Power Games in International Development Policy
The age of a Western dominated world order is drawing to a close. Rising powers from the South are becoming important global actors.
South-South cooperation thrives, but efforts remain fragmented. International institutions need to adjust to the reality of a new distribution of power.
Since the Millennium Agenda was adopted 14 years ago, the world has changed considerably. Rising transitional countries like Brazil, Russia, India, China and South Africa (BRICS) are playing a larger role in today’s economies and actively participating in multilateral and international negotiations. China and Brazil in particular seem to want to flex their muscles in international institutions of global governance. These countries have greatly ramped up their contributions to the UN core budget in the last 10 years and as such begun influencing the policy made by a range of UN institutions. They also contribute financially to other UN institutions, like the United Nations Development Programme (UNDP), with whom both Brazil and China have set up a “poverty center”. Correspondingly, the USA and other Western powers have lost influence over the United Nations system in recent years.
“The constellation of interests behind this grouping is already influencing the discussion about the Agenda 2015, its financing, as well as ongoing climate negotiations.”
For more than 60 years, international development policy has been designed in accordance with the concepts of the industrialized nations, who founded a select committee, the Development Assistance Committee (DAC), inside the Organisation for Economic Cooperation and Development (OECD) in the 1960s. However, the increasing role of emerging donors is drastically altering the traditional development policy landscape. The term “emerging donors” refers to a multiplicity of countries and institutions. Some experts divide the emerging donors into three general groups: the first are the DAC-compatible donors, such as the new EU members from Eastern Europe who are not OECD members. The second, South-South cooperation donors, includes countries from the BRICS groups, but also countries like Thailand and Indonesia. The third group comprises the Arabic countries. The constellation of interests behind this grouping is already influencing the discussion about the Agenda 2015, its financing, as well as ongoing climate negotiations. And while the emerging donors have been actively involved in formulating a “development agenda” for the G20, the willingness of these “newcomers” to accept the standards held by traditional donors varies from country to country. Part of this is due to the fact that not all emerging donors are emerging powers. Not all challenge the Western dominance in important institutions of global governance (International Monetary Funds, the World Bank, etc.) and demand a place at the table in formal and information regulatory institutions as spokespersons for the global South.
In June 2104, the BRICS christened a development bank. Its headquarters are in Shanghai and India currently holds chairmanship. The founding of this bank was very historically relevant; as such a bank might lead to more commitment from the informal BRICS structure. Based on the enormous liquidity of the BRICS group, it could serve as a catalyst for mobilising existing financial instruments from industrialised countries (pension funds and bond-based funds). Ultimately, a BRICS bank would also offer developing countries more rapid access to financial resources in areas like energy and productive infrastructure currently seriously neglected by multilateral and bilateral development banks.
“The flow of BRICS capital into low-income countries has increased dramatically in recent years.”
Experts estimate that this idea could also serve as inspiration to other emerging nations to take similar steps, such as the MIST coalition (Mexico, Indonesia, South Korea and Turkey). This would move the centre of gravity of development financing and development assistance further and further away from the traditional industrialised countries and the World Bank and International Monetary Fund (IMF) institutions they dominate.
The flow of BRICS capital into low-income countries has increased dramatically in recent years. According to IMF estimates, a large percentage of these resources goes to poor countries with weak institutions and poor governance. On the other hand, loans to these countries are less concessionary than loans to countries with stronger institutions. Trade and investment from the emerging nations offers poor developing countries both opportunities and risks.
Three of the five BRICS countries founded a dialogue forum called IBSA (India, Brazil, South Africa) back in 2003. The IBSA Dialogue Forum is of key importance for the Post-2015 Agenda, since it brings together three large, pluralistic, multi-cultural and democratic societies from three continents. Based on their roles in each respective regional context and their demand for more co-determination in the bodies of global governance, these three countries view themselves as likeminded. The forum’s goals and principles were clearly set out in the IBSA founding document, the “Brasilia Declaration”. For these three countries, the heart of the matter is strengthening their roles in the institutions of international architecture and as such overcoming the imbalances that currently exist. The three countries are particularly dissatisfied with the current composition of the United Nations Security Council. They insist on their right to a permanent seat on the World Security Council and demand recognition as representatives of and financial powerhouses in their regions of the world.
“Is IBSA a new powerful structure that proponents of South-South cooperation can use as a vehicle for introducing new impulses into international DC and as such into the Post-2015 Agenda?”
Government representatives of IBSA have noted with pride that the Forum has been consolidated after ten years. By now IBSA has developed an international routine. There is powerful political coordination on international issues regarding the UN, World Trade Organization (WTO), G20, BRICS etc. Additionally sectorial cooperation in at least 14 working groups has developed and the “IBSA Facility for Poverty and Hunger Alleviation” (IBSA Fund) is now backed by 3 billion US dollars annually. The IBSA Fund has proven the relevance of South-South cooperation and can become an important instrument for countries that depend on external assistance. A forum for civil society dialogue was also created.
IBSA is extremely important both for South-South cooperation between the three countries and for networking with other developing nations. Trade among the three countries began at 3.9 billion US dollars in 2003 and has risen to around 12 billion US dollars in 2009. In 2013, trade amounted to 23 billion US dollars and will soon exceed the declared objective of 25 billion US dollars by 2015.
Is IBSA a new powerful structure that proponents of South-South cooperation can use as a vehicle for introducing new impulses into international Development Cooperation (DC) and as such into the Post-2015 Agenda? The three IBSA member countries can certainly point to successes in their own development policy through the use of innovative instruments in education and health care. But overall the progress made by IBSA has been rather modest thus far given the potential of the member countries. With regard to global governance in particular, IBSA would have had the greatest opportunity to develop joint alterative suggestions on development policy issues that might have provided new impulses for a Post-2015 Agenda. Instead IBSA sometimes seems like a “club of good friends” that regularly meet up to exchange ideas.
In view of the challenges facing a global Post-2015 Agenda and the general crisis facing traditional DC, it would seem important to explore the potential of IBSA. However the last joint communique from IBSA at the 68th General Assembly of the United Nations contained no new substantial suggestions for a development agenda beyond the usual general formulations. Although the Forum professes to be drafting global goals that should apply to all countries, it has made no concrete proposals about the scope of such an agenda. The Forum emphasises the principle of “shared, but differentiated responsibility”, in particular with respect to drafting Sustainable Development Goals (SDGs).
The importance of emerging nations like the BRICS is also palpable in development financing. This has inspired traditional donors to attempt to include the new actors in the existing processes for improving the effectiveness of DC.
“In this time of globalisation and in view of the multiplicity of existing crises and conflicts, multilateralism has become unavoidable.”
It is equally important that traditional donors try to tie new donors into the existing DC standards. But emerging donors have not always demonstrated much interest in adopting the standards defined by other donors. Since emerging donors are not willing to adopt the DAC standards for improving the effectiveness of DC, traditional donors should strengthen the role of the UN Development Cooperation Forum. The Global Partnership for Effective Development represents another alternative for constructive dialogue, despite the reservations of some emerging donors.
In this time of globalisation and in view of the multiplicity of existing crises and conflicts, multilateralism has become unavoidable. Yet it is undergoing a structural crisis. Multilateral institutions, like the UN Security Council, the IMF and WTO, reflect outdated economic and power-political realities. The G8 are in danger of becoming an obsolete model. The Ukraine crisis in particular is revealing the limitations of this mode of governance. It remains to be seen whether the G8’s power to make policy will be replaced by the G20.
“Expectations of the Post-2015 Agenda should not be too great, however.”
When shaping a Post-2015 Agenda, the BRICS will not participate as a unified group of countries. In contrast, greater influence by IBSA on the drafting of global development goals seems more realistic, especially since Brazil, India and South Africa already have experience in trilateral cooperation with OECD countries.
An agenda based on a global partnership is possible, if the reforms to the global governance structures of the OECD countries are supported and the fragmentation process in international DC is overcome via intensified coordination. Expectations of the Post-2015 Agenda should not be too great, however. Other international forums, such as the WTO and UN framework convention on climate change, are also exceptionally important for protecting global public goods and fighting poverty. The “Global Partnership for Effective Development Co-operation” emerged from an international meeting on “DC effectiveness” in South Korea in 2011 and offers a suitable platform for linking the principles of South-South cooperation with the experience of traditional DC. The principle of “shared, but differentiated responsibility” can be applied here.
The OECD countries should recognise the different points of view and demands of the emerging donors for the new agenda and take their initiative as new donor countries seriously. South-South cooperation is not an equally valid alternative to the North-South model yet. In contrast, a new global partnership as recommended by the High Level Panel has the potential to harmonise the principles of South-South cooperation with the experience of traditional DC. To date the emerging donors have presented a very heterogeneous front. The country coalitions and their South-South cooperation still lack a clear profile and unified orientation in addition to shared DC goals.