Towards a New Development Cooperation Dynamic

2011NSI Forum Draft Background Paper Towards a New Development Cooperation Dynamic Penny Davies Independent Consultant, and Seniorr Policy Advisor, Development Financing, Diakonia Sweden June 2011

Draft Conference Background Paper Towards a New Development Cooperation Dynamic Penny Davies Abstract International development cooperation is going through major transitions in tandem with an urgent need to succeed in addressing global development challenges and crises. Notably in recent years there has been an increase in funding from and activities of sovereign bilateral assistance providers outside of the OECD Development Assistance Committee (DAC), including in the form of South-South Cooperation. As a result the global development cooperation landscape has become more diverse with more options and resources available for partner countries. This is challenging the development co-operation of DAC donors and the multilateral institutions traditionally dominated by them. This new dynamism highlights the need for new thinking and restructuring of international, including multilateral, dialogues on aid and development cooperation. Furthermore, it underscores the need for mutual learning and collective action to address development challenges. A number of suggestions are made for all actors engaged in development cooperation to consider under the following overarching headings: 1) Enhance collective multilateral action and broad based participation in partnerships 2) Increase transparency and the sharing of information 3) Engage in genuine mutual learning for development results 4) Put policy coherence for development into practice. Introduction International development cooperation is going through major transitions in tandem with an urgent need to succeed in addressing global development challenges, including eradicating poverty, and making equitable and sustainable development a reality for all people and the planet. Recent years have seen an increase in the number of actors providing various types of development assistance, coupled with new types of modalities, channels and partnerships for development. As a result, the global development cooperation landscape and so-called aid architecture have become more diverse. Most notably there has been an increase in funding from and activities of sovereign bilateral assistance providers outside of the Organisation for Economic Co-operation and Development (OECD) Development Assistance Committee (DAC), a reflection of changes in global economic and political power dynamics. These are countries with very different experiences of and approaches to providing assistance. Some have long histories of providing assistance while others are new or re-engaging. Some are both providers as well as recipients, or were so until recently. Some of these countries are making use of DAC definitions and standards as a reference point whilst others provide assistance under the framework of South- South Cooperation within and across geographical regions. Regardless, it is clear that these heterogeneous non-dac countries are already playing and will play an even more central role in delivering assistance to and engaging in partnerships with developing countries. New forms of cooperation, ideas and models are emerging, 1

complementing, challenging and providing an alternative to DAC donor practices and the multilateral institutions traditionally dominated by them at a time when time when there are increased pressures to demonstrate tangible development results. This new dynamic brings both opportunities and challenges. It highlights the need for new thinking and restructuring of international, including multilateral, dialogues on aid and development cooperation so that they incorporate and fully reflect the practices and experiences of all development cooperation partners. Furthermore, this dynamic also underscores the need for multilateral cooperation and sharing of lessons learned to maximise the benefits of diversity and ensure a common strategy for combating poverty, and addressing the crises and challenges of this century. While some steps have been taken in this regard, further action is needed. The upcoming 4 th High Level Forum on Aid Effectiveness in Busan (29 November 1 December 2011) provides a key opportunity to form a new consensus on development cooperation on a multilateral level which is inclusive and apt for the tasks ahead. Providers of assistance beyond the usual suspects - who are we talking about? Sovereign bilateral development assistance providers beyond the membership of the DAC are often, in shorthand, collectively referred to as non-dac donors or non-dac providers of assistance, emerging or even new donors. However, these labels are all unsatisfactory. Several of the countries in question are, in fact, not new but have long standing histories of providing various types of assistance. For example, China s and India s assistance date back to the 1950s, Arab donors have provided substantial assistance over the past decades and Russia is re-emerging rather than emerging as a donor. By using the DAC as a reference point, these actors are defined by what they are not, rather than by what they are and it has the connotation of separating those that are outside from those that are inside the club. Furthermore, some are using DAC standards as a reference point whilst not being members, such as the new EU member states, which makes the emphasis on DAC non-dac less relevant. Finally, several countries, including Brazil, China, India and South Africa, are reluctant to refer to themselves as donors nor do they describe their cooperation in terms of donor-recipient relationships but consider themselves as engaging in partnerships of mutual benefit within the framework of South-South Cooperation (SSC). This terminology challenge is more than a matter of semantics and points to the need to find better ways of capturing the increasingly diverse forms of, and partners engaged in, development cooperation. The heterogeneity of these providers makes it questionable to refer to them as a group at all, and raises the question of how best to describe providers of assistance in ways which actually enhance the understanding of their roles and activities. Previous categorizations, including that of donor recipient or developing developed countries, are clearly non-applicable, outmoded or interchangeable. Current analyses divide providers of assistance beyond the DAC into different overarching (sometimes overlapping) categories based on their political affiliations and characteristics. The categorization of these countries also depends on which institutional perspective informs the analysis. Twenty countries beyond the DAC report their ODA to the DAC. OECD-DAC statistics divide these countries into three categories: 1) OECD non-dac; 2) Arab countries; and 3) Other donors. 1 At times, analyses also single out European Union (EU) members 1 Table 33: ODA from Non-DAC Donors in Statistics on Resource Flows to Developing Countries, OECD Development Co-operation Directorate. February 2011. The 20 countries that report their ODA to the DAC, as presented in the DAC statistics, are: OECD non-dac: Czech Republic, Hungary, Iceland, Israel, Poland, Slovak 2

(some of which are OECD members, others not), or the BRICS countries 2 as major providers and emerging political and economic power houses. Southern providers of assistance engaging in SSC are often treated as a separate category. 3 An article by OECD Development Co-operation Directorate staff members introduces the categorizations emerging donors, providers of South-South Development Cooperation and Arab donors based on their different features. 4 Here, emerging donors are defined as those that model their growing aid programs on those of the DAC donors. This group mainly consists of the twelve newest EU members 5 but also countries with more long-standing cooperation programs: Israel, Russia and Turkey. While they demonstrate similarities, there are also variances among this group including the share of aid provided multilaterally. Arab donors, like Kuwait, Saudi Arabia and the United Arab Emirates (UAE), who have delivered substantial assistance for over three decades, have a different approach from that of DAC donors. They have their own coordination group, light administrative structures for aid and allocate almost all of their aid bilaterally. 6 Finally, providers of South-South Development Cooperation include middle income countries and emerging economies, many of which are also aid recipients. These providers do not refer to themselves as donors and base their assistance on key principles within the framework of SSC. In particular, the principles and approaches of assistance provided within the framework of SSC demonstrate their distinctiveness from those of DAC-donors. Although much attention has been paid to SSC of late, its principles date back to the Bandung Conference in 1955 which pointed at the need for developing countries to reduce their dependence on industrialized countries, including through the provision of technical assistance to one another. The conference provided inspiration for various South-South alliances and the subsequent formation of the Non-Aligned Movement in 1961. This was followed by the Buenos Aires Plan of Action, adopted at the United Nations (UN) Conference on Technical Cooperation among Developing Countries in 1978, which provided further guidance for SSC. Since then, various conferences and multilateral initiatives on SSC have taken place within different fora. In 2009 a UN conference was held on SSC in Nairobi and the same year the G77 plus China, a leading voice of developing countries, established guiding principles for SSC. 7 The OECD-DAC Working Party on Aid effectiveness now hosts the Task Team on South-South Co-operation, which was established in 2009 and played a key role in bringing about the High Level Event on South-South Cooperation and Capacity Development held in Colombia in 2010. This event resulted in the so-called Bogotá Statement to enhance the practice of SSC. 8 In sum, SSC frameworks have generated a range of multilateral initiatives within and as a complement to existing structures, building upon and advancing the principles that were established already in the 1950s. Republic, Slovenia and Turkey. Arab countries: Kuwait, Saudi Arabia and United Arab Emirates. Other donors: Chinese Taipei and Thailand, plus a subsection of Other donors : Cyprus, Estonia, Latvia, Liechtenstein, Lithuania, Malta and Romania. 2 The BRICS grouping consists of Brazil, Russia, India, China and South Africa, which was added by an S to the former BRIC acronym in April 2011 when South Africa became a member. 3 See e.g. UN ECOSOC (2008). 4 Zimmermann and Smith (forthcoming 2011). 5 These are Bulgaria, the Czech Republic, Cyprus, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovenia and the Slovak Republic. 6 Between 1973 and 2007 Arab total ODA reached around USD 115 billion (current prices) and although levels have dropped, Arab donors still provide high levels of ODA (World Bank 2009). Saudi Arabia is by far the largest of the non-dac donors that report their ODA to the DAC, reaching around USD 3.1 billion in 2009. 7 UNCTAD (2010) pp.7-9. 8 For further information see the Task Team webpage: http://www.southsouth.org/en/ 3

Key guiding principles for providing assistance within the framework of SSC include solidarity, mutual respect, mutual benefit and non-interference in the internal affairs of partners. Subsequently, countries providing assistance within the framework of SSC claim to attach no policy conditions to their assistance in contrast with DAC donor and International Financial Institution (IFI) practices. The mutual benefit principle reflects how the interests of the assistance provider are also seen as important in the partnership. Furthermore, South- South development assistance is not distinguished from and is often mixed with other types of financial flows including investments and non-concessional loans. The concept of South- South Development Cooperation (SSDC) is sometimes used to separate the specific development dimension of SSC, although according to the G77 plus China, SSC is itself a development agenda. 9 Non-DAC providers of assistance share similarities and differences with DAC donors. 10 On an aggregate level, donors beyond the DAC target less assistance through multilateral institutions. However this varies, similar to DAC donors. In particular those with comparatively smaller volumes channel the majority of their assistance multilaterally, such as the new EU member states which do not have large bilateral programs. Multilateral institutions are however playing a larger role in channeling assistance of non-dac members, reflecting an interest in taking part in multilateral efforts to combat poverty. For example, this is noticeable in the non-dac countries contributions made to the World Bank International Development Association (IDA), which have been growing rapidly albeit from a small base. While geographical proximity is an important factor for determining the direction of assistance, and that of Southern providers in particular, assistance demonstrates a wide geographical reach. An increased focus on Africa is visible among assistance providers beyond the DAC as for DAC donors; to some extent, recipients converge. In terms of sectors, the bias towards infrastructure and productive sector financing is complementary to that of DAC donors to a large extent. For example, this is visible in infrastructure financing (not necessarily aid as defined by the DAC) in Sub-Saharan Africa by China, India and Arab donors. However, many assistance providers beyond the DAC channel assistance to a diversity of sectors, including health and education. Technical cooperation and project assistance are, with a few exceptions, the norm and assistance is almost always tied to the purchase of goods and services of the provider. The above examples illustrate just a few general features of assistance providers beyond the DAC and it is important to avoid generalizations given their diversity. While key differences exist such as the emphasis on non-interference of Southern providers versus the conditionality practices of DAC donors there is an expressed shared interest in ensuring that development assistance, in its various forms, contributes to the achievement of partner country development objectives and the Millennium Development Goals. However, international discussions on development cooperation, including those surrounding the Paris Declaration on Aid Effectiveness, have until recently been dominated by traditional DAC donors resulting in a lack of ownership of the declaration and its principles. Yet, it is clear that many non-dac providers of assistance agree to, or support similar principles, including that of strengthening partner country ownership. 11 It can be argued, as phrased by one of the 9 UNCTAD (2010) p.8. 10 This section is an abstract of the findings in Davies (2010), a desk study review commissioned by the World Bank on the roles and activities of new development partners. The review covers eleven countries that represent a large part of the assistance from non-dac providers. See Davies (2010) for further sources. 11 Davies (2008) pp.8-9. 4

Chairs of the Working Party on Aid Effectiveness (WP-EFF), that we have to rid ourselves of the counterproductive discussion that stresses differences between the Paris Declaration principles and South-South Cooperation practices, and that efforts should focus on identifying how each approach can benefit from the distinct advantages of the other. 12 Calls and initiatives for further dialogue, experience sharing and cooperation between different providers of assistance are now being made. However, such calls raise questions regarding the willingness of all actors to learn from each other and of the inclusiveness of international and multilateral fora where development cooperation is discussed. Assessing volumes - how much are we talking about? The increase in volumes from development assistance providers beyond the membership of the DAC has generated a lot of attention. However, assessing volumes is difficult as several non-dac assistance providers do not systematically collect or transparently report figures in a detailed and disaggregated manner. Furthermore, there is no globally agreed upon definition of what counts as aid ; for non-dac countries, the DAC definition of Overseas Development Assistance (ODA) does not necessarily serve as a relevant reference point. Many non-dac providers of assistance operate within the frameworks of SSC and/or triangular cooperation, and data to measure these modalities is particularly scarce. Assistance is often delivered in package deals and SSC includes other financial flows, some of which would be ODA eligible and others not according to the DAC criteria. All this makes it difficult to measure volumes and compare them with DAC donor aid. However, several non-dac members do report their assistance to the DAC. In 2008, total reported ODA from non-dac countries 13 amounted to USD 9.5 billion in net figures. This is a steady increase since 2003 when the same figure was USD 3.4 billion, reflecting both a growth in volumes from individual donors as well as a rise in the number of countries reporting to the DAC. 14 In 2009, the figure was down however, to USD 6.7 billion. 15 In terms of volume, Saudi Arabia stands out with an annual ODA of around USD 3 billion. For the countries that do not systematically disclose their figures, estimates frequently vary, due to differences in interpretations of what counts as aid and data constraints. According to Zimmermann and Smith, the estimated total gross development co-operation flows from bilateral providers beyond the DAC amounted to almost USD 11 billion in 2009, the equivalent of around eight per cent of global gross ODA for the same year (USD 133.2 billion for DAC donors in 2009). 16 This figure consists of the twenty countries that now report their annual ODA to the DAC, plus estimates for the BRICS countries based on various 12 Remark made by Talaat Abdel-Malek, Co-chair of the Working Party on Aid Effectiveness at the Policy Dialogue on Development Co-operation Mexico City, 28-29 September 2009. 13 See footnote 1. 14 Table 33. ODA from Non-DAC Donors, in the OECD-DAC Development Cooperation Reports as reflected in Davies (2010). 15 Table 33 ODA from non-dac donors in Statistics on Resource Flows to Developing Countries, OECD Development Co-operation Directorate, February 2011. As of January 2010, South Korea is a member of the DAC and is no longer included in the statistics of non-dac donors provided by the DAC for 2009 and backwards. The omission of South Korea can partly explain the decrease in figures compared with previous years. 16 Zimmermann and Smith (forthcoming 2011). Whilst ODA is usually presented in net figures, gross figures are here used, as formulated by the authors, to increase comparability between DAC ODA and estimates of development co-operation flows from countries outside of the DAC s membership for which loan repayment figures are not available. 5

government sources. 17 China is the heavyweight amongst the BRICS with an annual estimated aid budget of 1,947 USD million (followed by Russia 785, India 488, Brazil 362 and South Africa, all in USD million). However, China also illustrates the challenge of comparing aid data with that of DAC ODA. A breakdown of Chinese assistance, taking into account debt relief (included in DAC ODA), puts Chinese development assistance at USD 3 billion already in 2007. 18 Volumes are, as stated, difficult to assess and analyses of figures change as reporting gets more sophisticated and/or transparent. Figures of external analyses also frequently vary due to methodological differences. A general conclusion is that, albeit on the rise, development assistance from countries beyond the DAC on an aggregate level is comparatively low, although in certain sectors or countries they can constitute the main bulk of assistance. The importance of development assistance providers beyond the DAC does not primarily lie in their volumes but rather in the way in which they transform international and multilateral development cooperation by contributing new ideas and modalities, as well as increasing the options available to partner countries. This diversity brings both challenges and opportunities, as explored below. Opportunities and challenges Opportunities Increased and more diverse resources for development The increased engagement of more development partners means greater resources are available for partner countries to pursue their national development strategies and the Millennium Development Goals. This is important given that many DAC-donors are failing to meet their aid commitments and the financial and climate crises have put additional pressures on scarce public resources. While the financial crisis may also affect SSC negatively, the deterioration of the global economy has resulted in renewed opportunities for SSC as developing countries look to one another and to innovative cooperation mechanisms to respond to the crises. 19 The diversity in resources also generates more options and leverage for partner countries in negotiating with donors. Southern providers of assistance are, to some extent, complementary to the efforts of DAC donors and multilateral institutions, particularly in terms of sector focus, which remains on infrastructure and productive sectors. 20 Relevant development experiences and lessons to share Assistance within the framework of SSC from fellow developing countries is valued by partner countries as they face similar challenges and have relevant insights to share based on their own, often recent, experiences of reducing poverty. Furthermore, several non-dac countries have, until recently, been, or are still, recipients of aid. Therefore, they are well 17 The figures are likely to be even higher given that active providers within the framework of SSC, such as Chile, Colombia, Egypt, Malaysia, Mexico and Venezuela, are not included. 18 Brautigam (2009) p.169. 19 United Nations General Assembly (2009). 20 Davies (2010). 6

placed to draw on their own experiences of good and bad practices in delivering assistance and have lessons to share from managing incoming aid. Innovative development assistance modalities and efficient partnerships The diversity of partners engaged in development assistance has brought to the fore innovative cooperation modalities in the form of SSC and triangular cooperation (North- South-South as well as South-South-South) which are contributing to mutual learning between stakeholders. 21 These modalities have gained increased recognition as effective contributions to development; SSC and knowledge exchange have for example become part of the work programs of multilateral institutions. 22 Compared with DAC donor and IFI approaches, SSC is appreciated by partner countries for being less bureaucratic and less donor driven, as well as more responsive to country priorities with few or no conditionalities attached. Assistance is often highly flexible and providers are often speedier in processing and disbursing assistance. Partner countries have expressed the view that traditional donors could learn more from these positive aspects. 23 Challenges Lack of transparency and sharing of information Partner countries, civil society organizations and donors (DAC and non-dac) see the lack of transparency on the volumes, types and terms of assistance of some non-dac providers as a key challenge. SSC agreements are often made at the highest political level, by-passing aid management systems in partner countries. The lack of transparency inhibits broad based ownership and the possibility for citizens to engage in the development process and hold their governments to account. It has also made it difficult to conduct impact assessments of these engagements and led to misunderstandings. Transparency constitutes an obstacle to coordination of assistance among different providers. 24 Challenges in adhering to social and environmental standards and aid effectiveness principles Concerns have been expressed by civil society organizations, multilateral organizations and others that SSC agreements do not sufficiently take into account social and environmental standards. At times, rapid and low cost assistance takes place at the expense of wider development concerns, lacking environmental and social impact assessments. In particular, concerns have been put forward in relation to infrastructure projects, which are sensitive in terms of their impact on the environment and local communities. 25 Governance and corruption 21 UN ECOSOC (2008) provides an overview of SSC and triangular cooperation. 22 See e.g. the Task Team on South-South Cooperation (TT-SSC) http://www.southsouthcases.info/; the World Bank: http://wbi.worldbank.org/wbi/devoutreach/article/529/south-south-knowledge-exchange-tool-capacitydevelopment; and the United Nations Development Programme: http://ssc.undp.org. 23 This was in particular expressed by partner countries in the consultations ahead of the Third High Level Forum on Aid Effectiveness, Davies (2008). 24 Davies (2008). Lack of information is for example also mentioned as a key challenge in the context of SSC in Africa by UNCTAD (2010) p.28. 25 For further information, see for example UN ECOSOC (2008), The Reality of Aid (2010) and UN (2010). 7

is a concern when assistance is provided to countries where accountability frameworks are weak and where reforms to address these problems are lacking. 26 On the question of aid effectiveness, and in particular, progress on the Paris Declaration and the Accra Agenda for Action, performance of non-dac countries varies, similar to DAC donors. Tied aid is often a concern as non-dac project assistance, with a few exceptions, is almost always tied to the purchase of goods and services. However, some of the drawbacks of tied aid, such as higher costs, are not always applicable to Southern assistance which tends to be cost effective and can also involve skills transfers. However, there are examples of turn keys projects which do not involve local contractors and inhibit choice. 27 In SSC there is little involvement of actors beyond governments in partnerships, such as parliamentarians and civil society, a trend that runs counter to the Paris agenda, and does not contribute to strengthening broad based national ownership and mutual accountability. 28 The proliferation of partners poses challenges for partner country management Although increased choice in partners presents a key opportunity for partner countries to pursue national development priorities, strategic management of these diverse actors can pose a challenge, in particular where capacity is weak. Depending on how well assistance is aligned with national systems or on the level of coordination at the country level, this proliferation can lead to higher transactions costs. Evidence suggests that there is little coordination between Southern providers of assistance and DAC donors. Likewise, providers of assistance within SSC frameworks, like many DAC donors, have a tendency to set up their own structures for engagement and delivering assistance with little multilateral cooperation. 29 It should be noted that the challenges mentioned above are also applicable to assistance from multilateral development banks as well as DAC-donors, many of whom have longer experiences in development cooperation in comparison to some non-dac countries who often face capacity constraints. To assess the impact of aid and development assistance in terms of development outcomes is a key challenge for all. To make the most of the opportunities, partner countries need to carefully negotiate with all development partners, compare the various options available and consider what impact they will have on development objectives, such as social and environmental targets and debt levels. 30 In addition, increased cooperation is also called for between the diverse development actors. Reshaping global development cooperation - towards greater inclusiveness? The surge in activities of bilateral development assistance providers beyond the DAC, including in the form of SSC, is often described as challenging so called established donors and the multilateral institutions traditionally dominated by them. As described by Woods, emerging donors are triggering a silent revolution, quietly offering alternatives to aidreceiving countries and thereby introducing competitive pressures into the existing system. 31 26 G24 Secretariat (2008) p.18. 27 UN ECOSOC (2008) and G24 Secretariat (2008). 28 UNCTAD (2010) p. 27, UN (2010) p.36 and The Reality of Aid (2010). 29 UNCTAD (2010) p.27; UN (2010) p.35; UN ECOSOC (2008) p.34. 30 G24 Secretariat (2008) p.17. 31 Woods (2008) p.17. 8

This challenge comes at a time when the established international development cooperation system is facing what can be described as a legitimacy crisis. 32 After a series of high profile commitments (including unfulfilled ones like those made at the G8 Gleneagles Summit in 2005) DAC donors and multilateral agencies face increased pressures to demonstrate results, and skeptics are making their voices increasingly heard questioning the accomplishments of aid over the past decades. In the wake of the financial crisis, there are also concerns that donors are reverting to short term results in their focus on value for money and national interests when faced with domestic pressures, at the expense of championing aid effectiveness principles of ownership and mutual accountability. According to Zimmermann and Smith, the emergence of alternative models of development, sources of development finance and modalities for development co-operation has only served to intensify this legitimacy crisis. If they are to maintain their relevance, established donors will need to grasp the rise of other providers of co-operation as a major opportunity. 33 This in turn means opening up dialogue and decision making processes. 34 There are various signs of how existing development cooperation fora are giving recognition to the new players and modalities, and how these players are claiming space in global policy-making on development cooperation. The3 rd High Level Forum on Aid Effectiveness which took place in Accra in 2008, took an important step in this regard by welcoming and acknowledging the contributions of all development actors, in particular the role of middleincome countries as both providers and recipients of aid. Furthermore, recognition was given to the importance and particularities of South-South Cooperation and acknowledgement was made that we can learn from the experiences of developing countries. 35 As mentioned above, in 2009 the Task Team on South South Cooperation (TT SSC) was created to document, analyze and discuss synergies between the principles of aid effectiveness and the practice of SSC as well as the complementarities between North-South and SSC. The High Level Event on South South Cooperation and Capacity Development held in Bogotá in March 2010 was a further manifestation of how developing countries are now actively taking part in shaping development cooperation policies and practices and how a new type of multilateral cooperation is taking shape. The DAC - the traditional donor s club is pursuing dialogues with development assistance providers beyond its membership to enhance mutual learning and collaboration. In the run up to the upcoming 4 th High Level Forum on Aid Effectiveness (HLF4), the DAC in April 2011, endorsed a statement Welcoming new partnerships in international development cooperation, which acknowledges the role played by major nations beyond its membership in contributing to the MDGs and which emphasises the forging of new relationships, mutual learning and cooperation without requiring acceptance of the norms and rules required of DAC member states. 36 This statement signals the eagerness of DAC members to work more closely with other providers of assistance. Interestingly, as part of the DAC discussions ahead of the HLF4, recognition exists that in order to reach an inclusive agreement on aid and development, some letting go by the DAC is needed. For example, it has been stated that the DAC must be prepared to lose its copyright on the Paris principles, and that a change in language is needed to respect the development traditions of all groups. 37 32 Zimmermann and Smith (forthcoming 2011). 33 Zimmermann and Smith (forthcoming 2011). 34 Zimmermann and Smith (forthcoming 2011). 35 Accra Agenda for Action (2008), Paragraph 19b. 36 DCD/DAC (2011b). 37 DCD/DAC (2011a) p. 4. 9

The increased activities of assistance providers beyond the DAC is a direct reflection of shifts in global economic and political power, and a trend towards a multi-polar world order. Middle-income as well as developing countries are claiming space in global policy-making on development issues among others. The replacement of the G8 with the G20 as the main body for global economic policy coordination in the wake of the financial crisis, and the adoption in November 2010 of the G20 Seoul Development Consensus for Shared Growth can be seen as game changers in this regard. The document reflects the importance of principles for providers of assistance within the framework of SSC. Within the G20, the BRICS countries have played a role in pushing for reform of the Bretton Woods Institutions, 38 traditionally dominated by DAC donors. This has resulted in an increase in voting shares for emerging economies, thus increasing the incentives to engage with and contribute financially to these multilateral institutions. While much focus has been on the BRICS, a third wave of development actors, in the form of the so called CIVETS countries, 39 also want to engage in the global governance of development cooperation. CIVETS are active in SSC and are especially suited to triangular cooperation as they generally acknowledge the standards developed by the DAC. Whilst neglected in the past, multilateral institutions are becoming more aware of the specific contributions these countries can make in delivering development solutions. These countries were key drivers behind making South-South knowledge exchange a policy and operational tool for multilateral players, including the World Bank and specialized UN agencies. 40 There is much optimism that South-South knowledge exchange can transform the development cooperation agenda. According to UNCTAD, strengthening South-South economic and political relations can give a significant contribution towards global convergence within a development-led process of globalization. 41 Indeed, as demonstrated above, middle income and developing countries are playing an active part in reshaping international and multilateral development cooperation. However concerns remain regarding the extent to which a global inclusive development agenda is in the making. Whilst the G20 is more inclusive than the G8, accounting for two-thirds of the world's population, this institutional set up still excludes the remaining 173 member states of the UN, including the poorest countries. There are question marks as to what extent the poorest countries, and civil society actors with a global justice agenda, will be able to engage with and influence the G20, and to what extent the G20 will implement concrete action to address global development challenges. Likewise, it is unclear as to what extent the new economically and politically influential developing countries, notably the BRICS, will champion the development interests of all developing countries and to what extent they will include the entire South in their efforts and partnerships. 42 Despite some reforms of the Bretton Woods Institutions, there is still a pressing need to strengthen the voices and votes of developing countries. 43 One flagrant example of how the old post Second World War power structures linger on in the multilateral system is the selection process for the heads of the World Bank 38 Sidiropoulos (2011). 39 Schulz (2010). CIVETS refers to Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa. South Africa joined the BRICS in April 2011, creating some overlap. 40 Schultz (2010) p.4. 41 UNCTAD (2011) p.2. 42 This issue is addressed in Senona (2010) focussing on the BRIC and IBSA forums.. 43 For detailed analysis of IMF and World Bank governance reforms see Bretton Woods Project: http://www.brettonwoodsproject.org/topic/governance/index.shtml. 10

and the International Monetary Fund (IMF), which remains in the hands of traditional western powers. Although the DAC is making efforts to open its doors and cooperate with countries beyond its membership, it is still seen as a traditional donors club by many developing countries. Furthermore, although the global development architecture is meant to meet the needs of the poorest countries, it does not explicitly build on the collective will of their citizens, who at best have to hope that international power-brokers have their interest at heart when they decide on development issues. 44 There are power imbalances between recipients and providers of aid as well as between partners in SSC which play out above the head of citizens. From a different perspective, the surge in providers of assistance beyond the DAC and in SSC is taking place in a context of, and adding further dimensions to, what has been described as a complex institutional sprawl of multilateral and other development cooperation bodies. These fora are often stepping on each other s toes and demonstrate different scales of inclusiveness and effectiveness between which there are difficult balancing acts. 45 Some suggest that the international community is facing an institutional vacuum when it comes to discussing the way forward for the global governance of development. 46 Clarifications of mandates and how to make best use of synergies between different institutions are needed to prevent a stalemate in multilateralism and, through collective action, to achieve effective and tangible development results towards the Millennium Development Goals and beyond. The upcoming HLF4 in Busan, Korea offers one such opportunity. As part of this restructuring, existing institutions need to better incorporate the experiences and modalities of the heterogeneous actors beyond the DAC donors which have traditionally dominated multilateral and global development cooperation. However, this restructuring needs to go beyond just inviting and making room for more actors in the tent, to also ask whether the tent is still fit for purpose and allow space for new ideas and mutual learning beyond business as usual. Multilateral cooperation has a history of going through changes and restructuring, and this need not be a bad thing; on the contrary it should be seen as an opportunity. Most importantly, the needs and interest of the people who development assistance is intended to benefit should inform the decisions on the direction of the future of development cooperation to a greater extent. This is what inclusiveness should be about. Suggestions for ways forward Enhance collective multilateral action and broad based participation in partnerships The global aid and development architecture suffers from systemic inefficiencies created by too many actors contributing too little. 47 There is a worrying trend of donors planting their flag on unilateral contributions, as part of their efforts to demonstrate results to their own taxpayers, adding further transaction costs. A spirit of collective multilateral action and a subsequent willingness to collaborate and pool resources is needed to counter this trend. The increased engagement of providers of assistance beyond the DAC and the resulting increase in complexity calls for further collaboration to ensure complementarity and to harmonize aid at 44 Killen and Rogerson (2010) p.2. 45 A comparison is made between the IFIs, UN-DCF, DAC-OECD and the WP-EFF according to these two variables by Killen and Rogerson (2010). 46 Schultz (2010) p.2. 47 DCD/DAC (2011a) p.7. 11

the national level based on partner country systems and development plans, in accordance with aid effectiveness principles. However, coordination should not diminish diversity; rather it should serve the purpose of making the most of the comparative advantages of different providers in a strategic way. The lack of progress on coordination between traditional donors raises questions of the prospects for accomplishing this amongst a wider set of actors. There are many challenges for moving from words to action. Triangular cooperation has been identified as one way forward to combine the respective advantages of different development partners, and such partnerships are evolving between DAC and SSC partners. 48 More financing and support of triangular cooperation could be explored at multilateral level. For triangular cooperation to have a positive contribution, it is vital that partner countries are the drivers, as in all cooperation, and that they set the agenda based on national democratic development priorities. There is a need to prevent donors ganging up and to be aware of power relations in all partnerships, South- South as well as in North-South. Furthermore, development partnerships should involve civil society organizations that have an important role to play in putting forward suggestions based on their first hand experience of the impacts of aid, development cooperation and other policies on poor people and the environment. In this context, civil society organizations have raised concern that SSDC has almost exclusively been limited to government to government affairs with little opportunity for civil society organizations or parliamentarians to engage. 49 Broad based participation in development partnerships is a prerequisite for sustainable multilateral collaboration. Increase transparency and the sharing of information All actors engaged in providing assistance should transparently share information on the volumes, types and terms of assistance provided. Information should be available on who does what at country level. This remains a key challenge, as described above, for many SSDC providers, but also for several DAC donors. There are many good arguments for making progress on transparency. Transparency is essential for ensuring ownership and accountability of governments to the people on both sides of a partnership. Making information available on terms and volumes of assistance in a predictable manner enables the integration of assistance into national planning tools and budgets at country level. In the context of enhancing multilateral cooperation, information sharing is a prerequisite for mutual learning on how to best achieve development outcomes and for drawing on each others comparative advantages. The call for transparency in development cooperation is frequently made. Partner countries have called on all development partners to provide information in a transparent manner on the types of financing they provide, including the terms of loans. 50 There are some signs of commitments towards increased transparency on the part of non-dac and DAC donors alike. The International Aid Transparency Initiative (IATI), which aims to make information about aid spending easier to find, use and compare, is one example. However, so far, this initiative 48 Triangular co-operation is encouraged in the Accra Agenda for Action, Paragraph 19b.The China DAC Study Group is one example of triangular mutual learning. 49 The Reality of Aid (2010). 50 This request was expressed by partner countries at the regional consultations ahead of HLF 3, Davies (2008) and is brought up in a report by the G24 Secretariat (2008) among others. 12

does not include SSDC providers. The case for improved measurement, monitoring and transparency of SSC has been made in the so called Bogotá Statement. 51 Transparency commitments need to be put into practice and should not be limited to aid partnerships, but are equally vital in all types of cooperation to ensure accountability towards citizens. Engage in genuine mutual learning for development results There is widespread agreement that aid and development cooperation dialogues and initiatives need to incorporate the diverse experiences of all actors, beyond DAC donors who have traditionally dominated these discussions. The need for mutual learning between actors is also recognized. In November 2010, the G20 leaders requested the TT-SSC and the United Nations Development Programme (UNDP) to recommend how knowledge sharing activity, including North-South, South- South, and triangular cooperation, can be scaled up. 52 On a practical level, mechanisms and initiatives for mutual learning on the global and country level are needed to enhance development results. DAC donors should, in accordance with the recommendations of the Accra Agenda for Action, learn from the positive aspects of SSC which are appreciated by partner countries. Likewise, those who are scaling up their assistance should incorporate lessons learned from multilateral and bilateral agencies with longer experiences on how to enhance aid effectiveness and address challenges related to data gathering, reporting, monitoring and evaluation of development outcomes. However, mutual learning is not a technical fix. There needs to be openness and a genuine will to learn from each other and to critically assess one s own principles and strategies based on lessons learned from the experiences of different actors, not least local communities and citizens, on how to enhance development results. However, there are differences in approaches between DAC donors and SSDC providers that are sources of tension and which generate debate, most notably the practice to provide assistance with no strings attached. SSC is based on the principle of non-interference while DAC donors and IFIs continue to apply conditionality when providing loans and grants. Both approaches have been criticized from different perspectives; conditionality for overriding national democratic ownership and non-interference for disregarding social and environmental standards and perspectives beyond those of governments. Donors have committed to limit and change the nature of conditionality to support ownership in the context of the Paris Declaration and the Accra Agenda for Action, although progress is slow and the commitment itself is vague. Whilst recognition was given to the noninterference principle in the context of SSC by the international community in the very final draft of the Accra Agenda for Action, 53 there is a lack of clarity on what non-interference means and how this relates to widely agreed upon social and environmental standards. The Reality of Aid Network, a broad, global network of civil society organizations, has in a report assessing SSC argued that respect for national sovereignty should not mean ignoring gross human rights violations, environmental destruction, corruption and blatant abuse of power in partner countries. 54 The report expresses concerns based on a number of cases, but at the same time, it states that these concerns should not lead to attaching conditionalities to 51 Bogota Statement Towards Effective and Inclusive Development Partnerships, March 25th, 2010. 52 TT SSC chairs Indonesia and Colombia welcome the G20 mandate to recommend on knowledge sharing. The result is yet to be presented as this article goes to print. 53 Accra Agenda for Action Paragraph 19e. 54 The Reality of Aid (2010) p.17. 13

development assistance. Rather, it is argued that human rights are obligations assumed by all governments and should therefore inform their dialogue and agreements on international cooperation. 55 Looking ahead, there is a need to build a common understanding on how to strengthen ownership in development partnerships beyond the limitations of both conditionality and noninterference. DAC-donors and IFIs need to end their practice of conditionality which overrides national democratic ownership. Those who apply the non-interference principle need to ensure that this does not disregard the interests and rights of citizens, in particular in situations when governments do not act in the best interests of their population. Such rethinking requires an openness and willingness to learn from past mistakes and to find common ground based on joint interests in achieving development results. Multilateral cooperation can play a bridging role in creating mutual understanding, starting with joint cooperation on a more practical level in the form of concrete projects which in turn could facilitate overcoming any eventual differences between actors. Multilateral institutions that bring together different actors and are seen as legitimate by those involved, could provide a starting point for such cooperation. Put policy coherence for development into practice According to DAC donor discourse and current views on best practice aid should be separated from trade and FDIs. 56 It should also be free from the national interests of the provider (albeit this is far from always the case in practice). This separation is challenged by SSC which bundles different flows together and explicitly builds on the principle of mutual benefit for both partners. These differences in practices frequently result in misunderstandings. Often outsider debates and DAC donor politicians criticize aid from Southern providers, most notably China, for being driven by self interest, in comparison with DAC donor aid. This is a gross misconception, as DAC donor aid is often politicized in reality despite a stated objective of poverty reduction. 57 Moreover, this discourse compares DAC donor activities with the whole undertakings of China in a developing country. A relevant comparison would look at a similar package of DAC donor policies, including official flows, trade and investments, for example, vis-à-vis developing countries. It then becomes clear that both the policies of Southern providers of assistance, including China, and those of DAC donor countries have varying impacts across aid and non-aid contributions to poverty eradication and sustainable development. It is critical to recognize this and avoid sweeping generalizations as well as onesided criticisms that employ double standards. 58 Despite these differences in practice, there is widespread recognition that coherent policies are needed for development across sectors that affect developing countries, as well as on the global level between different policy agendas, for example, climate change, trade and financing for development, etc. Aid, even when it is effective, cannot by itself end poverty. This insight has yet to translate into practice as the objectives of aid are undermined by the 55 The Reality of Aid (2010) p.17. 56 United Nations (2010) p.3. 57 See e.g. Oxfam (2011) on how aid is being politicized in crises and conflicts and Aid Watch/CONCORD (2011) for a critical scrutiny of EU members ODA. 58 Brautigam (2011) provides a good overview of the myths about China s assistance and double standards in the China-Africa debate. 14