Foreign Policy of the EU The Effectiveness of EU Conditionality and China as a Threat Luis Cornago Bonal 02/01/2016 Copenhagen Business School CPR: 230593LUB1 Final Exam / First Examination

10 pages / 22653 words

Professor Kirstian L. Nielsen

1. Introduction

Today, the European Union is the world’s leading provider of

development and humanitarian aid. Since its beginning in 1957, the European

Economic Community (EEC), later called the European Union (EU) (1992), has

wanted to embody such values as peace, economic and social progress,

democracy, and the rule of law and human rights (Cameron, 2011).

Internationally, following Dimier (2014), “the EEC has presented itself as a

benevolent actor concerned with bringing those benefits to the rest of the world

through instruments like external aid and trade” (Dimier, 2014, p.1).

Consequently, European Development policy, inter alia, has gained increasing

importance within the European Union’s foreign policy. Looking at today’s data,

the EU foreign aid handled by the EU Commission represents 12% of all

international financial aid (Börzel & Risse, 2004). Moreover, according to

OECD data, in 2001 about 55 per cent of total aid was provided by the EU (EU

and member states combined).

Cooperation with developing countries can trace its history back to the

establishment of the EEC. Initially, the EEC came to an agreement with

different former colonies of some Member States. From then on relations with

African, Caribbean and Pacific countries (ACP), Asia and Latin America,

Mediterranean countries and the Middle East and Eastern neighboring

countries have gradually developed with the aid of instruments such as the

European Development Fund (EDF), along with other agreements, conventions

and partnerships. For example, the EDF was established with the EEC under the

Treaty of Rome in 1957 and is the main European financial aid resource for ACP

countries, funded by the voluntary contributions of the Member States. The EU

development policy centered on the Lomé agreements, the first of which was

signed in 1975 between the EU and the ACP countries.

However, the development policy has gone through significant and

important reforms over the years, and it would not be until 1990s when the EU

would include conditionality in its development policy. As Santiso (2003) notes,

“in the course of the 1990s, the promotion of democracy, the strengthening of

good governance and the enhancement of the rule of law have progressively

become both an objective and a condition for the assistance of the EU to

developing countries” (Santiso, 2003, p. 107).

The purpose of this paper is primarily to understand the changes of EU

development policy as well as show some of its main challenges. In order to

have a clear picture and understanding of how we’ve arrived at its current

situation, we must also focus on other political actors outside of the EU, such as

Africa and China, or organizations such as the World Bank.

2. The Evolution of EU Development Aid: a Neo-Institutionalist

Approach

In Constructing Conditionality: the Bureaucratization of EC

Development Aid (2006) Véronique Dimier takes a neo-institutionalist

approach to explain how the introduction of conditionality was the first

consequence of that long process of institutional change started in the 1970s.

The neo-institutionalist analysis highlights how institutions constrain and limit

the role of individuals, but also how individuals can shape the institution

(Steinmo & Thelen, 1992).

Keeping this framework in mind, Dimier argues that the successive EEC

enlargements, starting with the UK entry in 1973, and the bureaucratization of

the Directorate General for Development and Cooperation (DG8) of the

European Commission are the main keys to understanding the evolution of the

European development aid over the past forty-five years. Bureaucratization

means the rationalization of procedures of the criteria for aid attribution as well

as the depersonalization of procedures (Dimier, 2006).

Historically, the French colonial administrators led by Jacques Ferrandi,

played a leadership role in the DG8 that was largely facilitated by the

institutional framework of the Treaty of Rome (1957) and the political context of

the time, namely a balance of power between member states very favorable to

France (Dimier, 2001). Therefore, Ferrandi’s team barely readapted their

colonial methods to the new DG8 context and instead continued to be “anti-

bureaucratic and based on close personal relationships with the African elites”

(Dimier, 2006, p. 265) for a long time.

3. IV Lomé Convention and the Introduction of Conditionality

The Lomé IV agreement of 1989 between the EU and the so-called ACP

countries (mostly former colonies of Great Britain, France and Belgium) was the

first multilateral development agreement to incorporate political conditionality

(Börzel & Risse, 2004). Ten years later, in 1999, the EU adopted the European

Initiative for Development and Human Rights (EIDHR) regulations as a

comprehensive strategy “in support of democratization, the strengthening of

rule of law and the development of a pluralist and democratic civil society”

(EIDHR 976/1999, preamble; see in Börzel & Risse, 2004, p.2).

In 2000, the Cotonou Agreement was signed, replacing the Lomé System.

Cotonou insisted on the relevance of the relations between development,

democracy, human rights, the rule of law, and good governance as well as the

political dialogue that prevents the use of sanctions. Besides that, Cotonou

considered an additional way to encourage developing countries to stick to the

clauses: programming. Thus the EU financial assistance would depend

exclusively on the performance of the recipient country in respect to different

indicators related to the promotion of democracy. Most remarkably, instead of

being arranged by the agreement, the conditions for financial allocation had to

now be bargained. As a result, this would increase the incentives for recipient

countries to comply with the EU development policy principles (Börzel and

Risse, 2004). Similarly, Cameron affirms that the agreement “aims to

strengthen the political dimension, provide more flexibility and entrust the ACP

states with greater responsibilities” (Cameron, 2012, p. 193).

Therefore, it seems more than clear that democracy promotion by the

hand of political conditionality has become an increasingly important part of the

EU’s foreign policy. However, according to Dimier (2014), we have to be

cautious and remain aware that many of DG8’s neo-patrimonial methods and

practices are still present in the European development policy.

4. EU-Africa: a Triangular Approach

Since its conception, the European Union has played a very important

role in Africa. Consequently, European policy towards Africa has existed ever

since European integration process started. In fact, the European Union is not

only the world’s largest supplier of official development assistance and

humanitarian aid but also Africa’s major donor –more than 40 percent of EU

aid and humanitarian assistance goes to Africa (Faria, 2004). As we saw earlier,

the EU’s policy towards Africa was initially very molded by the colonial links

some of its member states –especially France and Belgium— had with recently

independent African states (Heldring and Robinson, 2012).

In the case of Africa, the two last Lomé agreements and the Cotonou

agreement were important proof of how EU-Africa relations were becoming

more politicized and securitized (Faria, 2004). Furthermore, Africa “has the

potential to provide for the re-legitimization of the EC’s development policies,

the experimentation and development of the ESDP and the Europeanization of

member-states’ African and security policies” (Bagayoko & Gibert, 2009, p.

806).

In this way, what started as an almost exclusive focus on economic and

social development has turned into a broader approach where the political

dimension has gained more relevance “partly due to the recognition of the

‘failure’ of development policies or impact on the development of the recipient

countries” (Faria, 2004, p. 31). Somehow, the reconsideration of the European

development policy towards Africa –with a clear link between peace, stability

and development– took place, according to Joao de Deus Pinheiro, the former

EU Commissioner for development aid, on account of the worrying increase in

the number of violent conflicts in the 1990s (Pinheiro 1999; see in Olsen, 2002).

While focusing on development aid and conflict prevention, DGVIII tried

to empower African capacity for conflict management and political and

economical issues, which “manifested itself in a number of initiatives to develop

closer relations between the EU and the Organization for African Unity (now

African Union)” (Olsen, 2002, p. 90). This interest for a better understanding

and collaboration of parts became clearer in the agreement between the New

Economic Partnership for Africa’s Development (NEPAD) in 2001 and the

African Union (AU) in 2002. These occurrences show that on the one hand the

EU took a step forward in considering the AU as a credible and legitimate

change agent and, on the other hand, that the regional organizations had begun

to tackle all these issues. In fact, the Cotonou Agreement mentioned the

principle of ‘ownership’ (of the development strategies), which means that

“reforms and policies will rapidly be appropriated by local governments and

communities so as to guarantee the sustainability of these reforms and prevent

further external interventions” (Bagoyoko & Gibert, 2009, p. 792).

The idea that drives this triangular approach (the linkage between

security, good governance and economic development) is that “development can

only be achieved in a secure and democratic environment, conducive to long-

term investments” (Bagoyoko & Gibert, 2009, p. 789). The European Security

Strategy (2003) – the so-called ‘Solana Document’, adopted in December 2003

(Council of the European Union, 2003) – also promoted this holistic approach

and in doing so claimed an international power status.

Bagayoko & Gibert (2009) warned how this approach, in particular the

merging of development and security programs, could possibly end up in a more

military-based approach to development programs. Thus some commentators

note that the three concepts are not as compatible as the current holistic

approach to development suggests. Others accuse the approach of not taking

into account the complexities of the different recipient countries or even

suggest, as Mansfield and Snyder (1995) do, that transitions to democracy

usually bring about instability and can be counterproductive for a state’s

development strategy.

5. China’s Role in Africa

Many commentators have pointed out that the European Union’s

development assistance leadership role in Africa has been challenged in the last

decades. Emerging economies such as China, the United Arab Emirates, Saudi

Arabia, Korea, Venezuela, India, Kuwait and Brazil, among others, have been

increasing their aid to poorer countries (Woods, 2009). Indeed, none of these

countries form part of the donors’ club established within the OECD, called the

OECD Development Assistance Committee (DAC). If we focus more specifically

on the African countries’ aid recipients, Chinese influence in Africa is on the

rise. It has become the continent’s largest trade partner and it has recently

established its first mission to the African Union (Kishi & Raleigh, 2015). The

main beneficiaries include Ethiopia, South Africa, Ghana, and Mozambique.

Nevertheless, as Kragelund (2008) notes “the presence of non-DAC donors in

Africa is neither a new nor an extraordinary phenomenon” (Kragelund, 2008, p.

555).

In 2007, Moises Naim in Foreign Policy clearly summarized the Western

fears about the emerging donors. When he asks readers “what’s wrong with the

foreign aid programs of China, Venezuela and Saudi Arabia” he answers: “They

are enormously generous. And they are toxic”. Chinese aid is not planned to

impact recipient state’s governance or sovereignty. It is mainly intended to

benefit China. On the one hand, there is a security and political issue. From the

perspective of the DAC donors, China, Venezuela, Saudi Arabia and others are

supporting rouge states such as Sudan and Zimbabwe, “making regional and

global security and stability more precarious” (Woods, 2008, p. 1207). On the

other hand, economically speaking there could also be consequences for the

recipient countries. In 2006 the head of the OECD DAC commented how the

loans from emerging donors to low-income countries could worsen their debt

situation, delay necessary adjustments (since the conditionality is minimum), or

even throw away resources on unproductive investments (Manning, 2006).

Most literature agrees then on the main difference between the European

Union development policy and the one put into practice by most of the non-DAC

donors: political conditionality standards. As we have previously seen, the EU

has progressively moved towards a policy more dependent on not only the

recipients’ economic performance but also on the social progress, the respect for

human rights, and rule of law. From the western side, many argue that China’s

aid policy lowers standards, undermines democratic institutions and increases

corruption since they do not establish any requirement in order to receive the

aid. In this way the emerging donors are said to be throwing away progress

made by the World Bank or the European Union towards setting up clear codes

and standards to promote human rights, the respect for minorities, or safeguard

the environment (Woods, 2008).

For example, in Naim’s previously mentioned article he refers to the

expansion of Indonesia’s electrical grid by constructing plants that use a highly

polluting, coal based Chinese technology when “no international agency would

have signed off on such an environmentally unfriendly deal”. Even Obama has

claimed against China’s non-interference policy when he sought to differentiate

the United States from China, noting that “economic relationships can’t simply

be about building countries’ infrastructure with foreign labor or extracting

Africa’s natural resources” (Baker, 2015). Similarly, during his visit to Africa last

summer, Obama affirmed that the United States offers a better, more

empowering vision for the continent’s future than China does. In addition,

according to a recently published AidData report, there are reasons to be

skeptical towards Beijing’s “hands-off” policy in Africa. The report shows that

African leaders are almost three times more likely to spend Chinese

development aid in areas where they have ethnic ties.

Contrary to the skepticism towards China’s aid policy, other authors

argue that “the hysteria surrounding the emerging donors is overplayed”

(Woods, 2008, p. 1212), especially in the economic performance side. For

instance, Reisen (2008) recollects data that demonstrates a positive impact on

debt tolerance through stimulating exports, infrastructure investment, and

GNP. On the more political side, he shows how countries where China’s

presence is evident, such as Angola and Nigeria, have improved in the reduction

of corruption contrary to what was expected. Furthermore, new research also

challenges the Western pundits’ narrative about China’s activities in Africa

(Dreher, Fuchs, Parks, Strange, & Tierney, 2015). They find that Chinese ODA

(official development assistance) to Africa is strongly oriented toward poorer

countries.

6. Chinese Aid and Political Violence in African Countries

New research has also recently shed some light on the political

implications of China’s non-interference aid policy in Africa, supporting the idea

that this policy has terrible consequences for the continent. In a working paper

Roudabeh Kishi and Clionadh Raleigh investigate the relationship between

Chinese aid and political violence in Africa. They find that “Chinese aid to

African states increase the risk of civilian abuse by giving state leaders and

politicians access to funds with which to carry out this violence” (Kishi &

Raleigh, 2015). In other words, when a state gets more Chinese aid, its military

increases its violence against civilians. Additionally, they also study to which

extent we would see a similar effect on countries that receive Western aid.

However, Western aid does not seem to be followed by any such increase in

violence.

We have seen above that the international community, including the

European Union, has lately favored an approach to development and aid that

places emphasis on a triangular linkage between security, good governance and

economic development. That is to say that a secure and democratic environment

is a required condition in order to achieve development –through foreign aid

and multiple other ways. These findings on the increase of political violence in

African countries that receive Chinese aid are just more proof of the importance

of a holistic approach when we deal with development, foreign aid, and political

conditionality.

7. But Is Europe Taking Conditionality that seriously?

Woods (2008) affirms that many Western commentators have

exaggerated the extent to which direct conditionality –related to corruption,

human rights, or environmental standards imposed by OECD DAC donors– has

been successful.

Alesina and Dollar (2000) try to explain the reasons why foreign aid has

been only partially successful at promoting growth and human rights or

reducing inequality. Firstly, they find the answer in the poor performance of the

bureaucracies of the recipients’ countries. The second reason, and more relevant

for our discussion, involves the patterns of the flow of foreign aid. They

conclude that factors such as colonial past and voting patterns in the United

Nations explain more of the distribution of aid than the political institutions or

economic policy of recipients. Strikingly, they find that “a non-democratic

former colony gets about twice as much aid as a democratic non-colony”

(Alesina and Dollar, 2000, p. 55). For instance, French assistance –France

being one of the three “big” donors along with Japan and the United States– is

not correlated with poverty levels or democracy after controlling for their

strategic partners in former colonies and UN friends. However, we cannot

extrapolate these results to the European development policy since these

authors focus on each country individually.

Since the 1990s the European Union has made important efforts to

include democracy and human rights in development cooperation. However,

public intellectuals such as Easterly (2013) have questioned that promotion of

democracy is the main issue driving development policies in Europe or the

United States. In order to know the current situation of EU democracy

promotion in Africa, Del Biondo (2015) explores “whether countries that

facilitates the EU’s interest or good development performers are shielded from

sanctions” (Del Biondo, 2015, p. 74). The author concludes that conditionality

and sanctions are only applied in the absence of donor interest, except in Kenya

and Niger, where the EU threatened with sanctions despite those being

strategically important countries.

8. Conclusion

The purpose of this paper was to primarily show the increasing

importance of conditionality in the EU development policy. With Europe being

the traditionally major donor to Africa, we have considered it also relevant to

put a special emphasis on Africa and to explore the evolution of the EU’s role in

the continent over the years. In order to have a wider perspective of its current

situation, we have also tackled the growing Chinese influence in Africa —

because it is perceived as threatening by most European elites— and how

China’s foreign aid policy, primarily based on the lack of any kind of

conditionality towards the recipients’ countries can have terrible consequences

—politically, economically, and environmentally.

I would like to add that what has been discussed in this paper is merely a

modest approach to an immense, complex, and ongoing discourse about all

these issues. For example, in the case of China’s non-interference policy impact

on Africa the empirical analysis that emerges from literature on the topic is

contradictory. On the one hand, we have found much evidence supporting the

idea that Beijing’s aim is to buy the loyalty of African elites —providing them aid

with no conditionality— and secure access to the continent’s rich natural

resources, without caring about the negative political or economic consequences

for African people. On the other hand, in recent years we have seen renowned

commentators start to question this view and instead suggest that China’s

involvement with Africa has a positive impact on debt tolerance through

stimulating exports, infrastructure investment and GNP, and does not increase

the chances of corruption.

In the case of our main object of study, the European Union, we have to

recognize that some important improvements have been made towards the

rationalization of procedures of the criteria for aid attribution, reducing the

influence of the French neocolonial approach to development policy. Moreover,

the triumph within the EU institutions of the triangular approach —the linkage

between security, good governance and economic development— along with the

understanding that development can only be achieved in a secure and

democratic environment can be also considered a positive step forward in the

perfection of the EU development policy.

In relation to the current situation, we have found that conditionality and

sanctions still tend to be applied only in the absence of donors’ strategic

interests or former colonies ties. We cannot overlook that, independently of

China’s lack of conditionality in its development policy, the European Union

still has to improve in the allocation of aid and the use of sanctions. Therefore,

the EU should move forward with a more performance-based type of

conditionality. Nevertheless, it is very possible that conditionality alone does

not improve standards. As Woods’s notes, “a more inclusive process for setting

standards needs to be developed” (Woods, 2008, 1212). The references to

ownership in recent years are a good sign of this direction. In addition, to gain

legitimacy in the international arena it is important to speak with one voice.

Thus, the approach of different European countries regarding development

policy should be as homogenous as possible.

Previous research has referred to the realist-idealist discussion of

whether interests or norms affect either the aid allocation or conditionality use.

By now the only statement we can make, taking our own research into

consideration is that the realist perspective —where the international actors

primarily worry about their power position— is the most satisfactory

explanation to understand how conditionality and foreign aid allocation work in

the European Union.

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