistance.
Justifying the Extension of Development Assistance Perhaps a distinction should be made between the motives underlying the establishment of a national development assistance program and those that guide the granting of development assistance to particular countries at certain times. The postwar emergence and subsequent proliferation and growth of Western development assistance programs may indeed have been fundamentally based on, as Lumsdaine argues, “the
humanitarian and egalitarian principles of the donor countries, and [on] their implicit belief that only on the basis of a just international order in which all states had a chance to do well was peace and prosperity possible” (1993, 30). Ample scholarly evidence, however, suggests the opposite hypothesis: that development aid is better explained on the basis of the political and economic interests of the donor countries, rather than on the latter’s humanitarian concerns. Both arguments are defensible, depending on, for instance, the donor, the recipient, or whether one considers a national program in its totality, or the time frame, for example. This not withstanding, this paper contends that the perceived national interests that may have informed the decision to found a national aid program may or may not be those that explain its continuation or define its current character. National interests are subject to change. Or do they? According to IR theory, the way that states perceive international relations is destined to remain relatively unchanged. Perhaps the initial impetus to grant aid to the less endowed countries four decades ago coincides with the national interests of a particular post-Cold war donor, perhaps it diverges radically. This is a fundamental question, for it suggests whether foreign assistance ever really had “a shot” at succeeding. One way to look at foreign assistance is to view it in the context of foreign policy, or more precisely, as an active component of national foreign policy. As such, it is subject to similar limitations and similar themes and desires that seek to define its character. Guess rightly observes that in the case of the American foreign assistance program, aid “is frequently pressed into service of American foreign policy for ‘diplomatic’ (establish a presence by earthquake or food aid), ‘compensatory’ (military base rights in exchange for aid) and ‘strategic’ purposes (improve world order via
economic and military aid)” (1987, 3). Such grand, sometimes competing, objectives naturally open aid up to controversy and make parsimonious accounts regarding the precise objectives and perceived rewards of national Western foreign assistance programs in the postwar era difficult to produce. Especially when foreign assistance is measured— much to the chagrin of aid planners—by the success of rather nebulous foreign policy concepts as “frontiersmanship” or “containment.” As an informed observer of American foreign assistance, Guess writes that the underlying mission of aid is to “assist other countries to attain conditions (political, economic, social) that will serve world order and freedom” (1987, 3). How best to serve those noble ends invariably fall in the realm of the subjective, and are further complicated by the close relationship between foreign assistance and defense-security programs. Put another way, aid is sometimes viewed as a “cost-effective means of providing the maximum security benefits to the US without direct US involvement” (1987, 6). Many observers have noted the linkage between foreign aid and foreign policy; few have provided a rationale for their separation. Foreign assistance programs, at least among American statesmen, were to be a temporary fix after the Second World War, not a “continuing liability” (Guess 1987, 6). According to Guess, American foreign assistance programs have been subjected to “continuous retooling to meet various military and diplomatic cold war crises.” In Guess’s estimation, aid seems to have become a “permanent postwar innovation” (1987, 6), despite that it remains poorly defined and often appears as among the most controversial of foreign policy tools. In the case of official development assistance, it would be astounding to find a single set of factors that explains the aid programs of some 22 donors, distributed to some 120
recipients, over the course of forty-some years. As indicated above, critics on the right have assailed foreign aid as wasteful and ineffective tool that at best facilitates state planning and artificially buttresses socialist regimes. What is more, according the right, foreign aid is nothing more than an instrument of self-serving bureaucrats. Somewhat paradoxically, adherents of realist thought have sympathetically discussed aid in the context of national self-interests. Detractors on the left have attacked foreign aid as a neo-imperialist Trojan horse. From this perspective, foreign assistance served the Cold War interests of the various donors and disguised the destructive elements of capitalism in the Third World. All these groups contribute to a better understanding of foreign aid and illustrate the point that selfish national (or personal) motives do, from time to time, influence foreign aid. Such statements hardly constitute a revelation in international relations. As students of international politics, should we be astonished to learn that “it was hard to keep constituent and state economic [and military] interests out of aid”? (Lumsdaine 1993, 31)
Emergence The stage was set for the establishment of Western aid programs in the early postwar period. Foreign aid can trace its roots to a number of historical developments and events, many of which were noted in the previous chapter. The emergence of a Western development aid regime in the early 1960s, however, was a rather sudden and profound departure from traditional international relations. Numerous examples of foreign aid prior to the 1960s are recorded in the annals of diplomatic history, but these were relatively limited and isolated events, at least compared to the official establishment of comprehensive national aid programs in the early 1960s. What accounts for this
amazing transformation in interstate relations? The onset of the Cold War is frequently cited in the literature as the primary precipitating force behind the American-led establishment of a Western aid regime. Patrick Callahan observes that “to prevent the spread of communism in western Europe immediately following World War II and in Africa, Asia, and Latin America, the United States had to foster progressive social change through aid programs that built up economies and strengthened democratic forces. The Marshall Plan, foreign aid programs, and the Alliance of Progress grew out of that thinking” (2004, 86). Yet many of the seeds for Western aid programs were sown prior to the advent of Cold War rivalry and are found in the global depression of the 1930s, World War II, and the growth of the welfare state. Although these three occurrences are sometimes viewed as historically distinct events, they played a mutually reinforcing role in the development of Western aid programs early in the postwar period. The economic dislocation associated with the world-wide economic crisis of the 1930s, the aftermath of the Second World War, and the solidification of the welfare state contributed significantly to a domestic politic climate conducive to official aid programs in many of the Western industrialized democracies. All three events suggested a greater role for the state in international political economy. For example, the political and economic instability found throughout Europe in the wake of the war convinced the Truman administration that proactive U.S. foreign policy was necessary to both avoid further human tragedy and to limit Soviet influence. The Truman Doctrine and its attendant resource transfers to the war-ravaged nations of Europe (e.g., Marshall Plan) were consistent with the positive international role for the U.S. envisioned by American
foreign policymakers. Reflecting Washington’s perception of American exceptionalism, Truman’s Fourth Point applied the logic of the Marshall Plan to the developing world and signaled the formal inception of Western development aid, or ODA. Inside and outside the U.S., the Second World War was an alarming wake-up call and largely viewed by Western policymakers as the failure of world politics as usual during the interwar years. One of the fundamental lessons of the conflagration (as well as the economic crisis of the 1930s) drawn by many Western statesmen was that progressive foreign policy initiatives could contribute to global stability and peace by ameliorating the conditions that bred international conflict. World War Two also contributed to a general movement in the West toward decolonization. The newly independent, generally poor successor states were natural targets of Western development assistance. Although Western assistance to these “developing” successor states reflected a number of donor interests, the advent of the Cold War ascribed geo-strategic value to the developing world. Especially in the U.S., Cold War politics offered an important security rationale for the collective transfer of resources from the West to the developing nations of the South. Cold War politics also played some role in the establishment of the German aid program, if for no other reason than Bonn’s desire to honor its commitments to the Western Alliance and to isolate East Germany. Aid-giving states, of course, justified the adoption of foreign aid programs on a variety of nationalistic impulses, many of which were not simply reducible to security concerns. In Sweden, where a formal position of neutrality in international politics enjoyed broad public support throughout the twentieth century, the notion that Cold War politics should dictate aid policy was largely unpalatable and politically unrealistic. Indeed, the security dimension of ODA among
some Western donors, while certainly important, obscured other equally important rationales for the extension of aid in the Cold War period. Interestingly, those states that justified aid on strategic arguments were found by Lumsdaine (1993) to demonstrate comparatively weaker commitments (quantity and quality) to aid than donors who justified assistance on humanitarian or commercial imperatives. As indicated by the Swedish example, security concerns associated with potential Soviet expansion varied in importance among Western aid agendas. Accordingly, aid programs were justified on the grounds that aid promoted commercial, cultural, and humanitarian interests. Where the war had devastated national economies, Western European states could hardly justify the expense of an aid program if it did not at least potentially facilitate access to foreign markets and trade and thus contribute to economic reconstruction. Aid could also help maintain cultural linkages between the donor and former colonial possessions. Such was an important justification for the French and British aid programs. Further, in so far as aid was intended to assist the needy nations of the world, it satisfied important humanitarian impulses thus facilitating the establishment, institutionalization, and perpetuation of national aid programs throughout the industrialized democracies. Finally, in states where progressive social welfare policies were firmly grounded, such as in Sweden and in West Germany, the logic of the welfare state provided a powerful and generally popular rationale for the establishment of foreign aid programs. In such cases, foreign aid was the natural extension of the welfare state to poor nations. The extent that an aid program reflected the internationalization of the Western welfare state varied from donor to donor, of course. Still, recent studies (e.g., Lumsdaine 1993)
indicate that where the welfare state was most evolved, humanitarian concerns contributed significantly to the establishment of a national aid program. Moreover, Lumsdaine finds a strong, positive connection between aid programs rationalized on humanitarian-moralistic grounds and the quality of aid. In sum, those states with pronounced social-welfare policies tended to base their aid programs on humanitarian concerns and consistently demonstrated a greater commitment to quality foreign aid over time than those states that justified aid on strategic, economic, or cultural imperatives (Lumsdaine 1993). It is difficult to account for the nearly universal materialization of ODA programs throughout the Western world at roughly the same point in history by adopting a countryby-country approach. As Lumsdaine suggests, looking only at American aid, one might hypothesize that it was inspired by American exceptionalism in foreign policy or informed by U.S. hegemony. German aid alone might be attributed to overseas commercial interests; or French aid alone might appear as a convenient tool by which to disseminate her proud cultural traditions (1993). National variations in aid policies and motives are still evident among the Western democracies, although perhaps to a lesser extent with the end of the Cold War (a point more fully explored below). At any rate, single-country explanations do not explain why similar assistance programs developed throughout all of the industrial democracies at roughly the same time and have remained in practice for nearly 50 years. Naturally, there was some degree of imitation from country to country, but this is no explanation of why aid was uniformly found attractive by the Western democracies. Nations do not often copy policies they find unattractive or detrimental. The important question here seems to be: Why did so many countries find
the notion of foreign aid appealing at roughly the same point in time? The rationale for joining an aid regime may be reflected in how donors allocated their resources—or more precisely, what types of states received aid. According to Lumsdaine, even a cursory examination of Western assistance distribution prior to the collapse of the Soviet Union suggests that aid programs were oriented more to the alleviation of poverty and economic development than to countries of political and economic importance to donors. He further finds that there seems to be a correlation between aid and trade, although it is small and arguably insignificant. Indeed, some studies statistically indicate a positive relationship between trade and aid among some donors, and a weak or negative relationship between aid and poverty among others. Nevertheless, the total figures on aid, asserts Lumsdaine (1993), indicate a strong relation between aid and need. Furthermore, argues Lumsdaine (1993, 39), seen in their totality, most aid programs required that resources were invested only in specific, “developmentally relevant” projects. Often, projects were chosen that at least theoretically benefited the poorest people in the recipient countries. Aid administration in most donor countries is managed in administratively separate aid agencies and handled not by diplomats or politicians, but by technical specialists and economists, who are at least ostensibly apolitical in their professional duties. Moreover, there are fewer instances of tied aid, that is, assistance that is contingent upon recipient purchases of donor products. In other words, aid became less a quid-pro-quo proposition. Finally, many donors earmarked an ever-increasing proportion of their aid budget to multilateral institutions. Traditionally, the former has tended to favor large poor countries more so than have bilateral programs.
Perhaps another way to uncover what informed the institutionalization of foreign assistance programs is to look at countries that were strong donors. Studies examining aid as a percentage of gross national product (ODA/GNP) indicate that among the industrial democracies, the countries with strong domestic social welfare programs and those that maintained high private contributions to private voluntary organizations tended to be the stronger aid donors. As a corollary, individuals and political parties who favored a strong welfare state tended to support higher quality aid programs and increased concessional commitments to the poorest of the world’s countries. Countries with extensive colonial or commercial interests in the Third World tended to fall somewhere in the middle of aid spending. The country with arguably the greatest overseas strategic concerns, the United States, was not among the big spenders. The Scandinavian countries of Norway and Sweden, with their highly comprehensive and rather developed domestic social welfare programs, maintained aid programs of “high quality” focused on the neediest countries. Norway and Sweden also allocated a much higher percentage of their respective GNPs to aid. The United States, with its apparent admixture of humane and political rationales for aid, has reduced its commitments over the years. When compared to other types of countries, the advanced democracies demonstrated a commitment to aid that no other group of countries had demonstrated. For example, the Soviet Union and her East European “allies” developed “aid programs” through the Council for Mutual Economic Assistance (CMEA). Though inspired by the Western model, CMEA assistance programs were much smaller by comparison, were fully tied to products in the CMEA countries, consisted mainly of loans, had little or no multilateral component, and focused—especially after the initial few years, on a select
few strategic allies—namely Cuba and Vietnam. The Eastern bloc had nothing that was similar to the widely distributed, concessionally granted aid programs characteristic of all the industrial democracies (Conteh-Morgan 1990; Lumsdaine 1993). Even if the notion that egalitarian and humane principles contribute significantly to the inception and perpetuation of Western aid programs is accepted, we would be deluding ourselves to believe that foreign assistance is driven by Third World poverty alone. Despite the fact that most aid programs were managed by professionals and experts and were to a greater or lesser degree insulated from their countries’ foreign bureaus, they could not always remain above or outside the political fray. It would be unrealistic to expect domestic politics not to enter into the aid dialogue—both in determining the aid budget and in determining the direction of assistance and the volume of assistance allocated to particular countries. For instance, in the early years at least, a substantial portion of aid was tied to purchases in the donor countries (Schulz 1995). Office holders and business interests naturally wanted some guarantee that aid would not be utilized to strengthen foreign competitors, at least not at the donor’s expense. During the Cold War years, perhaps as much as half of all U.S. bilateral development aid was specifically intended to serve American security interests, it being reserved to special allies like Egypt, Israel, and South Vietnam, for example. American aid for development in the 1960s and 1970s is likewise quite commonly viewed by the literature “as an instrument in Western competition for the loyalties of poorer nations” (Holbik and Myers 1968, 4). The prize of this competition was apparently some degree of economic and political good will on the part of the developing world toward the Western international system. In keeping with this approach, the United States also
refused to grant aid to countries that allied themselves to the Soviets and vowed to apply the Hickenlooper Amendment, which made countries that expropriated American firms, ineligible for American aid. The incorporation of strategic-commercial interests into the distribution of official development assistance by Western donors is not a uniquely American phenomenon. Throughout the Cold War years, Japanese ODA, for instance, has been characterized as a primer for national commercial interests. According to Krueger, Michalopoulos, and Ruttan, Japanese aid was closely linked “to countries with markets of importance to Japanese exporters” (1989, 71). As a another example, initial West German Entwicklungspolitik, or development policies, were intimately tied to American Cold War interests, as they related to Third World development. Consequently, the West German aid program was framed more in the context of the East vs. West rivalry than in any specific development doctrine. The early distribution of West German ODA reflects this in its strategic-commercial nature, as well as demonstrates “Bonn’s willingness to defend Western interests as defined by Washington” (Schulz 52, 1995; see also Schultz 1980, Sohn 1972). Another aspect of the close relationship between the U.S. and West German aid programs was the so-called Hallstein Doctrine. In the years preceding the Brandt government, West Germany unabashedly applied the Hallstein Doctrine to prospective aid recipients. As essentially a legislative rider to foreign aid appropriations, the doctrine refused to consider countries that recognized East Germany as eligible for aid (Sohn 1972). In many respects, the doctrine determined not only relations between East and West Germany, but also relations between West Germany and the developing world and it dovetailed nicely with the American conception of world order (Schulz 1995; White
1965). As a final example of how national interests can influence the direction and volume of ODA, Holbik and Myers (1968) and Krueger, Michalopoulos, and Ruttan (1989) find that historical attachments between underdeveloped and developed nations appear to strengthen legislative arguments in favor of establishing a national aid program. Belgium, British, French, and Dutch assistance throughout the sixties and seventies, as witnessed by the provision ODA to overseas territories and departments and former colonies, suggest some sort of post-colonial relationship. Even in the United States, where colonialism was officially rejected after World War II, historical ties appear quite relevant in the distribution of postwar American ODA. American assistance to the Southeast Pacific area and to Latin America reflects these historical ties and historical commitments. A sense of responsibility seems to underlie U.S. development aid to a number of countries and possessions in the Southeast Pacific that dates back to American efforts to remove first the Spanish and then the Japanese from the area. There, as in Latin America—where the Monroe Doctrine initiated the special relationship between Latin America and the U.S.—the United States sphere of influence is quite prevalent. While strong historical ties may have justified the creation of national aid programs in a number of Western powers, other motives must be found to explain why many other Western donors, whose historical involvement in the developing world was either weak or far removed, chose to establish development aid programs and to support a Western foreign aid regime.
Other Arguments from the Literature The literature on foreign development aid offers several other explanatory motives behind the institutionalization and perpetuation of Western aid programs. Many
studies point toward statistical evidence that tends to support both the notion that the interests of the donor have commonly outweighed any consideration given to recipient needs and that the efficacy of recipient policies regarding the use of aid is of little value in determining the allocation of Western bilateral assistance (see Maizels and Nissanke 1984; McKinlay and Little 1979; White 1974). Previous studies, such as the 1989 work by Kreuger and associates, for example, indicate that the domestic political factors of the donor and historical relationships between donor and recipient figure prominently in various Western bilateral assistance agendas. In assessing American aid patterns, Conteh-Morgan (1990) and Eugene Wittkopf (1972) noted the security or Cold War concerns evident in the distribution of U.S. assistance throughout the 1960s. Indeed, among the Western donors “the idea of foreign aid has from the beginning been more closely linked with Cold War strategy in the United States than elsewhere” (Holbik and Myers 1968, 3). Even outside the United States, Cold War concerns seemed to be on the minds of many early advocates of an extensive Western aid regime who, observed Karel Holbik and Henry Myers (1968, 2), argued that “unless the populations of the underdeveloped regions learn to trust democratic capitalism now, they will soon fall into the Communist camp and be irretrievably lost” (Italics in the original.). Western assistance could facilitate such “trust” and thus lure the developing world away from the Soviet orbit. Not only would foreign assistance potentially enhance the political and economic security of the donors, it would presumably enhance the political and economic security of the recipients. Such intentions were evident in Truman’s Four Points Speech and later echoed by President Johnson in his 1965 foreign-assistance message: The Communists are hard at work to dominate the less developed nations of Africa, Asia and Latin America. Their allies are the ancient enemies of mankind: tyranny,
poverty, ignorance and disease. If freedom is to prevail, we must do more than meet the immediate threat to free world security, whether in Southeast Asia or elsewhere. We must look beyond—to the long-range needs of the developing nations (Holbik And Myers 1968, 4). Among other primary explanatory motives offered by students of foreign assistance are those that include donor commercial interests. Western governments have sought to justify and drum up support for their aid programs on the grounds that foreign assistance would advance domestic commercial interests. Development assistance would presumably facilitate the economic development of recipient nations and consequently increase their demands for goods and services from the Western industrialized countries. Theoretically, economic development would seemingly best be served by committed foreign assistance programs that sought to promote long-term, wide-sweeping economic policies through ODA that both encouraged economic development in recipient countries and enhanced donor commercial goals. But this is evidently an unrealistic or an infeasible idea for a number of donors throughout the aid years. Kreuger and associates note that “commercial interests, however, are often perceived by the donor in a much narrower and a much shorter-term perspective and pursued through much more direct means” (1989, 73). Accordingly, donors frequently employ a host of measures, such as the direct and indirect tying of aid, export credits, and the prerequisite that aid be used to finance imports, to link the allocation of foreign assistance with the procurement of goods and services from the donor country. As Kreuger, Michalopoulos, and Ruttan evenhandedly observe, these measures, to a greater or lesser extent, reflect both the commercial aims of donors and their genuine, objective desire to foster economic development in recipient nations (1989). Nevertheless, one wonders just how effective ODA can truly be when such practices are commonplace.
In light of aid in its totality, that is, over the many decades since its inception and including all DAC donors, the commercial-motives explanation suffers somewhat. According to Lumsdaine (1993) and official DAC publications (e.g., DAC 1993), over the years ODA went increasingly to the poorest nations, came with fewer strings attached, came increasingly in grant form, and was extended in growing proportions from multilateral institutions. In other words, the quality of aid improved considerably. Aid as a viable vehicle by which to further national economic interests takes a hit when the empirical evidence is examined. Over the last few decades, donors and domestic groups that have been the most supportive of aid (the Scandinavian countries, Social Democratic parties, for example) have sought not only to increase the levels of assistance but also the quality of that assistance. The commercial ties between donors and recipients, as demonstrated by trade volume, were at best a secondary concern among the chief supporters of foreign development assistance. In contrast, those donors and domestic groups that viewed aid less favorably (the United States and Britain, Conservative parties, for example) have sought to attach strategic goals to ever diminishing levels of aid. To the extent that aid was viewed as a fruitful tool of foreign policy, opponents have sought to target those recipients that furthered their national economic/commercial and political interests. Other motives that have been offered in explaining the inception and perpetuation of foreign assistance have to do with collective benefits. This line of reasoning suggests that aid could be viewed by the DAC members as an attractive means by which to secure such collective benefits as the extension of capitalism and democracy, thwarting the spread of communism, and exerting some degree of control over the developing
countries. Objections to the international public goods hypothesis often center on the socalled free-rider problem. There are other ways to secure international public goods without resorting to a foreign assistance regime. The industrialized democracies, critics would likely further argue, would not necessarily have to participate in foreign assistance to secure such collective goods. When one considers the different levels of national participation in aid, the freerider objections to the collective-interests argument are further strengthened. We would expect the U.S. to participate vigorously in the aid regime. Typically, the largest country has the most to gain from the maintenance of the regime—especially if that country initiated it—and the most to lose from the dissolution of the regime. The U.S. has enjoyed a unique position relative to other donors in the Western aid regime (although this is less true today) in the sense that it could single-handedly disrupt or even break the regime. Yet, as has been already noted, while the U.S. participated strenuously in the early days of Western ODA, it has since decreased its commitments. Furthermore, the collective self-interest rationale for foreign assistance is not easily reconciled with increasing levels of aid by smaller countries like Norway and the Netherlands. Nor does this rationale satisfactorily explain why countries like Finland, Ireland, and New Zealand opted to start aid programs well after the Western aid regime was well established and when their donations would not would seriously impact the overall distribution of Western assistance. Why would these countries entangle themselves in collective agreements? Why not go it alone? Finally, collective self-interest does not adequately explain why donors continue to channel varying percentages of their aid budget to multilateral institutions, which traditionally have focused on the least developed countries
(Lumsdaine 1993). Nor does the rationale account for varying degrees of tied bilateral aid among donors. At any rate, even in the absence of U.S. leadership (or as it waned), DAC countries might have sought to further their perceived economic interests through foreign assistance. From a neoliberal institutional perspective, Stephen Krasner (1983) and Robert Keohane (1984), among others, consider how sustained cooperation even among self-interested states is possible, especially when a regime is established by the dominant power. Accordingly, a Western foreign aid regime was initially constructed to enhance collective interests by providing public goods to its members (e.g., security, access to foreign markets, open and free trade, etc.). Such a regime—through hegemonic persuasion and diplomatic arm twisting, open monitoring, and set targets of spending— would overcome the free-rider problems associated with the provision of public goods and provide its members with certain benefits. As such, members would simply “pinch in” to further the collective interests of the group. In such a scenario, the foreign aid regime would be driven less by altruistic motives than by national self-interest. Over time, however, international regimes, including the Western aid regime, may evolve into something different than their architects’ had originally intended. International regimes may become institutionalized to such an extent that they survive even after their raison d’être loses relevance. So while the Western aid regime was inspired by American Cold War security and economic concerns, the regime persists, even thrives in some circles, despite that U.S. hegemony waned, despite that the U.S. reduced its commitment to it, and despite that the Cold War has ended. The character of the regime has changed, as evidenced not only by its post-Cold War existence but also by the fact that it continues to
draw popular support in many donor nations, particularly among those nations that reject the security and economic dimensions associated with aid. Even if the Western aid regime has evolved from its security and economic rationale to a more humanitarian effort, it still allows donors to pursue a number of interests in a relatively structured and peaceful manner. Also possible is that the expectations driving the Western aid regime are different than those that precipitated its establishment. Critics challenge the neoliberal notion that Western states would collectively seek to enhance their political and economic security through an aid regime. For instance, while it is true that the DAC has established goals and guidelines, there are neither universal standards nor firm agreement among members in regard to which countries should receive aid and how much these countries are to receive. Furthermore, while it is true the DAC monitors aid transfers and sets targets for spending, there exists no formal machinery for the enforcement of those guidelines and targets—compliance is voluntary. Also troubling are the national variations in the amount spent, the direction or distribution of assistance, and the percentage of tied aid. The numerous national variations would seemingly make free riding on the DAC efforts quite possible. Moreover, it seems curious that a country would increase either the quantity or the quality of assistance (which some did), when no matter its contributions the donor’s reputation could hardly suffer from failing to meet DAC goals. The argument that aid furthered collective economic interests is also difficult to square with the willingness of donors to devote a percentage of aid disbursements to multilateral institutions. The policies of multilateral institutions are not always designed to parallel the policies or goals of the DAC community. Nevertheless, neoliberal thought allows for these national variations in aid
policy within the overall framework of a Western aid regime. Although the regime lacks formal enforcement machinery, it does establish norms and expectations that shape state behavior which is typically in accordance with guidelines set forth by the DAC. Thus, while states voluntarily join the regime, their participation is publicly recorded and subject to annual monitoring. Moreover, while as members of an international aid regime, donors operate with some degree of autonomy, it is a mistake to assume that the regime is reducible to individual state interests. In other words, the sum total of the regime is more than its constituent parts. There are additional explanations for the rather sudden emergence of a Western aid regime. For instance, American postwar hegemony, albeit cynically perhaps, is frequently credited as a major force behind the creation of the Western aid regime. Foreign aid, at least theoretically, served the hegemonic strategic interests of the United States by extending international capitalism and enticing the Third World away from the Soviet orbit (Conteh-Morgan 1990; Schulz 1995). Aid was one method by which to secure the Western alliance and other American goals. Through the process of “burden sharing” (which was stressed by the U.S. soon after the onset of Cold War), the “dependent” allies would share in the costs of the Western Alliance. Foreign assistance was one way in which, so the argument goes, the other industrial democracies could help pick up the tab of the alliance and in doing so would help secure such valuable international and domestic assets as international political stability, fighting communism, and facilitating trade and prosperity (Lumsdaine 1993). There are some problems with the theory that American hegemony and American Cold War concerns (i.e., the Communist “threat”) account for the establishment of
foreign assistance programs throughout the Western industrial democracies after the Second World War. There are even greater difficulties if one attempts to use the American hegemony-Communist threat thesis to explain the continuation of Western foreign aid into the post-Cold War era. Many of these problems have been alluded to or discussed above. First, it is clear that the United States played the dominant role in initiating the Western foreign assistance regime that arose following World War II. In reality, the establishment of such a regime could probably not have occurred otherwise, that is to say, without American leadership and guidance. Put quite simply, the United States alone emerged from the war with the economic capability to undertake such an enterprise. The global conflict had severely strained or destroyed many of the industrialized economies of world. In fact, many of today’s DAC countries were more likely to be recipients of foreign (i.e., American or Marshall) aid in years that followed the war than to be donors of aid. At least as far as the U.S. is concerned, the Communist threat embodied in the Soviet Union figured highly in the decision to establish a national aid program and to push a Western aid regime. As discussed above, foreign assistance programs could theoretically help buttress the Western alliance in several ways. In fact, it is probably not much of stretch to say that official American assistance may not have become a reality without the presence of the “Communist menace.” Perhaps this sounds a bit too convenient. Nevertheless, it seems hard to imagine the Marshall Plan or Truman’s Fourth Point—two events that arguably set the stage for official foreign aid programs— without the Soviets. Indeed, in many respects, aid could be devised in such a manner to fit in nicely with the leading American foreign doctrine of the day—containment.
Indeed, as James Mittelman observes: The purpose of the Marshall Plan was to strengthen Europe as a bastion against the Soviet Union, and the recipients of aid obtained non-repayable grants, not loans conditioned on bankers’ criteria of creditworthiness. Donors know that debt-ridden borrows are unlikely to repay new loans. And no one seriously believes that aid is a disinterested gift (1988, 50). While American hegemonic influence and Cold War concerns may have been the principle driving force behind the establishment of many Western aid programs, such influence and concerns unsatisfactorily explain the perpetuation of those programs, not to mention the establishment of new national assistance programs. They also fail to account for the variations in aid levels among contributors. More specifically, if U.S. influence determined assistance levels we would expect aid to vary with American strength, or with American commitments to foreign assistance (as measured by American contributions). The United States was the leading power in initiating Western ODA programs and, early on, participated earnestly. Shortly after the institutionalization of foreign assistance, however, U.S. support for the Western aid regime waned. Nevertheless, as U.S. influence decreased (and its strategic advantage over the Soviet Union also eroded), aid from many “independent” donors (e.g., Sweden, Norway) actually increased. In these cases, aid was inversely related to U.S. strength and American commitment to aid. Moreover, few DAC members framed their assistance programs in terms of American strategic interests. The vast majority of DAC contributors focused on developmental objectives, de-emphasizing not only American strategic interests, but also those countries that would seemingly be of greater economic importance to the donor. For example, from 1965 to 1980 India received approximately twice as much DAC aid as did Brazil and Mexico combined. Yet Brazil managed over twice, and Mexico three times, the
trade with the West than did the poorer and more populated India (Lumsdaine 59, 1993). Further inspection of DAC aid distribution appears to reinforce the notion that the Soviet threat, at least among most aid contributors, was primarily an American fear. Defining development assistance in Cold War (that is, American) terms seems to have been fairly unattractive to a number of DAC members, as demonstrated by the distribution of assistance and the quantity and quality of that assistance. To some DAC members, like Sweden and Switzerland, which had traditions of neutrality, and Austria and Finland, two countries that found themselves in positions of somewhat forced neutrality, the idea of utilizing aid to secure American strategic Cold War concerns (namely, Communist containment) was controversial at best, impossible at worst. Even steadfast American allies like England and Germany, two countries firmly involved in the Western alliance to stem Soviet expansion, were often vocal in their reluctance to use aid as a Cold War tool. In addition, much to the dissatisfaction of U.S. cold warriors, European aid often demonstrated a preference for egalitarian regimes that were steady detractors of the American-led international system, such as Tanzania. Though European assistance to socialist Tanzania was in many American circles annoying, the European aid transfers to Allende’s Marxist regime in Chile, or aid to countries that were considered by the U.S. as Communist enemies, such as Cuba or North Vietnam, were particularly objectionable, if not frightening. In sum, development assistance as a counter balance to Soviet influence varied greatly among Western nations as a motivational force (Holbik and Myers 1968). As shown above, Cold War arguments have limited value in predicting which Western countries will strongly support a Western aid regime. After all, the United
States was and remains resolutely anti-Communist, but has in relative terms been delinquent in its aid commitment. Ardently anti-Communist, the United States should figure among the most zealous of Western aid supporters. While this may have been true in the institutionalization of the Western aid regime and the years that immediately followed, the American commitment to aid fairly quickly became questionable. Meanwhile, Western states that have avoided attaching anti-Communist concerns to aid have maintained a strong commitment to aid before and after the end of the Cold War. If the threat of communism were the motor force driving Western aid, we would expect diminished levels of aid in the post-Cold War era now that that threat of communism has effectively disappeared. Paradoxically, the anti-Communist motive behind aid may have harmed as much as it facilitated Western aid. Lumsdaine rightly observes that opposition to communism played an important, “transitionary role” in establishing a Western aid regime. Particularly in the U.S., and to a lesser extent in Europe, securing conservative support for a national assistance program may well have been impossible without linking aid to anticommunism. When, however, aid failed to thwart leftist revolutions in the Third World, this linkage served to undermine and ultimately erode support for aid. As the anti-Communist rationale for foreign aid appeared more and more flimsy, the character of aid was tarnished and its domestic support, especially in the United States, was weakened. Ironically, where the connection between aid and anticommunism was the strongest, support for aid now seems to be the weakest (1993, 56-7). Furthermore, one may find it surprising that in a bipolar international system, where a tit-for-tat strategy often characterized the confrontational East v. West
relationship, the Soviets chose not to utilize aid in a manner similar to the Western aid regime. Assistance from the Eastern bloc was quite limited in scale (despite initial more generous promises) and was channeled almost exclusively to close allies, such as Afghanistan, Cuba, and Vietnam. In contrast to DAC/OECD aid, the Soviet bloc demonstrated little regard for the multilateral distribution of aid through UN organizations, for example, and allocated only a small percentage of aid to a few nonaligned states like India. In Lumsdaine’s estimation, “If aid chiefly constituted a newly effective means of political influence for superpowers, blocs, or individual nations, it would be surprising to find groups of competing nations behaving so differently” (1993, 56). Perhaps Lumsdaine has a point. Clearly there are differences in DAC or Western aid and aid emanating from the Soviet bloc. But there are also suggestive differences in aid distribution within the Western bloc. At first glance, American aid shows a greater concern for security interests than do the other DAC members. In this respect, American aid is similar to Soviet aid in its apparent security dimension. The sudden appearance of national aid programs could also be justified on other grounds, such as prestige, influence, or bureaucratic interests. Smaller powers, in particular, may have sought some degree of international prestige through the adoption of a national aid program. A national aid program would conceivably offer smaller powers an international role that might not otherwise been available. Such a role could enhance a donor’s existing reputation—whatever that reputation might be—or foster a reputation that the donor seeks to disseminate throughout the international community. Sweden, for instance, has a reputation as both a generous donor and possessing a relatively progressive and dedicated foreign assistance program, in that the Swedish program
appears to take into account more fully recipient needs rather than domestic interests. Nevertheless, “reputation” and “prestige” are rather hazy concepts, especially when taken in the international context, or in the context of national interest. It is hard to see what tangible benefits might accrue to a state renown for its foreign assistance program. One supposes that a tenable argument could be made that having the reputation as a generous donor might generate international prestige and thus help sustain the domestic support necessary to perpetuate an aid program. Reputation and prestige, nevertheless, seem to offer little insight into why a country would initiate an aid program in the first place, unless perhaps the failure to do so is perceived at home as damaging to the state’s international standing, or its international reputation. Moreover, that a nation would actively seek the reputation as a generous donor of foreign assistance suggests a profound shift in customary state behavior. Why would a country wish to be recognized internationally as a generous donor? Traditionally, the international system has been perceived by nation-states as favoring and rewarding power and wealth. States have accordingly sought to maximize their military might and economic wealth vis-à-vis other international actors. It is much easier to understand why a state would seek the reputation of military or economic strength rather than the reputation of a charitable donor. After all, the reputation for military or economic strength would seem to offer states concrete advantages that might further their national interests. It remains unclear how generosity in the allocation of foreign aid can be easily translated into national interest or why a state should attempt to do so. When states undertake certain activities for the sake of international reputation or prestige they do so because they perceive some value in reputation or prestige. The type of international
reputation a nation seeks to foster through the distribution of development assistance offers us not only insights into the character of the international system, but also insights into the type of actor the nation wants to be seen as in the international system. Consequently, as Lumsdaine points out (1993, 64), to say that Sweden, for instance, 'sought prestige' as a generous donor of foreign aid is to raise the question of why it wanted to be seen as that sort of an actor. If what the international system favors is power, and if nations seeking to advance their interests seek those capacities that give them wealth and power, then to seek 'prestige' as a donor is not to seek to advance national interest (Italics in the original.). Perhaps in this instance, then, to pursue the reputation as a charitable donor reflects less the desire to further traditional national interest than the desire to do the “right thing.” In other words, generous aid programs that seem driven by moral or altruistic motives perhaps reflect less concern for the tangible or intangible benefits that donors may collect in the name of national self interest than a genuine concern for the welfare of developing countries. The rather sudden emergence of national aid programs within the Western industrialized democracies might also be accredited to bureaucratic interests or the desire to exercise some degree of control or influence over aid recipients. These explanations suffer from what are now familiar defects. First, domestic aid agencies and various aid constituencies naturally have an interest in promoting the perpetuation of the aid program—doing so justifies their existence and allows opportunities to strengthen the importance of their positions. While bureaucratic interests are helpful in explaining the continuation of aid, they tell us little in respect to why aid programs were instituted in the first place. There had to be a reason (or reasons) to establish a national aid program and its attendant bureaucracies, as well as reasons that made their perpetuation possible.
Even with bureaucratic interests contributing to the preservation of aid, the aid bureaucracies did not, and do not, operate in a vacuum, and therefore must appeal to a larger audience outside official aid constituencies to sustain their relevance. Finally, Western donors may seek to utilize aid as a vehicle through which to exert some degree of control or influence over aid recipients. While all donors probably wish to influence recipients in one way or another through the dispersal of (or the threat of withdrawing) foreign assistance, former colonial powers, in particular, are inclined toward using aid as a means of influence over existing or past colonial possessions or mandates or as an attempt to preserve ties between the home country and the periphery. This line of reasoning, however, does not satisfactorily explain why Western countries with limited or no colonial history would initiate an aid program at roughly the same time as the Western colonial powers. Nor does it explain why colonial powers simultaneously would want to employ aid, rather than more conventional or traditional means, to retain post-colonial relationships.
In Summary This chapter has reviewed the most significant motives offered by previous aid studies that purportedly explain why national aid programs were instituted in the first place and why they have survived. The literature is helpful in identifying the various motives driving the establishment and the perpetuation of national development assistance programs and the Western aid regime. While Lumsdaine makes a strong argument that only humane internationalism offers a viable explanation of Western foreign aid, both in its original implementation and its perpetuation over the years (1993), the comparative aid literature clearly indicates that donors seek to satisfy a number of
different objectives through the extension of ODA. Thus, the aid picture remains cloudy, even insensible at times. Some of the confusion results from the literature’s sporadic incorporation of IR models into aid research. It is small wonder that the bilateral aid policies of Germany, Sweden, and the U.S. appear either incoherent or contradictory when they are removed from their theoretical and international context. To add more clarity to the aid debate, this study has turned to several theoretical models of IR, which suggest that particular state attributes are attractive to donors and thus determine their aid distribution. The IR models are valuable instruments in discerning potential aid patterns and they provide some structure to comparative aid research. They also offer an important global perspective, in that aid is not separated from its international context. Foreign aid represents a microcosm of donors’ foreign policy objectives and as such reveals how donors perceive the international environment. In other words, the distribution of foreign aid reflects the capability of competing IR schools of thought to explain inter-state behavior. In chapter five, attention is given to state attributes assumed by IR models to account for the direction and volume of ODA. The IR models, or more accurately, the independent variables generated from these models set the stage for the quantitative analyses that follow. As will become evident, the hypotheses are arranged according to IR theory and constructed to reflect expectations regarding “attractive” aid recipients during and after the Cold War.
PART II RESEARCH STRATEGY
CHAPTER 5 VARIABLES AND HYPOTHESES Several hypotheses have been constructed to evaluate the American, German, and Swedish aid programs, the relevance of the peace dividend (i.e., the end of the Cold War), and the explanatory power of major theoretical models of international relations, as they apply to the direction and flow of American, German, and Swedish ODA. As with the hypotheses that follow, the independent variables are arranged into four (somewhat) loose categories: Geopolitical, Statist/Commercial, Ideological/Humanitarian, and Domestic. The variables under the Geopolitical heading are dichotomous in nature, while the Statist/Commercial and Ideological/Humanitarian variables are primarily continuous, interval-level and ordinal-level measures. The fact that all of the geopolitical variables are dichotomous (with the possible exception of population) is problematic. While there is precedence in the quantitative foreign aid literature for such measures, they are arguably rather unsophisticated measures and obscure a variety of nuances from state to state. Categorizing a state as either/or does sacrifice information, but the relative ease with which these variables are constructed and the fact that they, for the most part, remain accepted by the literature as legitimate indicators of Western aid make their use practical. Moreover, the interval and ordinal level measures capture many of the state nuances ignored by the dichotomous variables.
As mentioned above, the hypotheses are based on assumptions generated by various approaches to IR (see Table 1). Many of these hypotheses, or at least variants thereof, have been tested against the distribution of total American aid expenditures (Meernik, Krueger, and Poe 1998) or against specific components of U.S. foreign aid (Poe and Meernik 1995; Zimmerman 1993). What makes this study unique, at least to my knowledge, is that these hypotheses have yet to be systematically applied to the direction and flow of bilateral ODA in a cross-national survey that takes into account the end of the Cold War era. Moreover, little attention has been given to ODA as a surrogate measure for the explanatory power of theoretical models of IR as they apply to three Western donors during and after the Cold War.
TABLE 1 DECISION AND FLOW OF BILATERAL ODA BASED ON IR THEORY Geopolitical Statist-Commercial IdeologicalHumanitarian Realism X Neorealism X X Idealism X Neoliberalism X Neo-Marxism X
Geopolitical Hypotheses (GPH) GPH1: States with an American Military Presence (MP). States that maintain an American military presence are more likely to receive ODA and greater levels of ODA during and after the Cold War, but that the importance of U.S. military presence will diminish in the post-Cold War environment. Aid could be used to reward states that enhance U.S. force projection by allowing an American military presence, could be used
by recipients to strengthen their own military forces, could be used to sustain a regime friendly to the U.S., or could be used to finance joint military exercises (Meernik, Krueger, and Poe 1998; Poe and Meernik 1995). South Korea and the Philippines, for instance, would seemingly fit these conditions. In some cases, an American military presence is not indicative of a defense agreement between the United States and the host nation, but follows a peace-keeping mission or military hostilities, such as the American presence in Bosnia or Iraq. In such cases, ODA could be used to facilitate the political and economic re-stabilization of nations that have experienced serious disruptions in civil authority. Military presence is defined by at least one hundred active-duty military personnel who are permanently stationed in host countries. Forces that are temporarily deployed for covert or classified operations or forces deployed for humanitarian relief do not constitute a “presence” in the sense employed here. Also excluded from consideration are those forces not under direct control of the United States or the North Atlantic Treaty Organization (NATO). Accordingly, UN sponsored forces that may or may not include contingents from the U.S. or NATO member-countries are disqualified. This definition also avoids the tricky business of quantifying the approximately 12,000 American overseas military bases or installations from 1945 to 1988 that have housed (sometimes on a regular basis) U.S. forces. As such, the United States enjoys access to hundreds of military installations in allied or friendly countries and territorial possessions that are occupied by only a handful of military personnel. While most of these installations are owned and maintained by the U.S. government and generally indicate security agreements between the U.S. and host nations, they alone do not constitute a
military presence. Many overseas facilities that are frequently utilized by American air, land, and naval forces are in fact owned by foreign governments (Blaker 1990). Unquestionably, access to these facilities contributes significantly to U.S. military capabilities in the area, but military capability is not within the purview of this study. Admittedly, access to these foreign-owned installations also suggests some degree of American “presence.” Yet “access,” per se, is not the central component of this variable in the distribution of ODA. Moreover, this presence is discretionary, in that the extent of any American presence is contingent upon the approval of host governments. Finally, the United States maintains military offices in most countries which serve diplomatic or liaison functions between the U.S. and the host governments. For example, throughout the 1980s, the U.S. maintained a greater military “presence” in the former Soviet Union (e.g., 43 in 1980, 51 in 1984) than in most of the former’s Latin American allies who were and are obligated to mutual defense under the Rio Treaty of the Organization of American States (OAS). U.S. military personnel in Soviet Russia thus can hardly be viewed as a military presence. Only when a substantial number of military personnel regularly occupy facilities owned by the deploying government or the host government can we speak of a visible military presence in any real sense. Scholars have long suggested a link between a U.S. military presence and the extension of American foreign aid (e.g., Meernik, Krueger, and Poe 1998). And while it should be noted that neither a German nor a Swedish overseas military presence is expected, of course, both donors arguably have an interest in aiding countries that maintain an American or NATO military presence. As a NATO member and a country that allows a considerable American military presence within its own borders, Germany
may seek to strengthen the Western alliance by extending aid to countries that host American troops. Extending ODA in such a manner may also indicate a German desire to shoulder some of the burden associated with maintaining the Western alliance, an alliance that guarantees its territorial integrity and its political sovereignty. Even Sweden, which has eagerly professed its neutrality and appeared throughout the Cold War to relish its distance from entangling alliances, may tacitly acknowledge the worth of the Western alliance through the extension of aid to countries that allow an American military presence. To ascertain the potential linkage between the extension of ODA and an American military presence, this study constructs a dichotomous variable coded 1 for nations that have a U.S. military presence of at least 100 military personnel and 0 for those nations that do not. The data used to indicate military presence/no military presence were obtained from the Department of Defense (DOD), Washington Headquarters Services, Directorate for Information Operations and Reports, Selected Manpower Statistics (1979, 1984, 1994, and 1999). Additional reference material was obtained from the U.S. State Department (1998) and Harry Magdoff et al. (2002). GPH2: Allied States (AS). Allied states, especially those involved in civil or interstate wars (Allies At War, AAW) are more likely to receive ODA and greater levels of ODA during and after the Cold War, but that the importance of alliances and allies at war in determining aid distribution will decrease in the years following the Cold War. Development assistance could enhance the donor’s security by sustaining existing alliances and help offset the costs of training allied military personnel and allied military exercises (Meernik, Krueger, and Poe 1998). Formal alliances, that is to say bilateral
Mutual Defense Treaties (MDTs) or multilateral security alliances, such as the Tripartite Security Treaty Between the Governments of Australia, New Zealand, and the United States (ANZUS Pact), NATO, the Western European Union (WEU), and the Rio Pact, as well as defense agreements indicated by military base rights, define allied states (Schraeder, Hook, and Taylor 1998). A dichotomous variable is constructed to indicate the relationship between ODA and allied states. Thus, allies are coded 1, while nonallied states are coded 0. A number of independent states are dependent upon other governments for their defense. As such, they are counted among allied countries. These states typically have the status of commonwealth nations or have entered into “free association” with another government. In the case of the United States, the Federated States of Micronesia, the Republic of Palau, and the Marshall Islands, for instance, are freely associated states and have entered into defense agreements that make them dependent upon the U.S. for their security. In addition, the U.S. typically maintains and operates military bases in these countries. For these reasons, these countries are considered allied to the United States. They are not, however, assumed to be allied to Germany (and certainly not to Sweden). Data regarding membership in formal security agreements were obtained from various volumes of the Political Handbook of the World (1980, 1984-85, 1994-95). Data regarding base rights were obtained from the U.S. DOD, Selected Manpower Statistics (1979, 1984, 1994, and 1999), the U.S. DOD’s Base Structure Reports (1999), and Blaker (1990). In addition, publications by the US State Department (1998) and Magdoff et al. (2002) provided useful reference material. Finally, Israel and Taiwan are included as U.S. allies, although no formal mutual security agreements exist between the U.S. and
Israel and the U.S. and Taiwan. The United States does not own or maintain military bases in either of these two countries for that matter. Nevertheless, the U.S. has demonstrated a level of commitment to the territorial integrity of these two nations that makes it difficult to exclude them from the group of American allies. States that were once considered formal allies, such as Iran through the Central Treaty Organization (CENTO), but have since renounced allied status, naturally would not continue to qualify as allies. To reverse this logic, Taiwan (as indicated above) would informally remain a U.S. ally. The now defunct South-East Asia Treaty Organization (SEATO) is not considered relevant to this study in determining U.S. allies, though many of its members remain allied to the United States through other defense agreements. Aid could also bolster allied states involved in interstate or civil wars. It could also be used to facilitate the rebuilding process that often follows militarized conflicts. States involved in armed conflict were identified by the Uppsala dataset (Gleditsch et al. 2002). The Uppsala dataset on armed conflicts is the product of a joint effort by the Conflict Data Project in the Department of Peace and Conflict at Uppsala University and the Conditions of War and Peace Programme at the International Peace Research Institute, Oslo (PRIO). The Uppsala dataset records varying levels and types of armed conflicts from 1946 to 2001. Previous longitudinal studies interested in internal or external armed hostility have primarily relied on the Correlates of War (COW) dataset. The chief reason for choosing the Uppsala dataset over the COW dataset is the difference in the minimum battle casualties required by each to qualify for inclusion. The COW dataset maintains a fairly high threshold of 1,000 annual battle-deaths, while the Uppsala
dataset employs a less strict threshold of 25 annual battle-deaths. Naturally, the lower threshold used by the Uppsala is likely to produce a more comprehensive, or at least a larger, dataset. To illustrate, the relatively high threshold of the COW project disqualifies from the dataset such notable and persistent armed conflicts as the one in Northern Ireland. Since it broke out in 1969, the Northern Ireland conflict has claimed 3000-plus casualties, but has not in any single year produced 1,000 battlefield deaths and is thus excluded from the COW data. In most years of the conflict, casualties exceeded the 25 necessary to qualify for inclusion into the Uppsala dataset (Gleditsch et al. 2002). Again, this relationship is best indicated by a dichotomous variable. Allies at war are coded 1, all others 0. GPH3 and GPH4: Border-States Communism (BSC); Border-States Islam (BSI). States that border countries with regimes ideologically “hostile” to Western values, namely Communist regimes and Islamic republics are more likely to be ODA recipients. It is hypothesized that Communist-border states are more likely to receive ODA and greater levels of ODA during the Cold War than after; inversely, states that border Islamic republics are more likely to receive ODA and greater levels of ODA after the end of the Cold War than the years preceding it. Accordingly, border-states are designated 1. All others are designated 0. As a strategic goal advanced throughout the Cold War by the United States and, with a greater or lesser degree of enthusiasm by its allies, donors may have attempted to contain the spread of communism by extending ODA to states bordering Communist nations (Meernik, Krueger, and Poe 1998; Wittkopf 1972). Development assistance could be utilized in a number of socio-economic and political ways to reduce the
susceptibility of Communist-border states to subversive elements emanating from “next door.” Moreover, extending aid to Communist-border states could facilitate access to potential forward bases, or strengthen existing forward bases. Communist states are identified by membership in the Council for Mutual Economic Assistance (COMECON/CMEA). Socialist countries that were not members of CMEA but nevertheless had regimes avowedly Marxist or Marxist-Leninist in principle and had outlawed non-socialist opposition, such as Albania and China or Mozambique and Nicaragua, are also considered Communist in character and thus satisfy the operational requirements of this location variable. In some cases where the political ideology of the regime is obscure, like Ethiopia, Nicaragua, and Mozambique in the 1980s, the presence of Cuban troops and/or Soviet advisors or significant amounts of aid from the Eastern Bloc help clarify matters. States identified as meeting these criteria in the years 1980 and 1985 include: Albania, Benin, Bulgaria, Burma, Cambodia, China, Cuba, Czechoslovakia, East Germany, Ethiopia, Hungary, Mozambique, Nicaragua, North Korea, Laos, Mongolia, Poland, Romania, South Yemen, Soviet Union, Vietnam, and Yugoslavia. For the years 1995 and 2000, far fewer states meet the definitional parameters to qualify as Communist. They are China, Cuba, Laos, North Korea, and Vietnam. Whether or not a prospective aid recipient is a Communist-border state is best expressed as a dichotomous variable. Accordingly, countries that physically border Communist states for the years 1980, 1985, 1995, and 2000 are coded as 1, all others are coded as 0. In keeping with more recent studies on foreign aid (Meernik, Krueger, and Poe 1998; Poe and Meernik 1995), Pakistan is included as a Communist-border state,
although the border territory of Kashmir is disputed (Wittkopf 1972). The island of Cuba produces no border states, although its geographical proximity to the U.S. and numerous Latin American and Caribbean allies, as well as its relationship with Moscow, has likely influenced the distribution of American aid. To reverse this logic, the island of Taiwan is not included as a border state, although because of its proximity to mainland China and its uneasy relationship with Beijing, it is likely treated by Washington as one. Data regarding the identification of Communist regimes were obtained from several of volumes of Political Handbook of the World. Following the end of the Cold War, the Western powers may wish to employ development assistance to stem the tide of the so-called “Green Peril” (green is the color of Islam) by extending assistance to countries that border certain Islamic republics. According to Leon T. Hadar (1992), the American foreign policy establishment began searching for new enemies soon after the collapse of the Soviet Union. Topping the list of potential enemies is the perceived threat of Islamic fundamentalism, or the Green Peril. The Green Peril is embodied by the Middle Eastern Moslem fundamentalist—the “Fundie,” to a borrow a termed introduced by The Economist (“Fear of Fundies” 1992)— “a Khomeini-like creature, armed with radical ideology, equipped with nuclear weapons, and intent on launching a violent jihad against Western civilization” (Hadar 1992, 1). It is important to emphasize that nothing in Islamic teaching, or more particularly, the Koran, advocates or encourages violence against fellow human beings, especially murder, except in cases of self-defense. Nevertheless, the fact that every known terrorist captured or sought by the United States is of Arab or Muslim origin creates an unfavorable image among Americans, for example, that the two are inseparable. This
suggests both a real and imagined link between the Arab or the Muslin world and Islamic fundamentalism and terrorism. To say that no link exists between the two would be false, but to say that Islamic fundamentalism is synonymous with terrorism would be equally false and misguided. Indeed, most Arab/Muslim nations are suspicious of the distorted version of Islam preached by Osama bin-Laden, who has corrupted the teachings of the Koran to make a virtue of terrorism. The irony of it is that many of these nations are themselves threatened by terrorism but are reluctant to openly support America’s war on terrorism until they determine our level of commitment (Ben-Meir 2001). Development assistance may thus be an indicator of that commitment. Other Western donors, such as Germany and Sweden, may also choose to deploy development assistance in such a manner as they too might view Islamic fundamentalism as a threat to their national interests. Contrary to popular belief, Islamic fundamentalism did not arrive spontaneously on the post-Cold War international scene, but is the culmination of a number of historical events. According to Alon Ben-Meir (2001), the modern rise of Islamic fundamentalism is here summarized by three important events: the Six-Day War of 1967, the 1979 Iranian Islamic Revolution, and the 1992 Algerian experience. Israel’s unqualified victory in The Six-Day War—the armies of Egypt, Jordan, and Syria were decimated and Israel occupied three times the size of its territory in less than a week—was a shock to the Arab world and left millions of Arabs feeling profoundly humiliated. Suffering from despair, disillusionment, and cynicism, the Arab masses sought an outlet for their anger and pain. They quickly found consolation in the Mosques where fundamentalist preachers eagerly welcomed them. In the Mosques, they
were offered physical and emotional support, as well as a renewed sense of Arab community and hope for a brighter future (Ben-Meir 2001). In the Mosques, the preachers also offered their downtrodden audiences “a heavy daily dose of distorted versions of Islam, as well as targets to blame and hate for their misfortune. Israel, and its protector, the United States, were the natural enemies against which the preachers directed their poisonous verbal onslaughts in the name of Islam” (Ben-Meir 2001, 1). The Six-Day War, then, acted as a catalyst for the resurgence of contemporary Islamists. The outcome of that war and its consequences elevated the popularity of Islamic fundamentalism to unprecedented heights throughout the Arab world. Millions of Arabs flocked to the mosques immediately following the conflict and, in doing so, an attitude was produced connecting Islamic fundamentalism to antipathy for Israel and the United States which made violence against the two nations justified, even honorable (Ben-Meir 2001). A new dimension was added to Islamic fundamentalism with the 1979 Iranian Islamic revolution that overthrew the Shah of Iran. In many respects, argues Ben-Meir (2001) the Iranian revolution demonstrated to the average Muslim how Islam could be employed as an antidote to the corrupting influence of the United States and as a counterforce to American arrogance and exploitation. To facilitate the consolidation of the revolution, Ayatollah Khomeini, the leader of the Iranian clergy, squarely blamed the United States for the misery suffered by the Iranian people under the Shah’s regime. The subsequent takeover of the U.S. embassy in Tehran and the hostage crisis that followed were exploited by the Iranian clergy to illustrate both the difference between the decadent secular Arab states and the Islamic Republic of Iran and how best to deal with the “Great
Satan,” a.k.a. the United States. After the revolution, the Iranian clergy zealously attempted to export their brand of Islamic fundamentalism to the rest of the Arab/Muslim world. While the Iranian clergy were largely unsuccessful in replacing what they considered to be decadent secular Arab states with Islamic republics (Afghanistan and the Sudan being the exceptions, but are hardly models of success), they did succeed in providing the Arab/Muslim world with “contrasting images of Islamic virtue and American evil” (Ben-Meir 2001, 1). Finally, the Algerian experience in 1992 reaffirmed what many Muslims had long suspected: that the United States was hostile to Islam and was less committed to the principles of democracy and human rights than to suppressing the proliferation of Islamic fundamentalism in any form (Ben-Meir 2001). Since independence in 1962, Algerians had suffered the often-bloody vicissitudes of military coups. After 27 years of turmoil, a new constitution was implemented in 1989 that allowed for the first time the establishment of political parties to compete against the ruling National Liberation Front (FLN). The Islamic Salvation Front (FIS) had little trouble winning the 1990 provincial and municipal elections and went on to command a sizeable majority in the first round of the democratic national elections in January 1992. Deemed unacceptable by the militarydominated FLN regime, these election results were declared invalid and the second round of the elections was accordingly canceled (Banks 1995). Disgruntled supporters of the FIS took to the streets and, in the violence that ensued, thousands were killed. According to a recent article in the New York Times, more than 150,000 Algerians have been killed by both Islamic rebels and government forces since the coup in 1992 (“Voices of the Dead Echo Across Algeria 2004, 1 ). To the consternation of most Algerians and
numerous Arab intellectuals outside Algeria, the United States remained conspicuously absent from the fray. The United States, the chief advocate of democracy, was content to quietly sit on the sidelines, refusing to openly condemn the regime’s abrogation of democratic principles. Newspapers in the Arab world wasted little time in scornfully pointing out the hypocrisy of the United States. In Algeria, the United States had shown its true face—a nation at odds with Islam, willing to support even the most corrupt regimes to further its own selfish and myopic interests (Ben-Meir 2001). These three events—the Six-Day War, the Iranian revolution, and the Algerian experience—have helped create a movement that many Americans now consider more menacing that Marxism-Leninism (Streusand 1989). Indeed, according to Amos Perlmutter (1992), “Islamic fundamentalism is an aggressive revolutionary movement as militant and violent as the Bolshevik, Fascist, and Nazi movements of the past.” He further warns that Islamic fundamentalism is authoritarian, anti-democratic, and antisecular and as such cannot be reconciled with Western secular values. Its followers are “fanatic” and “suicidal.” Among its primary goals is the establishment of a “totalitarian Islamic state in the Middle East.” Such a zero-sum portrayal of Islamic fundamentalism is reminiscent of the Cold War rhetoric that described the Red Menace as “a cancer spreading around the globe, undermining the legitimacy of Western values and political systems” (Hadar 1992, 2). In preparing for the inevitable global confrontation between the West and militant Islam, it stands to reason that Washington would find it necessary “to adopt a long-term diplomatic and military strategy; to forge new and solid alliances; to prepare the American people for a never-ending struggle that will test their resolve; and to develop
new containment policies, new doctrines, and a new foreign policy elite with its ‘wise men’ and ‘experts’” (Hadar 1992, 2). Hadar’s 1992 article alludes to this development (2-3): Foreign policy experts are already using the familiar Cold War jargon to describe the coming struggle with Islam. There is talk about the need to ‘contain’ Iranian influence around the globe, especially in Central Asia, which seems to be the main reason for Secretary of State James A. Baker III’s February stop in that region. Strategists are beginning to draw a ‘red line’ for the fundamentalist leaders of Sudan, as evidenced by a U.S. diplomat’s statement last November warning Khartoum to refrain from exporting revolution and terrorism. Washington’s policymakers even applauded the January 1992 Algerian ‘iron fist’ military coup that prevented an Islamic group from winning the elections. The notion that we have to stop the fundamentalists somewhere echoes the Cold War’s domino theory. Hadar believes, and he is not alone, that Washington has overstated the “specter” of Islam and has erroneously (and perhaps cynically) identified “isolated events and trends in the Moslem world” as a “monolithic threat” to the West (1992, 1, 2). He argues that the Green Peril thesis “is now being used to explain diverse and unrelated events in that region, with Tehran replacing Moscow as the center of ideological subversion and military expansionism and Islam substituting for the spiritual energy of communism” (1992, 2). Hadar further finds the association between the Red Menace and the Green Peril faulty, as it based on exaggerated fears and misconceptions advanced by the Washington foreign policy establishment, as well as a number of countries that desire, for a variety of reasons, to see the United States actively engaged in this “struggle.” Much like the perceived threat posed by Marxism-Leninism, he is skeptical of the potential destructive capability of Islamic fundamentalism. He doubts that Islamic fundamentalism enjoys the popularity, the organization, and the resources to seriously undermine the Western-dominated international system, despite the rhetoric emanating from Washington, Islamabad, or Tel Aviv. In the wake of the terrorist attacks on
September 11, 2001, one wonders, however, if Hadar underestimated the danger of Islamic fundamentalism or if he is trying to warn us to be careful of what we wish for. Notwithstanding Hadar’s objections to the Green Peril thesis, Islam does seem to embody the perfect post-Cold War international bogeymen. As David Ignatius wrote of Islam: “It’s big; it’s scary; it’s anti-Western; it feeds on poverty and discontent” (1992, 1). Moreover, in the early 1990s, the increasing popularity of political Islam in Northern Africa, particularly the electoral strength of anti-liberal Islamic fundamentalist parties in Algeria; the post-Soviet emergence of a number of independent Islamic republics in Central Asia whose political direction is uncertain; and the efforts of Islamic governments in Iran and Sudan to establish ties throughout the Muslim world have all facilitated Washington’s decision “to identify Islam as an inherently anti-democratic force that is America’s new global enemy now that the Cold War is over” (Hoagland 1992). Unfortunately, Washington’s fear of Islamic fundamentalism has played into the hands of several foreign governments, which cynically enough, tend to think that the Islamic threat to the U.S. is exaggerated. The governments of Turkey, Saudi Arabia, Israel, Egypt, Pakistan, and India, to name the key players, have exploited the “menace” of Islamic fundamentalism to ensure American commitments to them in the form economic assistance, military support, and political support to facilitate their own domestic and regional agendas (Hadar 1992). With the passing of the Cold War they are evidently concerned that they no longer enjoy relevance in America’s foreign policy strategy. With the advent of Islamic fundamentalism, however, they are once again in the position to be important players in a new global struggle. In many respects, the behavior
of these governments reminds one of the ways many Third World countries exploited America’s fixation on the Red Menace during the Cold War years, despite the fact they considered Cold War issues to be rather peripheral (Hadar 1992). In any event, this study assumes that the same containment logic that more or less defined Western foreign policy toward the Soviet Union during the Cold War is active toward particular Islamic republics in the post-Cold War era and that the distribution of development assistance in the 1990s will reflect this fact. Admittedly, the results of testing this hypothesis are meant to be more suggestive than definitive. Individuals or groups that identify with fundamental Islamic ideology are not necessarily confined to the countries that this study identifies as the Islamic republics subject to aid-related containment policy. Adherents are found from the Philippines to Saudi Arabia and many points in between. Moreover, some Islamic republics like Pakistan or regimes that are known to sponsor terrorist organizations, like Syria, are considered strategic or tactical Western allies and do not therefore qualify as potential target states for aid/containment policy. Egypt and Saudi Arabia, for instance, arguably America’s most steadfast Arab allies in the region, are often home to a number of groups that are bent on the destruction of the Western international system. Nonetheless, for 1995 and 2000, three Islamic republics are identified as principal supporters of international terrorism and “deserving” of special treatment in regards to Western aid/containment policy: Afghanistan, Iran, and Sudan. As such, the following border-states are likely to be targets of American, German, and Swedish development assistance: Armenia, Azerbaijan, Central African Republic, Chad, China, Egypt, Eritrea, Ethiopia, Iraq, Kenya, Libya, Pakistan, Tajikistan, Turkey, Turkmenistan, Uganda, Uzbekistan, and Zaire (Democratic Republic of the
Congo). For 1980 and 1985, only Iran is treated as a potential target for Islamic containment through the distribution of Western development assistance. The borderstates of Iran are thus Afghanistan, Iraq, Pakistan, Turkey, and the Soviet Union. During the Cold War, the five Soviet republics of Armenia, Azerbaijan, Tajikistan, Turkmenistan, and Uzbekistan, are coded simply as part of the Soviet Union. Thus, for the years 1980 and 1985, the Soviet Union is recorded as a border-state to Islamic republics. Eritrea is not included as a border-state until 1995, as the country did not gain its independence until 1993. Once again, a dichotomous variable is constructed that codes border-states as 1 and all others as 0. Data used to identify border-states were obtained from the Political Handbook of the World, 1994-1995. To identify the Islamic republics which advocate and sponsor a brand of Islamic fundamentalism (correctly or incorrectly) considered by numerous sources as inimical to Western values and international interests, this study relies heavily upon Leon T. Hadar’s 1992 contribution to the CATO Institute, “The ‘Green Peril’: Creating the Islamic Fundamentalist Threat” and Alon Ben-Meir’s “Islamic Fundamentalism and Terrorism” (2001). (Note: The impact of America’s “War on Terrorism” on the distribution of development assistance could be a very revealing study. One might hypothesize that states that border countries with regimes identified by the United States as sponsoring terrorists or terrorist activities are more likely to receive ODA and increased levels of ODA after the September 2001 terrorist attack on the U.S. than before the attack. Particular attention would necessarily be given to those countries that border the regimes labeled as constituting the so-called “Axis of Evil.”)
GPH5: Strategic Materials (SM). Countries possessing strategic raw materials are more likely to receive ODA and greater levels of ODA during and after the Cold War, but that the importance of strategic raw materials will decrease in the post-Cold war era. Of the hypotheses tested, it is the potentially positive relationship between ODA and strategic minerals that has been the most difficult to formulate and to operationalize. This difficulty is reflected in the rather lengthy exposition below. Complications occur mainly because no universal definition of “strategic materials” exists. Unfortunately, “strategic” is a rather hazy, fluid concept. This dilemma becomes abundantly clear in the paragraphs that follow. The economies of Germany, Sweden, and the United States, like those of all highly industrialized nations, are rigidly dependent upon raw materials (i.e., fossil fuels and nonfuel minerals). Indeed, the economic health of these three nations is in no small way contingent upon an adequate and secure supply of raw materials. While some countries, like Australia, Canada, Russia, and South Africa, for various geographic, geologic, and demographic reasons, are more nearly self-sufficient than most, no industrialized nation is entirely self-sufficient in raw materials. Accordingly, today's modern economies must rely, to a greater or lesser extent, upon foreign sources of essential materials. In Germany, Sweden, and the U.S., a host of economic, political, and geological considerations limit the ability of these nations to domestically satisfy their raw materials' needs and they are thus compelled to rely heavily upon imports to make up the difference. The bottom line is that in the case of many essential raw materials, Germany, Sweden, and the U.S. consume more of these materials than they can produce (or in most cases, extract) at home. It is for this reason that securing access to adequate
and dependable foreign sources of essential raw materials is critical to the health of the German, Swedish, and American economies. One potential way to secure access to foreign sources of raw materials is through the extension of development assistance. Because many of the known deposits of the most critical materials are located in the developing world, donors may use ODA specifically to fund the mining and production of these materials in recipient nations. In the years 1999-2000, Germany, Sweden, and the U.S. directed an average of approximately 5% of their total net bilateral ODA towards "Production," a sector of aid distribution which includes the extraction and production of raw materials (i.e., fossil fuels and nonfuel minerals). In the case of Germany, this meant that in 1999 and 2000 an average of roughly $596 million was allocated to Production (OECD 2002). More generally, ODA may be used to encourage both a favorable political climate and trading relationship with the recipient nation that in turn facilitates the transfer of raw materials. Of the three case studies, Germany is least capable of domestically satisfying its minerals requirements (a feature of the country clearly recognized during the two world wars). For this principal reason, the import requirements of the heavily industrialized, manufacturing-oriented economy of Germany exceed the requirements of the Swedish and American economies. While the United States enjoys a relative advantage over Germany and Sweden in domestic resource endowments, since about 1920, when imports of raw materials began to consistently exceed exports, it has experienced a general but unmistakable shift from "imports of relatively few minerals that could not be produced in the United States to a greater overall reliance on imports" (Bullis and Mielke 1985, 89;
also see Anderson 1988). This is a trend that has essentially been followed in Germany and Sweden and one that appears at the present day to continue unabated. The resource requirements of today's industrialized nations are staggering. A fairly recent survey by L. Bullis and James Mielke (1985, 26-7) reports that "the world's major industrialized nations, with less than 30% of the world's population, now consume more than 80% of the total world production of the major industrial metals: aluminum, chromium, cobalt, copper, iron, manganese, nickel, the platinum-group metals, tin, tungsten, and zinc." In the case of the United States, despite a decline in overall materials consumption as a percentage of total world consumption (1975 materials usage was nearly half that of 1950), the U.S., whether measured per capita or in total, continues to consume far more resources than any other nation. As of 1985, the U.S. consumed approximately 23% of the world's production of nonfuel minerals, although it claimed only about 5% of the world's population and around 7% of its land area. For the same time period, annual per capita consumption of mineral materials was about 40,000 pounds, which includes about 22,000 pounds of nonfuel materials (Bullis and Mielke 1985, 27). To say that the US economy is dependent upon raw materials is an understatement. Clearly, raw materials are fundamental to the economic well-being of all industrialized nations. Furthermore, a strong economy is fundamental to sustaining both a high standard of living and a strong national defense. In regards to the latter, "the power exercised by a nation depends in large measure on its economic base," notes one student of the discomforting geopolitical dimension associated with America's continued reliance on foreign sources of strategic minerals (Anderson 1988, 24). It is frequently
acknowledged in the highest levels of American government that access to raw materials is of paramount importance to the country (Anderson 1988). In 1982, President Ronald Reagan reaffirmed this importance in the National Materials and Minerals Program Plan and Report to Congress when he recognized "the critical role of minerals to our economy, national defense and standard of living" (White House 1982). Because of the importance of raw materials in sustaining both a healthy economy and a strong national defense and because of the fact that Germany, Sweden, and the U.S. are unable to meet their resource requirements domestically, the procurement of raw materials from foreign sources is not only absolutely necessary, but a question of national security. Of the roughly 2,000 estimated mineral materials, only about 100 are economically or militarily significant. The significance or value of a particular mineral element is not a function of its geological occurrence but rather relative to the technological advancements that require its use. Of the 100 economically and militarily significant minerals, a smaller number of minerals are considered strategic or critical. The concept of strategic and critical materials can be traced back to the World War I era. To a greater or lesser degree, import reliance for certain raw materials began to surface in Germany, Sweden, and the U.S. prior to the First World War, but the wartime supply disruptions of mineral resources illustrated for the first time the economic and military vulnerability associated with import dependence for belligerent and nonbelligerent nations alike. Germany in particular, as has been frequently documented, felt the sting of supply disruptions. Indeed, the outcome of the war was considerably influenced by control over mineral resources, as the German war machine was crippled by its inability to procure sufficient quantities of certain critical materials, such as copper, nickel, and tin
(Anderson 1988). In the United States, the lessons of the war, in regards to minerals policy, provoked serious discussions which centered on the one hand on choosing between reliance on foreign sources and developing higher-cost domestic sources, and the necessity of constructing a strategic stockpile on the other (Anderson 1988). Although several minerals—including chromium, manganese, nickel, and tungsten— were for geopolitical reasons considered "strategic" (Anderson 1988), these discussions produced little in the way of concrete action or official policy, as domestic sources of most essential materials were still capable of providing a large share of U.S. industrial requirements (Bullis and Mielke 1985). In the meantime, however, Sweden began stockpiling essential materials in 1930 (U.S. Bureau of Mines 1983). Resource requirements and the concept of “strategic and critical” materials took on a new and more serious meaning with the advent of World War II, particularly for those nations engaged in hostilities. (For Sweden, which remained neutral throughout the course of the conflict, the wisdom of stockpiling essential materials seemed validated.) Not only did mineral resource requirements shape the conduct of the war, the volume and diversity of required mineral resources increased appreciably (Anderson 1988). During the war and the years that immediately followed, American reliance on foreign sources of critical materials had become increasingly problematic. Although mineral supply disruptions did not limit the capability of the U.S. to prosecute the war to the extent they impeded the Axis war effort, American import dependency had serious ramifications (Bullis and Mielke 1985). Additionally, American reliance on imports was accelerated by three key factors, which were more or less evident in Germany and Sweden (Bullis and Mielke 1985, 127):
First, the exhaustion of the richest domestic ore deposits, those that could be mined most efficiently and economically, and second, the emergence of foreign competition that could mine and ship material ores over great distances more cheaply than domestic producers could mine similar ores locally. Equally significant was a third factor: the emergence of high-technology industries that required new, high-performance materials using minerals that were not available domestically. These three factors— exhaustion of primary ore deposits, foreign competition, and the need for hightechnology materials—have largely been responsible for the fact that U.S. import dependency is still increasing and is likely to continue to do so. Consequently, Congress enacted the Strategic and Critical Materials Stock Piling Act (50 USC) in 1946, which has since provided the basis for all U.S. stockpile activity (Weston 1984). While serious geopolitical supply disruptions have been infrequent since 1946, maintaining a stockpile has proven on numerous occasions to be a wise investment (Anderson 1988). It has become common in the debate regarding strategic and critical materials to equate import dependence with vulnerability. This is a logical association, for if a nation must rely on foreign sources to meet its raw materials requirements, then it is clearly vulnerable to supply disruptions. In the case of the United States, by 1981, foreign sources supplied the U.S. roughly 25% of its mineral requirements. If one looks at unprocessed metallic minerals, including for example iron ore, the import reliance is more conspicuous at about 40%. Moreover, foreign sources supplied roughly one-third of America's needs in nonferrous metals, including copper, aluminum, and zinc. The import picture is even more striking when one considers a number of "critical and strategic" minerals (to be more fully explored below). The United States is more than 50% dependent on 25 such critical minerals. In the case of chromium, cobalt, and manganese, the U.S. in 1980 was 85 to 100% dependent on foreign sources (Bullis and Mielke 1985; U.S. Bureau of Mines 1983). A 1978 study conducted by the National
Materials Advisory Board found that the United States was "strategically more vulnerable" to long-term disruptions of foreign sources of chromium than to long-term disruptions of any other natural resource including crude oil (Bullis and Mielke 1985, 120). At the time, the world's largest known chromium deposits were concentrated in southern Africa and the U.S.S.R. Soviet influence in southern Africa—Kremlin support for majority rule, covert or subversive Soviet operations, for instance—served to aggravate American vulnerability to south African chromium. Admittedly, the report was at least in part a response to perceived Soviet designs to deny or limit the United States' access to strategic materials, the so-called "resource war." Assuming for the sake of argument that such a "war" actually took place, Bullis and Mielke portray it as a "deliberate Soviet policy to supply its own materials needs while denying materials to the West, to the extent that such denial is possible short of outright war" (1985, 146). While an actual resource war has not been conclusively proven and is often described by critics as a figment of an overactive American imagination, even as a Cold War document, the report underscores the critical level of American dependence on imports of some mineral resources (See Table 2). Finally, to press the point further, the combined value of processed and unprocessed imported nonfuel minerals in 1984 was to the tune of $39 billion, which amounted to $19 billion more than the value of U.S. mineral exports and 50% greater than the total value of imported crude oil (U.S. Bureau of Mines 1985; Anderson 1988). The above notwithstanding, the United States is clearly more self-sufficient in domestic resource endowments than the smaller developed nations of Germany and Sweden. Although the U.S. enjoys an overall advantage over Germany and Sweden in
domestic sources of mineral deposits, all three share a marked dependence on foreign sources of many critical nonfuel minerals, such as cobalt, chromium, manganese, and platinum (See Table 2). By 1985, West German dependence on foreign sources of several strategic and critical minerals had become acute. For such minerals as antimony, asbestos, bauxite, chromite, magnesite, manganese, mercury, molybdenum, nickel, phosphate, platinum, titanium, tungsten, vanadium, and zirconium, the FRG was nearly 100% dependent on imports. In addition, the country imported substantial quantities of copper, iron ore, lead, oil, and zinc (U.S. Bureau of Mines 1987, 348). Naturally, the proportion of a nation's import dependence for essential materials and their potential for supply disruption can vary considerably from relatively insignificant to potentially disastrous depending on a wide variety of factors, not the least of which are the materials in question and their foreign sources of supply. During the Cold War, government and private organizations, most notably in the United States, have had occasion to express apprehension over the procurement of foreign sources of
TABLE 2 IMPORT RELIANCE IN 1980 FOR SEVEN SELECTED CRITICAL MATERIALS, EXPRESSED AS THE PERCENTAGE OF DOMESTIC CONSUMPTION* Material Germany Sweden United States Chromium 100 100 98 Cobalt 80 100 94 Columbium 100 NA 89 Manganese 100 100 75 Petroleum (crude) 99 100 99 Platinum group 100 100 90 Tungsten NA 91 50
*Figures are generally accurate, but should be taken with some caution as they are preliminary and intended to be suggestive. Sources: U.S. Bureau of Mines, Minerals Yearbook 1983, and British Geological Survey, World Mineral Statistics 1985.
strategic and critical materials owing largely to what they perceived as a resource war waged by the Soviet Union. Admittedly, experts disagree over the extent to which a resource war ever existed. Nevertheless, while persuasive arguments have been offered against the notion of a concerted Soviet attempt to block Western access to essential materials, there is evidence to suggest that the Kremlin engaged in a political battle to deny the Western alliance access to a number of strategic and critical materials. Those that accept the reality of the resource war point to the following conditions, put best in the words of Bullis and Mielke (1985, 146): ● The Soviet Union is losing its position of relative materials self-sufficiency and hence is becoming increasing dependent upon materials resources located outside its area of military and political control. ● Because of this dependency, the Soviets are starting to consider materials availability not merely as an economic issue but also as a strategic one. ● In strategic terms, the Soviets are attempting to acquire or control materials assets in sufficient quantities to deny to the United States and its allies the quantities of materials their economies now require. ● Such materials denial is being pursued in Soviet attempts to subvert, destabilize, win over, or even physically take over governments of nations now supplying the Western powers. These activities are being conducted through a strategy of confrontation extending beyond normal economic competition but falling just short of conventional military confrontation. As evidence of Soviet intentions to cripple the West by denying it essential materials, one has to look no further than the somewhat belligerent statements made by Nikita Krushchev and Leonid Brezhnev. In 1960, Krushchev suggested that the Soviet Union should actively promote its interests throughout the mineral-rich Third World nations in order to hold the West captive to Moscow (Bullis and Mielke 1985). Not to be outdone by the intemperate remarks of his predecessor, Brezhnez declared the desire "to
gain control of the two great treasure houses on which the West depends: the energy treasure house of the Persian Gulf and the mineral treasure house of central and southern Africa" ("National Minerals Policy" 1981, 30). The reference to the Persian Gulf "treasure house" is obviously directed toward Western dependence on oil imported from that region. The reference to the "mineral treasure house of central and southern Africa" is a bit more obscure but equally ominous. Brezhnev's statement recognizes the geopolitical importance to the West of the mineral-rich nations of Angola, Botswana, Gabon, Guinea, Mozambique, Nigeria, Namibia, the Republic of South Africa, Zaire, Zambia, and Zimbabwe. As Table 3 shows, several of these countries possess some of the largest known deposits of several strategic and critical minerals, including bauxite/alumina, chromium, cobalt, manganese, platinum-group metals, and tantalum. Moreover, these nations supply a substantial percentage of total world production of these minerals (Bullis and Mielke 1985). One might be tempted to dismiss the rhetoric of Kruschev and Brezhnev as nothing more than political grandstanding if it were not for several Soviet actions in Africa that appeared to reinforce their intentions to deny Western access to vital materials in the region. The Soviets quite vocally encouraged mineral-rich nations to dissociate themselves from their former Western colonial masters. They clearly understood and pressed the point that one way for the formerly "oppressed" and "exploited" colonial possessions of Africa to demonstrate their newly won independence was for the latter to pursue mineral policies inimical to the West. When such political initiatives proved insufficient, the Soviets sometimes resorted to more forceful measures, such as active support for Marxist liberation movements and the destruction of pro-Western
TABLE 3 ANNUAL PRODUCTION AND RESERVE BASE OF SIX AFRICAN NATIONS AS OF 1985 FOR SELECTED STRATEGIC MATERIALS* Platinum Chromium Cobalt Columbium Manganese Group Tantalum Gabon 8.3/3.7 Nigeria 0.6/2.2 2.4/13.2 Republic of South 40.0/80.8 12.9/70.8 27.6/83.6 Africa Zaire 46.9/25.0 0.3/2.2 4.2/8.8 Zambia 13.5/6.5 Zimbabwe 5.3/11.0 Total 32.9/94.6 60.4/31.5 0.9/4.4 21.2/74.5 40.0/80.8 9.8/26.4
*Expressed in percentages of world totals (annual production/reserve base). Source: Harold Bullis and James Mielke, Strategic and Critical Materials (Boulder, CO: Westview Press, Inc., 1985), 152.
governments of mineral-rich nations. An aggressive resource policy is evidenced by the following Soviet actions (Bullis and Mielke 1985, 153): • • • • • Installation in southern Africa of East German and Soviet advisors. Presence of Cuban soldiers, advisors, and technicians in a total of 17 African states. Covert or subversive Soviet operations in, among other neighboring areas, Namibia, the Republic of South Africa, and Zaire's Shaba province. Direct military involvement in Angola, Ethiopia, Mozambique, and Zaire. Installation of a pro-Soviet government in Zimbabwe. The words and deeds of the Soviet Union seem to support the notion that the Soviet resource war was more than merely a product of American paranoia. Nevertheless, the idea of a concerted and sinister Soviet plan to deprive the West of critical materials garnered little credibility among several American allies, including Japan and many European nations. It simply remains unclear whether Soviet motives were hostile, economic, defensive, or opportunistic in nature. For the purposes of this study, Soviet motives are largely irrelevant, for the debate regarding the existence or the
nonexistence of the resource war further attests to the fundamental importance of raw materials to the Western economies. While Cold War politics were undoubtedly influential in Western raw materials policy, the 1973-1974 energy crisis provoked considerable alarm throughout the industrialized North regarding import dependence and supply vulnerability (Anderson 1988). The actions of the Organization of Petroleum Exporting Countries (OPEC)— namely the sudden increase in the price of petroleum and a collective petroleum boycott of the United States (October 1973)—had worldwide ramifications and was a wake up call to the industrialized North. In the United States, the events of 1973-74 were particularly sobering, as they occurred at time when the domestic production of minerals was consistently unable to meet consumption (Anderson 1988). Perhaps for the first time, Americans understood what it meant to be dependent on foreign sources for essential materials (Bullis and Mielke 1985). Although the experience was limited to a single mineral commodity, the implications for vulnerability to the foreign supply of other vital materials were clear. No longer could the Western nations assume an uninterrupted supply of essential materials from foreign sources. Traditionally, the concept of strategic and critical materials has suggested the vulnerability of a nation to the supply of these materials. Generally, “strategic” has implied the difficulty involved in securing the supply of these materials and originally was reserved for those materials that were deemed “essential to effective military strategy” (Weston 1984, 1), while the criticality of a material is based on the importance of its end use (Anderson 1988). Over the years, however, the criteria for "strategic and critical" have become more inclusive, indeed to the point of ambiguity. The rather
subjective nature of these criteria has effectively hamstrung any real chance at consensus among the government, business, military, scientific, and academic communities. As such, there exists no straightforward definition of what constitutes a "strategic and critical" mineral. Indeed, the term “strategic,” in particular, has been used so ambiguously that some have argued that it be discarded in favor of more exact terms like “vulnerability” and “criticality” (Weston 1984). In the United States, the terms “strategic" and "critical” were first linked in 1944 (Bullis and Mielke 1985). Thirty-five years later, the linkage was maintained by the 1979 Strategic and Critical Materials Stock Piling Act, which advocated stockpiling materials that (a) would be needed to supply the military, industrial and essential civilian needs of the United States during a national emergency, and (b) are not found or produced in the United States in sufficient quantities to meet such need. This definition, however, was sufficiently vague as to allow considerable interpretation. The Federal Emergency Management Agency (FEMA) sought to clarify these terms in its operational definition used to draft a national stockpile policy (Bullis and Mielke 1985). According to FEMA, the term "strategic" reflects the material's relative availability, while the term "critical" reflects its essentiality (U.S. General Accounting Office 1982, 6). Altering the criteria of strategic and critical somewhat, the Department of Interior’s Office of Minerals Policy and Research Analysis (OMPRA) developed a critical materials index, in which two factors in particular were applied to assess the criticality of a mineral: (a) the likelihood that the future supply of the particular mineral to the U.S. might be interrupted and (b) the importance of the mineral to the functioning of the U.S. economy (Anderson 1988, 11). The primary difference between the criteria employed by the stockpiling act and the
OMPRA index is that the latter devalues the commonly accepted notion that criticality is in large part expressed by the percentage of import dependence of a particular mineral. Finally, the Office of Technology Assessment (OTA) has defined “strategic” to include both vulnerability and criticality. The OTA assessed the vulnerability to a particular material as the potential for complete and long-term supply interruption, while the criticality of a particular material was assessed as its percentage necessary for essential civilian and military applications. Thus a strategic material is "one for which the quantity required for essential civilian and military uses exceeds the reasonably secure domestic and foreign supplies and for which acceptable substitutes are not available within a moderate period of time" (1985, 11). For the most part, the OTA report is consistent with the trend in recent literature to encapsulate the various conditions of dependency, vulnerability, and criticality into the one single term, "strategic." While there is a fair degree of overlap in the fuel and nonfuel minerals identified as strategic in the recent literature, naturally studies differ in the emphasis given to a particular criterion or in how criteria are defined or applied. For example, the U.S. strategic stockpile in 1980 listed 60 materials, including such items as vegetable tannin extract, feathers and down, and opium group minerals. While one supposes that an argument could be made that each is important, or even critical, to certain American industries, it stretches one's credulity to suggest that any of these three commodities is "strategic" in the traditional sense of the word. In short, the guidelines used to include materials in the stockpile are perhaps somewhat loose, namely because it accepts a relatively low percentage of import dependence as indicative of a material's criticality or strategic importance. The works by Bullis and Mielke (1985) and Leonard L. Fischman
(1980) each list seven "major" strategic minerals, although the lists presented by the two studies are not identical. Between them, Anderson (1988) and Rae Weston (1984) consider roughly 25 materials to be strategic, although in the case of Anderson, six nonfuel minerals are given emphasis. Finally, Gordon McLendon (1980) identifies 31 strategic materials, while the Sinclair Securities Company (1980) lists 18 such materials (Weston 1984). One way for scholars and policymakers to assess the criticality of particular materials is to construct models based on methods of indexing or ranking. The primary function of indexing models is to identify materials of strategic or geopolitical concern so that precautions may be taken to avoid their supply disruption. In general, materials that rank the highest on the index are particularly susceptible to supply problems and “have the greatest expected cost of disruption and thus are most deserving of policy attention” (Bullis and Mielke 1985, 109). As with other index models, the two examples provided below consider a number of economic, geologic, and political indicators that increase the likelihood of supply disruption (see Tables 4 and 5). Indicators, for instance, include the presence of formal or informal cartels, violent conflict, insufficient or nonexistent domestic resources, embargoes, intensive usage in critical applications, vulnerable transportation systems, a small number of foreign suppliers, unstable or hostile foreign suppliers, or the lack of substitution or recycling opportunities, and so on. It is clear that the concept of strategic materials is fluid in nature, as the “strategic" quality of a material is subjective and is invariably determined by the varying political, military, and economic considerations of the day. It is for these reasons that a parsimonious definition of strategic materials which transcends time and national borders
is difficult to formulate and apply. Fortunately, a comparison of the strategic minerals needs of Germany, Sweden, and the United States is not tantamount to comparing “apples and oranges.” TABLE 4 U.S. ARMY WAR COLLEGE INDEX OF SIX STRATEGIC DEFENSE AND INDUSTRY RELATED MATERIALS FOR THE U.S. Materials Vulnerability Index* Major Supplier Countries Chromium 34 USSR, Rep. S. Africa Platinum group 32 USSR, Rep. S. Africa Tungsten 27 Canada, Peru Manganese 23 Brazil, Gabon Cobalt 20 Zaire, Canada Tantalum 16 Zaire, Brazil, Canada
*Higher number indicates greater vulnerability. Source: U.S. Army War College, Strategic Studies Group. In L. Harold Bullis and James E. Mielke, Strategic and Critical Materials (Boulder, CO: Westview Press, 1985), p.112.
TABLE 5 POLITICAL RISK (VULNERABILITY) OF SELECTED MATERIALS TO GERMANY Material Political Risk Index* Major Supplier Countries Chromium 370 Rep. S. Africa, Turkey, USSR Manganese 300 Rep. S. Africa, Belg-Lux Tungsten 290 China, Canada, Austria Cobalt 280 Bel-Lux, Zaire, Japan Platinum group 270 USSR, Rep. S. Africa, UK
*Higher number indicates greater political risk. Index ranges from 100 to 500. Source: Bohdan O. Szuprowicz, How to Avoid Strategic Materials Shortages. (New York: John Wiley and Sons, 1981), p. 286. In L. Harold Bullis and James E. Mielke, Strategic and Critical Materials (Boulder, CO: Westview Press, 1985), p. 113 and the U.S. Bureau of Mines, Minerals Yearbook Vol. 3. Area Reports: International (Washington, D.C.: U.S. Department of the Interior, Bureau of Mines, 1981).
Difficulties aside, it is possible to compile from the literature—including several independent studies (e.g., Anderson 1988; Bullis and Mielke 1985; Fischman 1980; Weston 1984) and those undertaken by the U.S. Army War College, the U.S. and European (NATO) aerospace agencies, the U.S. Bureau of Mines, the U.S. Department of Commerce, and the British Geological Survey—a reasonably comprehensive list of the raw materials considered by the United States, Germany, and Sweden to be of critical importance since 1980. Taken together, the nonfuel and fuel minerals listed below form the foundation upon which the health of these three economies rest. The materials include, but are not necessarily limited to, the following (the major "strategic" nonfuel minerals identified by Anderson 1988, Bullis and Mielke 1985, Fischman 1980, and Weston 1984 are in bold type, as are strategic fuel minerals): aluminum/bauxite, antimony, arsenic, asbestos, asphalt and bitumen, barite, beryllium, bismuth, boron, bromine, cadmium, carbon, cement, cesium, chromium, clays, coal, cobalt, columbium (niobium), copper, corundum, diamond (industrial), diatomite, feldspar, fluorspar, gallium, garnet, gemstones, germanium, gold, graphite (natural), gypsum, hafnium, helium, ilmenite, indium, iodine, iron (ore, steel, steel scrap, and steel slag), kyanite, lead, lime, lithium, manganese (including magnesium metal and compounds), mercury, mica (flake and sheet), molybdenum, natural gas, nickel, nitrogen, peat, perlite, petroleum, phosphates, platinum group (palladium, ruthenium, rhodium, iridium, and osmium), potash, pumice and pumicite, quartz crystal, rare earths, rhenium, rubidium, rutile, salt, sand and gravel, selenium, silicon, silver, sodium (carbonate and sulfate), stone (crushed and dimension), strontium, sulfur, talc and pyrophyllite, tantalum, tellurium, thallium, thorium and or uranium, tin, titanium and titanium dioxide, tungsten, vanadium, vermiculite, yttrium, zinc, and zirconium. As one can clearly see, the list of essential materials is quite extensive. As this study seeks to explore the relationship between strategic raw materials and the distribution of development assistance, it applies a rather strict definition of “strategic”— a definition that is applied by two of the most widely recognized and authoritative studies on strategic materials and modified somewhat here. To identify the strategic materials
that donors may seek to secure through the extension of ODA, the present analysis adopts the following six criteria (Anderson 1988, 11-12; Weston 1984): • • • • • • The resource is critical for defense and defense-related industries. The resource is essential to the health of the economy. There is a marked degree of import dependence. There are few significant and/or reliable sources of supply. International demand for such resources is consistently high. Suitable substitutes for the material do not presently exist or are prohibitively expensive. For the purposes of this particular study, all six criteria must be met to classify a material as “strategic.” As such, the following eight minerals are identified as strategic and potentially influence the distribution of American, German, and Swedish development aid: chromium, cobalt, columbium (niobium), crude oil (petroleum), manganese, platinum-group metals, tantalum, and tungsten. Admittedly, all the materials listed above are in their own right essential. Very few, however, are strategic in the sense employed here. Even most of the materials in bold type, while unquestionably critical, are not strategic. Aside from chromium, cobalt, columbium (niobium), crude oil, manganese, platinum-group metals, tantalum, and tungsten, the materials in bold exist naturally in sufficient quantities, are reasonably accessible, have been substantially stockpiled, or have suitable substitutes, if more expensive. In addition, unlike several other critical materials, the international demand for the eight aforementioned minerals is consistently high. Finally, while the import reliance for the materials in bold range from fairly insignificant to total in Germany, Sweden, or the United States, foreign supplies of the vast majority of these materials are reasonably secure. For example, Germany is 100% dependent on foreign sources of blue asbestos, a material that has important industrial applications. Blue asbestos, however, is not critical to defense-related
applications. Furthermore, nearly all German blue asbestos imports originate in Canada, which for all intents and purposes is a secure source. Thus, while Germany is heavily reliant on Canadian imports of asbestos, it should not be considered as vulnerable to supply disruptions. Thus far, relatively little attention has been given to a material that many readers would consider to be obviously strategic, that being crude oil (petroleum). This may have come as somewhat of a surprise. Yet such an “omission” is not uncommon in much of the recent literature on strategic minerals. Indeed, many studies dealing with strategic minerals (see Anderson 1988; Weston 1984) limit the scope of analysis to “those metals—especially chromium, cobalt, manganese, and molybdenum—required for making the specialty steels and complex superalloys needed by the defense and aerospace industries,” and allow crude oil only superficial discussions (Bullis and Mielke 1985, 12). This is not a function of oversight or negligence, but the result of an implicit understanding of the essentiality and criticality of crude oil and the desire to stress the point that some nonfuel mineral substances are every bit as important, indeed as strategic, as crude oil, if not more so. Accordingly, most studies acknowledge that metals “comprise only one part of the overall [strategic] materials picture” (Bullis and Mielke 1985, 12), and allude to, to a greater or lesser extent, the essentiality of fossil fuels. Chief among these energy materials are crude oil, natural gas, and coal. Much of the recent literature has simply taken for granted the essential nature of these materials and focused on the lesser known, but arguably, more critical nature of several nonfuel minerals. While the importance of oil to the economic viability and national defense of industrialized democratic or nondemocratic nations has long been understood, the energy
crises of the 1970s firmly established the strategic quality of petroleum. This status is widely accepted throughout not only the academic literature and government circles, but also resonates with the general public. Of all the materials identified here as strategic, it is the supply and cost of petroleum that has come to dominate discussions of critical materials in the mainstream press, especially in the U.S. Of the eight strategic materials identified here, it is oil that most profoundly affects the civilian sector, if for no other reason than its direct application and usage are more clear and immediate among consumers. Although I do not wish to expand the scope of this particular topic, oil “shortages” have as much to do with production and politics as they do with simple, unadulterated supply and demand. At any rate, hardly does the casual observer encounter debate regarding depleted chromium reserves or the security threat to the Western industrialized democracies posed by a potential cobalt embargo, for instance. In some cases, as suggested above, Germany, Sweden, and the United States are more susceptible to supply disruptions of the seven aforementioned strategic metal minerals than they are to disruptions in crude oil supply. As such, the lack of access to foreign sources of these nonfuel materials potentially poses a greater threat to national security that does oil. While it is certainly true that all three nations have relied and continue to rely heavily or exclusively on oil imports to satisfy domestic requirements, none were in 1980, 1985, 1995, and 2000, strictly speaking, vulnerable to severe or indefinite supply disruptions. Over the years, all three have taken steps to reduce their reliance on Middle Eastern oil and thus reduce their vulnerability to supply disruptions. Oil is imported by a host of countries that are typically considered “secure” sources, such as Canada and Venezuela in the case of the U.S., or North See oil in the German and Swedish cases. This has been
facilitated by recent discoveries of substantial oil reserves and new technologies that allow for their exploitation. Moreover, as recently as 1970, the United States led the world in oil production (including both crude and shale oil) at 9,648 barrels a day. This is roughly 2.5 times the amount produced by either of the perennial oil-rich countries of Iran, Saudi Arabia, and Venezuela in 1970. From 1970 to 1996, the U.S. has ranked among the top three oil producers. In 1996, for instance, the U.S. produced 6471 barrels of oil a day. Only Saudi Arabia, at 8083 barrels per day, surpassed the U.S. in oil production for that year (U.S. Bureau of Mines 1995; “Crude Oil Production” 1997). Furthermore, the United States is known to have considerable oil reserves that remain untapped for essentially political and environmental reasons. Nevertheless, crude oil must naturally be included any study that seeks to examine the relationship between ODA and strategic materials. Aside from meeting the definitional parameters listed above, it is worthy of note that Germany, Sweden, and the U.S. demonstrate extremely high levels of import dependence for oil (see Table 2). Moreover, oil is obviously essential to both the health of the three respective economies and their national defense. Furthermore, of the strategic materials considered here, only crude oil has figured into the decision to wage war by any of our three case studies. The American-led liberation of Kuwait (and this is not meant cynically) was at least in part motivated by the urge to deny Saddam Hussein control over Kuwaiti oil. To summarize, the known deposits of the eight minerals identified here as strategic are limited to relatively few countries. They either do not exist or do not exist in sufficient quantities in Germany, Sweden, or the U.S. to remove a substantial reliance on foreign suppliers. Moreover, because these materials are both geographically and
geologically scarce and are frequently found in areas of the world characterized by political instability and anti-Western sentiment (see Table 2), these eight minerals are subject to a greater likelihood of supply disruption. The likelihood of supply disruptions is further increased by the limited infrastructural capabilities often characteristic of the regions in which they are found. In addition, these eight minerals have applications that are absolutely critical to the defense-related industries in Germany, Sweden, and the United States. Their value is further increased by the fact that suitable substitutes are largely nonexistent. Accordingly, a yes/no dichotomous variable has been devised to evaluate the relationship between ODA and the strategic minerals chromium, cobalt, columbium (niobium), crude oil, manganese, platinum-group metals, tantalum, and tungsten. States that are known to domestically produce (that is to say, extract and export) any of these strategic minerals are coded "yes" (or 1), otherwise they are coded “no” (or 0). The primary sources of these data are various volumes of the Minerals Yearbook, which is annually published by the U.S. Bureau of Mines, Department of the Interior. It should be noted that states identified as possessing strategic materials (designated 1) are generally considered by the Minerals Yearbook to be among the world’s leading producers of these materials. One final note on strategic materials is necessary. A case could be made that raw materials in general influence the distribution of aid and that this focus on only a handful “strategic” minerals unnecessarily limits the scope of the hypothesis and may consequently overlook an important feature in aid distribution. There can be little doubt that raw materials are vital to the economic well-being and the defense of Germany, Sweden, and the United States. To expand the list of strategic minerals to include all raw
materials or even “necessary” raw materials is exceeding problematic for operational and methodological reasons. Paramount among these are: (1) for the modern, industrialized economies of Germany, Sweden, and the U.S., most countries of the world possess a “necessary” raw material and thus there would be little or no variation among recipients in regard to raw materials; (2) the vast majority of raw materials are undeserving of “special treatment” (i.e., ODA) from Germany, Sweden, and the U.S. because they relatively easy to attain; and finally (3) it is assumed that the transactions involving the transfer of raw materials from recipient to donor are already incorporated into the statist/commercial hypotheses discussed below.
Statist/Commercial Hypotheses (S/CH) S/CH1: Trade Relationship (TR). The more extensive the trade relationship (i.e., the value of donor imports) between donor and potential recipient, the more likely the latter will receive ODA and greater levels of ODA, and that that relationship will become more significant in post-Cold War years (Meernik, Krueger, and Poe 1998). In this instance, aid could be used to reward states that have an extensive trade relationship with the donor and as a tool to enhance the economic viability of the donor (Cingranelli and Pasquarello 1985; McKinlay and Little 1979; Wittkopf 1972). Many studies have sought to measure the relationship between trade and the distribution of foreign assistance by using donor exports to and imports from recipient-countries. Such a measure is a bit clumsy, however, as recipients frequently use foreign aid as short-term import financing, which conceivably could cause simultaneity problems in the model (Meernik, Krueger, and Poe 1998). To avoid this methodological difficulty, this study examines only the value of donor imports from each prospective recipient. Trade data are in thousands of
U.S. dollars and were obtained from various volumes of Direction of Trade Yearbook published by the IMF. Because the range in trade values is considerable, the trade data were logarithmically transformed prior to formal analysis. Thus, in the statistical analyses, the TR variable was replaced with LNTR, the natural logarithm of TR. S/CH2: Economic Openness (EO). The more open a nation’s markets are to the donor, the more likely the former will receive ODA and greater amounts of ODA, and that this commitment to economic liberalism will have greater impact in the post-Cold War era. It is not unreasonable to anticipate a positive relationship between aid and economic openness for a number of reasons. Not the least of which is that donors could use aid to promote open markets abroad or to assist countries moving from closed to open-market economies. Also important, if perhaps cynical and selfish, aid could be used to enhance the overseas business opportunities of domestic firms (Oye 1992). To evaluate this relationship, a widely accepted measure is used which divides the level of trade with the donor (exports plus imports) by the recipient’s gross national income (GNI) to approximate the level of openness of the recipient’s economy (Krasner 1976; Meernik, Krueger, and Poe 1998). As with the trade relationship variable, data for economic openness were taken from various volumes of the IMF’s Direction of Trade Yearbook and are expressed in thousands of U.S. dollars. The economic openness data were also transformed into their corresponding natural logarithmic values. The GNI data, likewise expressed in U.S. thousands, were for the most part obtained from databases published by the DAC/OECD (International Development Statistics 2002) and the World Bank (World Development Indicators 2004). World Development Indicators (WDI), in particular, provides a vast array of comparative
development statistics (550 indicators—from Adjusted Net Savings as a Percentage of GNI to Workers’ Remittances) dating from 1960 to 2001 for 208 nations and is available for purchase in CD form. Researchers may also access the database online for an annual subscription fee. In some respects, International Development Statistics (IDS) is redundant, in that all of socio-economic development indicators (e.g., Population, GNI, GNI per Capita, Energy Use, Adult Life Expectancy, and Adult Literacy) are provided by the World Bank and are thus included in the Bank’s WDI. As a DAC publication, however, the IDS database places greater emphasis on financial flows from North to South, including development aid statistics, and as such is an invaluable tool for any study on foreign aid. Data coverage in IDS spans the years 1960 through 2000, but comprehensive data coverage is limited to developing nations or, more precisely, to aidreceiving nations. For this reason, comprehensive economic indicators for more affluent nations, namely OECD member-states, were obtained mainly from the World Bank database. In some cases, data were supplied by the U.S. Central Intelligence Agency’s (CIA) World Factbook (1994, 1999) and Alan Heston and Robert Summers’s Penn World Tables (2003). For 1979 and 1984, GNI data for Czechoslovakia, East Germany, the Soviet Union, North Yemen, and South Yemen were obtained from the Penn World Tables. The CIA’s World Factbook was used for Afghanistan, Andorra, Bosnia, Cuba, Iraq, North Korea, Liberia, Libya, Liechtenstein, Monaco, Palau, San Marino, and Yugoslavia for 1994. For 1999, the CIA’s World Factbook provided data for Afghanistan, Andorra, Bahrain, Burma, Brunei, Cuba, Libya and Monaco, Nauru, North Korea, Qatar, San Marino, Tuvalu, and the United Arab Emirates.
S/CH3: Population (POP). The more populous a country (measured in thousands and logged), the more likely it is to receive greater levels of ODA both before and after the end of the Cold War. In other words, the relationship between population and the distribution of development assistance is expected to remain positive throughout the two the eras. It should be noted that while the population variable is included within the cluster of Statist/Commercial hypotheses, it is not intended to be exclusive of the geopolitical or humanitarian interests of the donor. On several grounds, it seems reasonable to assume some type of proportionate relationship between the population of a country and the volume of aid it receives. Presumably, greater levels of ODA would be necessary in heavily populated areas in order to be effective. Apart from the rather obvious humanitarian rationale in providing large countries with greater levels of assistance, heavily populated countries also are inherently more important from both an economic and military standpoint than are small countries. Quite simply, large countries have the potential economic and military capabilities to make them likely recipients of aid (Wittkopf 1972). Population figures for ODA recipients were obtained from the OECD’s IDS database. Population data for all other states were obtained from the World Bank’s WDI, the U.S. Census Bureau, and various volumes of the Political Handbook of the World (Banks).
Ideological/Humanitarian Hypotheses (I/HH) I/HH1: Promotion of Democracy (DEM). In the absence of the Soviet threat, democratic regimes (and liberalizing regimes) are more likely to receive ODA and greater levels of ODA after the Cold War than they did during the Cold War, and that regime type and indigenous efforts at political liberalization will be more important in the
post-Cold war international environment. Policy-makers have frequently identified the promotion of democracy as an important justification for assistance (Peceny 1995). As such, foreign assistance could be used to entice states to embark on a democratic path and to stabilize fledgling democracies. Furthermore, donors may act on the premise that democracies are less likely to engage in military hostilities with other democracies (Russet 1993). As a consequence of such reasoning, the three donors (all being established democracies) may wish to promote democratic principles and institutions abroad through the extension of ODA in an attempt to further international peace. To determine the "democraticness" of a particular regime, the polity scale developed by Ted Gurr for the POLITY IV dataset is used. The scale ranges from -10 to 10, 10 indicating the most democratic and -10 indicating the least democratic. Polity scores are not available for states with populations less than 500,000 (overseas territorial possessions are completely excluded). For the independent states not included in the POLITY dataset, some polity scores are inferred from Freedom House rankings and data obtained from U.S. State Department publications and a number of volumes of the Political Handbook of the World and the CIA World Factbook. Of course, Western efforts to encourage democracy abroad would not be unique to the post-Cold War era. Since the First World War, the United States in particular has traditionally professed to include the global promotion of democratic values and principles as among its primary foreign policy goals. Especially in Latin America, the promotion of democracy has been a recurrent component of U.S. policy toward the region. A number of American presidents, including Woodrow Wilson, John F. Kennedy, and Jimmy Carter, have championed the cause for democracy in Latin
America. While these frequent efforts to establish viable democracies “were to some degree and expression of the idealist, moral crusader streak in U.S. foreign policy, for the most part they were grounded in the practical belief that promoting democracy in Latin America was a way of advancing the United States’s underlying economic or security interests in the region” (Carothers 1991, 1). In keeping with that tradition, the promotion of democracy continues today as a cornerstone of American foreign policy. Speaking before the Carnegie Endowment for International Peace in 1996, Deputy Secretary of State Strobe Talbott declared that “democracy, in short, is the one big thing that we must defend, sustain, and promote wherever possible, even as we deal with the many other tasks that face us” (1996, 120). To Talbot, vigorous American support of democratic principles around the world is an issue of moralpolitik and realpolitik as “the promotion of democracy is a means of advancing American interests as well as American values” (1996, 121). In support of his argument, Talbott observes that “democracies are more likely to be reliable partners in trade and diplomacy and more likely to pursue foreign and defense policies that are compatible with American interests. Democracies are less likely to go to war with each other, to unleash tidal waves of refugees, to create environmental catastrophes, or engage in terrorism” (1996, 121). Nevertheless, perceived national interests have competed with the Western desire (or the urgency with which) to spread liberal democracy. In the interwar period, for instance, external (i.e., the Western Allies) attempts to solidify young East-Central European democracies were sacrificed in favor of isolationist or appeasement sentiments. The evisceration of First Czechoslovak Republic, arguably the most viable and
progressive Western-style democracy in the region at the time, was due in no small way to Western indifference and catastrophic miscalculation of Hitler's motives. Similarly, during the Cold War, the Western struggle against Soviet influence generated geopolitical and economic concerns among the Western powers that seemed to rather frequently transcend their commitment to promoting democratic values abroad. Several Latin American countries—the Dominican Republic and Chile, for example—attest to this fact (Sorensen 1993). With the Cold War behind us, we might anticipate greater effort on the part of Western policy-makers to promote democratic institutions abroad. During the Cold War, North-South relations were essentially framed in terms of the East-West ideological conflict. Each camp had its own assembly of loyal and semi-loyal client states. Indeed, as Sorensen recognizes, between 1946 and 1988 "the top ten recipients of U. S. aid were all countries that were important to the West from the viewpoint of the confrontation with the Soviet Union; that is, aid depended less on needs in terms of poverty and more on geostrategic position in the East-West struggle" (1993, 128). This preoccupation with national security helps explain substantial levels of U.S. aid earmarked for the pseudodemocracies of Taiwan and South Korea. Admittedly optimistic, it is not inconceivable that the peace dividend would translate into greater Western emphasis on democratic principles around the world in the post-Cold War era. According to this scenario, in the absence of the Soviet threat, the Western industrialized democracies led by the United States (and the international institutions they control) should be much less inclined to support nondemocratic regimes based solely on geopolitical concerns. Likewise, they should be more inclined to support
popular socialist governments—as reflected in the distribution of foreign aid— considering that said governments have no international Communist movements with which to ally (Sorensen 1993). Perhaps the days of overt and covert Western (in particular, American) support for the Pinochets and Mobutus of the world at the expense the Allendes and Boschs has at last past. On the other hand, the end of the Cold War may signal a decline in Western aid to the South. Although it is probably in the best interests of the industrialized Western democracies to support development and democratization in the developing countries of the South, the Cold War justification to do so is now gone. The consolidation of democracy in the South operates on several levels. In terms of ideological appeal, democracy has never been stronger. On another level, the conclusion of the Cold War appears to have reinforced Western political commitment to democratic principles abroad. On the economic level, the record is mixed or inconclusive (Sorensen 1993). Fukuyama may have been right when he suggested that the international ideological appeal of democracy and Western political commitment to democratic principles have facilitated the introduction of democratic political institutions around the world, but thus far have failed to ensure the consolidation of democracy in a number of countries, particularly in the South (1995). What may be missing are a number of social-cultural elements that seem imperative to the consolidation of fledgling democracies. Western aid may encourage the development of these elements and thus facilitate the consolidation of democratic regimes. I/HH2: Respect for Human Rights (HR). States with greater respect for human rights are more likely to receive ODA in the post-Cold War environment, and that respect
for human rights will become more important in the post-Cold War years. The Western donors have often publicly emphasized the importance of human rights in their foreign policy agendas. Thus, donors may employ aid as a tool to encourage prospective recipient-nations to respect human rights. Scholars have long noted the significance of human rights considerations in the distribution of aid (e.g., Cingranelli and Pasquarello 1985; Radetzki 1973). To operationalize the human-rights' variable, data are taken from Freedom House reports which rank a regime's respect for human rights. Freedom House assigns to regimes numerical values based on political rights and civil liberties. Values range from 1 to 7, 1 being reserved for the regimes that exhibit the highest regard for political rights and civil liberties, and 7 assigned to the regimes that display the least respect for political rights and civil liberties. Freedom House also classifies regimes as free (f), partly free (pf), and not free (nf). As an illustration of this classificatory scheme, since Freedom House began recording data in 1972, the U.S. has annually been classified as 1,1,f, while China has been classified as 7,7,nf. Previous studies, such as the one by Meernik, Krueger, and Poe (1998), have relied primarily on data based on rankings obtained from Amnesty International and the U.S. State Department. While those two sources are occasionally utilized in this study to reinforce Freedom House rankings, they are not the primary sources of data. Freedom House scores have been judged to best satisfy the methodological requirements of this work as they are both comprehensive in scope and serve dual statistical functions. That is, scores indicate not only the respect a regime exhibits toward human rights, but also indicate the democraticness of the regime. Although the methodology employed by Freedom House is designed to measure freedom and not democracy, per se, the overlap is obvious. As such, while Freedom House
rankings are clearly designed to calculate a regime's respect (or lack thereof) for human rights, the rankings incorporate political measures that can theoretically be applied to regime type. I/HH3: Per Capita GNI (NEED). The poorer the nation (measured by per capita GNI), the more likely it is to receive ODA and increased levels of ODA, and that NEED will become more significant in post-Cold War ODA distribution. This hypothesis should figure highly in the distribution of development assistance. After all, economic development and improved living conditions are (officially) at the heart of ODA (Lumsdaine 1993). Several studies have indicated a strong relationship between aid and need (Maizels and Nissanke 1984; Poe and Meernik 1995). Per capita GNI figures were obtained primarily from the OECD’s IDS database and the World Bank’s WDI. In relatively few cases, data were obtained from the World Factbook (U.S. CIA 1994, 1999) and the Penn World Tables constructed by Heston and Summers (2003). To illustrate, for 1979 and 1984, per capita GNI data for Czechoslovakia, East Germany, the Soviet Union, North Yemen, and South Yemen were obtained from the Penn World Tables. The CIA’s World Factbook was used for Afghanistan, Andorra, Bosnia, Cuba, Iraq, North Korea, Liberia, Libya, Liechtenstein, Monaco, Palau, San Marino, and Yugoslavia for 1994. For 1999, the World Factbook provided data for Afghanistan, Andorra, Bahrain, Burma, Brunei, Cuba, Libya and Monaco, Nauru, North Korea, Qatar, San Marino, Tuvalu, and the United Arab Emirates. Per capita GNI, or NEED, is in hundreds of 1999 U.S. dollars and is logged. IHH/4: War (WAR). States involved in civil or interstate armed conflict are more likely to receive elevated levels of ODA both during the Cold War and after.
Donors may wish to utilize ODA as a stabilizing force in the uncertain environment typically associated with armed hostilities. Donors may also seek to offset the inherent costs of waging war through the provision of assistance. Aid could be used to rebuild damaged or destroyed infrastructure, to reinvigorate a weakened economy, to provide humanitarian relief to displaced civilians, or to purchase medical supplies for the wounded, and so forth. Data regarding states at war were obtained from the Uppsala dataset, the same dataset noted in the above discussion of allies at war. The same threshold applies here: 25 annual battle-deaths. A dichotomous variable has been constructed to indicate the relationship between conflict and ODA. Accordingly, states involved in interstate or civil armed conflict (as identified by Uppsala) are coded 1, all others 0.
Domestic Hypotheses (DH) Unlike the hypotheses above that are primarily intended to evaluate the relative importance that donors attach to specific attributes of the aid recipient, the domestic hypotheses below focus on the donors and attempt to explain patterns or shifts in aid distribution. The domestic hypotheses are not incorporated into the following quantitative models that test the hypotheses associated with the state attributes of prospective aid recipients. The domestic hypotheses, however, are utilized in the qualitative review of the distribution of American, German, and Swedish development assistance. DH1: Party In Power (PIP). The literature on foreign policy suggests a tendency in the “conservative” camp to define national interest in traditional security terms. The literature also suggests willingness in the “liberal” camp to blur the line between “high”
and “low” politics and to place greater emphasis on issues that are not traditionally considered security related when defining national interest. Therefore, it is hypothesized that when either the chancellor (Germany), prime minister (Sweden), or president (U.S.) is from the “conservative” party (i.e., a Christian Democrat or a Republican) traditional security interests will be more evident in the distribution of aid. In these instances, countries of strategic value are more likely to receive ODA and expanded levels of ODA during and after the Cold War, but that strategic value will become less important in the post-Cold War years. Conversely, when the chancellor, prime minister, or president is from the “liberal” party (i.e., a Social Democrat or a Democrat), ODA is less likely to be distributed according to geopolitical concerns during the Cold War, and that after the Cold War geopolitical concerns will become even less relevant in determining the distribution of development assistance. DH2: Economic Downturns (ED). In times of donor economic distress or general economic sluggishness—although the total amount of ODA is likely to be reduced—ODA is more likely to be distributed according to traditional security interests during rather than after the Cold War. Conversely, in good economic times, countries of strategic importance will receive ODA and increased levels of ODA before and after the Cold War, but strategic value will become less significant in the post-Cold War environment. Economic health is measured by the annual percentage growth in GDP. As a preliminary standard, a real GDP growth rate of 2% or less is considered to reflect a sluggish or distressed economy.
Some Thoughts on Anticipated Theoretical Obstacles A potential criticism of the study is that the theoretical implications of the hypotheses are not mutually exclusive, that is, they have theoretical implications that are not strictly the domain of a single IR school of thought. In particular, trade and economic openness, and to a lesser extent, regime type and human rights, can arguably be strategic values, although perhaps not so much in the traditional sense. Population, as well, could serve the strategic, humanitarian, and/or economic interests of the donors. Much has to do with definition and interpretation, of course. Per capita GNI, for instance, can be utilized in different ways. Development assistance targeting countries with low per capita GNI might indicate humanitarian interests on the part of the donor, thus lending credence to idealist assumptions. Development assistance targeting countries with high per capita GNI might indicate economic interests on the part of the donor, thus lending credence to neo-Marxist and neorealist assumptions. The problem is defining what is security related (or strategic), and what is not. As an element of foreign policy, ODA serves the perceived national interests of the donor. The literature, particular the casestudy literature, suggests a geopolitical emphasis in the Cold War distribution of American development assistance. German development assistance, according to the literature, seems to favor commercial interests, while aid from Sweden is oriented toward humanitarian concerns. From the realist perspective, only the United States was, strictly speaking, engaged in “high” politics in regard to its distribution of development assistance. In the traditional sense, only the U.S. attached “strategic” value to development assistance. The German case is a bit blurred. The focus on commercial interests could potentially enhance Germany’s economic strength, arguably a strategic
value. Of the three cases, Sweden’s aid distribution is most consistent with “low” politics. Admittedly, the boundary between high and low politics is increasingly porous. Nevertheless, it seems reasonable to anticipate the distinction to be clearer in aid distribution during the Cold War years than in years following the end of the Cold War. Naturally, states define their strategic interests in different ways. How states define their national strategic interests has much to do with their relative position in the international system. It is not unreasonable to expect that a fundamental change in the international system—such as the disintegration of the Eastern Bloc—would cause states to redefine their strategic interests. Or would it? What if the end of the Cold War produces no appreciable differences in the distribution of development assistance? If development assistance patterns remain relatively unchanged in the post-Cold War era, what are the implications for theories of international relations? Additionally, the "qualitative" aspect of the study is problematic. The intention is to combine quantitative and qualitative research. The reasons for doing so are fairly clear. The Domestic hypotheses are, admittedly, imperfect. The primary concern is accounting for coalitional government, or more precisely, its impact on aid distribution. Sweden is probably less of a problem than Germany or the United States. A single party, the Social Democrats, has essentially dominated Swedish national politics. Despite the presence of the Free Democrats, the Greens, and the Republicans, Germany has two major parties: the Christian Democratic Union and the Social Democratic party. In the postwar era, one or the other has clearly been the senior partner in any coalitional government. This is evident in the fact that every German chancellor since World War II
has either been a Social Democrat or a Christian Democrat. In the United States, divided government is, with few exceptions, par for the course. Nonetheless, since the inception of an official aid program, either a Republican or a Democrat has occupied the White House. The point of this discussion is that in each of the three countries, at any given time, a single party is in the driver’s seat in as far as directing the distribution of aid. This is more apparent in parliamentary systems than in the U.S. presidential system where divided government is the norm. Nevertheless, the president has the initiative and thus an advantage in formulating the American aid agenda. That is not to say that a Republican president enjoys carte blanch in determining the amount of aid and its distribution, especially when confronted by a Democratic House.
In Summary A number of hypotheses have been presented. They are intended to highlight a particular dimension of development assistance, namely the state attributes of prospective recipients that may determine the direction and volume of aid before and after the Cold War. The hypotheses are generated from assumptions drawn from IR models—realism, neorealism, idealism, neoliberalism, and neo-Marxism. The IR models are potentially useful in identifying attractive aid recipients. The state attributes, i.e., the independent variables, previously discussed are not meant to represent an exhaustive list of the possible determinants of ODA, but are meant to be suggestive of the general aid patterns of Germany, the United States, and Sweden. The next chapter considers in some detail the current ODA programs of the three donors. This is part of a larger effort to outline the methodological strategy devised to test the hypotheses. Attention is given to the dependent variable and the quantitative
methods that are implemented to identify the state attributes significantly related to the distribution of American, German, and Swedish bilateral ODA. In addition, chapter six identifies several methodological issues that require elaboration. We then go on to review the findings (chapter 7) and consider alternative approaches that might further illuminate the distribution of Western bilateral ODA (chapter 8).
CHAPTER 6 THEORY AND METHODS
This chapter describes several features of the methodological approach undertaken to evaluate the distribution of American, German, and Swedish bilateral ODA. First, however, it makes the case for choosing ODA as an appropriate indicator of the relative significance three Western donors attach to the various state attributes exhibited by prospective and actual recipients of ODA during and after the Cold War. Next, it presents the quantitative models to be used and discusses a number of methodological issues.
Development Assistance and the Donors At the international level, ODA is the most prevalent form of bilateral economic aid, consisting of low-interest loans and public grants. While most countries demonstrate a clear preference for bilateral development assistance, they do routinely direct a certain percentage of their total aid disbursements to multilateral development institutions, such as the World Bank. At the national level, the disbursement of development assistance to other countries is administered by specific government bilateral aid agencies, such as the U.S. Agency for International Development (USAID), the German Development Corporation, and Swedish International Development Agency (SIDA). One of the primary responsibilities of the aid agencies is to oversee the direct transfer of public funds from the donor government to the government of the developing country.
Typically, these funds are negotiated with some basic understanding of how the funds are to be utilized. These agencies also administer the provision of necessary technical assistance and may provide development funding to multilateral or private organizations (Fry and Martin 1991). As leading members of the OECD/DAC, the United States, Germany, and Sweden have been involved in some form of official development assistance since the early 1960s. Founded in 1961, the OECD replaced the Organization for European Economic Cooperation (OEEC), which coordinated Marshall Plan efforts to rebuild postwar Europe. The OECD is currently comprised of 29 industrialized, marketeconomy nations. The OECD is charged with harmonizing and promoting “policies designed to enhance economic growth, financial stability, and trade in and among member nations” (Fry and Martin 1991, 383). It also attempts to coordinate international development assistance aimed toward the developing world. As more countries sought to join the list of aid recipients, it became clear that coordination between the activities of donors and recipients was necessary. In addition, the growing number of donors and the complex and varied nature of the problems of the developing countries demanded the creation of an organization that would compile information so as to avoid duplication of aid projects and waste of resources (Knusel 1968). To that end, the DAC was established to review, debate, coordinate, and monitor the bilateral aid levels (i.e., ODA) and the aid policies of OECD member states. Though the DAC itself does not dispense funds, it has set guidelines for the allocation of aid and has assumed the important responsibility of recording the impact. The DAC currently is comprised of the 22 most affluent members of the OECD.
Although development assistance is common among all OECD members and represents an important and highly visible component of their national aid programs, foreign aid is a broad category, including a variety of formal and informal programs of resource transfer. American foreign assistance, for example, consists of both economic and military aid. Disaggregating these two categories, one finds a surprising number of components. To illustrate, economic aid itself is divided into PL 480 Food Assistance, the Economic Support Fund (ESF), and Development Assistance (i.e., ODA). The American military assistance program is likewise divided into three related but distinct components: the Foreign Military Sales Credits (FMSCR) Program, the Military Assistance Program (MAP), and the International Military Education and Training (IMET) Program (Conteh-Morgan 1990). Ostensibly, each of these components of U.S. economic and military aid are designed to fulfill specific national objectives (e.g., security, access to markets, humanitarian relief) within the broader framework of American foreign assistance and American foreign policy. The German aid program can be divided into three primary categories: Financial Assistance, Promotion of Trade and Investment, and Technical Assistance. These categories are not exhaustive and merely represent the focus of German aid. The first category, Financial Assistance, is the primary emphasis of the German aid program and includes bilateral and multilateral capital assistance, as well as special forms of bilateral assistance. In terms of expenditures, the Germans have shown a clear preference for bilateral capital assistance. Bilateral capital assistance, with slight variation, is the German equivalent of the American and OECD category of development assistance, or ODA. Under the heading of Promotion of Trade and Investment one finds measures to
encourage private investment and trade. The final category of Technical Assistance includes a number of measures that provide support in technical training, education, and social welfare. The German aid program has no “PL 480 Food Assistance” or “Economic Support Fund,” per se. It does, however, offer other more limited forms of bilateral financial assistance that serve similar purposes. The German aid program puts less emphasis on these measures than does its American counterpart. In addition, the Germans have minimized the military dimension of foreign aid, although German military assistance has been supplied to Nigeria, the Sudan, and Tanganyika (Tanzania) (Holbik and Myers 1968). This limited German military assistance notwithstanding, the comparison between the German and American military assistance programs is virtually meaningless except perhaps to reinforce the point that Germany has no formal military aid program and to suggest the goals each country assigns to its aid program in toto. The Swedish aid program also de-emphasizes the military component of foreign assistance. Much like other small European countries, Sweden had no comprehensive, pre-existing foreign aid apparatus when the OECD was founded. Although Sweden established an aid program 1962, it did not formally join DAC until 1964 because it objected to aid policies that it perceived to favor the national interests of DAC members over the needs of the developing world. In other words, Sweden agreed with Western aid in principle, but saw much of its application as largely self-serving in practice. When Sweden finally joined DAC, Stockholm made it clear that its “participation was undertaken in the spirit of reforming [development] aid” (Lumsdaine 1993, 243). Over the years, Sweden has established a reputable foreign assistance program (one that is especially envied by those who wish to see foreign assistance take on a more
humanitarian character). Prior to 1995, five separate official aid agencies and several private ones managed the Swedish aid program. As a result of the fairly large number of specialized agencies involved in the Swedish aid program, the administration of aid had become an increasingly complex process. In 1995, the five official agencies were organized into one agency, SIDA. Before and after SIDA, the Swedish aid program has demonstrated a high regard for ODA, as evidenced not only by ODA as percentage of GNP (it ranks in the top 3 of all DAC members), but also by ODA as percentage of total aid expenditures (DAC 1994). Swedish development assistance has ostensibly focused on the world’s poorest countries, emphasizing social and administrative infrastructure and (in recent years) development education (Fry and Martin 1991). Sweden also diverts a far greater percentage of its ODA to multilateral organizations like the World Bank and various specialized UN agencies than either the U.S. or Germany (DAC 1993). (Incidentally, future studies that utilize IR theory to explain the distribution of development assistance may well consider exploring the theoretical implications of donor preference for either multilateral or tied ODA. Typically, donors direct a certain portion of their total gross ODA to multilateral institutions. Donors also quite frequently impose qualifications on some of their ODA disbursements which ties aid to the purchase of donors' products and services. The percentage of ODA that donors reserve for multilateral institutions or that qualifies as tied aid may prove suggestive of the national priorities donors attach to their ODA programs. The frequency with which donors utilize multilateral or tied aid is also theoretically indicative of the primary determinants of aid as suggested by the models of IR. For example, multilateral aid is consistent with idealist assumptions because it removes the self-serving motives of the donor from the aid
equation. Tied aid is consistent with neorealist and neo-Marxist thought because it furthers the commercial interests of the donor.) Direct comparisons between German, Swedish, and American aid categories are a bit problematic (but far from impossible) owing to difficulties associated with foreignlanguage equivalents. The Germans, for instance, arrived somewhat late on the Western aid scene and were thus “saddled” with a pre-existing aid vocabulary, which in some instances defies a completely accurate translation. (In the late 1950s, West Germany (the Federal Republic of Germany or FRG) emerged on the heels of the now famous Wirtschaftswunder. This economic miracle propelled the FRG once again onto the world stage. Accordingly, in 1960, the West German government conceived an aid program that was both original to the Federal Republic and unfettered by prior commitments.) (White, 1965) Take for example the phrase, “Technische Hilfe” (Technical Assistance). In English, the phrase is rather expansive and includes the transfer of personnel (technical experts), skills (e.g., technical training and education), and any necessary equipment. In English and in OECD parlance, Technical Assistance covers nearly everything except direct financial assistance. To the Germans, the phrase has a much narrower meaning, encompassing little more than the “loan of technical equipment for some specific purpose” (White 1965, 81; also see Sohn 1972 ). This type of confusion is rather typical of the German aid program. In general, the Germans are more precise in defining their aid categories, as witnessed by their tendency to sub-classify various components of assistance. Fortunately for this study, the Germans have undertaken steps to systematically define their aid categories in terms that more closely approximate their English counterparts. The type of assistance that this study examines—ODA—is rather
explicit in the German aid program. Development assistance is also clearly defined in the Swedish aid program. Development assistance is found in all three of the national aid programs in essentially the same form. Because of its “universality” among aid programs, it is a natural object for comparison. However, just because it is utilized by all three donors does not mean it is utilized in the same manner or for the same reasons. The particular national interests that Germany, Sweden, and the U.S. have sought to enhance through the provision ODA during and after the Cold War is the primary focus of this study. Officially, ODA is to be in the form of concessional loans and grants and is intended to improve the economic development and social welfare of the developing countries. Technical assistance and cooperation are included in this official definition. Strictly speaking, development assistance would not include loans made at commercial market rates or military assistance, although some Western governments have mistakenly or intentionally included both in their total aid package. It is fairly common to associate ODA with the bilateral assistance provided by the members of the DAC/OECD. Bilateral development assistance, however, has also been extended by the OPEC countries of Kuwait and Saudi Arabia, as well as by China, Cuba, and Taiwan. Kuwait and Saudi Arabia, for instance, have contributed rather impressive levels of development assistance (2.90% and 4.29% of GNP in 1986, respectively), which is channeled primarily to the poorer Muslim countries in Africa and Asia (Fry and Martin 1991). Roughly 30% of international development assistance is channeled through a variety of multilateral aid agencies, including development banks, regional organizations,
and various UN agencies (OECD 2002). Figure 2 illustrates the total volume of net bilateral and multilateral ODA distributed from 1960 to 2000. While the DAC/OECD is by far the largest foreign assistance group numerically and monetarily (its member countries contributing around 85% of total global bilateral ODA), few DAC countries have met or exceeded the UN target of 0.70% as a percentage of GNP (Browne 1990, 160-1). The ratio of ODA to gross national product is commonly taken as a measure of a the donor’s commitment to international development and its commitment to reducing the gap between rich and poor (Fry and Martin 1991). Of the three donors under consideration here, only Sweden has met and exceeded the UN’s target figure of 0.70 %. In 1995-96, for instance, Sweden provided some $1,999 million in ODA, or about 0.84% of its GNP. For its part, the United States has figured quite prominently in the transfer of DAC-related ODA, although its share of total development assistance has declined over the years. The American commitment represented 14.6% of
FIGURE 2 TOTAL NET BILATERAL AND MULTILATERAL ODA FROM 1960 TO 2000 IN BILLIONS OF CURRENT USD
72000 63000 54000 45000 36000 27000 18000 9000 0 1963 1967 1971 1975 1979 Year 1983 1987 1991 1995 1999
Source: OECD, International Development Statistics (Paris: OECD, 2002).
the total DAC ODA in 1995-96. During the same time period, ODA granted by the U.S. totaled $9,377 million, or 0.12% of its GNP, well below the UN target. Finally, in 199596, Germany contributed $7,601 million in ODA, about 0.33% of its GNP. Its share of total DAC development assistance in that same time period was 13.2%, making its commitment the third largest after Japan and the U.S., respectively (“Preliminary Estimates…” 1999, 2). As suggested above, ODA accounts for a small proportion of the total GNP of the three case studies under consideration here. Nevertheless, despite the relatively smaller percentage of GNP set aside for official development assistance, the distribution of ODA realistically reflects specific interests (or the foreign policy goals) that the donor countries seek to enhance or project through the extension of development aid. These may be short- or long-term goals, and may, for example, be security-strategic, commercial, and/or humanitarian in nature. An examination of the distribution of ODA, or more precisely, the recipient state attributes that appear to attract ODA and greater levels of ODA from the U.S., Germany, and Sweden, illustrate the prioritization of those goals. Moreover, and of great importance to this study, such an examination also evaluates whether the cessation of the Cold War has prompted donors to re-assess the particular national interests they seek to enhance through development assistance. There are other reasons why ODA is an attractive measure of national interests. First, ODA is largely a bilateral transfer of resources and thus more closely reflects the aims of donor nations than does multilateral assistance, the latter removing a substantial degree of donor autonomy by subjecting resources to third party involvement. Second, ODA is truly global in scope. Third, in contrast to other aid programs that are fairly
explicit in their motives (e.g., PL 480, MAP), official development assistance is somewhat ambiguous. (Incidentally, this may partly explain the relative lack of scholarly attention devoted to particular issues associated with ODA). The kind of “development” that ODA seeks to foster and the countries that are considered in need of “development” remains unclear. Are the poorest countries (measured by per capita GNI) in the greatest need of development? Or are military allies in the greatest need of development? An examination of ODA recipients may indicate donor preferences for certain types of countries and remove some murkiness from the ODA equation. In addition, development assistance is an attractive measure of comparative national priorities because of its universality. It is the one category of aid that is common and prevalent among all three national aid programs. Because its definition is virtually identical in each of the three aid programs, national comparisons are relatively easy. Moreover, ODA is also a practical and relatively inexpensive instrument of foreign policy. Finally, the OECD has taken a keen interest in development assistance and therefore dutifully reports the annual distribution of ODA (whether it be bilateral, multilateral, financial, or technical) from all Western sources through the DAC. In a cross-national survey such as this, focusing only on official development assistance has several theoretical limitations, but many methodological advantages. On balance, the benefits outweigh the costs, as the theoretical limitations of ODA are far less severe than the evident methodological limitations inherent in a cross-national examination of other components of foreign aid. For instance, as previously alluded, national comparisons are rather difficult when considering military assistance, food aid, or ESF—three important components of the U.S. aid program that receive limited or no
expression in the German and Swedish aid programs. This raises an interesting question and poses a dilemma: How does one account for the national divergence in aid programs, namely the relative or absolute absence of significant German or Swedish military aid or ESF or food assistance? Focusing exclusively on development assistance is unlikely to answer this question. If we choose to accept foreign aid as a fundamental and useful element of foreign policy (rather than a colossal waste of resources) and as such indicative of perceived national interests, it is a bit misleading to focus on only one aspect of that aid program. This creates a dilemma. American military aid and, to a somewhat lesser extent, ESF, clearly reflect U.S. strategic or geopolitical national interests (Conteh-Morgan 1990). This is hardly a secret—they are advertised as such. It makes little sense to examine the distribution of these types of assistance in the hopes of determining their underlying objectives. Nevertheless, it seems reasonable to assume that national aid programs differ, to put it rather simplistically, because, presumably, the national priorities reflected in the provision of aid differ. And it also seems reasonable to assume that national aid programs incorporate various components to serve various donor national interests. In isolating only one element of a national aid program, like ODA, one runs the risk of misrepresenting the character of that program. Consider this example. If the findings of this study unexpectedly indicate that American development assistance favored humanitarian concerns over security interests, it would not then be appropriate to extrapolate humanitarian interests to the entire American aid program. We could not characterize the U.S. aid program as essentially humanitarian in nature simply because ODA demonstrated a high regard for humanitarian values, especially if the U.S.
government regularly allocates considerably more funds to military aid and ESF than it does to ODA. Perhaps the United States satisfies its security concerns through military aid and ESF and thus avoids attaching geopolitical value to ODA. In other words, military aid and the Economic Support Fund are intended to serve security interests, while development assistance is intended to serve humanitarian interests. Even if this were true, it does not necessarily provide us with an accurate depiction of the relative importance the U.S. attaches to these programs. If we were to discover that either military aid or ESF, or the two combined, annually received more dollars than ODA, would we view ODA an as equal partner in the American aid program? What would be truly suggestive would be to find that American ODA behaved differently—that its distribution followed a geopolitical trajectory. This might indicate that not even American development assistance is safe from national security concerns. At any rate, to the extent that this is feasible, post-Cold War, cross-national studies that examine the direction and volume of Western foreign aid programs in their totality would be, to say the least, valuable contributions to the literature. Of course, donor aid preferences are based on a number of international and domestic interests and constraints. Resources are finite and consequently transfers must be prioritized. Therefore, identifying the criteria or characteristics by which countries qualify for ODA sheds light on the foreign policy priorities attached to ODA disbursements. Among the central questions of this study, the reader may recall, is the extent to which the passing of the Cold War has altered those criteria. A cross-national examination of ODA both evaluates the extent to which the passing of the Cold War has altered those criteria and simultaneously tests the explanatory power of the IR models in
the post-Cold War world. Moreover, such a comparative, cross-national examination may produce findings that have serious political implications, not the least of which are the donors’ commitments to promoting socio-economic development and democratic principles abroad. Speaking from the realist viewpoint, one would anticipate traditional security concerns to prevail in the absence of the Soviet threat, although they would likely anticipate at least a nominal shift in priorities with the reduction of that threat. Accordingly, Western aid would continue to be channeled to those countries of greatest strategic importance, regardless of regime type for example. Like realist thinkers, the neorealist school would also expect geopolitical interests to reign supreme in the distribution of ODA, but would also reserve some importance for national economic interests. The idealist camp would most likely perceive the current international environment as one in which traditional security concerns no longer dominate the foreign policy agendas of the industrialized Western democracies. In this context, international trade and commerce, humanitarian concerns, and the promotion of democracy for democracy’s sake, for instance, would be among their foremost foreign policy objectives. Because of their emphasis on market economics and free trade, neoliberals would argue that aid be utilized to promote global capitalism. Thus, in the context of this study, ODA would best serve the interests of donors and recipients alike if it encouraged open markets and trade. Finally, adherents to neo-Marxist thought would expect aid to follow donor commercial interests, as indicated by trade relationship and recipient economic openness, for instance. In terms of development assistance, it remains unclear whether the “peace
dividend” has diminished the overall explanatory power of the realist paradigm, for instance. Realists would likely expect leading Cold War and post-Cold War recipients to be countries that are geopolitically valuable to the West. This is not to say that traditionally “nonsecurity” issues—human rights and democratic consolidation for instance—are absent in Western aid calculations, but that they take a backseat to the more pressing concerns associated with national security. As such, it is reasonable to expect the empirical evidence to indicate that official development assistance is generally more likely to be distributed according to nonsecurity issues in the post-Cold War era. We might also expect that the top aid recipients will for the most part be the same before and after the end of the Cold War, although this is not necessarily a function of their strategic value.
Methods and Expectations In the pages that follow, a number of quantitative methods are employed to assess the relative value the donors attach to a host of recipient state attributes (i.e., the hypotheses in chapter five) during and after the Cold War. The state attributes are inferred from leading models of IR to be attractive targets of ODA. Thus, much of the methodological plan below is based on the following premise: IR theory identifies the state attributes that in turn act as determinants of bilateral ODA. Discussion is also given to two domestic variables that intuitively would seem to figure prominently in the distribution of Western bilateral ODA. The study also takes advantage of existing scholarship and government publications to further account for the distribution of American, German, and Swedish ODA during and after the Cold War. In the previous section, theoretical and methodological justification was provided
for the usage of ODA as the dependent variable. More precisely, the dependent variable is reflected in net disbursements of bilateral ODA from Germany, Sweden, and the United States. A binary dependent variable represents the Direction (DIR) of German, Swedish, and American ODA for all independent states of the world. A binary probit model with robust standard errors is used to explore the relative significance of the independent variables, i.e., the state attributes incorporated in the hypotheses discussed in chapter five. Robust standard errors are employed to minimize any suspected violations of the maximum likelihood estimate (MLE), particularly heteroskedasticity (Kennedy 1998; Long and Freese 2001). Meanwhile, the flow of ODA is a continuous, intervallevel dependent variable and is indicated by the Volume (VOL), or the net year amount (measured in thousands of 1999 US dollars and transformed into the natural log scale), of bilateral ODA a nation receives. Accordingly, a regression model is utilized to assess the relative importance the donors attach to the various state attributes in determining the amount of assistance ultimately extended to various types of states. The volume of aid is logarithmically transformed to minimize both the impact of influential cases and the potentially heteroskedastic distribution of aid flow in its raw form. In the raw form, the data values frequently exhibited wide, even extreme, ranges among the units-of-observation; thus, all interval-level variables have been transformed logarithmically. The Economic Openness (EO) variable has also been standardized to recipient GNI. This minimizes some of the methodological problems associated with analyzing cases of varying size in quantitative models, in that the transformations correct for the heteroskedastic distribution of the raw data, as well as decreases the impact of potentially influential cases (Schraeder et al. 1998; Wittkopf 1975). It would be
preferable to utilize the data in their raw or unadulterated form, assuming of course that the data are legitimately comparable from donor to donor. Steps have been taken to ensure that comparable data are available (e.g., adjusted monetary values). Yet comparable data do not guarantee the absence of wide disparities in value among both the dependent and the independent variables. A number of statistical runs were attempted using the raw data (results not reported). Specifically, probit runs with the raw data were attempted and indicated the presence of influential cases, especially with Germany and Sweden. The U.S. aid pattern demonstrated the least change among the three donors from the raw to the transformed data. While the direction of the coefficients remained unchanged from the raw data to the transformed data in the German and Swedish cases, several state attributes had a greater impact on the direction of bilateral ODA when the data were expressed in their raw form than when logarithmically expressed. For instance, the untransformed data indicated that in the two post-Cold War years Communist borderstates (BSC) were significantly more likely to obtain German ODA, while those states enjoying a strong trade relationship (TR) with Germany were significantly less likely to receive aid. Both the BSC and the TR variables were insignificantly related to the direction of German ODA when the data were logarithmically transformed, although their coefficient signs were unchanged. Further, NEED was found to be an insignificant determinant of the direction of German ODA in 1980 when the raw data were employed. After the log transformations, NEED was statistically related to the direction of German ODA in 1980. Interestingly, the post-Cold War direction of German ODA in 1995 and 2000 showed little change from the raw to the transformed data. Swedish aid patterns also indicated a greater impact of a few independent variables when considering the data
in their raw form. Again the direction of the coefficients remained unchanged, but the BSI variable was found to be statistically related to the direction of Swedish ODA in the Cold War years, while states that possessed strategic materials were significantly more likely to receive ODA in 1980. Meanwhile in the two post-Cold War years, the TR and BSI variable were negatively and significantly related to the direction of Swedish ODA in 1995 and 2000, respectively, while the EO and WAR variables were positively and significantly related to the direction of Swedish assistance in 2000. None of these variables were statistically related to the direction of Swedish assistance in those years when the data were transformed. Unfortunately, the rather extreme ranges in the raw data—namely the continuous, interval-level measures—pose serious methodological challenges. Particularly with Sweden in the regression model, the standard errors often exhibited unfavorably large ranges among the regressors. Rather than scale or standardize the interval-level variables to either GNI or population of recipient country, for example (see Schraeder et al. 1998), this study has elected to transform these measures logarithmically. One advantage of log transformation is that great disparities in the data values for the observations (i.e., prospective and actual aid recipients) are largely reduced, without erasing the relative order of the observations vis-à-vis one another (Wittkopf 1972). Log transformation tends to compress the data more at the upper end of the data range than at the lower end of the scale. While log transformation avoids complicating matters by incorporating standardizations that inherently contain political implications and may not significantly remove the outlier effect, the relationship between the dependent and the independent variables is no longer linear but curvilinear. The regression coefficients are, nevertheless, “directly interpretable” as elasticity coefficients.
Accordingly, the coefficients indicate the percentage increase in the dependent variable which corresponds to a certain percent increase in the independent variables, holding all else equal (Wittkopf 1972, 196). This is a suitable compromise, both methodologically and theoretically, namely because logarithmically transforming much of the interval-level data preserves the relative order of the observations without removing the outliers (or the potentially influential cases). Moreover, the data are transformed in such a manner that satisfies the classic methodological concerns associated with regression models without unduly biasing the data in favor of certain political assumptions. Nevertheless, several regression runs were attempted (not reported) using a standardized dependent variable, i.e., per capita aid and aid as a percentage of GNI. It was found that results were not substantively different from those of the raw data and suffered many of the same methodological problems associated with the raw data, namely the presence of influential cases and wide ranges in data values. For instance, Egypt and Israel remained influential cases in the American models, even when ODA was standardized to population. The probit and the regression models are estimated by the Stata software package. While the probit regression and the multiple regression models are nonlinear, the results, nevertheless, are directly interpretable. The probit model is curvilinear, which does not lend itself easily to the standard interpretation of coefficients associated with classic linear regression. Moving on, many of the post-estimation procedures used to interpret the models are performed by Stata Post-estimations Commands (known collectively as SPost). SPost is an invaluable tool for the post-estimation interpretation of regression models for categorical dependent variables and as such has greatly facilitated hypothesis testing in this work (Long and Freese 2001). Indeed, the statistical probabilities
presented in the next two chapters are the result of SPost commands. Essentially, there are two statistical questions: (1) What value did the three donors attach to specific state attributes as reflected in the direction of ODA before and after the end of the Cold War? and (2) What value did the three donors attach to specific state attributes among potential recipients as reflected in the amount of ODA recipients obtained during and after the Cold War? As to the first question, the probit model estimates the relative impact of the various state attributes on the direction of American, German, and Swedish ODA among all independent states (for which adequate data are available) in 1980, 1985, 1995, and 2000. The goal here is to identify the state attributes that are significant determinants of the direction of aid among prospective recipients. To illustrate, a diagram of the statistical plan is provided below in Table 6. The years 1980, 1985, 1995, and 2000 allow for the presence and the absence of Cold War calculations in the distribution of ODA and should capture any patterns or trends in bilateral ODA from Germany, Sweden, and the U.S. The International Development Statistics (IDS) database was used to identify the states that received American, German, or Swedish aid and those that did not. The database was also quite useful in determining the amount of assistance the three donors extended to recipients. It was necessary to supplement the IDS database with
TABLE 6 A SAMPLE OF THE DIRECTION AND VOLUME OF AMERICAN ODA, 1980
Recipient: Yes=1/No=0 1 1 0 Volume: $ Millions 125 60 0 Ally: Yes=1/No=0 1 1 0 Trade: $ Millions 35 120 4 Regime: -10 to 10 9 -6 -7
Israel Korea Poland
publications from the U.S. Department of State (2000; 2001) and the U.S. CIA (2002) to identify all independent states of the world. The probit samples thus include both recipients and nonrecipients of ODA and number between 142 and 182 states/ observations per year and per donor. To elaborate, the recipients and nonrecipients of American ODA, the recipients and nonrecipients of German ODA, and the recipients and nonrecipients of Swedish ODA are compiled independently, that is, by each of the three donors for each of the four years. All told, there are 12 probit models. Of some concern is that this approach necessarily reduces the sample sizes to approximately 150 cases per donor per year. The small sample sizes create obvious methodological concerns. Fortunately, Stata is a powerful and an extremely user-friendly program that is capable of managing small samples with a high degree of reliability. Nevertheless, the results are best viewed as preliminary. To determine the state attributes that may account for comparatively greater levels of ODA among potential recipients, the study follows essentially the same plan as the one regarding the direction of ODA. In this instance, however, the volume of net bilateral ODA a country receives is incorporated into a regression analysis. Thus the independent variables are valued proportionally to the amount of annual ODA a country receives (see Table 6 for illustration). This approach is problematic for one primary reason: the number of observations is necessarily limited to the world’s independent states for each of the four aid years of 1980, 1985, 1995, and 2000. The small sample sizes create methodological issues that must be considered when interpreting the regression results. Many previous studies have thus elected to compile and lag aggregate data over the course of many years (see Meernik et al. 1998; Schraeder et al. 1998). Inherent in such
an approach is the high probability of autocorrelation, in that the cases are not independent across time. The lack of independence among cases increases the likelihood of serial dependence in the error term. Also likely is that there will be greater or lesser variance in the error terms for some independent variables or countries than for others (Meernik et al. 1998). This study avoids the tricky business of autocorrelation and has opted to take a parsimonious methodological approach that seems best suited to answer the theoretical questions under consideration. There are perhaps better, or at least simpler, approaches to statistically evaluate the significance of the independent variables. For example, simply regressing the annual amount of ODA of recipients indicates the direction of ODA, as well as the importance each donor assigns to particular state attributes. It seems, however, that considering all the nonrecipients and the recipients absent their volume of ODA provides a general, or overall, picture of ODA distribution, as well as avoiding selection bias. The subsequent analysis incorporating the volume of ODA a nation receives serves to reinforce or perhaps contradict this picture. Nevertheless, an argument could be made that including all independent states of the world in both the probit and regression models unfairly stacks the deck in favor of certain state attributes over others. For instance, the inclusion of the relatively wealthy NATO states in the models is likely to diminish the impact of several of the strategic state attributes while perhaps intensifying the impact of other state attributes, like per capita GNI. While there is precedent in the foreign aid literature to include all independent states in the examination of the direction of aid (see Meernik et al. 1998), there is also reason to believe that the methodology of such studies (and this one) sets up the realist perspective to be a “straw man.” It seems unlikely that affluent
nations will be ODA recipients. For this reason, the probit model was run absent High Income Countries (HIC). The results are reported in Appendix 4. Finally, it is intuitively attractive to include only the actual recipients of ODA in the regression models. Such an approach is standard in a number of case studies, but in a cross-national survey such as this, the number of actual recipients in any given year varies among the three donors. Generally, the number of cases (observations) should not vary from regression to regression. In other words, it is methodologically prudent to establish consistent sample sizes among the donors for each of the four aid years. To limit the observations to only those states actually receiving ODA risks the potential dangers associated with sample selection. Thus, all independent states are included in the regressions. Germany, Sweden, and the United States annually distribute ODA to scores of countries. In the year 2000, for example, the U.S. granted ODA to 142 states. Germany extended assistance to 145 states, while Sweden saw fit to award ODA to120 states (OECD 2002). With so many states receiving ODA, we might well be tempted to characterize the distribution of German, Swedish, and American assistance as spreading the donor’s wealth and covering all the bases of both recipient and donor national interests. Yet recipients of ODA are not created equally, as the distribution of American, German, and Swedish ODA clearly shows. Cliches aside, in reality, American, German, and Swedish ODA is disproportionately extended to a number of select countries. For instance, the top fifteen recipients of American, German, and Swedish ODA routinely receive approximately 30 to 60% of total American, German, and Swedish bilateral ODA (measured in absolute dollars; see Table 7 for an illustration). (The following figures are in gross disbursements.) In the years 1970-71, 1980-81, and 1991-92, the top fifteen
recipients of American development aid received an average of 61.7% (roughly $2053.48 million), 44.4% (roughly $3096.01 million), and 57.3% (roughly $9335.89 million) of total American ODA extended, respectively. During the same time periods, the Germans dispersed an average of 51.2% (roughly $392.19 million), 43.3% (roughly $1829.86 million), and 40.7% (roughly $3472.52 million) of their total ODA to fifteen recipients, respectively. The top fifteen recipients of Swedish aid in 1970-71, 1980-81, and 1991-92 received an average of 35.2% (roughly $48.5 million), 48.4% (roughly $455.44 million), and 36.3% (roughly $826.91 million), respectively (DAC 1993, 218-27). Moreover, if one looks at the top five recipients of American, German, and Swedish ODA, again as a percentage of total donors ODA, the disparities in aid flow among recipients become even more striking. In 1991-92, five countries received an average of 45% of the total American expenditures in bilateral development aid. Germany and Sweden set aside an
TABLE 7 TOP FIFTEEN RECIPIENTS OF GERMAN, SWEDISH, AND U.S. NET ODA IN MILLIONS OF 1999 USD Germany
1980 Turkey 326.7 Bangladesh 114.6 Israel 110 Egypt 106.7 Tanzania 74.5 Indonesia 65.6 Sudan 62.4 Peru 58.6 Thailand 56.1 Brazil 47.8 Congo, D. Rep. 36.8 Zambia 35.3 India 34.6 Kenya 34.1 Burkina Faso 31.3 1985 Egypt 131.4 China 97.6 Indonesia 86.9 India 86.5 Pakistan 74 Sudan 70.8 Myanmar 65 Sri Lanka 53.6 Bangladesh 46.6 Turkey 38.1 Brazil 35.7 Peru 35.6 Kenya 34.5 Tanzania 32.9 Thailand 32.2 1995 Poland 2676.3 Russia 987.4 China 684 Bosnia 335.2 Nicaragua 174.6 Egypt 169.8 India 167.9 Belarus 136 Vietnam 120.4 Mozambique 110.9 Ethiopia 75 Cote d’Ivoire 74.2 Zambia 71 Bolivia 68.9 Iran 68.1 2000 China 212.8 Zambia 112.2 Yugoslavia 98.7 Bosnia 91.5 Israel 75.1 Egypt 65.2 Russia 63.5 Brazil 49.5 Mozambique 47.8 Cameroon 47 Bolivia 45.3 Jordan 44.3 Poland 44.3 S. Africa 41.6 Kenya 38.4
TABLE 7 (CONTINUED) Sweden
1980 Vietnam 91.9 Tanzania 78.1 India 69.5 Mozambique 35.8 Ethiopia 31.4 Zambia 31.1 Kenya 28.4 Bangladesh 27.6 Sri Lanka 23.1 Angola 16.9 Botswana 13.2 Laos 12.5 Pakistan 12.5 Turkey 11.8 Zimbabwe 11.5 1985 Tanzania 49 India 41.1 Vietnam 37.5 Mozambique 34 Sri Lanka 33.3 Ethiopia 24.6 Zimbabwe 23.5 Zambia 22.9 Kenya 19.6 Angola 18.7 Bangladesh 16.7 Nicaragua 12.6 China 11.4 Guinea-Bissau 8.8 Botswana 7.3 1995 Mozambique 54.1 India 51.5 Tanzania 45.3 Ethiopia 39.1 Bosnia 38.3 Vietnam 34 Zambia 32.4 Nicaragua 31.8 Zimbabwe 29 Iraq 28.5 Angola 26.5 Bangladesh 26.4 Uganda 25.3 Bolivia 22.8 Kenya 19.8 2000 Tanzania 63.5 Mozambique 46.3 Honduras 41.7 Vietnam 37.3 Yugoslavia 33.5 Nicaragua 33.3 PLO 32.4 South Africa 32.4 Bangladesh 31.9 Russia 31.6 Bosnia 23.9 Uganda 22.6 Namibia 21.1 Ethiopia 20.7 Zambia 19.1
1980 1985 1995 Egypt 834 Israel 1948 Egypt 626 Israel 780 Egypt 1354 Haiti 382 Turkey 265 Sudan 346 Israel 328 Bangladesh 174 El Salvador 287 Russia 234 Indonesia 117 Costa Rica 199 Iraq 133 Pacific Islands 108 Peru 177 Palau 132 India 83 Bangladesh 165 El Salvador 115 Nicaragua 79 Honduras 161 Philippines 112 Somalia 60 Pacific Islands 154 Jordan 107 Sudan 60 Pakistan 144 S. Africa 107 Peru 53 Ethiopia 143 Rwanda 101 Jordan 50 Dominican Republic 139 Turkey 101 Philippines 50 Philippines 135 Mozambique 96 El Salvador 43 Jamaica 101 Bolivia 89 Pakistan 42 Morocco 96 Pakistan 82 Source: OECD, International Development Statistics (Paris: OECD, 2000). 2000 Russia 915.2 Israel 867.2 Egypt 634.8 Ukraine 244.8 Indonesia 174.2 Jordan 187.8 Ethiopia 129.8 Bulgaria 119.2 Mozambique 115.5 Honduras 110.3 Yugoslavia 107.7 S. Africa 105.8 Colombia 105.1 Armenia 103.1 Peru 92.3
average of 23.2% and 19.6%, respectively, for five countries in the same time period. In the American case, 45% translates into about $4626.4 million, or roughly one-quarter of all American bilateral, multilateral, and unallocated development assistance. The top five ODA recipients include Egypt, Israel, Nicaragua, Jamaica, and Bolivia. As a percentage of total bilateral aid received, the disparity in distribution among the five countries is
quite revealing: Egypt 29%, Israel 9%, Nicaragua 2.3%, Jamaica 1.9%, and Bolivia 1.9%. This pattern (i.e., the discrepancy) in bilateral aid distribution is a common occurrence in American, German, and Swedish expenditures. This is especially evident in the case of the United States (DAC 1993, 218-27). With the disproportionate nature of ODA distribution in mind, a tempting approach to determining the state attributes most attractive to Germany, Sweden, and the U.S. is to apply the models to the top 25 recipients of American, German, and Swedish assistance. This is a dicey approach, to say the least, and methodologically infeasible. The small sample sizes and the many parameters employed would make the findings virtually non- interpretable from a methodological standpoint. Nevertheless, the fact that relatively few countries receive such a substantial proportion of the donors’ total bilateral ODA suggests an obvious attempt by donor governments to prioritize their respective aid allowances. Rather than applying the independent variables to the top 25 recipients of American, German, and Swedish aid, a more methodologically sound and revealing approach is to examine and compare the percentage of ODA given to certain types of states during and after the Cold War. This would be useful in further understanding how aid is prioritized, and in what ways donors’ priorities differ during and after the Cold War, as well as buttressing the findings produced by the probit and regression models. Combined, both the approach encapsulated by the probit and the regression models and that offered by the percentages given to specific types of states should be instructive and further illuminate the development aid landscape. The fact that certain countries frequently receive disproportionate levels of bilateral ODA has presented methodological problems for some foreign aid studies. This
is especially true for studies that focus on the U.S. Recall 1991-92, where the U.S. allocated 38.9% of its total ODA to two countries: Egypt (29%) and Israel (9.9%) (DAC 1993, 227). In such a case, the attributes of the countries that receive a disproportionate of ODA, namely Egypt and Israel, could possibly overwhelm the significance of the attributes of the remaining recipient countries. To overcome this problem, it is common, according to Meernik, Krueger, and Poe (1998), for researchers to exclude Egypt and Israel from their samples. Naturally, excluding Egypt and Israel from the sample removes the “disproportionate” impact they have on other countries, but is such an omission justified? One could persuasively argue that these studies “stack the deck” in favor of certain state attributes over others. After all, if we are seeking to identify the primary foreign policy goals of the donors, as reflected in the distribution of bilateral ODA, should we not include all recipients of assistance, no matter how disproportionate their levels may be? Does the disproportionate distribution of bilateral ODA tell us nothing about the allocation of aid? Does this not indicate some sort of donor prioritization? Admittedly, the levels of American ODA to Egypt and Israel do not necessarily prove the explanatory power of the geopolitical hypotheses. It is possible that entrenched aid constituencies sympathetic to high levels of American assistance to Egypt and Israel play a significant role in the continuation of high levels of American aid. This should be explored, rather than simply dismissing the two countries from the analysis. Excluding states that received a disproportionate amount of ODA is troubling for two additional reasons. First, how is “disproportionate” to be defined? Second, for the sake of discussion, let us assume that a satisfactory, generally applicable, measure for “disproportionate” has been established. Let us also agree that the countries that receive
a disproportionate amount of ODA should be removed from the sample because they bias the findings. In several studies of American aid distribution, this is not a hypothetical argument, it is taken for granted (e.g., Meernik, Krueger, and Poe 1998; Poe and Meernik 1995). In a comparative study like this one, should the recipients of disproportionate levels of Swedish or German aid also be thrown out? The rationale for excluding Egypt and Israel in many previous studies of American aid was to avoid biased findings. If the recipients of disproportionate levels of American ODA are ignored, then we must also ignore the recipients of disproportionate levels of German and Swedish aid, even though in the latter two cases the inclusion of these states might actually reinforce the findings rather than bias them. What if the state attributes of the recipients of disproportionate levels of aid were found to be consistent with the state attributes of the remaining recipients of aid? Would we then seriously consider ignoring those states that received disproportionate amounts of ODA? Would their exclusion not diminish the significance of particular state attributes? Moreover, the U.S. has routinely dispensed a disproportional amount of assistance to states that at least superficially would seem to rank rather high in strategic value to the U.S. What if this pattern of distribution was to change? If the U.S. was to dispense a disproportionate share of aid to several povertystricken, sub-Saharan African states, the logic of previous studies would demand that these states be excluded from analysis, though such disbursements may signal a shift in priorities. While such a shift seems unlikely, its possibility does serve to illustrate potential theoretical and methodological difficulties associated with omitting from the study states that receive disproportionate levels of ODA. For these reasons, the volume of ODA has been logarithmically transformed so as to include all observations, rather
than throwing out potentially influential cases. Finally, in addition to exploring the primary determinants of American, German, and Swedish ODA, it is with great eagerness that this study investigates the explanatory power of the IR models. For example, it is expected that the realist model is less powerful in explaining the ODA patterns of Germany and Sweden. In the case of the U.S., the expectation is that the ODA distributions of both time periods will reflect greater geopolitical concerns than the other two countries. Much of this predilection is probably explained by the Cold War hegemonic position of the U.S., a position that continues in some form today. It seems reasonable to assert that American hegemony during the Cold War allowed other DAC members, to a greater or lesser degree, to shape their ODA transfers according to nonsecurity issues. Consequently, especially among the “lesser” powers, the realist paradigm may have very limited explanatory power over the two time periods. The case studies are based on these assumptions and thus include the U.S. (hegemon), Germany (second-tier power), and formally neutral Sweden.
Additional Methodological Issues A few remaining methodological aspects of the study require attention. To begin with, overseas territories are excluded from the study for primarily practical and methodological problems that arise from the lack of comprehensive and reliable data. Statistical programs, like Amelia, could conceivably correct many of these data deficiencies and as such offer promising avenues for future research. At any rate, from a methodological and theoretical standpoint, the sample of independent states is sufficiently large and diverse to satisfactorily test the hypotheses presented above. Moreover, generally speaking, resource transfers from the metropole to its territorial
possessions are more likely to be an internal, or “domestic,” affair and not reflected in official development assistance. Accordingly, the volume of development assistance from any DAC member to dependent areas is relatively small. Nevertheless, it is a bit discouraging to remove territorial possessions from the analysis, as some routinely receive development assistance. The former colonial powers of Great Britain and France, in particular, maintain an aid relationship with many of their dependent areas. While not a colonial power in the traditional sense, of the three case studies, only the United States maintains overseas territorial possessions, including, for example, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands. None of these territories, or any other American territorial possession, for that matter, received American ODA in the years 1980, 1985, 1995, or 2000, although former member-states of the U.S.-administered UN Trust Territory of the Pacific Islands have received substantial amounts of American ODA (OECD 2002). Interestingly, compared to Sweden and the United States, it is Germany that demonstrates the strongest aid commitment to overseas territories, although that commitment is weak compared to the volume of German development aid to independent states (OECD 2002). It is safe to say that German aid to dependent areas is not indicative of a post-colonial relationship and suggests something other than post-colonial interests since Germany has neither a recent colonial history nor any overseas possessions. Yet the territories that do receive German development assistance may share characteristics (or state attributes) that indicate a preference among German aid officials for certain state attributes over others and thus shed some light on the priorities that Berlin attaches to its development aid program. In any event, this issue is outside the scope of this piece. The German aid
relationship with foreign dependencies is a research question better left to future research. Aside from a few exceptions, independent states are identified by membership in the United Nations (UN 2004). Simply stated, states that were UN members and received ODA in the years 1980, 1985, 1995, or 2000 are coded as “yes” (or more precisely, as 1), while those member-states that did not receive ODA for the same years are coded as “no” (or 0). As mentioned, there are exceptions to this general rule of UN membership. First, while the two Koreas did not formally enter the UN until 17 September 1991, they are nevertheless treated as independent states for the years 1980 and 1985. Second, Taiwan is likewise treated as an independent nation throughout the study, although its seat at the UN was awarded to mainland China in the fall of 1971. Third, the UN Trust Territories of the Pacific Islands and East Timor are also included in the sample of independent states. The UN Trust Territory System, formally known as the International Trusteeship System, was originally comprised of eleven territories, aside from East Timor, that either had been mandates of the League of Nations or territorial possessions of the Axis powers defeated in World War II (Banks 1995). East Timor came under temporary UN administration in the late 1990s and was admitted to the UN in 2002. It is included in 2000 sample of independent states while it was under UN administration. The Trustee System was specifically designed to “promote advancement toward self-government or political independence” of the Trust Territories in accordance with the wishes of the residents (Banks 1995, 1131). As of 1980, ten of the former Trust Territories (British Togoland, French Togoland, British Cameroons, French Cameroons, Ruanda-Urundi, Somaliland, Tanganyika, Nauru, northern New Guinea, and Western Samoa) had gained their independence, either as sovereign states or through partition or
merger with neighboring countries (Banks 1995). The one remaining Trust Territory, the U.S.-administered Trust Territory of the Pacific Islands began to formally dissolve in the early 1990s. Although this territory has been subject to administrative reorganization from time to time, for the sake of brevity and clarity, the Trust Territory of the Pacific Islands, for all intents and purposes, encompassed four political units: the Northern Mariana Islands, the Federated States of Micronesia, the Marshall Islands, and Palau. The four constituent units are recorded as a single political entity, the Pacific Islands, for the years 1980 and 1985. The Marshall Islands and Micronesia joined the UN in 1991, while Palau was admitted in 1994. The Northern Mariana Islands opted for commonwealth status in political union with the U.S. and is therefore not a member of the UN. Consequently, for the years 1995 and 2000, the nations of the Marshall Islands, Micronesia, and Palau are included in the field of independent states; as a dependency, the Northern Mariana Islands are excluded. The final exception to UN membership has to do with Belgium and Luxembourg and is more a qualification than an exception. Both Belgium and Luxembourg are founding members of the UN, but, for the sake of convenience, they are treated as a single nation for the years 1980, 1985, and 1995. This is done because of the economic union that existed between Belgium and Luxembourg. Among the hypotheses discussed below are those that consider the relationship between development assistance and trade and development assistance and economic openness. Data for these two independent variables were obtained from the IMF’s Direction of Trade (1986; 2001), which combines Belgium and Luxembourg into a single entry. In the dataset constructed here, treating the two as a single political entity is greatly facilitated (indeed, made possible) by
the fact that Belgium and Luxembourg score identically in the other measures employed throughout the study. As indicated by the hypotheses presented in the previous chapter, the aid literature has identified several state attributes which, to varying degrees, appear to influence the distribution of Western bilateral ODA. Data obtained from numerous sources seem to suggest that these attributes play some role in the donors’ decision to grant ODA in the first place, and are subsequently influential in determining the actual dollar amount a country ultimately receives (Lappe, Schurman, and Danaher 1987; Meernik, Krueger, and Poe 1998; and Sorensen 1993). Unlike the dependent variables of the direction of ODA and the volume of ODA, which are measured for the Cold War years of 1980 and 1985 and the post-Cold War years of 1995 and 2000, the independent variables are measured for the years immediately preceding the allocation of ODA. Accordingly, measures for the independent variables are taken for the years of 1979, 1984, 1994, and 1999. In doing so, this study presupposes that donor governments take into account a number of variables (not the least are the state attributes of prospective aid-recipients) before they decide which nations are worthy of ODA. It is only after these nations are selected do donor governments determine the levels of ODA to be extended. Understood best as a two-step process, the distribution of ODA reflects both an initial gate-keeping or selective step (i.e., policymakers decide aid/no aid) and a substantive or distributive step, wherein dollar amounts are established (Cingranelli and Pasquarello 1985; Poe and Meernik 1995). Recipient attributes figure early and highly into an aid equation that centers round who is to receive aid, and how much aid is to be extended. In other words, this study argues that aid closely follows state attributes. Admittedly, while the state
attributes operationalized in this study reflect a host of domestic security, economic, and ideological interests of policymakers in donor governments, they only superficially suggest the bureaucratic interests in donor governments that may come into play when determining the direction and volume of ODA. The findings may indicate a greater role for bureaucratic politics in explaining the distribution of ODA. A cursory glance at ODA patterns over recent years seems to betray a rather incremental approach on the part of policymakers in extending ODA, which perhaps suggests, especially after the end of the Cold War, a reliance on process or procedure rather than on an annual evaluation of the state attributes of prospective recipients. At any rate, incorporating bureaucratic-politics models into future analyses of ODA may prove to be a fruitful approach. Another methodological aspect of the study that deserves clarification is related to the monetary values in the dataset. Much of the data regarding the direction and volume of ODA was obtained from the OECD’s International Development Statistics database. All dollar amounts in the database are adjusted to 1999 U.S. dollars. For the sake of consistency among the independent variables that are monetary values and to facilitate comparisons across time (e.g., during and after the Cold War) that are recipient-specific and deal with actual dollar amounts and not the percentages of total aid provided, all monetary values in the dataset have been adjusted to 1999 USD. This reflects the impact of inflation and fluctuating currency exchange rates. It was also necessary to adjust the monetary values in the dataset as to allow for the combination of the Cold War years (1980 and 1985) and the combination of the post-Cold War years (1995 and 2000) when contrasting the percentage of ODA given to particular types of states during and after the Cold War. To account for inflation, a fixed-weight index, namely the consumer price
index (CPI), is employed to convert current (nominal) dollars into constant (real) 1999 U.S. dollars (Sahr 2003). The monetary values adjusted for inflation are those that represent the volume of ODA, trade relationship, economic openness, gross national income (GNI—formerly referred to as GNP), and per capita GNI. To more accurately combine and compare national wealth over time, this study uses GNI and GNI per capita data developed by the World Bank Atlas method. The Atlas method (also known as the Atlas conversion factor) is intended to offset oscillating market exchange rates. The Atlas conversion factor for any given year is simply the average of a country’s exchange rate for that year and the two preceding years (for more information regarding Atlas methodology, see the World Bank’s WDI 2004). The measure is then adjusted for the difference between the rate of inflation in the country and that in the G-5 countries (France, Germany, Japan, the United Kingdom, and the United States). In contrast to calculations of national wealth based on current market exchange rates, the Atlas conversion factor, much like the purchasing power parity (PPP) method employed by the CIA and by some international organizations, including the World Bank, tends to increase the national wealth of developing countries (for PPP methodology, see the CIA’s World Factbook 2002) . As stated by the CIA (2002), …the currency exchange rate method involves a variety of international and domestic financial forces that often have little relation to domestic output. In developing countries with weak currencies the exchange rate estimate of GDP in dollars is typically one-fourth to one-half the PPP estimate. Furthermore, exchange rates may suddenly go up or down by 10% or more because of market forces or official fiat whereas real output has remained unchanged. The underlying goal of any conversion method—whether that method involves currency exchange rates, Atlas, or PPP—is to provide data that reflect real purchasing power and thus allow for comparisons of economic strength and well-being over time and
across countries. Yet regardless of the conversion method employed, one should understand that the data produced are best interpreted as estimates of national wealth and should be viewed with some caution, especially when dealing with developing countries. Whereas estimates for OECD countries are generally reliable and fluctuate relatively little among different conversion measures of national wealth, estimates of national wealth for developing countries are frequently rough approximations at best and can (and often do) vary substantially depending on the conversion method applied. Much of the difficulty in assessing the accuracy of estimates of national wealth in the Third World begins with the source, that is, before a conversion method is even applied. This is due in large part to the lack of transparency in the collection methods employed by many governments in the region when they calculate national wealth. National wealth, whether it takes the form of GNI, GNP, or GDP, has traditionally encompassed the final value of all goods and services produced in an economy over a defined time period. National wealth is calculated according to three different approaches: the production approach, the income approach, and the spending approach. In many Third World countries, the approach, or the combination of approaches, is unclear. Moreover, for a variety of political reasons, Third World governments may wish to distort, either positively or negatively, national wealth. As a consequence, statistical findings based on national wealth, such as NEED (to be discussed below), must therefore be considered tentative. Because of the shortcomings associated with measures of national wealth in particular and monetary values in general, this study has endeavored to use a single primary source of data whenever possible in order to maintain consistency. This has not always been possible, however, and when dealing with a large cross-national survey over
a twenty-year period such as this (there are approximately 3000 separate observations), such an endeavor has proven to be more an ideal than a reality. In cases where multiple sources for monetary values are required, steps have been taken to reduce possible discrepancies and to produce comparable data that best represent real purchasing power. Fortunately, the observations that require a source other than the primary one are relatively few in number and are identified where appropriate. Databases procured from the OECD and World Bank, those being IDS (2002) and WDI (2004), respectively, provide the bulk economic data relating to national wealth—GNI and GNI per capita. Both sources use Atlas methodology, which is helpful in that they produce comparable data. In effect, the databases represent a single primary source, at least as far as measures of national wealth are concerned. Both databases are needed, however, because they are far more comprehensive when used in tandem. Nevertheless, the databases are not sufficiently comprehensive as to not require other sources. To illustrate, data were obtained from the Penn World Tables (Heston and Summers 2003) for the Cold War years and the World Factbook (CIA 2002) for the post-Cold War years. In such cases, data were needed for some Eastern Bloc nations and for several newly independent states, as well as for several sparsely populated states. While neither the Penn World Tables (Heston and Summers 2003) nor the CIA (2002) used the Atlas conversion factor to produce their estimates (market exchange rates in 1985 dollars and PPP, respectively), the data are expressed in real terms and is generally consistent with the OECD (2002) and World Bank (2004) databases. At any rate, the data from the Heston and Summers (2003) and the CIA (2002) are not expected to compromise findings based on national wealth. This expectation is based on three realities. First, as mentioned, the observations
that require economic data from Heston and Summers (2003) or the CIA (2002) are few in number. Second, economic data from Heston and Summers (2003) and the CIA (2002) have been adjusted for inflation and are reasonably consistent with data from the OECD (2002) and the World Bank (2004). Third, and most importantly, this study is less concerned with comparing economic data across countries than the relative statistical significance of that data over time. In this chapter, the case was made for the selection of bilateral ODA as a legitimate subject of cross-national comparison. In addition, the quantitative methods were described in some detail. Finally, many of the methodological obstacles inherent to a study such as this were identified and discussed. We now turn to chapter seven, where findings are presented and discussed.
PART III FINDINGS AND CONCLUSIONS
CHAPTER 7 FINDINGS
Having set the historical, theoretical, and methodological foundations of the study, attention is now given to the results of the statistical models. It is important, however, to pause here momentarily to review some of the substantive issues that form the basis for quantitative methods employed below. In chapter five, a number of state attributes were drawn, by and large, from differing perspectives of interstate relations. The state attributes were incorporated as independent variables in a series of hypotheses that were constructed in such a manner as to broadly group them according to competing IR schools of thought as well as to allow the evaluation of the variables’ impact on bilateral ODA distribution over time, i.e., during and after the Cold War. In particular, a probit model identifies the state attributes (i.e., the independent variables) that had a significant impact on the direction of bilateral ODA among all independent states of the world in the years 1980, 1985, 1995, and 2000. Meanwhile, a regression model identifies the state attributes that were significantly related to increased levels of ODA funding among potential aid recipients for the same years. In sum, the probit model indicates what types of states were more likely to gain access to bilateral ODA, while the regression model indicates what types of states were viewed by the three donors as “worthy” of elevated levels of assistance. With the statistically significant findings of the probit and regression models in
mind, the chapter continues on to explore the relationship between the distribution of bilateral ODA and two domestic variables—Party in Power (PIP) and Economic Downturns (ED). To introduce another helpful perspective to the overall aid picture, a third quantitative method is undertaken, one that involves the percentage of combined, net bilateral ODA given to various types of states during (1980 and 1985) and after the Cold War (1995 and 2000). Finally, a series of Wald tests are performed to more explicitly assess the impact of the Cold War on the distribution of assistance. Taken as a whole, the methodology employed herein examines the relationship between several “attractive” or “appropriate” state attributes assumed by theoretical models of IR and the distribution of bilateral ODA from three important donors before and after the end of the Cold War. As such, it goes some distance in evaluating the power of the IR theories to accurately identify the state attributes that act as significant determinants of the direction and flow of American, German, and Swedish bilateral ODA during and after the Cold War. Accordingly, we get a sense of the overall salience of these schools of thought to account for an important aspect of Western foreign policy in the face of a profound change in the international environment. Moreover, as an important and visible tool of American, German, and Swedish foreign policy toward the developing world, this examination of the distribution of bilateral ODA among various types of states indicates not only how the three donors prioritize their ODA budgets but also suggests the foreign policy objectives they seek to realize through the provision of aid. In many respects, then, the distribution of ODA represents a useful and comparative surrogate measure by which to illustrate American, German, and Swedish engagement in the developing world.
For the sake of convenience and clarity, the findings of the probit and regression models are presented separately by donor. In accordance with the hypotheses presented in chapter five and the statistical tables presented below, each section is further divided into Geopolitical, Statist/Commercial, and Ideological/Humanitarian subsections. Each subsection concludes with a brief commentary regarding the models’ overall fit. The domestic variables—Party in Power and Economic Downturns—are likewise discussed in turn. A cross-national perspective of the results is implicit throughout the chapter, but is more apparent in the section dealing with the percentage of ODA given to certain types of states. Before turning to the findings, a few general comments regarding the probit and regression models, as well as the overall distribution of bilateral ODA from the three donors, are appropriate. First, the Human Rights (HR) variable was dropped from both the probit and the regression analyses because of high levels of collinearity with the Democracy (DEM) variable. This is a bit of a disappointment as no definitive comments based on the two quantitative analyses regarding the relationship between the distribution of American, German, or Swedish bilateral ODA and recipient respect for human rights can be offered. Nevertheless, the two variables are highly interrelated and the likely impact of human rights on the distribution of ODA can reasonably be inferred from the performance of the Democracy variable. Indeed, the two variables go hand-in-hand, which is one of the reasons, along with the relatively small sample sizes, that the two were highly collinear. By definition, democracies exhibit a greater regard for human rights than do authoritarian or totalitarian regimes. Thus, a donor’s preference for more-
democratic states over less-democratic states in its aid distribution implies a preference for states that are respectful of human rights. When faced with multicollinearity, Paul Kennedy offers two basic options: (1) do nothing and (2) incorporate additional information (1998). Had the levels of collinearity been manageable, I would have accepted Kennedy’s advice to “do nothing.” A course of inaction was unadvisable, however, as the correlation between the two variables was sufficiently severe to warrant action. Kennedy suggests a rule of thumb when dealing with this issue: “Don’t worry about multicollinearity if the R2 from the regression exceeds the R2 of any independent variable regressed on the other independent variables” (1998, 187). Regressing the two variables on one another for the aid year of 1985, for instance, indicated that the HR variable accounted for .81 of the variation in the DEM variable, thus violating Kennedy’s rule of thumb. The models were run with the human rights and the polity data rescaled. This endeavor failed to yield the desired results; high levels of collinearity remained. Ultimately, the Human Rights variable was omitted rather than the Democracy variable because human rights measures are more explicitly incorporated into polity scores than vice versa. Hints of multicollinearity first surfaced in the statistical runs of the raw data. The findings associated with the Democracy and Human Rights variables in German aid distribution were paradoxical—even nonsensical, considering that it was expected that the impact of the two variables would dovetail rather closely. This was not the case, as they tended, for all intents and purposes, to conflict with one another. In the Cold War period, for instance, Germany was significantly more likely to extend aid and increased levels of aid to less-democratic governments, and was also significantly more likely to
extend aid and increased levels of funding to states that demonstrated greater respect for human rights. If less-democratic states were statistically more likely to receive German ODA, as the probit model indicated, we would then expect German aid recipients to score relatively poorly on the human rights scale. Less-democratic states are not typically associated with a high regard for human rights. The contradictory impact of these two variables was an unexpected and puzzling finding. At the very least, it was expected that the DEM and HR coefficients would be in the same direction. That is, either lessdemocratic states and states that demonstrate less regard for human rights OR moredemocratic states and states that rate higher on the human rights scale would be more likely to receive German aid and elevated levels of German aid. Econometric theory (e.g., Kennedy 1998) suggests several steps that could be taken to resolve, or at least minimize, instances of serious multicollinearity. I only briefly mention three of the more popular approaches. One is to increase the sample size. Another, the one chosen here, is to drop the offending variable. And a third possible course of action is to create a composite index that represents both regime type and human rights. As to the first remedy, expanding the sample was not possible within the methodological framework of this study, as the sample already includes the universe of cases. Moreover, to alter the work so as to allow for increased sample sizes would push the study into unfamiliar methodological terrain. In regard to the third option, I believed that creating a composite variable was largely unnecessary, primarily because a regime’s human rights record is implicitly reflected in the regime’s level of democraticness (i.e., Gurr’s polity rankings). Admittedly, the Democracy variable is not, strictly speaking, a composite variable representing both democraticness and human rights. Finally, the
foreign aid literature is of limited value when it comes to this particular dilemma. The relatively few quantitative studies that are comparative and utilize both polity and human rights measures tend to employ time-series models which are less prone to restrictions associated with limited sample sizes. A second comment concerns goodness of fit. Periodic reference is made to the R2s of the two models, primarily because the measure—particularly in linear regression models—is so commonly utilized to indicate the fit of the model. It is with some reservation that I follow the precedent. I do so with the understanding that the measure is problematic in assessing the comparative fit of the models among donors across time (King 1986). It should also be noted that the R2s are suppressed by the numerous logarithmic transformations of the data. The models were initially run with the raw data (not reported) and posted higher R2s, both pseudo and adjusted R2s, but were revised in favor of logarithmic transformations for reasons previously discussed. The point here is not that the R2s are utilized in this study as the measure of fit for the probit and regression models, but that statistical runs on the raw data were performed and the results were ultimately found wanting, primarily because of methodological concerns associated with wide ranges in standard errors. Analyses of the raw data indicated the presence of influential cases, but the findings were generally consistent with those of the logarithmically transformed data—at least in the sense that the signs of the coefficients remain unchanged. In any event, many econometricians would warn against assessing the strength or the fit of a statistical model on the R2 measure alone, as it is not necessarily a useful or valid measure of fit. J. Scott Long acknowledges this when he writes that “while the
desirability of a scalar measure of fit is clear, in practice their use is problematic” (1997, 102). Long and Jeremy Freese concede that “measures of fit can provide a rough index of whether a model is adequate. However, there is no convincing evidence that selecting a model that maximizes the value of a given measure results in a model that is optimal in any sense other than the model having a larger (or, in some instances, smaller) value of that measure” (2001, 80: Italics in the original.). Nevertheless, while scalar measures of fit should be viewed “with some skepticism,” their widespread use makes it difficult not to base the overall fit of the model on their value—in the probit and regression models below, the pseudo R2s and the adjusted R2s, respectively (Long 1997, 102). In the regression model, R2 is the customary measure of fit. Appropriate measures of fit are less straightforward in models with categorical dependent variables, such as the binary probit model adopted here. A number of alternative measures have been constructed for categorical outcomes, including the pseudo R2, which attempts to approximate the R2 in the linear regression model, and the percent reduction in error (PRE) statistic. While no single measure is universally accepted by practitioners as superior, the PRE statistic is, nevertheless, a common and intuitively appealing measure of model fit for probit (Hagle and Mitchell 1992). The PRE statistic indicates the predictive power of the model by comparing the percentage of cases correctly predicted (PCP) by the independent variables to the percent in modal category (PMC) of the dependent variable (Arceneaux 2005). It is tempting to simply use the PCP statistic as goodness-of-fit measure and forego the PMC and the PRE statistics. This is a temptation to be avoided as the PCP statistic is misleading and “takes credit” for cases incorrectly predicted when PCP is greater than PMC (Kennedy 1998; Veall and Zimmermann 2005). As an example, take a model that
records a PCP value of 95% and a PMC of 90%. While the independent variables correctly predicted 95% of the cases, a researcher adopting a naïve model based only on the central tendency of the dependent variable (PMC) would correctly predict 90% of the cases. The PRE takes these factors into account by imposing the PMC as a baseline figure of sorts to assess the model’s predictive power beyond the central tendency of the dependent variable. The PRE statistic is not standard probit output in Stata, so it was generated by a program developed by Kevin Arceneaux (2005). The reader will note that the pseudo R2 and the PRE statistics generally track each other. Together, the two give some indication of the overall fit of the probit model. Along these same lines of predicted values, a number of calls to Spost allow for the predicted percentage of a positive outcome for the dependent variable or the predicted value of the dependent variable when the focus is on one or more independent variables. These are not intended as goodness-of-fit measures, but serve to illustrate some of the more suggestive findings. The post-estimation measures, including the mean predicted percentage (MPP) of receiving ODA and the mean predicted level of funding (MPLF), are derived from a series of SPost commands (Long and Freese 2001). Another general feature in the distribution of American, German, and Swedish ODA is that the end of the Cold War ushered in elevated levels of assistance, at least initially. Figures 3, 5, and 7, respectively (located in Appendix 1), illustrate that the years immediately following the Cold War witnessed greater levels of bilateral ODA from Germany, Sweden, and the United States than the years immediately preceding the end of the Cold War. In fact, aid levels spike after 1989, suggesting post-Cold War-inspired efforts by Germany, Sweden, and the U.S. to extend greater amounts of assistance. This
post-Cold War surge in bilateral ODA budgets, however, was short-lived. By 1996, the financial “peace dividend”—as represented by the net volume of American, German, and Swedish bilateral ODA—was, by and large, history. Only in Sweden, did ODA appear to be on the rebound in 2000 toward levels associated with the immediate post-Cold War years. Moreover, looking at total net ODA (see Figures 4, 6, and 8, in Appendix 1) it is evident that only Sweden managed to sustain elevated levels of assistance throughout the 1990s. By 2000 the German commitment had declined, whereas the U.S. commitment had increased after a precipitous decline in the late 1990s. On the whole, the distribution of American, German, and Swedish ODA over the twenty-year period is perhaps best characterized by peaks and valleys. To be sure, the end of the Cold War did not go unnoticed among the three donors, in that each saw fit to increase their ODA commitment immediately following the Cold War. In particular, the donors channeled relatively substantial sums of ODA to a number of states formerly associated (either strictly or loosely) with the Eastern Bloc. In and of itself, American, German, and Swedish ODA to a number of successor states in the post-Cold War years—Russia, Poland, and Bosnia, for instance (see Table 7 above)—represents a profound departure in the customary distribution of bilateral Western ODA. What was inconceivable prior to the collapse of the Soviet Union, is now a reality as these successor states compete with the more traditional, Third World recipients for Western ODA. What remains unclear, however, is whether the end of the Cold War went unappreciated among the three donors. To a greater or lesser degree, aside from the initial surge or spike in ODA levels in the early 1990s, the volume of American, German, and Swedish development aid is quite unremarkable and follows the familiar pattern of knee-jerk fluctuations established during
the Cold War. Moreover, excepting the Swedish example, the volume of net ODA has declined in absolute and relative terms throughout the 1990s (complicating comparisons of model fit across time). Of course, it is best to await the statistical findings before attempting to make more definitive statements as to the impact of the end of the Cold War on the distribution of American, German, or Swedish ODA. Nevertheless, at face value, the end of the Cold War seems to have had a rather limited positive impact on ODA volume. One last comment regarding the overall distribution of German, Sweden, and U.S. ODA is in order before proceeding to the individual donors. From a geographical perspective, African and Asia continue to receive greater levels of bilateral development assistance from each of the three donors than do the Americas, Europe, or Oceania (see Figures 3, 5, and 7 in Appendix 1). For the most part, this has been a consistent trend since the inception of formal aid programs, with the exception of the United States until the mid 1970s. Before then, the U.S. directed more bilateral ODA to the Americas than to Asia. Considering the demographic and the geopolitical characteristics of the regions, it comes as no surprise that Africa and Asia received and continue to receive greater levels of ODA from Germany, Sweden, and the U.S than do other geographic regions. Africa, in particular, is an attractive target for ODA for all three donors. The extent to which this focus is essentially humanitarian, commercial, or strategic in character remains to be seen.
Germany: Apolitical Donor with an Economic and Poverty-Driven Aid Agenda Elements within the German aid literature indicate that Cold War politics were intimately tied to West German aid policy. Indeed, Schulz (1995), for instance, goes so
far as to suggest collaboration between Washington and Bonn in a global aid policy that functioned to protect security interests as defined by Washington. The findings below, however, do not support the West German Cold Warrior image, at least in terms of ODA during the 1980s.
Geopolitical Determinants As Table 8 illustrates, the Military Presence variable (MP) is negatively and insignificantly related to the direction of German ODA for three of the four aid years. Some of this negative relationship is likely explained by the presence in the probit model
TABLE 8 STATE ATTRIBUTES AND THE DIRECTION OF GERMAN ODA (PROBIT RESULTS)
Determinants Constant Geopolitical Military Presence Allied States Ally At War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population Ideological/Humanitarian Democracy Human Rights Per Capita GNI War Pseudo R2 Wald chi2 PCP PRE 1980 b t 4.35** 2.70 1985 b t 3.88** 2.85 1995 b 11.3 t 1.94 2000 b t 3.95 1.78
-.239 -0.55 -1.43** -2.68 DROPPED .258 0.76 .684 0.72 .181 0.48
-.190 -0.43 -1.54** -2.76 DROPPED .440 1.18 .125 0.12 -.433 -1.21
.658 1.01 -3.76** -3.83 DROPPED DROPPED DROPPED -.643 -1.32
-.538 -1.62 -1.74** -4.48 DROPPED DROPPED DROPPED -.239 -0.70
-.058 -0.88 .434** 2.44 .090 0.69
.007 .130 .132
0.10 0.68 1.10
-.221 -1.44 .970** 3.26 .822** 2.97
.011 .315** .445**
0.14 2.37 2.76
-.012 -0.60 -.030 -1.67 DROPPED DROPPED -.654** -4.32 -.590** -4.63 .202 0.57 .427 1.00 .412 74.0 82.7 38.6 N=156 .425 83.0 84.4 46.5 N=160
-.158** -3.39 -.066* -2.05 DROPPED DROPPED -1.81** -2.60 -.858** -3.52 DROPPED DROPPED .833 31.7 95.7 77.0 N=184 .651 46.0 93.2 71.6 N=190
*p<0.05;**p<0.01 Note: Ally At War dropped in 1980, 1985, 1995, and 2000 due to lack of variation among the four cases. The United Kingdom accounts for the lone 1980 case—it did not receive aid. Turkey accounts for the three remaining cases—it received aid in each instance. The variables BSC, BSI, and WAR were dropped from the 1995 and 2000 models for the lack of variability. All borderstates and countries at war (132 in total) received ODA.
of the many NATO states, which housed American troops but received no German ODA. Only in 1995, is MP positively related to the German decision to extend aid, although the variable is not statistically significant. The positive impact of MP in 1995 is likely the byproduct of the American/NATO military presence in the successor states to Yugoslavia, which found themselves not only eligible for German ODA, but recipients. As to levels of ODA, MP is negatively and weakly related to German funding in all four aid years. Allied states (AS), as a group, were consistently at a significant disadvantage when it came to obtaining German ODA. Indeed, in each of the four aid years—during and after the Cold War—the AS variable is negatively and statistically related to the Germany decision to extend assistance. All else being equal, the MPPs of an allied state accessing German ODA in 1980 and 2000, for example, are approximately 32.2% and 57.5%, respectively, as compared to the MPPs of 83.3% and 97.3% for nonallied states in 1980 and 2000, respectively. Much like the negative relationship between the provision of German ODA and military presence, the negative (but statistically significant) relationship between German ODA and allied status is probably at least partly the result of the NATO states in the probit model that did not receive aid (NATO states are removed in Appendix 2). Successive German governments were also not especially disposed to extend significant levels of ODA to allied states. Table 9 indicates that the AS variable is negatively and significantly related to funding levels in all four aid years. Table 10 illustrates the disadvantageous position occupied by allied states in the German ODA budget by recording the MPLFs for allied and nonallied states in 1980, 1985, 1995, and 2000. While allied states generally fared poorly in the German aid equation, Table 9
TABLE 9 STATE ATTRIBUTES AND THE (LN) VOLUME OF GERMAN ODA (REGRESSION RESULTS)
Determinants Constant Geopolitical Military Presence Allied States Ally At War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population 1980 b t 12.2* 3.92 1985 b t 9.53** 3.75 1995 b t 7.01 3.75 2000 b t 7.24** 3.54
-.636 -0.63 -2.89** -2.21 -1.70 -0.49 .462 0.69 .363 0.24 .164 0.24
-.214 -4.32** 3.48 .553 -.960 -.888
-0.26 -3.68 1.44 0.90 -0.65 -1.49
-.384 -6.04** 6.27** -.271 -.563 -.283
-0.73 -7.77 2.67 -0.42 -0.93 -0.67
-.460 -4.06** 6.11* -.313 -.609 -.818
-0.77 -5.35 2.31 -0.44 -0.90 -1.78
-.038 .781* .450*
-0.29 2.30 1.95
-.022 -0.18 .587 1.85 .689** 3.12
-.112 -1.10 .695** 3.13 .945** 5.41
.090 .219 .845**
0.86 1.09 4.68
Ideological/Humanitarian Democracy -.004 -0.10 -.027 -0.74 Human Rights DROPPED DROPPED Per Capita GNI -1.56** -5.59 -1.37** -6.03 War -.019 -0.03 .565 0.85 R2 Adj. R2 F-statistic Chi2(12) *p<0.05; **p<0.01 .443 .397 9.49 20.7 N=156 .543 .506 14.6 31.9 N=160
-.009 -0.34 -.027 -0.87 DROPPED DROPPED -1.06** -6.72 -1.13** -6.13 .495 1.06 .050 0.09 .735 .716 39.4 73.5 N=184 .665 .642 29.2 34.0 N=190
shows that allied states engaged in militarized conflict were significantly more likely to receive increased levels of aid in the two post-Cold War years. Indeed, in 2000, the MPLF for an ally at war is over 400 times greater than those states coded “no” for the Ally At War variable. This finding is deceptive, however, as it is biased by the tremendous levels of German funding to Turkey, the lone ally involved in armed conflict. The variables representing border-states follow a mutually similar pattern in determining the direction of German development aid in both time both periods, but they diverge in determining the levels of assistance border-states could expect to receive. Neither variable is statistically related to the direction of ODA in 1980 and 1985. In the two post-Cold War years, however, all border-states obtained German ODA, suggesting
TABLE 10 MEAN PREDICTED LEVELS OF FUNDING FOR ALLIED AND NONALLIED STATES
1980 Allied 637 Nonallied 35 *Monetary values in thousands 1999 USD. 1985 602 8 1995 2670 6 2000 1130 20
some influence of the end of the Cold War. Nevertheless, while all border-states obtained German aid in 1995 and 2000, they were not generally rewarded with significant levels of funding. Indeed, the BSC variable is insignificantly related to aid volume in all four aid years, before and after the end of the Cold War. These findings conflict with the notion of German ODA following U.S. containment policy. The BSI variable fared equally poorly in the German aid equation. In all four years, the BSI variable is only marginally related to German funding. In sum, neither border-state variable is significantly related, either positively or negatively, to increased levels of assistance. It is with some puzzlement that both models suggest that states which possessed strategic materials (SM) were generally unlikely to be accorded preferential treatment in the German ODA budget during the two time periods. In fact, the SM variable is positively related to the aid/no aid decision in 1980 alone, but its impact is marginal. It is insignificantly related to funding in all four years.
Statist/Commercial Determinants The Trade (TR) variable is insignificantly related to the German aid/no aid decision in both time periods. In terms of volume, states that enjoyed high levels of trade with Germany were not significantly likely, either positively or negatively, to be rewarded with increased levels of aid. The regression model indicates that the value of imports 226
from a prospective aid recipient and funding are inversely and weakly related in the Cold War period. The impact of the Trade variable on the amount of German aid is mixed in the post-Cold War period. In 1995, trade and flow of ODA are negatively related, while in 2000 the relationship is positive, although in neither case is the relationship statistically significant. Successive German governments during and after the Cold War clearly show an inclination to incorporate commercial interests into their aid calculations, as evidenced by the positive and often statistically significant relationships between the direction of ODA and economic openness (EO) and between the direction of ODA and recipient population (POP). As to the former, Table 8 indicates that the EO variable is positively related to the access of German aid in all four years and statistically significant in all but 1985. In general, the more open a state’s markets were to Germany, the more likely that state was be to a recipient of German ODA, particularly in the two post-Cold War years. In the two Cold War years, the EO variable is positively related to increased levels of German ODA funding; its impact is statistically significant in 1980 at the .05 level and at the .10 level in 1985. While states with freer markets were generally significantly more likely to be treated with relatively larger sums of ODA in 1995, the EO variable’s impact diminishes appreciably in 2000. At face value, it would seem that economic openness among prospective aid recipients was less important to Germany in the post-Cold War era. As a final note regarding trade and economic openness, it is possible that the two variables indirectly measure a nation’s prosperity and thus its level of “need” (Meernik et al. 1998). In both periods, the variable representing recipient population (POP) is positively
related to the German decision to extend aid. It is statistically related to the direction of German ODA in the post-Cold War years, indicating that Germany was more likely to target more populous nations with ODA in the post-Cold War period than in the Cold War period. In terms of funding, Table 9 illustrates that recipient population was an important factor in the German aid equation in all four years, during and after the Cold War. Accordingly, more-populous nations, as a group, could expect statistically significant levels of German aid in 1980, 1985, 1995, and 2000.
Ideological/Humanitarian Determinants The variable DEM is negatively related to the direction of German ODA in both time periods. The negative impact of the variable increased in the two post-Cold War years, as less-democratic states, as a group, were significantly more likely to obtain aid. Indeed, states which scored at the lowest end of Gurr’s polity scale have a MPP of accessing aid of 99.6%, ceritus paribus. Consistent with Germany’s rather “nondemocratic outlook” in granting assistance in the four aid years, more-democratic states (in general) were not especially likely to be rewarded with significant levels of ODA. As Table 9 shows, the DEM variable is weakly (and negatively) related to significant sums of German funding in 1980, 1985, 1995, and 2000. The distribution of German ODA in the four aid years suggests that Germany was disinclined to utilize aid to promote democratic principles abroad (and by implication—respect for human rights). While it is true that Germany was more likely to extend aid to less-democratic states, less-democratic states are also typically the neediest states, which, as we will soon discover, were generally more likely to receive German ODA. Thus, in many respects, to extend aid to the neediest states is tantamount to the extension of aid to less-democratic
states (the reverse is not necessarily true). Therefore, the provision of ODA to lessdemocratic states is likely a byproduct of Germany’s focus on the world’s neediest nations. Both models indicate that the Per Capita GNI variable (NEED) is consistently a strong indicator of the distribution of German bilateral ODA in both periods. A state’s per capita GNI was among the least ambiguous predictors of German aid distribution. In all four years, needier states were significantly more likely to receive ODA and increased levels of aid. In sum, successive German governments, before and after the end of the Cold War, have considered poorer nations to be deserving of ODA in general, increased funding in particular. Table 11 illustrates that, according to MPPs of obtaining aid in the first place and MPLFs, states with a per capita GNI at the level of Low-Income Countries (LIC) or Lower-Middle Income Countries (LMIC) were nearly assured of some German assistance in 1995 and 2000 and could together anticipate on average roughly three times the amount of ODA extended to states at the level of High-Income Countries (HIC). States involved in civil or interstate military conflict (WAR) were not significantly more likely to be German aid recipients in 1980 and 1985. The WAR variable, however, was dropped in the two post-Cold War years because all states at war received German ODA. While Germany was inclined to support states at war with some ODA, especially
TABLE 11 MEAN PREDICTED PERCENTAGES/MEAN PREDICTED LEVELS OF FUNDING FOR STATES AT LOW, LOWER-MIDDLE, AND HIGH INCOME CATEGORIES*
1980 1985 LIC=$779 94.6/3.04 92.4/1.57 LMIC=$3105 75.8/.350 73.2/.238 HIC=$9590 48.4/.060 48.1/.051 *Monetary values in millions of 1999 USD. 1995 100/4.39 99.9/1.01 89.4/.306 2000 99.4/2.11 90.9/.443 64.4/.124
with the passing of the Cold War, the donor exhibited no clear tendency to assist belligerents with increased levels of aid. Albeit a preliminary finding, perhaps Germany considered states involved in armed hostilities a risky proposition and was thus reluctant to invest substantial sums toward their development. Finally, Table 8 shows that the fit of the probit model is fairly decent. For the Cold War years of 1980 and 1985, the pseudo R2s are .41 and .40, respectively. The corresponding PRE statistics are 38.6 and 46.5. The regression model, i.e., the amount of assistance a state can expect to receive, has an adjusted coefficient of determination R2 of .397 in 1980 and .506 in 1985, respectively (see Table 9). In 1995 and 2000, the probit model posts pseudo R2s of .83 and .65, respectively. The model correctly predicts aid recipients 95.7% and 93.2% of the time in 1995 and 2000, respectively, for a corresponding 77% and 71.6% reduction in error over the naïve or null model. The regression model records relatively high adjusted R2s of .716 in 1995 and .642 in 2000.
Sweden: Apolitical Donor with Commercial Interests and Humanitarian Relief in Mind On the surface, the findings below reinforce much of the Swedish aid literature. Sweden enjoys, perhaps deservingly, the reputation of a benevolent donor. Its aid program is held in high regard among aid purists who wish to see development assistance completely severed from donor self interests. While apolitical, humanitarian relief may indeed be at the core of the heralded Swedish ODA program, the findings of this study suggest that more selfish national interests occasionally enter into the Swedish aid equation.
Geopolitical Determinants The geopolitical variables fared quite poorly in both models (Tables 12 and 14 below), suggesting that successive Swedish governments were, by and large, disinclined to incorporate conventional strategic concerns into their distribution ODA. This outcome is consistent with the bulk of the Swedish aid literature. In the two post-Cold War years, states that maintained an American military presence were significantly less likely to be Swedish aid recipients (see Table 12). Table 13 illustrates the negative impact the presence of American troops had on Stockholm’s decision to extend assistance in 1995 and 2000. Sweden was also largely uninterested in rewarding states that housed American troops with increased levels of aid in each of the four aid years. In 1995, for
TABLE 12 STATE ATTRIBUTES AND THE DIRECTION OF SWEDISH ODA (PROBIT RESULTS)
1980 Determinants Constant Geopolitical Military Presence Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population b 2.56 t 1.71 1985 b t 1.04 0.79 1995 b t 4.28** 2.93 2000 b t 7.72** 3.49
-.284 .049 .919 .512
-0.67 0.16 1.47 1.55
-.484 .092 .694 -.041
-1.32 0.32 1.03 -0.14
-1.25** -3.69 .013 0.03 .060 0.12 -.189 -0.67
-1.18* -.291 -1.05 .735
-2.36 -0.42 -1.31 1.56
-.049 -1.08 .341** 2.78 .146 1.19
-.065 -0.65 .560** 3.47 .201 1.50
-.026 -0.54 .391** 2.66 .656** 3.60
.081 .193 .736**
0.95 0.91 4.31
Ideological/Humanitarian Democracy -.007 -0.37 -.007 0.36 Human Rights DROPPED DROPPED Per Capita GNI -.622** -4.26 -.473** -3.64 War .026 0.09 .458 1.47 Pseudo R2 Wald chi2 PCP PRE .278 50.6 81.4 35.6 N=156 .258 42.7 80.6 33.6 N=160
.007 0.29 .043 1.60 DROPPED DROPPED -1.16** -4.51 -1.81** -5.92 DROPPED 1.10 1.72 .683 52.0 92.2 79.3 N=184 .750 54.3 93.2 81.6 N=190
*p<0.05;**p<0.01 Note: The variable War was dropped in 1995 for lack of variation. The 35 countries that were coded 1 for war all received Swedish development aid.
TABLE 13 MEAN PREDICTED PERCENTAGES FOR MILITARY PRESENCE
Year 1995 2000 Predicted Percentage No MP MP 89.3 49.7 92.1 59.1 Difference -39.6 -33.0
instance, the MPLF for states housing American soldiers is about $29 thousand, while states absent an American military presence averaged just under $185 thousand in Swedish bilateral ODA. Thus, on average, states without American troops could expect over six times the level of Swedish assistance extended to states maintaining an American presence in 1995. Sweden exhibited little interest in targeting border-states with aid. The BSC variable is weakly related to the distribution of Swedish bilateral ODA before and after the end of the Cold War, while states that shared a border with Islamic republics occupied only a slightly better position in the Swedish aid agenda in the two Cold War years. In any event, neither the BSC variable nor the BSI variable is statistically related to the distribution of Swedish development aid. In so far as the geopolitical variables are concerned, the relatively strong and positive impact of strategic materials on the Swedish aid decision in 1980 and 2000 is interesting. Nevertheless, states possessing strategic materials were not statistically likely to access Swedish ODA, nor were they likely to receive significant levels of assistance from Stockholm during or after the Cold War.
Statist/Commercial Determinants The Trade variable (the value of donor imports) is only marginally related to the Swedish aid decision; the relationship is negative in all but 2000 (Table 12). Table 14
illustrates levels of funding and shows that those states that enjoyed a relatively strong trade relationship with Sweden in 1985 were, as a group, statistically unlikely to tap into elevated levels of ODA. Overall, the findings indicate that trade is only weakly related to the Swedish decision to extend assistance. In terms of funding, however, the negative impact of the Trade variable is significant in 1985. Its negative impact is relatively strong in 1995 as well, testing at the .15 level. In all four years, the EO variable is positively related to the distribution of Swedish aid (Tables 12 and 14). Aside from 2000, Sweden was significantly more likely to target states with freer markets with ODA. States with open markets were likewise statistically more likely to receive significant amounts of Swedish development aid in three of the four aid years, 2000 being the exception. The overall relationship between EO and Swedish bilateral ODA reinforces the findings of observers of Swedish foreign aid who suggest an increasing role for domestic economic interests in Swedish aid calculations. Table 12 and Table 14 suggest a prominent place for more-populous nations in the Swedish aid agenda, particularly in terms of funding. The relationship between population and the Swedish ODA/no ODA decision is positive in all four aid years. The relationship is statistically significant in the two post-Cold War years, as more-populous nations, as a group, were significantly more likely to access Swedish bilateral ODA. At face value, the population of prospective recipients appears more relevant to the direction of Swedish aid after the Cold War than during the Cold War. The POP variable is positively and statistically related to the Swedish aid budget as more-populous nations, as a group, received significant levels of Swedish funding in each of the four aid years. Overall, we might conclude that population is a key variable in Stockholm’s aid equation.
TABLE 14 STATE ATTRIBUTES AND THE (LN) VOLUME OF SWEDISH ODA (REGRESSION RESULTS)
Determinants Constant Geopolitical Military Presence Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population 1980 b t 7.14** 2.37 1985 b 4.15 t 1.73 1995 b t 6.83** 3.64 2000 b t 10.3** 5.10
-.303 .314 2.06 .943
-0.34 0.47 1.34 1.39
-.937 .571 .590 .025
-1.19 0.91 0.40 0.04
-1.86** -.290 -.157 -.002
-3.20 -0.40 -0.24 -0.01
-.688 -.179 -.958 -.085
-1.22 -0.25 -1.47 -0.19
-.137 -1.35 .846** 3.01 .493* 2.12
-.198** -2.49 1.27** 4.45 .527** 2.53
-.111 -1.66 .643** 3.06 .881** 5.72
.035 .311 .655**
0.49 1.49 4.45
Ideological/Humanitarian Democracy -.006 -0.16 .004 0.10 Human Rights DROPPED DROPPED Per Capita GNI -1.23** -4.17 -.870** -3.84 War .318 0.43 1.48* 2.19 R2 Adj. R2 F-statistic Chi2(10) *p<0.05;**p<0.01 .308 .260 6.44 28.1 N=156 .336 .292 7.55 24.9 N=160
.011 0.37 .003 0.10 DROPPED DROPPED -1.22** -7.50 -1.54** -8.48 1.46** 2.82 1.21* 2.34 .630 .608 29.4 7.59 N=184 .643 .623 32.2 5.72 N=190
Ideological/Humanitarian Determinants Overall, the DEM variable is a weak and unreliable predictor of the distribution of Swedish bilateral ODA, suggesting that the donor followed an apolitical approach to aid distribution. As a donor traditionally regarded as preoccupied with humanitarian principles, it may come as a surprise to some observers that Sweden appeared to be largely ambivalent to liberalizing regimes or the notion of promoting democratic principles abroad through the provision of development aid. The promotion of democracy and humanitarian relief are not necessarily synonymous endeavors, however. The Swedish foreign aid literature notes that Sweden has attempted to carve out a niche in the Western foreign aid landscape by, in part, focusing the lion’s share of its foreign
aid budget on relatively few African states. These recipients are often overlooked by other Western donors. They are poor and tend to fall somewhere toward the middle of Gurr’s polity scale. The oscillations in positive and negative impact of the DEM variable likely reflect the oscillations in polity scores of these aid recipients (see Table 12). The performance of the DEM variable also reflects, to some extent, Sweden’s preoccupation with the socio-economic development of these select states, regardless of the democraticness of their political regimes. Although Sweden demonstrated little interest in extending preferential treatment to more-democratic states through elevated levels of ODA, the positive impact of the DEM variable on the direction of aid in 2000 hints at a possible shift in Swedish aid policy to target that group of states with some assistance. Sweden was generally more likely to target poorer nations with aid and larger amounts of aid. In each of the four years, the lower a state’s per capita GNI the more likely Sweden was to provide that state with ODA (see Table 12). The NEED variable is also significantly related to increased levels of Swedish funding (see Table 14). In sum, a nations’ per capita GNI was consistently a strong indicator of Swedish aid distribution, as needier states were generally considered by Sweden to be deserving of greater levels of assistance. Table 15 presents the MPPs of obtaining aid and the MPLFs for states at three different income categories. Table 15 illustrates Stockholm’s emphasis on poorer
TABLE 15 MEAN PREDICTED PERCENTAGES/MEAN PREDICTED LEVELS OF FUNDING FOR STATES AT LOW, LOWER-MIDDLE, AND HIGH INCOME CATEGORIES*
1980 LIC=$779 44.7/.043 LMIC=$3105 17.6/.008 HIC=$9590 5.70/.002 *Monetary values in millions 1999 USD. 1985 40.7/.021 17.7/.006 7.77/.002 1995 98.3/.424 69.4/.079 21.3/.020 2000 99.8/.418 63.5/.050 4.55/.009
nations in general (LICs and LMICs), as well as Sweden’s attempt to “spread the wealth” among LICs, so to speak, in the two post-Cold War years. It also shows a marked increase in 1995 and 2000 in the volume of assistance provided to the poorest of the three categories, the LICs. With the passing of the Cold War, Sweden seems more likely to engage states involved in armed conflict (WAR) with ODA. Each state identified as “at war” accessed Swedish assistance in 1995. The WAR variable is positively related to the Swedish aid/no aid decision in 2000 (significant at the .10 level). Meanwhile, states burdened by armed conflict were statistically more likely to receive elevated levels of Swedish assistance in 1985, 1995, and 2000. For those three years, the MPLFs for states fitting the WAR variable’s criteria are $29, $464, and $287 thousand, respectively. The corresponding MPLFs for states not involved in armed conflict are $6, $108, and $86 thousand in 1985, 1995, and 2000, respectively. Thus, states at war, on average, could expect between three and four times the amount of Swedish ODA than states not engaged in hostilities. In any event, it remains to be seen whether this signals a more aggressive Swedish foreign policy in the post-Cold War era. Although the WAR variable is presented as a humanitarian concern among donors, the apparent willingness of Stockholm to essentially “take sides” in post-Cold War conflicts calls Sweden’s formally neutral status into question. As to model fit, Table 12 shows that the probit model posts pseudo R2s of .28 and .26 and PREs of 35.6 and 33.6 in 1980 and 1985, respectively. In the post-Cold War years, the model records considerably higher values for these statistics. The pseudo R2s for 1995 and 2000 are approximately .68 and .75, respectively. The model attains
relatively strong PREs of 79.3 and 81.6 in those same two years. As can been seen in Table 14, the regression model posts relatively modest (at least in comparison to Germany) adjusted R2s of .260 in 1980 and .292 in 1985. As was the case with Germany, the regression model of Swedish aid recipients manages higher adjusted R2s of .608 and .623 in the two post-Cold War years of 1995 and 2000, respectively.
United States: Complex Aid Agenda A common theme found in the Cold War ODA literature concerning the U.S. is the rather narrow strategic quality of American aid. That theme persists in the post-Cold War literature. The findings presented below conflict with the enduring perception that American development aid is defined by Washington’s preoccupation with security concerns and distributes aid accordingly, that is, to states with geopolitical value. When compared to Germany or Sweden, the U.S. does demonstrate the greatest inclination to incorporate traditional security interests into its aid agenda, but this inclination is of an unexpectedly slight order and appears to have been exaggerated by many aid observers. The vast sums of assistance to Egypt and Israel have no doubt contributed to the widely held belief that Washington has put security first, humanitarian relief and the promotion of democracy a distant second.
Geopolitical Determinants The pervasive notion that American development aid is essentially security-driven leads one to expect that the distribution of American ODA would favor those states of strategic value to Washington. Thus we would anticipate that states housing American troops (MP) would figure prominently in the American ODA budget, especially during
TABLE 16 STATE ATTRIBUTES AND THE DIRECTION OF AMERICAN ODA (PROBIT RESULTS)
Determinants Constant Geopolitical Military Presence Allied States Ally at War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population 1980 b t -.153 -0.10 1985 b t 4.16** 2.87 1995 b t 5.33** 3.52 2000 b t 5.00** 2.67
-1.16** -2.85 .081 0.23 .794 1.18 .189 0.56 1.91** 2.54 .307 0.92
-.001 -.136 .928 .525 -.361 -.220
-0.01 -0.36 1.33 1.19 -0.50 -0.76
.095 -.025 DROPPED -.525 -.322 -.517
-.830* .722* DROPPED -0.98 .125 -0.58 .049 -1.74 -.168
-2.32 2.33 0.19 0.10 -0.61
-.296** -3.48 .908** 5.41 .448** 3.13
-.237** -2.69 .819** 4.52 .233 1.77
.015 .066 .098
0.23 0.48 0.88
-.044 .182 .158
-0.56 1.08 1.26
Ideological/Humanitarian Democracy .003 0.18 .004 0.21 Human Rights DROPPED DROPPED Per Capita GNI -.444** -3.09 -.770** -4.83 War -.407 -1.03 .636 -1.39 Psuedo R2 Wald chi2 PCP PRE .417 79.3 80.1 56.3 N=156 .489 60.5 83.8 61.5 N=160
.044* 2.02 .036 1.61 DROPPED DROPPED -.777** -5.56 -.764** -4.46 .528 1.21 .582 1.08 .379 71.0 82.6 46.4 N=184 .465 78.4 88.4 54.9 N=190
*p<0.05; **p<0.01 Note: Ally at war (AAW) dropped in 1995 and 2000 due to lack of variation. For those two years, a total of 15 countries were coded as “AAW.” All received ODA.
the Cold War. Yet states housing U.S.troops were at a significant disadvantage when it came to the direction of American development aid in 1980 (see Table 16 above). The MP variable is also negatively and significantly related to the direction of American ODA in 2000, as Washington was disinclined to target basing states with development assistance. Table 17 illustrates the negative relationship between MP and access to American ODA in 1980 and 2000. In the intervening years of 1985 and 1995, the MP variable has an insignificant impact on the direction of American ODA. In general, Washington was not likely to select aid recipients based solely on the presence of American troops, perhaps because these states were already likely to receive other types
TABLE 17 MEAN PREDICTED PERCENTAGES FOR MILITARY PRESENCE
Predicted Percentage Year 1980 2000 No MP 62.2 88.6 MP 19.7 64.6 Difference -42.5 -24.0
of American assistance (such as military aid and ESF) or because a large number of NATO countries are included in the probit analysis. As Table 18 shows, basing states, as a group, were also at considerable disadvantage when came to actual dollar amounts. Table 18 illustrates that military presence is negatively related to the American ODA budget in all four years, and Washington was statistically unlikely in both 1980 and 2000 to significantly fund states housing American troops. On average, basing states could expect roughly $25 and $120 thousand in American bilateral ODA in 1980 and 2000, respectively. Meanwhile, the corresponding MPLFs for states absent American soldiers are considerably higher at $230 and $1215 thousand, respectively. The Allied States (AS) variable is generally of limited value in determining the American aid/no aid decision in both periods. It comes as a surprise, particularly in the Cold War period, to find that allied states were generally not accorded preferential treatment in either the direction or the volume of American ODA. Aside from the year 2000, when allies have a MPP of being a recipient of American ODA of 88.6% (in contrast to the MPP of 64.6% for a nonallied state), Washington did not go out of its way to target allies with development aid. When funding is brought to the table (Table 18), Washington was also generally unlikely to significantly subsidize allied states. Only in 2000, was the relationship between allied status and increased levels of American ODA both positive and statistically significant. In that year, the MPLF for allied states is over 239
TABLE 18 STATE ATTRIBUTES AND THE (LN) VOLUME OF AMERICAN ODA (REGRESSION RESULTS)
1980 Determinants Constant Geopolitical Military Presence Allied States Ally at War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population b 6.19 t 1.87 1985 b t 16.3** 5.09 1995 b t 18.2** 5.89 2000 b t 14.3** 5.29
-2.21* .848 1.78 .041 2.91 .557
-2.05 1.00 1.18 0.05 1.65 0.72
-.254 .531 2.29 1.11 -.542 -.752
-0.26 0.63 1.58 1.50 -0.31 -1.02
-.482 -0.55 .141 0.18 4.66** 2.99 -.254 -0.24 .292 0.30 -.764 -1.16
-2.31** -2.95 1.69** 2.59 3.22* 2.13 1.07 1.17 .205 0.24 -.344 -0.59
-.502** -3.72 1.83** 5.79 1.05** 3.93
-.214 -1.63 1.28** 4.50 .368 1.43
.061 .036 .185
0.45 0.11 0.77
-.095 -0.70 .212 0.76 .588** 2.64
Ideological/Humanitarian Democracy .014 0.30 Human Rights DROPPED Per Capita GNI -1.42** -4.52 War -.749 -0.81 R2 Adj. R2 F-statistic Chi2(12) *p<0.05; **p<0.01 .460 .414 10.1 10.1 N=156
-.001 -0.01 DROPPED -2.08** -6.68 -.414 -0.43 .524 .485 13.5 17.3 N=160
.117** 2.69 DROPPED -1.95** -7.34 .388 0.46 .464 .426 12.3 21.2 N=184
.093* 2.31 DROPPED -1.72** -7.15 -.014 -0.02 .535 .504 17.0 15.8 N=190
five times greater than the MPLF for nonallied states, or $2565 and $473 thousand, respectively. It is possible that the positive and significant relationship between military presence and the distribution of American ODA in 2000 signals a strategic shift in American aid policy in the post-Cold War era, but such a conclusion requires additional research. The Ally at War (AAW) variable is positively related to the American decision to extend aid in both periods, but its impact is statistically insignificant. Interestingly, the probit model would not run the AAW variable in the post-Cold War years, because it did not vary in outcome. That is, every American ally engaged in armed conflict in 1995 and 2000 (for a total of fifteen) received some level of assistance. Allies at war also figured
positively in American funding levels (Table 18), especially in the two post-Cold War years, when allies at war were significantly more likely to obtain increased levels of American ODA. This group of states has MPLFs of approximately $48 and $20 million in 1995 and 2000, respectively, whereas the corresponding MPLFs for nonallied states not at war are appreciably less at roughly $455 and $804 thousand. Moreover, allies at war could expect, on average, considerably greater levels of American development funding than could allies. In 2000, for instance, the MPLF for allies at war is nearly $18 million more than the MPLF for allied states. In sum, both models suggest that allies at war occupy a more important position in American ODA calculations in the post-Cold War period than in the Cold War period. This is a curious finding. It seemed reasonable that the U.S. would have been more supportive of allies at war during the Cold War rather than after, if for no other reason than to protect the integrity of the Western alliance. This expectation presupposes that the U.S. viewed the Soviets as a genuine threat to the West, for if the threat was genuine the U.S. would not likely tolerate distracted allies. If the Soviet threat was more imaginary or rhetorical than real, this would explain Washington’s lukewarm attitude to allies at war in 1980 and 1985. It would not, however, explain America’s attention to allies at war in 1995 and 2000, years after the collapse of the Soviet Union. Perhaps absent the East-West rivalry the U.S. was more emboldened to overtly support allies at war with ODA. Perhaps allies at war were comparatively poorer in the Cold War period than during the Cold War years. Perhaps some allies involved in militarized conflict receive forms of assistance other than ODA. In any event, why the U.S. was more likely to utilize ODA in the post-Cold War period to assist allies at war is question left for future research.
The impact of the BSC variable on American bilateral ODA is less pronounced than expected. The expectation arose from the aid literature that characterizes the U.S. as a stalwart Cold Warrior, bent on the containment of communism. Washington, however, did not enthusiastically target nations that bordered Communist states with ODA or increased levels of ODA in any of the aid years. In 1985, the impact of the BSC variable on funding levels is positive and fairly strong, but not statistically significant. All in all, nations that bordered Communist states were not likely to be accorded preferential treatment in the American aid agenda. States that bordered Islamic republics (BSI) were statistically more likely to obtain American ODA in 1980 (the MPP of these states obtaining aid is .9771), but were not especially likely to receive assistance in the other three years (Table 16). The magnitude of the BSI variable in terms of dollar amounts is likewise strongest in 1980 (significant at the .10 level, see Table 18). The Iranian hostage crisis was ongoing at the time and perhaps the significant impact of BSI reflects an American attempt to curry favor with the border-states of Iran and possible isolate Tehran. The only border-state of Iran not to receive American ODA in 1980 was the Soviet Union. Both models suggest that the strategic materials (SM) variable is not particularly helpful in explaining the distribution of American ODA in the Cold War or post-Cold War periods. Indeed, the relationship between strategic materials and the distribution of American assistance, while statistically insignificant, is negative in all but 1980.
Statist/Commercial Determinants The U.S. was more likely in the two Cold War years to pursue economic interests through ODA than in the two post-Cold War years, although this is not reflected in the
Trade variable. Trade is negatively and significantly related to the American decision to extend ODA in the two Cold War years. Thus, the more the United States imported from a state the less likely was that state to receive American ODA in 1980 and 1985. Higher levels of trade with the U.S. were also inversely related to the likelihood of increased levels of ODA in 1980 and 1985. The TR variable’s negative impact on funding in the two Cold War years is significant at the .01 and .10 levels, respectively. In the two postCold War years of 1995 and 2000, the variable’s negative impact on the American ODA budget diminishes considerably, but is nonetheless statistically marginal. In sum, strong trading partners, as a group, did not figure prominently in the direction of American ODA, nor were they particularly likely to obtain significant amounts of ODA, particularly in the two Cold War years. In both models, the positive impact of the EO variable declines across the time periods. In 1980 and 1985, the U.S. was statistically more likely to target states with freer markets with development aid. That group of states was also accorded significant levels of funding in both 1980 and 1985. In 1995 and 2000, however, the EO variable is insignificantly related to both the direction and volume of American ODA. Although a preliminary finding, Washington appears to have placed greater emphasis on economic openness during the Cold War rather than after when making decisions regarding the allocation of ODA. Overall, recipient population is an important indicator of the distribution of American ODA, particularly in terms of dollars amounts. Tables 16 and 18 illustrate that the POP variable is positively related to both the American ODA/no ODA decision and funding levels in all four years. More-populous nations were significantly more likely to
receive aid in 1980 and the positive impact of population on the direction of American ODA is relatively strong in 1985 (significant at the .10 level). The impact of population on the aid/no aid decision diminishes in the two post-Cold War years. Washington also gave special consideration to recipient population when it came to determining funding levels (Table 18). More populous-nations tended to receive greater levels of aid in all four years and were significantly more likely to access elevated levels of American ODA in 1980 and 2000, all else being equal.
Ideological/Humanitarian Determinants A common criticism found in the aid literature is that the distribution of U.S. ODA during the Cold War often (sometimes unabashedly) devalued liberalizing regimes and respect for human rights in favor of anti-communist regimes and regional stability. Washington’s support of a number of right-wing, authoritarian regimes in Latin American is well documented and serves to buttress this argument. Table 16 suggests that the U.S. was rather apolitical in targeting states with aid in the two Cold War years of 1980 and 1985. The impact of the DEM variable is stronger in the two post-Cold War years, however. In 1995, for instance, more-democratic states were statistically more likely to obtain American development assistance. In that year, states that scored highest in Gurr’s polity scale have a MPP of obtaining ODA of 83.8%, while the MPP for states at the lowest end of the scale is 54.5%. Table 18 suggests that Washington was also more likely to aggressively promote democratic principles through increased levels ODA in the two post-Cold War years. More-democratic states were favored with significant levels of American ODA in both 1995 and 2000. In those two years, the MPLFs for states at the highest end of the polity scale are approximately $1200 and $1588 thousand,
respectively. Meanwhile, states at the lowest end of the scale managed to attract appreciably less American ODA with MPLFs of $116 and $247 thousand, respectively. Table 19 illustrates the positive impact of recipient democraticness on post-Cold War funding levels.
TABLE 19 MEAN PREDICTED LEVELS OF FUNDING FOR HIGH AND LOW SCORES IN RECIPIENT DEMOCRATICNESS
Year 1995 2000 *In thousands 1999 USD. Predicted Level* High Score Low Score 1200 116 1588 247 Difference 1084 1341
Few studies of American ODA stress the humanitarian component of U.S aid policy, especially those published during the Cold War. The American ODA program is often criticized as self-serving, oriented more towards national strategic and commercial motives rather than towards humanitarian relief and the socio-economic development of the world’s more deserving nations. While the charge is not without some foundation, it is commonly overstated and in need of revision. The findings associated with the direction of American ODA (Table 16) suggest that Washington was sensitive to the plight of the world’s developing nations, as the NEED variable is negatively and significantly related to the provision of American ODA in each of the four years. Like Germany and Sweden, the U.S. generally targeted poorer (but necessarily the poorest) nations with ODA during and after the Cold War. The NEED variable is also related to significant levels of ODA in each of the four aid years (see Table 18). In sum, needier states were statistically more likely to access American ODA and statistically more likely 245
to obtain substantially elevated amounts of ODA. Table 20 illustrates how per capita GNI relates to the MPP of receiving American ODA and how it relates to the MPLF for recipients that are at three different per capita income categories. Three notable features from Table 20 immediately become apparent. One is that the MPP of accessing American ODA has generally increased for states at each of the three income categories. Another feature is that in real terms the LICs consistently attract the lion’s share of American ODA, and their share of total American bilateral ODA has increased over time. Third, based on the MPPs and MPLFs for all three categories, it appears that the U.S. has been rather consistent in its allocation of development aid among the three income categories, regardless of the demise of the Soviet Union. The War variable (WAR) is negatively related to the provision of American ODA in the two Cold War years, but positively related to the provision of ODA in the two Cold War years. In neither period, however, is the variable significantly related to the American aid/no aid decision. Moreover, the U.S. did not appear especially eager to assist states engaged in armed conflict with significant levels of funding as the WAR variable is weakly (at best) related to the amount of American funding.
TABLE 20 MEAN PREDICTED PERCENTAGES/MEAN PREDICTED LEVELS OF FUNDING FOR STATES AT LOW, LOWER-MIDDLE, AND HIGH INCOME CATEGORIES*
1980 LIC=$779 74.7/.881 LMIC=$3105 52.1/.123 HIC=$9590 32.7/.025 *Monetary values in millions 1999 USD. 1985 85.2/2.07 49.3/.116 18.8/.011 1995 91.8/3.16 62.5/.214 28.9/.024 2000 96.1/4.08 76.1/.380 44.0/.055
Finally, as to the goodness-of-fit measures, Tables 16 and 18 indicate that the R2s for both models and the PRE statistics for the probit model are relatively stable over the four aid years. The probit model posts pseudo R2s of .42, .49, .38, and .47 in 1980, 1985, 1995, and 2000, respectively. It also records the smallest range in PRE values, from 46.4 in 1995 to 61.5 in 1985. The adjusted R2s in the regression model run from .414 in 1980 to .504 in 2000.
Domestic Determinants In chapter five, it was hypothesized that two domestic variables, in particular, influence the distribution of Western bilateral ODA—Party in Power (PIP) and Economic Downturns (ED). More specifically, it was suggested that the party affiliation of the chief executive of Germany, Sweden, and the U.S.—i.e., the chancellor, the prime minister, or the president, respectively—is a potential domestic indicator of the nation’s distribution of bilateral aid. Among the state attributes examined by this work, it was expected that the direction and flow of bilateral ODA would favor the Ideological/ Humanitarian determinants while leaders affiliated with left-leaning, or liberal or socialist, parties were in power, especially after the Cold War. Conversely, it was anticipated that the distribution of bilateral ODA would favor the Geopolitical determinants while leaders affiliated with right-leaning, or conservative, parties were in power. Also hypothesized was that in times of economic downturns, donors would be compelled to tailor their distribution of ODA according to strategic concerns. After all, in such, it seemed reasonable to anticipate security concerns to prevail amongst various other donor aid calculations. Accordingly, in times of economic decline, the geopolitical determinants would likely gain prominence in the distribution of American, German, and
Swedish ODA. Limiting the domestic variables to PIP and ED, of course, paints the domestic imperatives of bilateral aid distribution with a broad brush. Such an approach also assumes that chief executives play an important role in setting the bilateral aid agenda. In any event, this study sought to explore a potential link between ODA and PIP and between ODA and ED. As was the case with the recipient state attributes examined above, the domestic determinants discussed below were observed in the years immediately preceding the extension of ODA. Thus PIP and ED data are from the years 1979, 1984, 1994, and 1999. In the paragraphs to follow in this section, emphasis is given to how PIP and ED relate to the state attributes that were found to be statistically significant determinants of the bilateral distribution of American, German, and Swedish ODA during and after the Cold War.
Germany Throughout the postwar period, two political parties have dominated the political landscape in West Germany and unified Germany: the Christian Democratic Union (CDU) and its Bavarian affiliate, the Christian Social Union (CSU), and the Social Democratic Party (SPD). Every German chancellor since 1949 has risen through the ranks of either the CDU or the SPD. Because it has proven difficult for either the CDU/CSU or the SPD to win an outright majority of seats in the Bundestag, the Free Democratic Party (FDP) has played a pivotal role in German electoral politics as the perennial, junior coalition partner. Over the course of the four years preceding aid—1979, 1984, 1994, and 1999— power has changed hands between the Social Democrats and the Christian Democrats
twice. In each of the four years, the Free Democrats have served as coalition partners, for which they have been rewarded with an assortment of cabinet posts. Chancellors Helmut Schmidt and Gerhard Schroeder (both SPD) headed Social Democrat-Free Democrat governments in 1979 and 1999, respectively. In both 1984 and 1994, Christian Democrats under the leadership of Helmut Kohl (CDU) maintained coalition governments with the Free Democrats. The most likely place to find evidence of a relationship between the chancellor’s party affiliation (PIP) and the distribution of bilateral ODA are the “transition” years of 1985 and 2000. Kohl’s appointment in October 1982 as chancellor of the CDU-FDP government marked the end of nearly thirteen years of SPD control of the chancellorship. Schroeder’s appointment as chancellor in 1998 ended sixteen years of CDU-FDP governments under Kohl’s leadership. Thus, the aid years of 1985 and 2000 represent clear changes in the party affiliation of the chancellor from the preceding aid years of 1980 and 1995 where, by then, either the SPD (1980) or the CDU (1995) had been in power for an extended length of time. (By 1980, Schmidt had served as chancellor for over five years; his appointment followed the resignation of Willy Brandt in May 1974. Kohl assumed the office in October 1982.) Any relevance that PIP has in determining the distribution of German bilateral ODA should manifest itself while contrasting the aid distribution of 1985 with that of 1980 and contrasting the aid distribution of 2000 with that of 1995. Under Schmidt’s leadership, the direction of German bilateral ODA in 1980 significantly favored states with freer markets and needier nations (Table 8). Conversely, states allied to Germany, as a group, were at a significant disadvantage when it came to obtaining German bilateral aid. Three years into Kohl’s tenure, the direction of German
bilateral ODA in 1985 also favored states with relatively lower levels of per capita GNI. States with freer markets were no longer given special consideration in the aid/no aid decision, while allied states were again statistically less likely to obtain German assistance. Aside from Economic Openness, the significant determinants of the direction of German bilateral ODA were the same in 1980 and 1985—despite that power had changed hands in the meantime. The direction of German ODA in 1995 suggests an adjustment of aid objectives among policymakers, but not a post-Cold War overhaul. While needier states remained significantly more likely to obtain aid under Kohl’s CDUFDP government in 1995, more-democratic states were not especially likely to be rewarded with ODA. Instead, states with freer markets and more-populous nations were significantly more likely to be targeted with ODA. And while states that housed American troops were still statistically less likely to receive German aid, all border-states (BSC and BSI) and all states involved in militarized conflicts obtained some German assistance. In 1998, the SPD won a plurality of Bundestag seats and subsequently formed a coalition with the FDP under Schroeder’s leadership. Despite the change in leadership, the direction of bilateral ODA in 2000 essentially mirrored that of 1995: the AS, EO, POP, NEED, and DEM variables had a significant impact on the aid/no aid decision. As was also the case in 1995 under CDU leadership, the SPD-FDP government in 2000 oversaw the distribution of development assistance to all border-states and all states involved in militarized conflicts. In a substantive sense, PIP’s impact on the direction of German bilateral ODA over the four aid years is nearly nonexistent, at least as evidenced by the significant determinants. With the exception of the insignificant impact of the EO
variable in 1985, the same state attributes were significant in the two Cold War years and the same in the two post-Cold Wars. Indeed, the most obvious shift in aid direction occurred between the Cold War and the post-Cold War periods, not between the transfer of power between SPD and CDU (or vise versa) governments. The volume of ODA in 1980 under Schmidt’s SPD-FDP government resembles the significant findings associated with the direction of aid in 1980, with the notable exception of population. More specifically, as Germany was generally more likely to target states with freer markets and needier states with ODA, Bonn was also statistically more likely to award these types of states with significant levels of ODA (see Table 9). While more-populous nations were not statistically likely to access German aid, those that did were accorded significant levels of German funding. Allied states fared no better in terms of funding. They were not particularly likely to be recipients of German ODA in the first place and they were statistically unlikely to receive elevated amounts of development assistance. Under Kohl’s conservative government in 1985, the EO (at the .10 level), POP, and NEED variables remained significant in predicting the amount of aid a nation receives. Despite that a conservative coalition had been in power since 1982, none of the geopolitical variables were found to be positively and significantly related to German funding in 1985. Like the center-left government that preceded it, Kohl’s government was statistically unlikely to extend significant levels of assistance to allied states. The absence of clear strategic goals in German aid calculations does not square with some case-study research that alludes to Bonn’s willingness to serve American Cold War interests through the extension of aid (e.g., Schultz 1980; Schulz 1995; Sohn 1972).
Several years after the end of the Cold War, the determinants significantly related to larger amounts of German ODA in 1995 remained the same as 1985, with the exception of the AAW variable. States with more-open markets could still expect a relatively greater share of the ODA budget from Kohl’s unified Germany. In addition to states with freer markets, more-populous nations, allies at war, and needier states were generally more likely to be awarded significant levels of ODA. Meanwhile, as was the case in the Cold War period, states housing American troops were generally at a significant disadvantage when it came to obtaining elevated levels of German funding. It is worthy of note that while all border-states and all states involved in armed conflict obtained ODA, they were not necessarily accorded preferential treatment when it came to increased levels of assistance. In other words, bordering a Communist state or bordering an Islamic republic or involvement in military conflict were important attributes in gaining access to German ODA in 1995 (and 2000), but those attributes were not especially advantageous in securing relatively greater sums of development assistance. Under Schroeder, aid levels in 2000 followed a pattern similar to those in 1995, in that the AAW, POP, and NEED variables remained significantly related to larger amounts of funding. Aid levels in 1995 and 2000 were not mirror images, however, as best illustrated by the severely diminished impact of the EO variable. Whereas the EO variable was positively and significantly related to increased levels of funding in 1985 and 1995 under Kohl, states with freer markets were not accorded the same advantageous position in the 2000 ODA budget under Schroeder. In both 1995 and 2000, only two of the geopolitical variables were statistically related to German funding levels: AS in a negative direction and AAW in a positive direction. Germany appeared rather
ambivalent to basing states, border-states, and states possessing strategic materials as those groups of states were not especially likely to access significant levels of ODA in either 1995 or 2000. Any shift in the German aid budget from 1995 to 2000 that might conceivably be attributable to the transfer of power from the CDU to the SPD is found in the decline in magnitude of the EO variable, but this seems like a stretch. Nevertheless, this remains a subject to be determined by further research. In terms of economic performance, Germany achieved a relatively healthy 4% increase in GDP for 1979. For the years 1984, 1994, and 1999, Germany managed positive, if less impressive, annual GDP growth rates of 3%, 2%, and 2%, respectively (World Bank 2005). Intuitively, we would expect the German bilateral ODA budget to reflect the declining and stagnant rates of economic growth, especially in the aid years of 1995 and 2000. We would also anticipate the distribution of German bilateral ODA in 1995 and 2000 to reflect the sluggish economic climate of 1994 and 1999. As to the former, Germany extended roughly $2.4 billion (in constant 1999 USD) in total net bilateral ODA in 1980 (see Figure 4 in Appendix 1). In 1985, the total net level of German bilateral ODA fell below the 1980 level, to approximately $2.1 billion. If it were not for the end of the Cold War, a further decline in the German bilateral ODA budget might have been evident in the 1995 distribution of bilateral aid. Germany recorded weak economic growth in 1994 (a 2% increase in GDP), yet the 1995 level of total net bilateral ODA more than doubled the 1985 level, despite the seemingly unfavorable economic climate in 1994. By 1999, the state of the German economy had not improved. Germany mustered a 2% increase in GDP for 1999. In contrast to 1995, when a significant increase in German
bilateral aid followed a weak economic performance, aid levels in 2000 were more consistent with the poor economic conditions of the time, in that bilateral aid levels fell appreciably. The total net level of bilateral ODA in 2000 amounted to slightly more than half of the 1995 level. This suggests that economic downturns have some impact on the German bilateral ODA budget. From a logical standpoint, a sluggish or stagnant economy would not seem conducive to increased ODA spending. Indeed, declining levels of total net bilateral ODA in 1985 and 2000 coincided with the weak economic performances of 1984 and 1999. The sizeable increase in the level of total net bilateral in 1995, however, contradicts the notion that high levels of assistance are contingent upon robust economic growth. Amidst tough economic times, Germany nevertheless saw fit in 1995 to substantially increase its bilateral aid expenditures. While the level of German bilateral ODA 1995 was likely an exceptional occurrence precipitated by an extraordinary international event, namely the end of the Cold War, it does show that the state of the economy does not necessarily dictate the bilateral aid budget. Donors may be compelled to dig deep into their treasuries—even when economic conditions are not favorable—to respond to pressing global events. Of course, it is worth repeating that only four years were considered here. We do get a sense of how economic conditions affect the volume of German bilateral ODA, but it is possible, of course, that the relationship between ODA and ED looks considerably different in other years or over a greater period of time. Moreover, although Germany experienced economic growth rates well below optimal levels, the state of the German economy was nowhere near dire. A more accurate depiction of the relationship between ODA and ED would probably be found in exploring that relationship in times of negative economic growth.
Nevertheless, there is an opportunity here to assess the extent that a struggling economy impacts the distribution of German bilateral ODA, particularly in the aid years of 1995 and 2000 when the German economy recorded weak economic performances. The reader may recall that it was hypothesized that donors were more likely to incorporate strategic goals into aid calculations in difficult economic times. Amidst a sluggish economic climate, Germany did extend ODA to all border-states in 1995 and 2000. While Germany favored border-states with access to ODA, it was simultaneously disinclined to award these states with significant levels of funding. Moreover, the other Geopolitical determinants were negatively related to the direction of German development assistance. What is more, aside from the Ally At War variable, none of the Geopolitical determinants were positively and significantly related to funding levels in 1995 and 2000, despite Germany’s weak economic performance. Although they were not included among the Geopolitical determinants, the significant and positive impact of the EO and the POP variables on the direction of German ODA coincides with economic downturns. Targeting states with freer markets and more-populous nations with aid conceivably serves the donor’s strategic interests, as well as its commercial interests. Yet it is difficult to persuasively argue that tough economic times account for shifts in the distribution of German aid in general, the significant and positive relationship between EO and the direction of German ODA in particular. If a weak or stagnant economy precipitated increased levels of ODA funding to states with freer markets in 1985 and 1995, we would expect the same to be true in 2000, when an adverse economic climate prevailed. This did not happen. Based on the findings above, there is little evidence to suggest that PIP and ED had
a substantial impact on the distribution of German bilateral ODA. The party affiliation of the chancellor played a minor role at best when it came to the direction of assistance. In so far as the statistically significant variables were concerned, the impact of party affiliation on the decision to extend aid is imperceptible. First, German bilateral ODA was no more likely to target the Ideological/Humanitarian state attributes under SPD leadership than under CDU leadership. For instance, needier states were significantly more likely to receive assistance in each of the four aid years, regardless of the party in power. Secondly, at no point were the Geopolitical determinants positively and significantly related to the direction of German bilateral ODA, either during or after the Cold War, even in the two aid years under conservative governments. In fact, the only Geopolitical determinant to be found statistically significant was the AS variable, and its relationship to direction, although consistent in the aid years, was negative. In short, conservative governments under Kohl were no more inclined to favor strategic attributes than were their socialist counterparts. It is true that two Geopolitical determinants were relevant in the aid/no aid decision, in that all states bordering Communist states and all states bordering Islamic republics obtained German ODA in 1995 under Kohl. This phenomenon is difficult to attribute to party affiliation, however, as it was repeated in 2000 under Schroeder’s SPD-dominated government. Indeed, if any pattern or shift in the direction of German bilateral ODA emerges, it is one more likely associated with the end of the Cold War rather than one reflecting changes in party affiliation. In reviewing Table 8, two patterns emerge: a Cold War and a post-Cold pattern, neither one convincingly attributable to the party in power. For example, Germany was statistically more likely to target states with freer markets and more-populous nations with ODA in
the two post-Cold War years under either a conservative or socialist chancellor, respectively. Those states were not accorded the same level of attention from either the SPD government under Schmidt or the CDU government under Kohl in the two Cold War years, respectively. This pattern repeats itself when considering border-states and states involved in armed hostilities in the two post-Cold War years. All border-states and all states engaged in militarized hostilities received some assistance in both 1995 and 2000, despite that the Social Democrats assumed power in 1998. The DEM variable followed a similar pattern. In both the two post-Cold Wars of 1995 and 2000, Bonn was significantly less likely to target more-democratic states with ODA, regardless of the transfer in power. With the exception of the EO variable in 1980 and the AS and NEED variables in all four years, variables found to be significant were significant in both years of either the Cold War or the post-Cold War periods, but not both. In sum, certain types of states were consistently more likely to obtain assistance, regardless of the chancellor’s party affiliation. Overall, the end of the Cold War seems to have had a greater impact on the direction of German bilateral ODA than did party affiliation. Even so, successive German governments saw fit to target the world’s needier nations with ODA, Cold War or no. And successive German governments were disinclined to include allied states into their aid calculations, before or after the fall of the Berlin Wall. There is little evidence to support the hypothesis that party affiliation has an appreciable impact on levels of German funding. Allied states were statistically less likely to receive increased levels of aid in all four years, during or after the Cold War, and regardless of party in power. Moreover, conservative governments were no more likely to significantly fund states with strategic attributes than were their socialist
counterparts. In addition, both CDU and SPD governments oversaw significant levels of ODA to states with freer markets, to more-populous nations, and to needier nations, suggesting that both conservative and socialist administrations viewed these types of recipients worthy of relatively greater amounts of assistance.
Sweden After forty-four years of virtually uninterrupted socialist leadership, a nonsocialist coalition assumed power in 1976. Under the leadership of Thorbjörn Fälldin, a centristliberal-conservative coalition succeeded the liberal government of Ola Ullsten in 1979. As Table 12 illustrates, states with freer markets (EO) and poorer nations (NEED) were statistically more likely to obtain Swedish aid in 1980. By 1985, the direction of Swedish ODA had changed very little—EO and NEED remained the significant determinants, although the Social Democratic Labor Party had regained a majority of the seats in the Riksdag in September 1982. In 1994, Carl Bildt headed a conservative-liberal-centristChristian democrat coalition until the September election, when Ingvar Carlsson (Social Democrat) became the new prime minister. The direction of Swedish bilateral ODA again favored EO and NEED, as well as more populous nations (POP) and those engaged in armed conflicts (WAR). Meanwhile, states that housed American troops (MP) were significantly disadvantaged when it came to obtaining Swedish aid. Social Democrats retained a majority of the seats in the 1999 parliament, although under the leadership of a new prime minister, Göran Persson. The direction of ODA in 2000 under the Persson government followed a pattern similar to the direction of ODA in 1995, in that MP, POP, and NEED were again found to be significant indicators. States with more open markets were not accorded preferential treatment in the aid/no aid decision, however. It is unclear
whether the reduced impact of EO in 2000 is the product of several years of socialist control in parliament or other factors. Sweden did target states with freer markets under both socialist and nonsocialist governments in 1980 and 1985, respectively. Moreover, MP, POP, and NEED were significant features of the direction of Swedish ODA in 1995 and 2000, despite that control of the government had changed hands in the meantime. Looking at Table 12, it appears that the end of the Cold War was more relevant to the direction of Swedish bilateral ODA than was the prime minister’s party affiliation. The direction of bilateral Swedish ODA followed a remarkably similar pattern in the two Cold War years, although the composition of parliament and thus the prime minister’s party affiliation had changed from 1979 to 1984. Excepting the EO variable and the reduced impact of WAR, the same can be said of the direction of Swedish bilateral ODA in the two post-Cold War years. Table 14 paints an interesting picture of ODA as it relates to PIP and the volume of Swedish ODA in 1980, 1985, 1995, and 2000. To begin with, the volume of Swedish aid in 1980 is largely consistent with the direction of aid, in that economic openness and per capita GNI are statistically related to elevated levels of funding. While the POP variable is positively but insignificantly related to the direction of Swedish ODA in 1980, Stockholm evidently viewed more-populous nations as deserving of significant levels of assistance. By 1985, the Social Democrats had held a majority of seats in the Riksdag for three years. The socialist government extended elevated levels of ODA to states with freer markets, more populous nations, and needier states, much like the nonsocialist government that preceded it. Unlike its predecessor, however, the socialist government in 1985 also targeted states at war with significant levels of funding, while demonstrating
an aversion to rewarding trading partners with elevated levels of ODA. In 1995, aid levels associated with the nonsocialist coalition under Bildt are interesting and suggestive, primarily because the state attributes that trigger significant amounts of Swedish aid in 1995 are the same as those in 1985 under the Social Democrats— economic openness, population, need, and armed conflict. Bildt’s nonsocialist government was also generally unlikely to reward states housing American troops with significant levels of ODA. In 2000, the Social Democrats had regained a parliamentary majority in the Riksdag under Persson, yet the transfer of power amounted to little change in the state attributes associated with significant levels of Swedish funding. As was the case in 1995 under Bildt’s conservative coalition, Persson’s socialist government engaged more-populous nations, needier states, and those states engaged in militarized conflict with increased levels of ODA. States with relatively more-open markets to Swedish goods suffered somewhat under Persson’s government, but the relationship between economic openness and the volume of Swedish aid remained positive and fairly strong, if statistically insignificant. It is important to take these associations between party affiliation and the Swedish ODA budget with some caution as the relationship between PIP and the volume of Swedish bilateral ODA is more complex than the above associations suggest. Yet the patterns of Swedish funding before and after the end of the Cold War are revealing. For example, Social Democrats enjoyed parliamentary majorities for at least three years prior to the extension of aid in 1985 and 2000, while in 1980 and 1995, nonsocialist coalitions held a majority of seats in the Riksdag prior to the distribution of ODA. Thus, there are clear transfers of political power. Hypothetically, these transfers would manifest
themselves in the distribution of ODA. Yet the significant determinants of Swedish aid are largely unaffected by changes in political leadership. To begin with, none of the Geopolitical variables were positively and significantly related to the volume of Swedish ODA, during or after the Cold War. Regardless of party in power, Stockholm appeared disinterested in incorporating strategic concerns into its aid budget as those states of geopolitical value were unlikely to receive significant levels of funding. Indeed, in the two post-Cold Wars, basing states were significantly unlikely to access substantial levels of assistance, irrespective of the parliamentary majority in parliament. Whether or not a socialist or a nonsocialist (or a conservative-dominated) coalition was at the helm appears to matter little when it comes to significant levels of Swedish aid. Moreover, the end of the Cold War did little to diminish Stockholm’s budgetary emphasis on states with freer markets, more-populous nations, needier nations, and states engaged in armed conflict. Still, it is difficult to characterize Swedish ODA as purely humanitarian in nature as more-democratic states (and by implication, regimes that were more respectful of human rights) did not figure prominently in Sweden’s ODA agenda. As to Economic Downturns (ED), Sweden managed stable, relatively strong annual GDP growth of 4% in 1979, 1984, and 1994, and 5% in 1999 (World Bank 2005). Thus it is difficult to ascribe to ED any perceived shifts in the distribution of Swedish bilateral ODA. In addition, the absence of economic downturns also makes it difficult to attribute varying levels of total Swedish bilateral ODA to economic cycles. In any event, total net bilateral ODA in 1985 did fall below the 1980 level (see Figure 6 in Appendix 1), but this did not precipitate a shift in Swedish ODA toward the Geopolitical determinants. By 1995, net levels of bilateral ODA more than doubled the 1985 outlays. This coincides
with the center, center-right government under Bildt, which together may have precipitated significant amounts of ODA to states with freer markets and to more populous nations (but not to states that ranked high in strategic value, indeed basing states were at a significant disadvantage in 1995). In 2000, net expenditures in bilateral ODA increased marginally. All budget adjustments to bilateral ODA, up or down, took place during relatively favorable economic times. None prompted a shift in Swedish bilateral assistance toward the Geopolitical determinants. In sum, the state attributes found to be important indicators of Swedish aid distribution in 1980, 1985, 1995, and 2000 were economic openness, population, need, and armed conflict, regardless of the economic oscillations associated with those aid years. Still, these findings must be considered preliminary, as it is possible, however unlikely, that the Geopolitical variables were more relevant during times of economic distress or economic downturns, such as during the early 1990s when Sweden recorded negative economic growth.
United States James Clad and Roger Stone write that “periodic electoral changes have resulted in ideologically inspired shifts in [American] aid policy” (1991, 196). They refer only to aid policy during the early 1980s. A clear, consistent link between ODA and PIP is illusive, however, in so far as findings related to the direction of American ODA is concerned (Table 16). Aside from 1985, the Democratic Party held the presidency. Ronald Reagan (Republican) was inaugurated in January 1981, succeeding Jimmy Carter (Democrat). Three successive Republican administrations held the office throughout the 1980s in early 1990s. In January 1993, Bill Clinton (Democrat) was sworn in, thus ending twelve years of Republican control of the White House. President Clinton would
serve two terms. His successor, George W. Bush (Republican) assumed the presidency January 2001. Perhaps the most obvious place to look for PIP’s influence on the distribution of aid would be in the “transition” years of 1985 and 1995. Table 16 records some shifts in the direction of ODA in 1985 that may be attributable to PIP, namely the reduced impact of the MP, BSI, and POP variables. Otherwise, Table 16 does not indicate abrupt shifts (i.e., from statistical significance to insignificance or vise versa and coefficient sign changes) in ODA direction that might be linked to the party controlling the White House. Washington was generally more likely in 1980 to target states that bordered Islamic republics and more-populous nations with ODA, while states that housed American service personnel were significantly less likely to obtain ODA. In 1985, during the second Reagan administration, border-states of Islamic republics and more-populous nations were less visible on the ODA radar screen. The negative impact of the MP variable diminished appreciably in 1985 as well; nevertheless, states that maintained an American military presence were not especially likely to receive ODA. At any rate, the transition from Democratic to Republican control of the presidency in 1979 and 1984, respectively, was not accompanied by a shift in the direction of aid from a humanitarian to a security-driven process. Likewise, the transition from Republican to Democratic control of the White House in the post-Cold War years did not signal a shift by the U.S. to favor humanitarian interests over security concerns when targeting states with ODA. While the commercial variables diminished in their capacity to predict the direction of ODA in the Clinton years, more-democratic states (DEM) did significantly influence the aid/no aid decision in 1995. Meanwhile, basing states were significantly less likely to be recipients of American ODA in 2000. In that same year, however, allied
states (AS) were significantly more likely to be targeted with ODA, ceteris paribus. In both 1994 and 2000, all allied states engaged in military hostilities (AAW) received some American assistance. Of some interest is that neither the Democratic nor Republican administrations were particularly inclined to extend ODA to states at war in the Cold War years (unless they were allies). In the post Cold War years, however, the War variable was positively related to the direction of ODA. Finally, the NEED variable consistently figured prominently in the American decision to extend aid, regardless of the party occupying the White House. When considering PIP, the volume of American ODA (Table 18) follows a similar pattern to that of the direction of ODA. In 1980, the final year of the Carter administration, the EO, POP, and NEED variables were strongly related to greater amounts of American ODA, while the MP and TR variables were statistically related to diminished levels of funding. By 1985, under the second Reagan administration, states with freer markets and needier nations remained significantly more likely to access elevated levels of American development aid, but the positive impact of population on funding levels diminished somewhat. Basing states and strong trading partners were still not especially likely to be favored with significant levels of ODA, but the negative relationships between MP and funding and TR and funding declined in 1985. In the two post-Cold War years of 1995 and 2000, two Geopolitical variables—AS and AAW—are positively and statistically related to significant levels of American ODA. Meanwhile, the MP variable is statistically related to diminished levels of funding. While the relationship between AAW was positive in both Cold War years, allies at war were accorded significant levels of American ODA in the Clinton aid years of 1995 and
2000 (perhaps a byproduct of the Republican Congress). In 2000, under the second Clinton administration, allied states (AS) were significantly more likely to obtain elevated amounts of assistance. The incorporation of strategic interests into the American aid calculus appears to end there, however, as basing states were at a significant disadvantage in 2000 when it came to dollar amounts. Border-states and those states possessing strategic materials, in general, did not figure prominently in the American aid equation in either 1995 or 2000. Of some interest is that the Statist/Commercial variables had little statistical bearing on funding levels in 1995. In 2000, however, more-populous nations, as a group, could expect significant levels of assistance. Perhaps the most noteworthy shift in American aid policy from the Cold War years to the post-Cold War years has to do with the DEM variable. In 1993, President Clinton declared: “In a new era of peril and opportunity our overriding purpose must be to expand and strengthen the world’s community of market-based democracies” (Brinkley 1997, 110). Clinton’s national security advisor at the time, Anthony Lake, likewise advocated a strategy of enlargement of democratic states in the post-Cold War era to replace the doctrine of containment (Wittkopf, Kegley, and Scott 2003). In what may be remembered by historians as the “Clinton Doctrine,” the centrality of “democracy promotion” in American foreign policy is reflected in the two post-Cold War aid years (Brinkley 1997). In both 1995 and 2000, the DEM variable has a positive and significant impact on funding levels. Washington appeared committed to the promotion of democratic principles through the extension of ODA in the post-Cold War environment as more-democratic states enjoyed significant levels of funding in both 1995 and 2000. As Wittkopf and associates observe, “the
Clinton administration formalized certain institutional structures and processes to elevate democracy promotion in the policy process, and the U.S. Agency for International Democracy took advantage of its role in policy implementation to elevate democracy promotion to one of four core purposes in U.S. foreign aid policy” (2003, 57). Table 19 above illustrates that states scoring at the upper end of Gurr’s polity scale in 2000 could expect, on average, $1.3 million more in U.S. ODA than states that scored at the bottom end of Gurr’s scale. Whether this shift is attributable to the end of the Cold War or the transfer of power in the Oval Office remains to be seen, however. It does seem unlikely that the shift in aid policy toward more-democratic states is owing to the transfer of power, particularly when one considers the references to the end of the Cold War and the impracticality of containment policy made by the president and his national security advisor. More-democratic states did not receive preferential treatment in 1980 under the Carter administration, although it is certainly possible that Carter’s advocacy of human rights did not effectively translate into an American aid policy favoring more-democratic regimes. Finally, the Per Capita GNI variable (NEED) remained statistically significant in predicting dollar amounts in both of the Clinton aid years. As was the case in the two Cold War years, needier nations were statistically more likely to receive substantial amounts of funding from the U.S., regardless of the president’s party affiliation. Much like the German and Swedish cases, recipient “need” transcended partisanship when it came to the distribution of American bilateral ODA. The state of the economy plays an ambiguous role in determining the distribution of American ODA. While it was expected that the total volume of ODA would naturally
ebb and flow with economic cycles, the overall orientation of assistance (in so far as it relates to the determinants examined above) is not contingent upon either good or bad economic times. There appears to be “a bottom line” at work here. Regardless of economic prosperity or relative economic hardship, American bilateral ODA was generally targeted at the world’s poorer nations. Of the four aid years, annual GDP growth in the U.S. was at its lowest in 1979, hovering at about 3% (World Bank 2005). The sluggish economy, however, did not compel the Carter administration to prioritize ODA in 1980 according to strategic interests. States that housed American troops, for instance, were significantly less likely to be ODA recipients, and were significantly less likely to receive elevated levels of development assistance. The United States attained relatively high percentages of annual GDP growth in 1984, 1994, and 1999. In those three years, the U.S. recorded annual increases in GDP of 7%, 4%, and 4%, respectively (World Bank 2005). In 1985, the volume of net bilateral ODA was roughly double the 1980 level (see Figure 8 in Appendix 1). While the robust economic performance of 1984 likely spilled over into the 1985 ODA budget, the “wealth,” so to speak, was more likely to be shared among states with freer markets and needier nations while Reagan was president. The U.S. posted relatively favorable annual growth rates of 4% in both 1994 and 1999. While allied states (AS), allied states involved in armed hostilities (AAW), and more-populous nations (POP) were more likely to receive greater amounts of ODA in either 1995 or 2000, more-democratic states (DEM) and poorer nations (NEED) were the most consistent beneficiaries of American bilateral aid (see Table 18). Based on the evidence discussed above, PIP is of limited value in predicting the distribution of American bilateral ODA. The findings suggest that presidents might
“tinker” with the distribution of bilateral ODA, but party affiliation does not dictate that the orientation of bilateral ODA fundamentally shifts with changes in power. Presidents certainly favor particular state attributes among aid recipients over others and likely have some say as to the direction and flow of ODA. Yet the president’s role in ODA distribution is discretionary and his aid agenda does not come to fruition at the total expense of other domestic and international interests. Presidents may shape aid policy, but they appear to do so within an established framework of accepted principles and objectives. The state of the American economy is likewise not particularly useful in predicting the distribution of American ODA, either. Economic downturns appear to be of rather peripheral importance in determining the direction and flow of American development assistance, while PIP, although likely a relevant variable, yielded inconclusive results. Neither variable had a structural impact on the distribution of American ODA (at least in ways clearly discernable by the methodology employed here). The party affiliation of the president and the state of the economy did not define the orientation of American bilateral ODA according to either the Geopolitical, or the Statist/Commercial, or the Ideological/ Humanitarian determinants at the obvious expense of the other cluster of determinants. The two Democratic presidents did not restructure aid according to strictly humanitarian impulses and the Republican president did not restructure aid according to strategic imperatives exclusively. Moreover, at times of economic downturns, various American administrations did not sacrifice humanitarian interests to subsidize the realization of geopolitical objectives through the distribution of bilateral ODA. Nor did the U.S. necessarily gravitate toward the Ideological/ Humanitarian determinants in favorable economic conditions. More likely was that in
times of economic sluggishness, ODA funding was cut proportionally among recipients. In good economic times, funding was proportionally increased among recipients. The story of American, German, and Swedish ODA does not end here, however, for several interesting trends do not become evident until when one reviews the percentage of ODA extended to various types of states (Meernik et al. 1998). Table 21 shows the percentage of American, German, and Swedish ODA given to various types of states during and after the Cold War. The table serves to both distill some of the findings discussed above and offers additional insights into the distribution of ODA among actual recipients. To begin with, in contrast to reductions by both Germany and the U.S., Sweden saw fit to increase its percentage of ODA by 8% to states housing American troops. While the 8% increase may not seem especially noteworthy, it does perhaps signal a shift in Swedish ODA distribution toward limited strategic values. The increase also moves Sweden past Germany (but behind the U.S.) in the percentage of total bilateral aid given to states with a military presence. The German commitment to that group of states fell 13%, from 20% of its ODA budget in the Cold War period to a modest 7% after the Cold War. Meanwhile Sweden increased its allotment of ODA to states housing troops from a scant 2% in the Cold War years to 10% in 1995 and 2000. Both Germany and the U.S. reduced the percentage of their respective ODA budgets to allied states in the post-Cold War period by 9% and 24%, respectively. While the 24% reduction in American ODA to allied states is considerable, the U.S. still earmarked nearly $5.5 billion, or about half of its ODA budget, to that group of states in the two post-Cold War years. As a formally neutral nation, Sweden had no allied states to which to extend development assistance, although states (particularly in Latin
TABLE 21 PERCENTAGE OF AMERICAN, GERMAN, AND SWEDISH ODA GIVEN TO VARIOUS TYPES OF STATES
Legend for Table: A-Total net bilateral ODA 1980 and 1985-millions 1999 USD B-Percentage of Total C-Total net bilateral ODA 1995 and 2000-millions 1999 USD D-Percentage of Total E-Percentage Change in ODA Germany TOTAL* 3739.2 A B Military Presence Allied States Ally at War Border-State Communism Border-State Islam Strategic Materials Trade>mean Economic Openness>mean Democracy-more democratic Democracy-less democratic Human Rights-more respect Human Rights-less respect Per Capita GNI=LICs War 754.1 20% 364.8 10% 38.1 1% 1294.7 35% 467.8 13% 2000.6 54% 127.7 3% 885.8 24% 1280.7 34% 2437.2 65% 1393 37% 2346.2 63% 1510.5 40% 1533.7 41% 10689 C D 699.5 7% 112.5 1% 34.4 0.30% 1525.1 14% 1745.9 16% 4144.1 39% 5153.4 48% 5186.1 49% 7313.8 68% 3309.5 31% 5829.1 55% 4868.7 46% 3955.6 37% 3070.2 29% -12% -3% -17% 18% -34% 34% 25% 45% -15% 3% -21% -0.7 -9% -13% E 970.2 A B 20.5 2% 0 0% 0 0% 450.4 46% 27.9 3% 504 52% 0.4 0.04% 390.2 40% 241 25% 712.4 73% 246.3 25% 704.7 73% 741.1 76% 557.7 57% Sweden 1714.8 C D 170.3 10% 0 0% 0 0% 202.5 12% 267.7 16% 643.2 38% 87.5 5% 293.5 17% 1033.9 60% 616.4 36% 605.4 35% 1109.3 65% 1067.1 62% 656.8 38% -19% -14% -8% 10% -37% 35% -23% 4.96% -14% 13% -36% 0% 0 8% E 10957 A B 3177 29% 8040 73% 3882 35% 2253 21% 492 4% 3423 31% 576 5% 7224 66% 5013 46% 5607 51% 5263 48% 5694 52% 2409 22% 5552 51% US 11242 C D 2395.2 21% 5467 49% 2739.2 24% 1724.6 15% 2488.7 22% 4666.8 42% 2838.6 25% 3009.5 27% 7462.5 66% 3145.5 28% 4844 43% 6395.4 57% 4055.5 36% 5450.3 48% -3% 14% 5% -5% -23% 20% -39% 20% 11% 18% -6% -11% -24% -8% E
*Note: The total net bilateral ODA given for 1980 and 1985 combined and the total net bilateral ODA given for 1995 and 2000 combined are in millions of 1999 USD.
America) allied to the U.S. obtained some Swedish assistance. Allied states at war received a smaller percentage of the American and German ODA budgets in the two post-Cold War years. The proportion of German ODA given to allied states at war was
minimal to begin with, entirely comprised of ODA to Turkey. The American commitment to allies involved in militarized conflict declined by 11% in the post-Cold War years but still managed to account for nearly a quarter of the American ODA budget. States that bordered Communist states likewise witnessed their percentage of the American, German, and Swedish aid budgets diminish in the post-Cold War period by 6%, 21%, and 36%, respectively. Of particular interest is the Swedish case. In 1980 and 1985 combined, Sweden extended a rather surprising 46% of its bilateral ODA to states sharing a border with Communist regimes. In the post-Cold War period, the share of the Swedish ODA budget allotted to Communist border-states had fallen to 12%. Meanwhile, states that bordered Islamic republics saw their share of the American, German, and Swedish ODA budgets increase in the post-Cold War period by 18%, 3%, and 13%, respectively. Whether this signals an effort by the donors to contain Islamic fundamentalism remains to be seen. The probit and regression models above indicated a relatively minor role for strategic materials in American, German, and Swedish aid calculations. Nevertheless, Table 21 shows that states possessing strategic materials, as a group, obtained sizeable portions of the American, German, and Swedish ODA budgets. Table 21 also illustrates that states possessing strategic materials received a diminished share of German and Swedish ODA in the post-Cold War period. The U.S., however, allocated 11% more of its ODA budget to that group of states in the post-Cold War years than in the Cold War years. As a group, stronger trading partners among aid recipients received a greater share of the American, German, and Swedish ODA budgets in the post-Cold War period.
German aid recipients recorded the most dramatic increase. Better-than-average trading partners, again as a group, were rewarded in the two post-Cold War years with a 45% increase in German development assistance. Much of this increase is explained by the tremendous volume of German aid in 1995 to Poland (primarily) and Russia, two nations with which Germany had strong trading ties. Berlin also rewarded aid recipients that recorded above-average-values for economic openness with a 25% increase in their portion of the aid budget in the two post-Cold war years. Similar groups of American and Swedish aid recipients with freer markets witnessed their share of ODA decline appreciably in the post-Cold War period by 39% and 23%, respectively. Perhaps the starkest transformation in the distribution of American, German, and Swedish aid from the Cold War to the post-Cold War years is associated with what appears on the surface to be a strong interest by the donors to promote democratic principles through the provision of aid. In 1980 and 1985, each of the three donors extended the majority of its bilateral ODA budget to less-democratic states. Sweden channeled nearly three-quarters of its bilateral ODA budget to that group of recipients. Meanwhile, of the three, the U.S. directed the smallest portion (51%) of its ODA budget to less-democratic recipients. New dynamics were at play in 1995 and 2000, however. Each donor devoted a substantially larger share of its ODA budget to the moredemocratic aid recipients in the post-Cold War period. As a group, recipients that scored in the top half of Gurr’s polity rankings received 34%, 35%, and 20% more in assistance from Germany, Sweden, and the U.S., respectively. This meant that donors channeled approximately two-thirds of their total bilateral aid to more-democratic states in 1995 and 2000. Indeed, Germany directed 68%, or about $7.3 billion, of its bilateral ODA to this
group of states, while the portion of U.S. ODA budget to that group of states was 66%, or approximately $7.5 billion. Increased levels of aid to more-democratic states in the postCold War period may indeed suggest a determined effort on the part of the donors to promote or solidify democratizing regimes in the developing world. They are also likely a reflection of a more general trend in the developing world (and in the developed world) toward more liberal institutions of governance. Accordingly, there are more liberal or liberalizing regimes to which to grant ODA. Finally, a number of successor states to Soviet Russia and Yugoslavia became ODA recipients in the early and mid 1990s, some of which received substantial funding, particularly from Germany and the U.S. Many of these states ranked relatively high on Gurr’s democracy scale. As a group, recipients whose regimes demonstrated a higher regard for human rights witnessed an increase in their share of bilateral ODA from Germany (+18%) and Sweden (+10%) in the post-Cold War years. The same group of American recipients received a 5% reduction in total aid in the post-Cold War years. Although Germany and Sweden directed a greater portion of their ODA budgets in the post-Cold War period than the Cold War period to states that exhibited greater respect for human rights, only Germany allocated more than 50%, or about $5.8 billion, of its bilateral aid to that group of states. The U.S. extended a greater share of its ODA in 1995 and 2000 to those states (43%) than did Sweden (35%). In other words, well into the post-Cold War period Sweden and the U.S. allocated the majority of their ODA budgets (65% and 57%, respectively) to states that demonstrated comparably less respect for human rights. This translated into approximately $1.1 billion from Sweden and $6.4 billion from the U.S. to that group of states.
Low Income Countries (LICs) are the poorest nations on earth, managing an annual per capita GNI of $779 (1999 USD) or less. To an extent, the percentage change in American, German, and Swedish ODA provided to LICs from the Cold War to the postCold War years parallels the distribution of aid among recipients (i.e., the regression results in Tables 9, 14, and 18). Per capita GNI was significantly related to increased levels of American and German funding in both 1995 and 2000; the variable was also statistically related to Swedish funding in 2000, but not in 1995. The percentage of bilateral ODA extended by Germany and Sweden to LICs declined in the two postCold War years by 3% and 14%, respectively. Meanwhile the U.S. commitment to that group of states increased 14% in the two post-Cold War years, from 22% to 36%. Nevertheless, Germany and Sweden—despite their reductions—still allocated a larger portion of their ODA budgets to LICs in the post-Cold War years than did the U.S. Stockholm’s proportional commitment to LICs was the strongest at 62%, or roughly $1.1 billion of its combined 1995 and 2000 ODA budgets. By way of comparison, Germany committed approximately $4 billion in those years (or 37%), while the U.S. effort totaled approximately $4.1 billion, or 36% of its bilateral ODA. Each of the three donors invested a smaller percentage of their total ODA funding to recipients engaged in militarized conflict in the post-Cold War years. This could be attributable to fewer instances of armed conflict in the post-Cold War era or fewer recipients of American, German, or Swedish ODA involved in hostilities. In the Cold War years, the donors set aside between 41% and 57% of their ODA budgets to fund states engaged in interstate or civil armed conflict. Of the three donors, Sweden allocated the largest proportion of its budget (57%) to this group of states. Still, Sweden has a
reputation for limiting larger sums of ODA to relatively few, select nations. So whether Sweden specifically targets states at war with ODA and greater amounts of ODA or that fewer of Sweden’s longstanding aid clients were involved in armed hostilities in the postCold War years remains a question for further scrutiny.
In Summary In reviewing the findings, several notable features regarding the distribution of bilateral ODA from Germany, Sweden, and the U.S. become evident. Table 22 summarizes the findings from the probit and regression models according to variable headings by donor during and after the Cold War. Table 22 also, at least implicitly, reveals the power of the competing IR models to satisfactorily identify the state attributes
TABLE 22 BREAKDOWN IN THE DISTRIBUTION OF ODA FROM GERMANY, SWEDEN, AND THE U.S. BY VARIABLE HEADINGS
GERMANY 1980 Geopolitical Military Presence Allied State Ally at War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population Ideological/Humanitarian Democracy Per Capita GNI D/V D/V D/V D/V D/V D/V D/V D/V V D/V D/V War D D V V D/V Note: Direction (D) and Volume (V) indicate a positive and significant relationship. D/V D/V V D/V D/V V V D/V D/V D D/V D/V V D/V V D/V D/V D/V D/V D/V D/V V D/V D D D/V D D D D/V D/V D/V 1985 1995 2000 1980 SWEDEN 1985 1995 2000 1980 U.S. 1985 1995 2000
that account for the distribution of German, Swedish, and U.S. ODA during and after the Cold War. Meanwhile, Table 23 illustrates the extent to which the impact of various independent variables significantly changed with the passing of the Cold War. First, the end of the Cold War brought some important changes in the donors’ distribution of ODA. Ample evidence of this is found in the substantial sums of assistance extended to Russia and various eastern European states throughout the 1990s. Among the state attributes that triggered greater or lesser funding, however, the passing of the Cold War did not precipitate fundamental overhauls in ODA policy as shifts in the distribution of American, German, and Swedish ODA were generally more quantitative in nature than qualitative. A series of Wald (chi-square) tests were performed on those state attributes (independent variables) found statistically significant in either 1985 or 1995, or both (the p-values significant at the .05 level are reported in Table 23). These tests indicate the extent to which the impact of the significant independent variables changed from 1985 to 1995 by assessing the relative value of coefficients over time and across models. While not without flaws, this approach more directly evaluates the impact of the end of the Cold War on bilateral aid than do either the probit or the regression models. Table 23 shows that the statistical impact of a handful of state attributes significantly changed with the collapse of the Soviet bloc. Most of the determinants, however, demonstrated statistically insignificant changes from 1985 to 1995. Overall, the outcome of the Wald tests illustrated in Table 23 reinforces the findings associated with the probit and the regression models, namely that American, German, and Swedish aid is more accurately marked by continuity rather than by change, even in the face of a
TABLE 23 RELATIONSHIPS THAT SIGNIFICANTLY CHANGED BETWEEN 1985 AND 1995
Determinants Geopolitical Military Presence Allied States Ally At War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population Germany Direction Volume NS** -4.57 NS NS NS NS NS -4.90 NS NS NS NS Sweden Direction Volume -5.04 NS NS NS NS NS -2.50 NS NS NS NS NS U.S. Direction Volume NS NS NS NS NS NS NS NS 2.31 NS NS NS
NS 4.75 6.83
NS NS 2.15
NS NS NS
NS -8.94 5.28
NS -30.3 NS
NS -15.4 NS
Ideological/Humanitarian Democracy -8.42 NS NS NS 3.38 7.24 Per Capita GNI 3.43 -3.85 NS 4.56 NS NS War NS NS NS NS 7.09 NS Note: **NS-not significant at the .05 level. Minus (-) signs indicate a negative change in the relationship.
profound transformation of the international system. Indeed, the significant changes reported in Table 23 are largely a change in degree rather than a change in kind. Take, for example, Stockholm’s reluctance to target basing states with ODA and significant levels of ODA. As a group, states housing American service personnel were not especially likely to obtain Swedish assistance in the first place, nor were they particularly likely to receive significant amounts of Swedish funding. In the interim period between 1985 and 1995, the relationship between basing states and Swedish ODA significantly deteriorated. By 1995, basing states were at a significant disadvantage when it came to accessing Swedish ODA. The relationship between population and aid also significantly changed between 1985 and 1995 in the cases of Germany and Sweden. Both donors, however, were inclined to target more-populous nations with development assistance
prior to the demise of the Warsaw Pact. Nevertheless, recipient population became more important as an indicator of German and Swedish ODA in the post-Cold War era. The final example of quantitative changes in donor aid preferences from 1985 to 1995 concerns the Per Capita GNI variable. All three donors were significantly more likely to target poorer nations with ODA and significant levels of ODA in each of the four aid years. The relationship between NEED and U.S. assistance did not significantly change with the passing of the Cold War, but the importance of that relationship became more pronounced in the German and Swedish aid agendas in the post-Cold War years. While the above examples suggest a static quality of aid patterns among a few key state attributes, there are a few notably abrupt shifts in the distribution of ODA that indicate a greater impact of the end of the Cold War on donors’ aid calculations. Washington’s post-Cold War commitment to more-democratic states and its simultaneous failure to extend preferential treatment to states with freer markets in 1995 (and 2000), as well as Berlin’s willingness to universally target border-states, for instance, comes to mind. Notwithstanding the possible exceptions already noted, the collapse of the Eastern bloc was generally not accompanied by stark reassessments of the state attributes the donors found worthy of ODA and elevated levels of ODA. This suggests that many aspects of the aid agendas of the donors were firmly set prior to the end of the Cold War and not substantially altered by the event. This also likely indicates that, once established, aid relationships are not likely to be severed quickly, even if the stimulus of that relationship has long past. Accordingly, many of the hypothesized shifts in the distribution of American, German, and Swedish bilateral ODA failed to materialize with
the passing of the Cold War. Moreover, many of the hypothesized expectations regarding aid distribution during the Cold War were likewise not supported by the findings. The discrepancy between expectations and findings is in part the result of overestimating the impact of the Cold War on bilateral aid (at least in the 1980s), namely the extent that geopolitical imperatives traditionally associated with the Cold War influenced Western bilateral aid calculations. The hypotheses presupposed that the Cold War imposed, to a greater or lesser degree, a security-driven rationale on the Western aid agenda. Absent this condition, it was hypothesized that the donors would likely deemphasize the strategic component of their respective ODA agendas. The percentage of ODA channeled to states of strategic value (Table 21) generally reinforces this expectation. Yet, as Table 22 illustrates, strategic interests as reflected by the Geopolitical determinants were not pervasive features of American, German, or Swedish bilateral ODA during the Cold War. Indeed, their positive impact on the distribution of American and German aid was more pronounced in the two post-Cold War years. Germany, for instance, directed some assistance to all border-states in 1995 and 2000. As anticipated, the U.S. was most inclined to pursue strategic objectives through the provision of ODA as demonstrated by Washington’s commitment to allied states and allies at war in 1995 and 2000. Aside from these subsidies, however, Bonn’s (or Berlin’s) and Washington’s application of ODA as a strategic tool was only sporadically reflected in the distribution of aid among the geopolitical determinants. Second, in so far as the state attributes found statistically related to the direction and flow of bilateral ODA are concerned, the probit and regression models indicate that the three donors follow a diversified, yet a surprising similar, approach to development
assistance. The findings reinforce the notion that the provision of ODA is a complex endeavor, one that seeks to accommodate a vast array of objectives. The findings also suggest that certain core values animate the provision of ODA and are shared by each of the three donors. As to core values, each of the three donors, to a greater or lesser degree, prioritized their respective ODA agendas according to access to recipient markets, recipient population, and recipient need (see Table 22). What is most interesting about the “diversified” approach among the donors is that it runs counter to widely accepted perceptions regarding the nature of American, German, and Swedish bilateral ODA. In the cases of Germany and the U.S., the findings suggest that the two donors are undeserving of the reputation of carrying out myopic foreign aid policies—at least as they pertain to the distribution of ODA. Especially within the case-study aid literature, critical elements have facilitated enduring misperceptions among the general public and within academic circles that Germany and the U.S. actively (and sometimes aggressively) pursue either largely commercial or geopolitical objectives through ODA, respectively (see Conteh-Morgan 1990; Guess 1987; Knusel 1968; Schulz 1995; White 1965; and Zimmerman 1993). These images have persisted well into the post-Cold War era. Even in the two Cold War years, the strategic and commercial components of American and German ODA are overstated. Finally, Sweden, long touted as the exemplary, humanitarian donor, was not above incorporating domestic economic interests into its aid calculations. This element of Swedish bilateral ODA is quite apparent, as witnessed by Stockholm’s consistently positive attitude toward states with freer markets. Third, it seems clear that contentious Cold War rhetoric emanating from Washington (and often Bonn) did not dictate the provision of ODA. The variables under
the Geopolitical heading fared comparatively poorly in the two Cold War years. America’s funding commitment to allied states, for example, was weak in both 1980 and 1985, and Washington’s attitude toward nations that bordered Communist states was fickle at best. Moreover, basing states were at a significant disadvantage when it came to the distribution of American ODA in 1980. For Germany’s part, allied states were statistically unlikely to obtain German aid and statistically unlikely to receive significant amounts of German funding. Even more striking, considering the political rivalry between East and West Germany, was Bonn’s lukewarm attitude in 1980 and 1985 toward nations that shared a border with Communist states. These findings reveal that the provision of bilateral ODA was not solely predicated upon security issues typically associated with the Cold War international environment. In addition, they suggest that ODA was not a prominent component of either American or German containment policy. The poor showing of the Geopolitical determinants also does a fair amount of damage to the explanatory power of the realist school of thought—to the extent that the paradigm can account for bilateral ODA distribution by identifying the state attributes that trigger ODA and elevated levels of ODA. Overall, the variables under the Statist/Commercial and Ideological/Humanitarian headings appear more relevant to the distribution of bilateral ODA from Germany, Sweden, and the U.S. This conclusion supports neoliberal and idealist notions regarding the transfer of development assistance. To be sure, assumptions associated with realist and neorealist doctrine enjoyed varying degrees of validity in the German and U.S. cases, but they were of limited value when it came to the distribution of Swedish aid. NeoMarxist thought also enjoyed some support in that economic openness was an important
indicator of aid. The poor showing of the Trade variable, however, diminishes the explanatory power of the paradigm. More prevalent, cross-national themes among the three donors were securing foreign markets, aid to more-populous nations, and the amelioration of poverty. In sum, assumptions associated with the neoliberal and idealist schools of thought more accurately identified the types of states likely to receive assistance and were thus more reliable predictors of the distribution of American, German, and Swedish bilateral ODA. Fourth, party affiliation and economic downturns were not especially useful in explaining bilateral aid distribution. The limited impact of the PIP variable suggests that the chief executives may provide some overall direction to aid expenditures but were not heavily involved in the process. This might reflect that aid policy is fairly entrenched bureaucratically and that chief executives were limited in their ability to structurally influence bilateral aid patterns. This might also indicate that chief executives were reasonably satisfied with the established orientation of their bilateral ODA programs. Taken together, the limited impact of party affiliation, economic downturns, and the end of the Cold War on bilateral aid patterns likely reflects entrenched political interests and substantially bureaucratized national aid programs. Fifth, an interesting dynamic appeared to be at work when it came to the distribution of aid among the world’s less affluent nations. While some studies suggest that recipient need is a weak predictor of aid allocation (e.g., Wood 1996), the per capita GNI (i.e., NEED) variable was statistically related to the direction of American, German, and Swedish bilateral ODA during and after the Cold War (see Tables 8, 12, 16, and 22). The variable also had a significant impact on funding levels from each of the three donors
in each of the four aid years (see Tables 9, 14, 18, and 22). Of all the state attributes considered here, recipient need—that is to say poverty—was the most consistent indicator of American, German, and Swedish development assistance, as poorer nations were generally more likely to obtain aid and increased levels of aid from each of the three donors during and after the Cold War. Nevertheless, Table 21 indicates that the poorest nations, the LICs, witnessed their portion of total net German and Swedish bilateral ODA fall in the two post-Cold War years. The percentage of American aid extended to the LICs increased in the post-Cold War years, although the U.S. ODA commitment to these nations remained the smallest of the three donors. So while significant American, German, and Swedish funding was generally targeted at relatively more-needy nations, the same can not necessarily be said of the poorest nations (i.e., LICs). It is likely that the poorest nations present a dilemma to Western donors. On the one hand, they are clearly the neediest of prospective aid recipients and would seem to be the most deserving of increased levels of ODA funding. From this perspective, we would expect donors to channel a substantial percentage of their respective bilateral ODA budgets in the socioeconomic development of the least developed nations. And they did, generally speaking. On the other hand, as a practical matter, donors may be reluctant to substantially fund LICs, as some of these states may lack the political and economic stability, not to mention the infrastructural wherewithal, to successfully administer foreign assistance. It makes for interesting debate, to be sure, but critical comments regarding the percentage of total American, German, or Swedish bilateral ODA provided to LICs are likely to be subjective and fall within the realm of normative diagnoses and ideologically inspired prescriptions. Nonetheless, from the perspective of humanitarian involvement, it is
reasonable to expect donors to earmark a substantial proportion of their bilateral ODA budgets to LICs. As a practical matter, however, donors may be reluctant to substantially fund some LICs as they are risky investments. Of the three donors, Sweden appeared most willing to accept that risk. Despite that its commitment to LICs fell in the two postCold War years, Sweden still devoted 62% of it bilateral aid budget to this group of states in 1995 and 2000 combined. Sweden targeted fewer LICs but gave a greater portion of its total aid to them. Germany and the U.S., on the other hand, gave aid to more LICs, but their commitment to that group of states amounted to a smaller percentage of total bilateral aid extended.
CHAPTER 8 FINAL THOUGHTS: ALTERNATIVE AVENUES OF COMPARATIVE ODA RESEARCH
This study sought to introduce greater clarity to the aid picture. It began by framing Western foreign aid in its appropriate historical context. It then proceeded to discuss the many factors that facilitated the establishment and the perpetuation of Western bilateral ODA programs. From there, the study examined the relationship between several attractive or appropriate state attributes assumed by theoretical models of IR and the bilateral distribution of ODA from Germany, Sweden, and the U.S before and after the end of the Cold War. The examination revealed the power of the various schools of thought to account for an important aspect of Western foreign policy in the face of a profound change in the international environment. The examination also revealed the extent that the Cold War altered the bilateral distribution of American, German, and Swedish ODA. Finally, the study sought to dispel popular misconceptions regarding the nature of the America, German, and Swedish bilateral aid programs. In review, it is clear that the Cold War provided a major impetus to the loose coalition of American-led Western aid programs. Indeed, ODA’s postwar origins are found in the American desire to contain Soviet expansion by appealing to the periphery with development assistance. Robert E. Wood expands on this observation (1996, 19): It is inconceivable that the massive aid programs established during the post-World War II period would have originated or been sustained without the Cold War rivalry between the United States and the Soviet Union and China. Beginning with the
Marshall Plan in 1947 and continuing through the construction of an international regime of aid provided in the name of development, the rhetoric of anticommunism and superpower rivalry was critical in harnessing the necessary political support in the United States, for many years the main source of bilateral aid. While Cold War politics were important to all donors and provided the precipitating international context in which Western aid programs were spawned, strategic concerns were of varying importance to the donors. In a sense, Cold War politics imposed upon Western aid programs a degree of uniformity of purpose— anticommunism—that was more superficial than real and served to distort the underlying objectives of ODA. But in an era where nearly all international issues were framed in Cold War terms, the provision of bilateral ODA among the Western industrialized democracies served a number of additional objectives. The findings of the quantitative models bear witness to this fact. To be sure, strategic interests found their way into American and German aid calculations, but the generally sporadic influence of the geopolitical variables on ODA distribution demonstrate that these interests were largely opportunistic distractions from the overall purpose of development assistance. These forays into the geopolitical realm and the occasional subservience of ODA to selfinterested domestic constituencies distorted aid flows (American aid to Egypt and Israel come to mind) and obscured the gradual evolution of ODA from its Cold War roots into an international regime where a framework of “principles, norms, rules, and decisionmaking procedures” prevail in issues of ODA provision (Krasner 1982, 186). Selfinterested aid policies amongst the donors fueled the belief that Western aid lacked coherence or mission and belied the extent that the donors recognized what were acceptable rules of the game. In sum, the relationship between the ODA regime and the Cold War “was intimate but nebulous” (Wood 1996, 21).
With the passing of the Cold War, aid supporters are hopeful that ODA has been liberated from the geopolitical distortions associated with East-West competition. The analysis of the percentage of ODA given to various types of states indicates that the impact of the strategic variables generally declined with the demise of the Soviet Union. Nevertheless, new challenges face ODA in the post-Cold War period that exist alongside the more traditional objectives of securing foreign markets, establishing security agreements, and the alleviating poverty. World politics are increasing complex in this young, post-Cold War period, and ODA is likely to be strained by the new demands placed upon it. While the end of the Cold War has removed a more or less important consideration from the donors’ aid calculations, the formulation of aid policy in the current international environment is unlikely to be a simplified process as a result. The reality is that the potential claims on ODA have increased rather than diminished. In addition to easing the transition of a number of successor states from command to market economies, suggested applications of ODA since the demise of the Cold War include promoting democratization and human rights; combating international terrorism; assisting immigrants and refugees, controlling the international spread of AIDS and narcotics; discouraging overpopulation; and alleviating a range of environmental problems, from green-house emissions to desertification to endangered species (Wood 1996). Having said this, new and exciting avenues of research await students of Western bilateral ODA. Among its many objectives, this work sought to address a number of deficiencies in the foreign aid literature. As this study unfolded, the ODA aid picture has come into sharper focus. Nevertheless, there were clear limitations to the study—most were addressed above—and the ODA aid picture remains cloudy in a number of respects.
In chapters five and six, in particular, some attention was given to areas within comparative ODA research that would benefit from greater scholarly attention, such as tied and multilateral development assistance. Tied aid smacks of self-interested economic policy by the donor. A cross-national survey of the distribution of tied aid would be enlightening. Also enlightening would be a study that tracks the distribution of multilateral ODA to confirm or refute the notion that such aid is directed at the poorest nations. Moreover, there are a number of sources of multilateral aid. Examining the distribution of multilateral ODA from different sources may be quite revealing. In chapter five, I suggested that researchers who attempt to utilize theoretical models of IR to explain the distribution of foreign aid are careful—to the greatest extent possible—to clearly delineate the boundaries that separate these schools of thought. Accordingly, it is recommended that they devise ways to avoid some of the theoretical and methodological overlap among the IR models that this study faced. Researchers might consider developing alternative or even unconventional means to operationalize concepts or variables based on the IR models. For example, instead of using per capita GNI (i.e., NEED) as a potential indicator of humanitarian (i.e., idealist) impulses in the distribution of ODA, as this study did, students may wish to use infant mortality rates or daily calorie intake. Instead of using exports plus imports divided by recipient GNI (i.e., Economic Openness) as an indication of donor economic interests (i.e., neoliberalism) driving the provision of aid, as this study did, researchers may consider using the volume of foreign investment in recipient economies as an alternative measure. Moreover, it is important, considering the current state of the discipline, that researchers who wish to take advantage of IR theories to frame their analysis of aid take steps to more fully
incorporate neoliberal and social constructivist perspectives. The neoliberal approach, broadly speaking, deserves greater attention, as do models of bureaucratic politics. This study found evidence in the bilateral aid patterns of the three donors that both supports neoliberal arguments and reflects entrenched bureaucratic impulses. For example, that the three donors often targeted states with freer markets with aid and increased levels of aid lends credence to neoliberal thought. Moreover, that the integrity of the ODA regime was relatively unshaken by the declining American commitment (once the primary source of ODA) or by the end of Cold War demonstrates both the extent that ODA has become an institutionalized feature within the global economy and the extent that its provision has been widely accepted as an international norm (Wood 1996). The overall distribution of bilateral aid from the three donors suggests that development assistance has evolved from its strategic impetus to an established international institution where recipient poverty, the promotion of democratic governance, and access to recipient markets drive the provision of American, German, and Swedish ODA. This is not to say that strategic considerations were absent from donors’ aid calculations during or after the Cold War. The three donors, however, did not universally or comprehensively structure bilateral ODA according to the perceived geopolitical rivalry between East and West. Even the U.S. was not overtly inclined to utilize bilateral ODA to further strategic objectives at the expense of commercial or humanitarian goals, at least as defined by this study. Meanwhile, the end of the Cold War did not prompt donors to reevaluate their distribution of bilateral ODA according to humanitarian goals exclusively. Aside from the continuity of the NEED variable, the Ideological/Humanitarian state attributes fluctuated in statistical importance from the two
Cold War years to the two post-Cold War years. I have likewise alluded to several false starts experienced during the course of this project—most notably in the area of quantitative methods—namely data conditioning (e.g., the statistical application of the raw data, the standardization of the dependent variable to population or GNI, etc.) Outlined in greater detail in the few pages that remain are a few possible lines of research that, taken together, represent possible extensions or refinements of this study as well as outright alternative approaches in their own right. These suggestions may further illuminate the aid picture and redress notable shortcomings in the aid literature. First, this study establishes the groundwork for a more detailed, qualitative explanation of the direction and volume of American, German, and Swedish ODA. This would add breadth to the quantitative findings above and make for a much more comprehensive analysis of American, German, and Swedish aid patterns. For example, greater qualitative analysis might uncover the reasons why Germany and the United States were more inclined to incorporate strategic goals in their post-Cold War aid calculations than during the Cold War years of 1980 and 1985. Further qualitative analysis also might reveal why Sweden, a nation not known for incorporating national commercial interests into its ODA agenda, allocated a significant portion of its bilateral ODA budget to states with freer markets in 1980, 1985, and 1995. Or if increased percentages of aid from each of the three donors to states that bordered Islamic republics in the post-Cold War years reflect a new type of strategic containment policy or something completely different. In-depth qualitative discussion of the distribution of American, German, and Swedish ODA based on the quantitative findings was largely
outside the scope of this exploratory study. As such, while many of the quantitative findings presented above are indeed suggestive, they are incomplete and require further qualitative elaboration in my estimation, especially in the case of the domestic variables regarding economic downturns and party affiliation. This conclusion applies not only to this work, but to a great many quantitative analyses of foreign aid. It is important that ongoing and future comparative aid research, in particular, allows for the possibility of particular domestic nuances in aid distribution among all Western donors. This requires researchers wade deeply into the muddied waters of foreign aid. Second, the quantitative methods utilized by this study were collectively intended as a suitable methodological compromise between a snapshot and a time-series approach, or between ease and comprehensiveness, respectively. As such, it combined favorable elements of both the snapshot and time-series approaches, but, as with any compromise, it entailed sacrifices. On the one hand, the quantitative methods employed above were comparatively easier to implement than the more sophisticated time-series analysis and still allowed for some sense of aid distribution over time. On the other hand, these quantitative measures, as a whole, produced findings that are not as persuasively applicable to ODA over a twenty-year period than those generated from a time-series model over the same time period. While I believe that the years 1980, 1985, 1995, and 2000 reasonably reflect the overall distribution of American, German, and Swedish aid from 1980 and 2000 and that their selection represents a convenient, practical, and logical attempt to incorporate the impact of the end of the Cold War into the analysis, there are obvious gaps in the study’s temporal domain. Although unlikely, it is possible that the selection of 1981, 1986, 1996, and 2001, for instance, would have yielded substantively
different findings. As mentioned in the early stages of this work, preliminary research into the distribution of American, German, and Swedish aid in years other than 1980, 1985, 1995, and 2000 offers little evidence that any of the selected years are sufficiently anomalous to bias the results. Nevertheless, a well-devised, longitudinal approach would remove much doubt regarding the comprehensiveness of the quantitative findings, as well as resolve other outstanding methodological issues, namely the inherently small sample sizes encountered by the probit and the regression models above. In the probit model, for instance, the variation of the dependent variable was limited by the small sample sizes. The donors extended ODA to well over half of the world’s independent states in nearly all of the four aid years of 1980, 1985, 1995, and 2000 (the two exceptions being Sweden in 1980 and 1985). A pooled, cross-sectional time series model along the lines of that adopted by Meernik et al. (1998) seems particularly well equipped to address the methodological problems this study experienced along the way. Although more difficult to successfully implement, such an approach, with certain refinements, would also allow for a more thorough cross-national account of the state attributes that make for a more or less attractive aid recipient over time. This approach would also be better suited to assess the explanatory power of the various IR theoretical models over a significant period of time. Third, international terrorism is likely manifest itself in one form or another on the foreign policy agendas of all Western nations. The extent that confronting terrorism has been incorporated into aid distribution by different donors is a potentially revealing avenue of ODA research in the new millennium, regardless of the methodological parameters ultimately employed. Such studies may illustrate how different donors
perceive the “global” nature of the terrorist threat, in so far as ODA is concerned, and how the distribution of ODA is conditional to the prevailing international climate. Put another way, these studies may indicate a greater strategic impulse in ODA distribution among some Western donors in the post-9/11 international environment. Longitudinal studies may also indicate that international terrorism has had a greater impact on the distribution of ODA than the end of the Cold War had on ODA distribution among some Western donors. Such findings might therefore suggest that some or all Western donors view terrorism to be more dangerous to their national interests than was the Soviet Union. According to The 9/11 Commission Report, “countering terrorism has become, beyond any doubt, the top national security priority for the United States” (2004, 361). The main terrorist threat to the U. S. is “Islamist terrorism—especially the Al Qaeda network, its affiliates, and its ideology” (The 9/11 Commission Report 2004, 362). Reviewing the evolution of this threat, the Commission found that (2004, 362): Usama Bin Laden and other Islamist terrorist leaders draw on a long tradition of extreme intolerance within one stream of Islam (a minority tradition), from at least Ibn Taimiyyah, through the founders of Wahhabism, through the Muslim Brotherhood, to Sayyid Qutb. That stream is motivated by religion and does not distinguish politics from religion, thus distorting both. It is further fed by grievances stressed by Bin Ladin and widely felt throughout the Muslim world—against the U.S. military presence in the Middle East, policies perceived as anti-Arab and anti-Muslim, and support for Israel. Bin Ladin and Islamist terrorists mean exactly what they say: to them America is the font of all evil, the ‘head of the snake,’ and it must be converted or destroyed. It is not a position with which Americans can bargain or negotiate. With it there is no common ground—not even respect for life—on which to begin a dialogue. It can only be destroyed or utterly isolated. Because the Muslim world has fallen behind the West politically, economically, and militarily for the past three centuries, and because few tolerant or secular Muslim democracies provide alternative models for the future, Bin Ladin’s message finds receptive ears. It has attracted active support from thousands of disaffected young Muslims and resonates powerfully with a far larger number who do not actively support his methods. The resentment of America and the West is deep, even among leaders of relatively successful Muslim states.
Countering terrorism is not a challenge unique to the United States, however. While the U.S. may be the primary target of Al Qaeda and its affiliates, many nations face terrorist threats from within and abroad. Both The Commission Report (2004) and The New York Times (Van Natta Jr. 2004) pointedly acknowledge the international scope of terrorist activities. As Don Van Natta Jr. writes in a recent article: “Since being routed from Afghanistan in late 2001, Al Qaeda has again proved its protean nature by morphing into a baseless, rootless organization with potent alliances. Although two-thirds of its core leadership has been killed or captured, Al Qaeda has managed to export its violent, anti-Western militancy to dozens of like-minded regional terrorists groups” (2004, 4-1). He goes on to suggest that Al Qaeda has been replaced by “Qaeda-ism.” “This Qaedaism,” observes Van Natta Jr., “accounts for some but hardly all of the world’s terrorist activities. There are dozens of other groups with locally motivated reasons for murder and mayhem, from Maoist guerrillas in Nepal to right-wing paramilitary groups in Columbia” (2004, 4-1). For several reasons, many terrorism experts deem the world more dangerous today than at any time since the end of the Cold War: “the American-led occupation of Iraq, which has become a rallying cry for hundreds, perhaps thousands, of Islamic militants; the campaigns by a growing number of groups to obtain weapons of mass destruction; and the prolific violence of local terrorist groups” (Van Natta 2004, 4-1). In an international arena where Western values and interests are widely under attack, donors may turn to ODA as a possible counterforce to terrorism. Indeed, The 9/11 Commission Report identifies foreign aid as one vehicle by which to minimize future terrorist threats to the United States: “But long-term success demands the use of all elements of national
power: diplomacy, intelligence, covert action, law enforcement, economic policy, foreign aid, public diplomacy, and homeland defense” (2004, 363-364) . In such an environment, the distribution of ODA may increasingly take on strategic or national defense dimensions among Western donors. In this international context, American foreign aid scholars may wish to explore the degree to which America’s Millennium Challenge Account and the role ODA plays in America’s global war on terrorism are reconciled. The Millennium Challenge Account is an ongoing effort by the current administration to “fundamentally overhaul” assistance programs to developing nations (Marquis 2004, 1). The new initiative seeks to retool the American foreign aid program with performance-driven initiatives. As it is currently conceptualized, the new approach creates a competitive environment among prospective aid recipients in which a greater amount of American financing would be rerouted to the “worthiest” nations (Marquis 2004, 1). The plan envisions grants totaling $5 billion annually by 2008. In the first year, perhaps as few as 15 nations will receive grants. According to Christopher Marquis, “all but five countries in Latin America, for example, are ineligible for the Millennium Challenge because their per capita incomes are too high” (2004, 1). African states like Ghana and Senegal that demonstrate a relatively higher regard for civil liberties stand to gain under the new system; while the warravaged nations of Somalia and Sudan do not. A number of challenges confront the new initiatives envisioned for the American foreign aid program: “The new account, like a second new program, the president’s five-year, $15 billion global effort to fight AIDS, is up against foreign aid spending that is constrained by tight budgets and unusually heavy outlays on assistance to Afghanistan and Iraq” (Marquis 2004, 1). Indeed, there are signs
that the Millennium Challenge is under strain. As of June 2005, Washington has committed a total of only $120,000 to four nations under the new initiative. Meanwhile, the director of the Challenge, Paul Applegarth, recently resigned his position (National Public Radio 2005). Although the Millennium Challenge is in its early stages, these developments likely give pause to even the most ardent supporters of the plan and call into question the effectiveness and viability of the Challenge (for critical review of the Millennium Challenge, see Robert Guest 2004). Students of American foreign aid may find fruitful ground for research in such a climate, particularly in regard to the fiscal ability of the U.S. to both implement these programs and to honor its commitments, as well as whether and to what degree this or future administrations prioritize the limited aid budget. Examining the types of states that ultimately benefit under these new programs also offers exciting avenues of future research. Moreover, the devastating impact of the 2004 tsunami places additional strains on the American aid budget. Washington has pledged the ravaged nations substantial sums of aid and how successfully the U.S. balances the war on terrorism, the Millennium Challenge, and tsunami relief remains to be seen. A third alternative approach would be to include a regional dimension to this work. Aid flows to Africa, Asia, Europe, the Americas, and Oceania could be examined separately to assess whether region plays a role in the relative importance the three donors attach to the various state attributes. Intuitively, we would expect region to enter Western aid calculations in regards to the direction and volume of ODA. Indeed, since the inception of formal aid programs in Germany, Sweden, and the United States, Africa and Asia have figured highly in the American, German, and Swedish ODA equations.
For demographic reasons (such as population and per capita GNI), we might expect these two regions to receive substantially greater levels of assistance than the Americas, Europe, and Oceania. Yet regional levels of assistance in and of itself do not tell the entire story; they only imply how donors prioritize their ODA agendas. By examining the state attributes that donors find attractive by region, we may further illuminate the aid picture. We may also assess IR models on a regional basis, which may prove quite suggestive to the continued relevance of these theoretical models. In some respects, Schraeder and associates have taken this tack in a 1998 article. For instance, they cite evidence that suggests American security and commercial interests dominate aid flows to Africa. Meanwhile, Swedish aid to Africa is concentrated on progressive, socialist regimes in the former colonies of Portuguese Africa (an area virtually ignored by AngloAmerican aid). Schraeder et al. find little evidence of humanitarian impulses driving Swedish aid, although they find statistical support for aid following trade. This finding is contradictory to the popular belief that Swedish assistance is largely altruistic in nature (a finding largely consistent with the findings of this study), devoid of selfish or national interests. According to Schraeder and his coauthors, successive Swedish governments have sought to play a special (or middle power) role in the backwaters of Africa and have shown particular interest in the ideological stance of prospective aid recipients, in that Swedish ODA has clearly favored socialist regimes (1998). Fourth, students engaged in quantitative comparative ODA research might well consider devising a methodological strategy that allows them to include overseas territories and sparsely populated independent states into their studies. Previous research has unearthed post-colonial interests in the aid calculations of some donors, namely
France and Great Britain (see Schraeder et al. 1998 and Wittkopf 1975). Other Western donors, however, target territorial possessions with development assistance; even if those territories are not possessed by them (Germany comes to mind). It is interesting that they would do so when the socio-economic development of these territories would seemingly fall under the purview of the metropole. In any event, it is puzzlingly that donors would channel ODA to the territorial possessions of other donors and it is left for future studies to solve this riddle. In so far as the inclusion of sparsely populated, but independent, nations are concerned, researchers will have to rely on their own expertise and training to rigorously measure any number of state attributes that may account for greater or lesser levels of assistance. As an example, Gurr’s POLITY database does not include overseas territories or independent states with a population of less than 500,000 in its democracy ratings. Researchers who wish to examine the relationship between democracy or regime type and foreign aid among these omitted areas will have to do so without the benefit of Gurr’s polity scores. This may require scholars to operationalize this variable in unconventional ways or undertake in-depth, case-study analyses to determine appropriate and widely acceptable measures of the attributes in question. Finally, when reviewing the percentage of ODA given to various types of states (Table 21), further opportunities for a more detailed analysis of aid distribution become evident. Not only might scholars apply this approach to an entirely different set of independent variables, they also might restructure the interval-level independent variables. These variables were structured in such a manner as to be consistent with their anticipated influence on the distribution of ODA and to satisfy the exploratory nature of the study. Convenience and the relative ease with which they could be presented also
played a role in how they were structured. Nevertheless, one might examine the percentage of development assistance extended to recipients in the top or bottom third of the human rights and democracy scales, for instance, rather than focusing on recipients that scored in the top half of these indices as this study did. Researchers might examine the percentage of ODA given to recipients that record values in the top third or top quarter in trade or economic openness, rather than limiting the analysis to recipients that had values above the mean value for those two indicators as this study did. They might also consider the percentage of aid channeled to various types of states over an extended period of time, using the end of the Cold War or 9/11 as a dividing line. In addition, students of comparative aid distribution might adopt this approach and build upon the literature by selecting additional (or completely different) donor states for review. In closing, as students of international relations, we have perhaps become a bit jaded, accustomed to the self-serving or outright destructive elements that seem to frequently dominate world politics. Seen in this context, the provision of ODA is merely a disingenuous means to an end. Admittedly, development aid is an imperfect device, but to admit this shortcoming is not to suggest that the raison d’être of ODA is nothing more than simply self-serving. The provision of ODA, as with other human endeavors, is capable of a range of manifestations—from the altruistic to the self-serving. It is unrealistic to expect ODA to perform perfectly or according to exacting standards. It could be argued that if measured by the traditional manner in which international relations were conducted, ODA is an enlightened and a progressive human enterprise. Admittedly, aid programs are immense undertakings and are not immune to the shifting goals of their constituents, although the fundamental purpose of the program might
remain intact. With the passing of the Cold War, ODA has been freed from the EastWest rivalry that occasionally distorted its mission of Third World socio-economic development. Yet in the post-Cold War era, new strategic and fiscal challenges confront ODA that threaten again to sidetrack it from its more lofty objectives.
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________. 1983. Minerals Yearbook Vol. 3. Area Reports: International 1981. Washington, D.C.: U.S. Government Printing Office, U.S. Department of the Interior. ________. 1984. Minerals Yearbook Vol. 1. Metals and Minerals 1983. Washington, D.C.: U.S. Government Printing Office, U.S. Department of the Interior. ________. 1987. Minerals Yearbook Vol. 1: Metals and Minerals 1985. Washington, D.C.: U.S. Government Printing Office, U.S. Department of the Interior. ________. 1987. Minerals Yearbook Vol. 3 Area Reports: International 1985. Washington, D.C.: U.S. Government Printing Office, U.S. Department of the Interior. ________. 1995. “Minerals in the World Economy: 1993 International Review.” Minerals Yearbook: Volume III. Washington, D.C.: U.S. Government Printing Office, U.S. Department of the Interior. U.S. General Accounting Office. 1982. Actions Needed to Promote a Stable Supply of Strategic and Critical Minerals and Materials, GAO/EMD-82-69. Washington, D.C.: U.S. General Accounting Office. Van Natta Jr., Don. 2004. “A World Made More Dangerous as Terrorism Spreads: Al Qaeda is Active, but not Alone,” The New York Times, 18 April, sec. 4. “Voices of the Dead Echo Across Algeria,” New York Times, 18 April 2004, sec. A. Weston, Rae. 1984. Strategic Materials: A World Survey. London: Croom Helm Ltd. White House. 1982. National Materials and Minerals Program Plan and Report to Congress. Washington, D.C.: Government Printing Office. White, John. 1965. German Aid: A Survey of the Sources, Policy and Structure of German Aid. London: The Overseas Development Institute Ltd. __________. 1974. The Politics of Foreign Aid. New York: St. Martin’s. Wiarda, Howard J. 1992. “US Strategic policy in Latin America in the Post-Cold War Era.” In Evolving U.S. Strategy for Latin America and the Caribbean: Mutual Hemispheric Concerns and Opportunities for the 1990s, ed. L. Erik Kjonnerod. Washington, D.C.: National Defense University Press. Wikipedia. 2004. “Neoliberalism.” https://en.wikipedia.org/wiki/Neoliberalism (November 20, 2004).
Wittkopf, Eugene R. 1972. Western Bilateral Aid Allocations: A Comparative Study of Recipient State Attributes and Aid Received. Beverly Hills: Sage. __________. 1972. Distribution of Foreign Aid in Comparative Perspective: An Empirical Study of the Flow of Foreign Economic Assistance, 1961-1967. Syracuse, NY: Syracuse University Press. Wittkopf, Eugene R., Charles K. Kegley Jr., and James M. Scott. 2003. American Foreign Policy: Pattern and Process. 6th ed. Belmont, CA: Thomson/ Wadsworth. Wood, Robert E. 1996. “Rethinking Economic Aid.” In Foreign Aid Toward the Millennium, ed. Steven W. Hook. Boulder: Lynne Rienner. World Bank. 2005. World Development Indicators. https://publications.worldbank.org/ subscriptions/wdi/ (January 10, 2005). Zarjesky, Yefime. 1988. A Future Preserved: International Assistance to Refugees. Oxford: Pergamon, Office of the United Nations High Commissioner for Refugees. Zimmerman, Robert F. 1993. Dollars, Diplomacy, and Dependency: Dilemmas of U.S. Economic Aid. Foreword by Hans Binnendijk. Boulder: Lynne Rienner.
The figures below track German, Swedish, and U.S. bilateral ODA levels over time. Figures 3, 5, and 7 suggest the regional dynamic of ODA by illustrating the geographical distribution of German, Swedish, and U.S. bilateral aid from 1960 to 2000. These figures also indicate a general increase in aid levels from 1960 to the early 1990s, after which levels decline overall. A post-Cold War spike is also evident in Figures 3, 5, and 7. Figures 4, 6, and 8 illustrate total net levels of German, Swedish, and U.S. bilateral ODA for the years 1980, 1985, 1995, and 2000.
Distribution of German ODA
FIGURE 3 GEOGRAPHICAL DISTRIBUTION OF NET GERMAN BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS
2400 2100 1800 1500 1200 900 600 300 0 1965 1971 1977 1983 Year 1989 1995
Total, Africa Total, Americas Total, Asia Total, Europe Total, Oceania
Source: OECD. 2002. International Development Statistics. Paris: OECD.
FIGURE 4 TOTAL NET GERMAN BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS
5600 4900 4200 3500 2800 2100 1400 700 0 1980 1985 Year 1995 2000
Source: OECD. 2002. International Development Statistics. Paris: OECD.
Distribution of Swedish ODA
FIGURE 5 GEOGRAPHICAL DISTRIBUTION OF NET SWEDISH BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS
1000 800 600 400 200 0 -200 1965 1971 1977 1983 Year 1989 1995
Total, Africa Total, Americas Total, Asia Total, Europe Total, Oceania
Source: OECD. 2002. International Development Statistics. Paris: OECD.
FIGURE 6 TOTAL NET SWEDISH BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS
1400 1200 1000 800 600 400 200 0 1980 1985 Year 1995 2000
Source: OECD. 2002. International Development Statistics. Paris: OECD.
Distribution of American ODA
FIGURE 7 GEOGRAPHICAL DISTRIBUTION OF NET U.S. BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS
4900 Total, Africa 4200 3500 2800 2100 1400 700 0 1965 1971 1977 1983 Year 1989 1995 Total, Americas Total, Asia Total, Europe Total, Oceania
Source: OECD. 2002. International Development Statistics. Paris: OECD.
FIGURE 8 TOTAL NET U.S. BILATERAL ODA IN CONSTANT 1999 U.S. MILLIONS.
10000 8000 6000 4000 2000 0 1980 1985 Year 1995 2000
Source: OECD. 2002. International Development Statistics. Paris: OECD.
APPENDIX 2 ODA ABSENT THE MORE AFFLUENT
In chapter seven, the probit examination of American, German, and Swedish ODA among all independent nations revealed, among other things, that the lower a nation’s per capita GNI the more likely was that that nation to be targeted with ODA in both the Cold War and the post-Cold war periods. Indeed, the NEED variable was statistically related to the German, Swedish, and U.S. bilateral aid decision in all four aid years (see Tables 8, 12, and 16, respectively). It stands to reason that poorer nations would make for more attractive ODA recipients; after all, development assistance is ostensibly intended to assist the less affluent nations of the world. As anticipated, the probit model indicated that the more affluent nations of the world were unlikely to receive ODA, and an inspection of the dataset, with the notable exceptions of Israel and a few small, oil-rich Arab states and Caribbean island-nations, confirms this expectation. Of the three case studies, it was the United States that was most likely to consistently extend development assistance to relatively wealthy nations, although this changed with the end of the Cold War when both Germany and the U.S. began to allocate substantial funding to several former Eastern Bloc nations—such as the Czech Republic, Hungary, Poland, and Russia—which are all industrialized and, generally speaking, fairly affluent nations.
Many of the richest nations are ODA donors themselves, and as wealthy, advanced industrialized democracies, they “officially” do not qualify for development assistance. From a methodological standpoint (i.e., to minimize selection bias), it was important to include all independent states in the first quantitative analysis, regardless of their level of prosperity. But their presence in the initial probit model possibly obscures an accurate depiction of the German, Swedish, and U.S. aid/no aid decision among the more likely recipients of ODA. More to the point, including the richest states in the analysis may serve to undervalue the strategic quality of ODA, while simultaneously overestimating the magnitude of the NEED variable. Most of the richest nations are also NATO members and would thus rate positively for allied status (at least as far Germany and the U.S. are concerned) and military presence. Yet as affluent nations and ODA donors they are naturally viewed by other donors as “undeserving” targets of ODA. Having confirmed that rich nations are not typically considered by Germany, Sweden, and the U.S. as eligible targets for development assistance, the probit model was run without them. More precisely, the probit model was run absent the nations that fall within the OECD category of High-Income Countries (HIC). High-Income Countries have a per capita GNI above $9590 (in 1999 USD). This category includes the NATO states, except Portugal in 1980 and 1985, the Czech Republic, Hungary, and Poland in 2000, and Turkey throughout. It also encompasses the DAC donor states, as well as a several Caribbean island-nations, Israel, and a handful of oil-rich Arab states. This approach allows for the quantitative analysis of the state attributes that act as primary determinants of the direction of German, Swedish, and American ODA among the world’s less affluent nations and also goes some distance in countering the charge that the
methodological approach undertaken in the study stacks the deck against the recipient state attributes that are of strategic value. There is a natural inclination to reduce the samples even further to include only the world’s poorest nations, or the LICs. Considering the number of parameters, neither the probit model, nor the regression model for that matter, is well suited to even smaller sample sizes. (The sample sizes would be reduced to approximately thirty states in the Cold War years and approximately sixty in the post-Cold War years.) Nevertheless, this exercise does offer additional insights into the direction American, German, and Swedish ODA among the world’s poorer nations and expose some of the methodological shortcomings inherent in such an approach. Fortunately, the discussion in chapter seven regarding the percentage of aid given to LICs (Table 21) offers perspective into how the donors engaged the world’s poorest nations during and after the Cold War. Nevertheless, a more detailed analysis of the state attributes that determine the direction of American, German, and Swedish aid among the LICs is better left for future research.
Germany With a few exceptions, the direction of German ODA among the world’s less affluent nations in the two Cold War years closely resembles the pattern identified by the first probit analysis. Under the Geopolitical heading in Table 24, none of the strategic variables were found to be significantly related to the German aid/no aid decision among the non-HICs. The original probit model included all independent states and indicated a negative and significant relationship between German ODA and allied states in both 1980 and 1985. Excluding the HICs, only two states were formally allied to Germany, both
through NATO—Portugal and Turkey. Turkey obtained assistance; Portugal did not. Each of the four non-HIC states bordering Islamic republics received aid in 1985. The impact of the Statist/Commercial variables on the Cold War direction of German ODA without the HICs reveals little additional insights, except perhaps that population had a greater impact on the German aid/no aid decision among the non-HICs. In 1985, for instance, the more-populous nations among the non-HICs were significantly more likely to obtain aid. The Trade and Economic Openness variables among the
TABLE 24 DIRECTION OF GERMAN ODA TO STATES BELOW OECD THRESHOLD OF HIGH INCOME COUNTRY
Determinants Constant Geopolitical Military Presence Ally State Ally at War Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population 1980 b t 3.268 1.66 1985 b t 3.321 1.75 1995 b t -2.409 -0.4 2000 b t -4.289 -1.46
-.2860 DROPPED DROPPED .5222 .2907 -.1694
0.98 0.40 -0.39
-.2533 -1.197 DROPPED .3683 DROPPED -.7465
-0.44 -1.44 0.74 -1.56
DROPPED DROPPED DROPPED DROPPED DROPPED DROPPED
DROPPED DROPPED DROPPED DROPPED DROPPED DROPPED
-.1018 -1.24 .5576** 2.52 .2801 1.75
-.0720 .2220 .3871*
-0.78 0.95 2.33
-.1389 -1.09 .7182* 2.19 1.436** 2.50
-.0011 -0.01 .1433 0.92 .8576** 3.35
Ideological/Humanitarian Democracy .0305 1.14 Human Rights DROPPED Per Capita GNI -.6674** -3.35 War -.1134 -0.31 Pseudo R2 Wald chi2 .2451 25.98 N=127
-.0044 -0.19 DROPPED -.6940** -3.26 .3690 0.83 .3509 41.95 N=129
.0449 DROPPED -.7037 DROPPED .7656 18.70 N=150
.0096 DROPPED -.0736 DROPPED .6480 34.48 N=152
*p<0.05; **p<0.01 Note: The Military Presence variable was dropped in 1995 and 2000 for lack of variation. All states housing troops received ODA in those two years (27 states in total). The Ally State variable was dropped in 1980 because of collinearity associated with the presence of only two cases: one received aid—Turkey, one did not—Portugal. All allied states received ODA in 1995 and 2000; for a total of five states. The Ally at War variable was dropped in all four years because of the lack of variation among so few cases. There were no such cases in 1980 among non-HICs and only one for each of the three remaining years, for a total of three cases. Turkey accounts for those three cases and received aid in each instance. All nations that bordered Communist states received ODA in 1995 and 2000, for a combined total of 28 states. Germany extended ODA to all nations that bordered Islamic republics which were below the OECD threshold of HICs in all years but 1980. All told, forty border-states received aid. The Strategic Materials variable was dropped in 1995 and 2000. The 88 states that possessed strategic materials each received ODA in both 1995 and 2000. All states engaged in militarized conflict in 1994 and 1999 likewise received ODA in 1995 and 2000, for a total of 65 states. Finally, the PRE statistic was omitted because its applicability to a segregated sample is unclear.
poorer non-HIC nations generally paralleled their impact among all independent nations in the two Cold War years. Among the Ideological/Humanitarian variables, the per Capita GNI variable was found to be significantly related to the direction of German assistance in both probit models. This indicates that while Germany was statistically more likely to target poorer nations from among all independent states with ODA in 1980 and 1985, Bonn was also more likely to channel assistance to the poorer nations among the group of states below the high-income category of $9590. As was true of the direction of German assistance among all independent states, the direction of German aid absent the HICs was not significantly influenced by either the prospective recipient’s regime type or by its involvement in armed hostilities. The direction of German assistance absent the HICs takes an interesting turn in the two post-Cold War years. While several of the strategic variables were dropped from the initial probit analysis due to the lack of variation, the subsequent non-HIC probit model would not run any of the Geopolitical variables in 1995 or 2000 for the lack of variation. All states below the high-income category that housed American troops, or were allied to Germany, or possessed strategic materials, obtained German assistance. Allied states amounted to only five states, however, for both years combined, of which Turkey accounts for two appearances while Hungary, Poland, and the Czech Republic (new NATO members by 2000) round out the remaining three cases. There were only two cases of an ally at war in 1995 and 2000. Turkey, which received ODA in both years, accounts for both cases. Meanwhile, as was true among all independent states, all border-states (of either Communist states or Islamic republics) among the less affluent
nations obtained German assistance. In the aggregate, these findings suggest that the direction of German aid among the poorer nations is perhaps of greater strategic quality in the post-Cold War years than in the Cold War years and that geopolitical interests are more prevalent in German aid calculations than was suggested by the earlier probit analysis. Yet because Germany extends ODA to so many less-affluent states in any given year (as do Sweden and the U.S., particularly in post-Cold War era), it is difficult to say with any certainty that Berlin was more inclined in the post-Cold War years to incorporate strategic interests into its aid agenda. The Statist/Commercial variables exhibited little change in regard to the German aid/no aid decision among the poorer nations, in that the Economic Openness and the Population variables remained positively and significantly related to the direction of ODA in one or both of the post-Cold War years, respectively. The Trade variable had little impact in both analyses. In terms of the Ideological/Humanitarian determinants, the trajectory of German aid among the poorer nations in the two post-Cold War years is quite suggestive. The initial probit analysis indicated that Germany was statistically more likely to extend assistance to less-democratic states in 1995 and 2000. That group of states, however, was not especially likely to be favored with German aid after the HICs were removed from the sample. Some of the divergence from the first to the second probit analysis regarding the relationship between the direction of German aid and the democraticness of prospective recipients is likely explained by the fact that HICs, which generally do not receive ODA, tend to be democracies, or they at least typically score higher on the democracy scale. Among all independent states, the NEED variable was statistically
significant in both time periods, suggesting that Germany consistently targets poorer nations with ODA, ceteris paribus. Removing the HICs, however, reveals an interesting complexity in the direction of German ODA in the two post-Cold War years. Germany was significantly more likely to target the poorer nations of the non-HIC group in the two Cold War years. In the two post-Cold War years absent the HICs, however, the magnitude of the NEED variable diminished appreciably, indicating that Germany was less likely in post-Cold War period than the Cold War period to target the poorest of the poor nations. This apparent revision in German aid policy is probably, at least in part, attributable to the number of relatively more affluent successor states to the Soviet Union and Yugoslavia that received aid in 1995 and 2000. Finally, all states engaged in militarized conflict in 1995 and 2000, regardless of their annual per capita GNI, obtained German development assistance.
Sweden The overall direction of Swedish ODA among the poorer nations shows little evidence that strategic interests (as represented by the Geopolitical variables) were underestimated by the initial probit analysis. Overall, the variables of statistical significance and their years of significance are the same in both analyses. Indeed, the direction of aid among the non-HICs is remarkably similar to that among all independent states for each of the three variable clusters. Moreover, the coefficient signs are the same in both analyses. There are, nevertheless, instances where the magnitude of a variable diminishes from statistical significance to statistical insignificance, or vise versa, between the two probit analyses. For instance, per capita GNI was significantly related to the direction of Swedish ODA among all independent states in 1985. As Table 25 illustrates,
TABLE 25 DIRECTION OF SWEDISH ODA TO STATES BELOW OECD THRESHOLD OF HIGH INCOME COUNTRY
Determinants Constant Geopolitical Military Presence Border-State Communism Border-State Islam Strategic Materials Statist/Commercial Trade Economic Openness Population 1980 b z 1.166 0.81 1985 b z -.8675 -0.53 1995 b .0444 z 0.02 2000 b z 1.540 0.48
-.1432 .1350 .7048 .4476
-0.28 0.41 1.18 1.31
-.4676 .2196 .6794 -.1435
-1.09 0.75 0.82 -0.45
-1.309** -.4333 -.2798 -.1862
-2.42 -0.70 -0.53 -0.48
-1.450 -1.81 -.8600 -0.75 -2.115** -2.93 1.277 1.83
-.0547 -1.26 .3040** 2.61 .2030 1.70
-.0755 -1.84 .6544** 3.56 .2393 1.71
-.0375 -0.69 .5020** 3.02 .8375** 4.21
-.0109 -0.10 .2104 0.81 1.339** 6.07
Ideological/Humanitarian Democracy -.0051 -0.24 Human Rights DROPPED Per Capita GNI -.4868** -3.17 War .0332 0.11 Pseudo R2 Wald chi2 .1853 29.00 N=127
.0128 DROPPED -.2394 .4801 .2009 22.17 N=124
0.60 -1.38 1.54
.0245 DROPPED -.7584* DROPPED .6381 27.95 N=150
.0828* 2.37 DROPPED -1.515** -3.80 DROPPED .7552 64.40 N=152
*p<0.05; **p<0.01 Note: The HR variable dropped—collinearity. The Allied States and Allies at War variables were excluded because of Sweden’s neutral status. The War variable was dropped in 1995 and 2000 as each the 65 states involved in armed conflict received Swedish aid. The PRE statistic was omitted for the reason mentioned above.
the Per Capita GNI variable was still negatively related to Swedish ODA among the nonHICs in 1985, but its impact was statistically insignificant. Absent the HICs, Sweden granted assistance to all states involved in military hostilities in 1995 and 2000. In the initial probit analysis, the War variable was dropped in 1995 because all states involved in military hostilities received aid. In 2000, the variable was positively related to Swedish aid among all independent states, but the variable was not significant. Also in 2000, two variables—Border-States Islam and Democracy—were found to be significant indicators of the direction of Swedish aid among the poorer nations. In the presence of the more affluent HICs, neither variable was of statistical significance, although their impact was relatively strong. Aside from these examples, the absence of the HICs appears to have little impact on the direction of Swedish bilateral ODA. 324
United States The trajectory of American ODA absent the HICs is largely consistent with that of the initial probit analysis. Both analyses suggest that the strategic concerns identified in this study play a limited role in determining the direction of American aid. In both probit analyses, the Geopolitical variables are only sporadically statistically related to the American aid/no aid decision in 1980, 1985, 1995, and 2000. Only two strategic variables were found in the initial probit analysis to be both positively and significantly related to the American decision to grant aid—Border-States Islam (1980) and Allied States (2000). Absent the HICs, Table 26 shows that only the Border-State Islam variable (1980) was found to be statistically related to the direction of American
TABLE 26 DIRECTION OF AMERICAN ODA TO STATES BELOW OECD THRESHOLD OF HIGH INCOME COUNTRY
Determinants Constant 1980 b z -.9020 -0.56 1985 b z 3.569* 2.27 1995 b z 4.441** 2.42 2000 b z .6514 0.34
Geopolitical Military Presence -.4830 Allied States -.0129 Ally at War .5681 Border-State Communism .2538 Border-State Islam 1.437* Strategic Materials .2927 Statist/Commercial Trade Economic Openness Population
-0.89 -0.03 0.75 0.72 1.98 0.83
.4097 -.2173 .5474 .3880 -.3157 -.2634
0.80 -0.53 0.79 0.91 -0.48 -0.78
.8697 -.1492 DROPPED -.8020 -.2128 -.5640
1.50 -0.43 -1.53 -0.39 -1.58
.0267 0.04 .3953 0.93 DROPPED .0777 0.15 -.0311 -0.07 -.4139 -1.15
-.2665** -3.37 .8444** 5.03 .3996** 2.88
-.2525** -2.76 .8920** 4.45 .2650 1.89
.0394 -.0962 .1487
0.68 -0.72 1.25
-.0285 -0.44 .1092 0.72 .2535* 1.97
Ideological/Humanitarian Democracy .0023 Human Rights DROPPED Per Capita GNI -.2943 War -.3686 Pseudo R2 Wald chi2 .2755 42.64 N=127
0.11 -1.64 -0.96
.0158 0.71 DROPPED -.7173** -3.74 -.6509 -1.44 .3848 39.12 N=129
.0718** 3.14 DROPPED -.6681** -3.45 .3476 0.80 .2569 32.23 N=150
.0525* 2.02 DROPPED -.2302 -1.25 .4422 0.89 .1755 25.07 N=152
*p<0.05; **p<0.01 Note: Human Rights variable dropped—collinearity. Each of the twelve allied states involved in armed hostilities obtained American aid in 1995 and 2000. Accordingly, the Ally at War variable was dropped. The PRE statistic was omitted for the reason mentioned above.
assistance. In sum, there is little evidence to suggest that the presence of the HICs in the initial probit model devalued the strategic component of American bilateral aid. The magnitude of several Geopolitical variables actually diminished absent the HICs, suggesting that some affluent nations play a strategic role in American aid calculations. In terms of the Statist/Commercial variables, there is very little that is strikingly different between the two analyses—aside from the significance of the Population variable among the non-HICs in 2000. In both analyses, the TR and EO variables were statistically significant in the two Cold War years. In the two post-Cold War years neither was significantly related to the direction of American ODA. Consistent with a post-Cold War trend toward more-democratic states indicated by the initial probit analysis, the U.S. was more inclined in 1995 and 2000 to favor moredemocratic states among the non-HICs. Perhaps the most notable difference between the analyses has to do with recipient need. The overall relationship between per capita GNI and the American decision to extend ODA declined with the removal of the HICs from the sample of prospective aid recipients. Whereas NEED was statistically significant in all four years when tested against all independent states, it was found to be a statistically significant indicator of the direction of American development aid among poorer nations in only 1985 and 2000. While this is a preliminary finding, it suggests that American bilateral aid was not always intended to assist the world’s poorest nations. Finally, when limited to the less affluent nations, the War variable’s performance was much like that of the initial analysis; namely it was in both analyses negatively related to direction in the two Cold War years and positively related to direction in the two post-Cold War years. In neither probit analysis was the variable statistically significant.
VITA Graduate School Southern Illinois University Chad DeWaard 2012 Illinois #4, Murphysboro, IL 62966 139 West Orange Road, Waterloo, Iowa 50701 Date of Birth: September 13, 1968
University of Northern Iowa Bachelor of Arts, German, August 1991 University of Northern Iowa Master of Arts in Political Science, May 1994
Special Honors and Awards: Commendation for “Instructional Excellence,” USS Porter, October 2000
Dissertation Title: Official Development Assistance Unmasked: Theoretical Models of International Relations and the Determinants of American, German, and Swedish Aid
Major Professor: Dr. William Turley
Publications: Chapter 9: “National Environmental Policy and Programs in Mexico” in Environmental Policies in the Third World: A Comparative Analysis, O.P. Dwivedi and Dhirendra Vajpeyi eds., Westport, CT: Greenwood Press, 1995.
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