InteractIon between actors In InternatIonal cooperatIon towards flexIbIlIty and trust No. 82, February 2013 A I V Advisory council on internAtionAl AffAirs AdviesrAAd internAtionAle vrAAgstukken Members of the Advisory Council on International Affairs Chair F. Korthals Altes Vice-chair Professor W.J.M. van Genugten Members Professor J. Gupta Dr P.C. Plooij-van Gorsel Professor A. de Ruijter M. Sie Dhian Ho Professor A. van Staden Lieutenant-General (ret.) M.L.M. Urlings Ms H.M. Verrijn Stuart Professor J.J.C. Voorhoeve Executive Secretary T.D.J. Oostenbrink P.O. Box 20061 2500 EB The Hague The Netherlands telephone + 31 70 348 5108/6060 fax + 31 70 348 6256 [email protected] www.aiv-advice.nl Members of the Committee on the Complementarity of Aid Channels Chair Professor A. de Ruijter Members F.A.J. Baneke Dr B.S.M. Berendsen Professor B. de Gaaij Fortman J. van Ham Dr N. Tellegen Executive Secretaries D.E. van Norren Contents Foreword Summary 8 I Context, complexity, coherence 13 I.1 Shared global challenges 13 I.2 New actors 13 I.3 Need for frameworks 14 I.4 Aiming for coherence 15 I.5 Global governance 15 I.6 Global public goods 16 I.7 Shifting poverty 16 I.8 The role and responsibility of the Dutch government 17 II From ‘aid channels’ to ‘actors’: capitalising on added value 18 II.1 From aid channels to actors 18 II.1.1 The definition of aid channels used by the Dutch government 18 II.1.2 The definition of aid channels used by the OECD/DAC 18 II.1.3 From aid channels to actors 19 II.2 Governments as actors in international cooperation 20 II.2.1 The potential added value of governments as actors 20 II.2.2 Possible limitations of governments as actors 20 II.3 Multilateral institutions and the EU as actors in international cooperation 21 II.3.1 The potential added value of multilateral institutions as actors 21 II.3.2 Possible limitations of multilateral institutions as actors 21 II.3.3 The potential added value of the EU as actor 22 II.3.4 Limitations of the EU as actor 23 II.4 Businesses as actors in international cooperation 23 II.4.1 The potential added value of businesses as actors in international cooperation 23 II.4.2 Possible limitations of businesses as actors in international cooperation 24 II.5 Civil society organisations (NGOs) as actors in international cooperation 25 II.5.1 The potential added value of NGOs as actors 25 II.5.2 Possible limitations of NGOs as actors 26 II.6 Research institutions and communication networks 26 III Synergy: combinations of actors that generate added value 28 III.1 Bilateral cooperation between governments 28 III.1.1 Modalities: project, programme, budget support and multiannual plans 28 III.1.2 Partner country policy 30 III.1.3 Synergy in bilateral cooperation with other actors 31 III.2 Cooperation with multilateral institutions 31 III.2.1 The Netherlands and multilateral institutions 31 III.2.2 Cooperation between multilateral institutions 32 III.2.3 Multilateral institutions, other donors and local actors 32 III.2.4 Cooperation between multilateral institutions and NGOs 33 III.2.5 Cooperation between multilateral institutions and the private sector 34 III.3 Cooperation between the European Union and its member states 35 III.3.1 Complementarity between Dutch and European development cooperation 35 III.3.2 Coherence between the EU’s development policy and its other policies 35 III.3.3 The EU’s role in donor coordination 36 III.3.4 The EU and civil society actors 38 III.4 Synergy between the private sector and other actors 38 III.4.1 Synergy between businesses and with governments 38 III.4.2 Synergy between the private sector and non-governmental organisations 39 III.4.3 Government facilitation of the added value of businesses as actors in international cooperation 41 III.5 Synergy with research institutions 43 III.6 Synergy with civil society organisations 44 III.6.1 North-South civil society cooperation 44 III.6.2 How the government uses NGOs’ added value 45 IV Interaction between actors in low- and middle-income and fragile countries and for global public goods 49 IV.1 Permanent international security budget: for an integrated approach 49 IV.2 Coherence between trade policy and development cooperation 50 IV.3 Selecting actors for specific components of international cooperation 54 IV.4 The added value and synergy of various actors from four policy perspectives: fragility, LICs, MICs and GPGs 55 V The complexity of governance in a turbulent world – exploring flexibility and trust 59 V.1 Limitations of the current system 59 V.2 The myth of controllability versus emerging complexities 59 V.3 New perspectives: towards trust and flexibility 61 VI Conclusions and policy recommendations 64 VI.1 The future of bilateral actors/cooperation 65 VI.2 Future cooperation with multilateral actors 65 VI.3 Future facilitation of the private sector 66 VI.4 Future facilitation of civil society organisations 68 VI.5 Permanent international security budget: an integrated approach 68 VI.6 The importance of public implementation and preserving the mission network 69 Annexe I Request for advice Annexe II Experts consulted Annexe III List of abbreviations Annexe IV Definitions of complementarity and synergy Foreword In March 2012, the Advisory Council on International Affairs (AIV) was asked to produce an advisory report on the complementarity and synergy of aid channels (see annex I). This follows on from the recent report by the AIV on shifting patterns of poverty, ‘Unequal Worlds: Poverty, growth, inequality and the role of international cooperation’ (advisory report number 80), which was requested at the same time. This advisory reports goes further than the request for advice in two respects. More than with other advisory reports, this request for advice touches on the implementation modalities of development cooperation. For that reason the AIV extensively consulted experts working for the various aid actors (see annex II). Special thanks go to Jan Gruiters. A pattern emerged of declining confidence in social design, measurability, plan-based approaches and legislation and a growing call for flexibility and trust within clear, but broad frameworks. The AIV explores this input further in chapter V, on the possible need for a paradigm shift. This request for advice was submitted by the previous government. The new government is currently facing a number of issues on which the minister has indicated that she would appreciate the opinion of the AIV in the short term. Chapter VI therefore contains a number of recommendations that are consistent with the main text of the report, but do not necessarily follow on from it. This report was prepared by a committee consisting of the following persons: Professor A. de Ruijter, F.A.J. Baneke, Dr B.S.M. Berendsen, Professor B. de Gaay Fortman, J. van Ham, Dr N. Tellegen, D.E. van Norren (executive secretary) and E.C.H. Wielders (trainee). The AIV adopted this report at its meeting on 1 February 2013. Summary ‘Doubt requires more courage than conviction does, and more energy; because conviction is a resting place and doubt is infinite; it is a passionate exercise. [...] We’ve got to learn to live with a full measure of uncertainty. There is no last word: that’s the silence under the chatter of our time’ (John Patrick Stanley, Doubt: A Parable (2004)). ‘The remaining membrane that held Dutch culture together for more than a century was a marvel of elasticity. Responding to appropriate external stimuli, it could expand or contract as the conditions of its survival altered’ (Simon Schama, The Embarrassment of Riches, p. 596). Context and complexity Today, international cooperation is faced with a world characterised by complex issues and hybrid international relations. Complexity is reflected in the indefinite, unlimited and interconnected nature of issues. These are thus becoming ‘wild problems of organised complexity’. The hybrid nature of international relations is mainly reflected in the growing number of non-state actors. Although the national state will remain an important point of reference, it will increasingly become part of a loosely structured network of continually changing actors and theatres.1 Chapter I presents a short history and summary of changes, acquired rights and complexity in the field of international cooperation, with references to previous AIV advisory reports. From channels to actors Unlike the request for advice, the AIV refers not to aid channels but to actors in international cooperation. Current definitions of aid channels are problematic, and the actors involved play roles not only as part of the aid chain (which flows in one direction, from donors to recipients) but also as active agents of social change, each contributing to international cooperation within their own mandate. This is addressed in the first section of chapter II. The added value of the actors This report distinguishes four groups of actors: bilateral, multilateral, civil (civil society organisations and research institutions) 2 and the private sector. Chapter II analyses the added value and limitations of these actors. The analysis is generic per actor, allowing a discussion in general terms of how the government can make use of their added value. Two tables in chapter IV aim to pinpoint this added value for a number of policy areas. Chapter II also contains an analysis of the disadvantages of the current cofinancing system for civil society organisations and advocates a different way of funding NGOs by the government, analogous to the model used in Sweden. It proposes a number of 1 Advisory Council for Government Policy (WRR), ‘Aan het buitenland gehecht: over verankering en strategie van Nederlands buitenlandbeleid’ [in Dutch], Amsterdam, 2010. 2 Civil society refers to the structure of a society, to the groups and organisations, with widely varying degrees of formalisation, positioned between the household, the state and the private sector. It includes non-governmental organisations (NGOs), think-tanks, trade organisations, faith groups, social movements, traditional and religious leaders, community groups, youth groups and women’s groups. These actors protect public or common interests. Civil society organisations play diverse roles in varying contexts and are indispensable in achieving social, economic and political development. 8 criteria that government programmes for cofinancing private sector activities should meet in order to benefit as much as possible from the added value of businesses in international cooperation. Cooperation and synergy between the actors Synergy can be described in short as ‘1+1=3’. As other actors can also be identified (e.g. the EU and research institutions), and because combinations within groups of actors (government – government) or with three or four different actors are possible, chapter III presents a broad range of combinations of actors that generate added value. The positive conclusion is that actors – and businesses and NGOs in particular – show increasing respect for each other and are increasingly inclined to cooperate, and that the government has some opportunities to promote this cooperation, for example in the increasingly popular form of public-private partnerships (PPPs), as long as certain conditions are fulfilled. Basic suggestions for the complementary deployment of actors in relation to a number of current issues At the request of the new minister, in Chapter IV the AIV briefly puts forward suggestions – in brief and allowing for further elaboration of the issues in question – on the complementary roles the various actors can play in relation to a number of current issues and on opportunities for the government to enable them to do so. It addresses the following issues: - The international security budget: an integrated approach. The AIV notes that opting for a broad interpretation of the coalition agreement constitutes a political choice. The agreement states: ‘Underscoring the importance of peace and crisis management operations for developing countries, a new permanent budget of EUR 250 million will be established for international security, to begin operations in 2014. It will be available to cover international security-related spending that currently comes out of the Ministry of Defence budget.’ This budget ‘will be available to the Ministry of Defence for costs connected with international security.’ It is important that the Ministry of Defence should continue to have a sufficient budget not only for participation in crisis management operations in fragile states but also for defence within the context of the alliance, otherwise no operational budget will be available. The AIV emphasises the importance of an integrated approach, as stated in the coalition agreement. The development dimension of such an approach was recently outlined in the letter to the House of Representatives on the policy priority Security and the Rule of Law. With regard to participation in peace and crisis management operations, the AIV recommends that the goals, approach and resources described in the assessment framework and the Article 100 letter on deployment of the Dutch armed forces in peace operations should devote explicit attention to human security and the protection of civilians. The assessment framework should also state that independent monitoring and public reporting of civilian victims needs to be carried out from the start. - Coherence between trade policy and development cooperation. The report discusses aid for trade, import chains, export and the revolving SME fund (added value of smaller and medium-sized enterprises). The SME fund should be demand-driven and flexible, act as a catalyst, provide access to funding, mitigate risks, assess activities against development goals, impose strict reporting requirements and offer an expert implementation framework. 9 Conclusions for governability The analysis in these first chapters shows that these complex issues and hybrid relations are very difficult to govern, let alone design. Ministers and policy-makers are increasingly finding that classical instruments to achieve coordination, consistency and coherence no longer ensure effective and efficient policy. In fact, given the interdependence and interaction between issues and actors, and the unintended consequences of policy, efforts to reduce complexity are more likely to increase it. There is no single remedy for complexity, no one-size-fits-all solution. That implies accepting uncertainty and not going directly into ‘analysis-instruction mode’, which encourages tunnel vision. A degree of modesty is called for, and openness to variation and multiplicity, together with a multi-actor approach. Interaction between actors on the future international cooperation agenda Against this background it is impossible to give off-the-peg answers to all the questions in the request for advice. Other like-minded donors have not yet developed ready-made systems either. The AIV therefore puts forward recommendations that point in a direction and provide points of reference for facilitating complementarity between actors. The decision to suggest a direction and reference points for each challenge is partly inspired by the fact that the new government, and the new Minister for Foreign Trade and Development Cooperation in particular, must soon develop new policy, within new political and financial frameworks and with a broader mandate. The AIV recommends that in formulating policy on complementarity priority should be given to two strategic questions: - What actors can make a strategic contribution to effective implementation of a future international cooperation agenda, on the basis of their specific added value and innovative strengths? - How can the government provide the conditions and support needed to enable these actors to make a strategic contribution to international cooperation? Two tables in chapter IV show the most logical added value of actors and synergy- generating combinations of actors in the following policy areas of the Netherlands’ international cooperation agenda: - sustainable development in low-income countries; - sustainable development and security in fragile states; - sustainable development and redistribution in middle-income countries; - fair and legitimate management of global public goods. Paradigm change Chapter V argues that if the Netherlands wishes to continue to play a significant role in international cooperation a change of perspective is required. SMART-based ‘New Public Management’ is becoming obsolete. Society is moving towards a way of working based on networking, flexibility, variation, resilience, vitality and agility. The government should take this into account, since in the unpredictable reality of a complex world, the capacity to adapt is more decisive than planning, and agility and resilience are more effective than permanence and uniformity. The keywords are trust from the outset and accountability and effective control afterwards. Effective government increasingly means managing, connecting and facilitating, rather than monitoring and controlling. This paradigm change is essential in facilitating the hybrid relationships with actors whose added value gives them a comparative advantage in international cooperation. The AIV advises the government to consider the consequences for policy and to put them into practice. 10