1. Foreign Aid: How to Manage Competing National Interests Workshop on Managing Aid Effectively: Lessons for China? Beijing March 2008

2. Lessons on Foreign Aid All aid donors provide aid for multiple purposes, reflecting different national interests The combination of those interests differ from country to country Those interests/purposes sometimes coincide; sometimes they conflict, creating tensions within donor governments and programs and programmatic problems The challenge for donor governments is to clarify their priority interests/purposes and organize themselves (through central control or coordination) to manage those multiple interests

3. Multiple Purposes/interests Typical purposes: –Diplomatic –Commercial –Developmental –Humanitarian –Promoting democracy/human rights –Addressing global problems –Strengthen ‘fragile states’ Interests often difficult to disentangle

4. Which Governments Pursue Which Interests/Purposes? Denmark: developmental/commercial France: diplomatic/development/commercial Japan: diplomatic/development/commercial US: diplomatic/development/other

5. Why these interests? History – e.g., colonial ties; affinity groups Geo-strategic position National economic imperatives Development – domestic constituencies

6. China’s Interests/Purposes? Diplomatic Taiwan; Japan Commercial Raw materials; export markets; emigration? Developmental? Where is the domestic constituency?

7. Interests can coincide: Diplomatic/commercial/developmental: BRICs (Brazil, Russia, India, China) Diplomatic/developmental: Senegal, Cambodia Diplomatic/commercial: DROC

8. Interests/purposes can conflict Country allocation: Diplomatic/developmental: Egypt, Pakistan assumption: poor governance blocks development Use of aid: Commercial vs development: big projects; budget support; strengthening security services Terms of Aid Loans to poor countries, esp for non-revenue producing projects

9. Costs of Conflict in Purposes Tensions within donor governments Policy incoherence; confusing signals One purpose can undercut another Confusion and worse for recipient governments International criticism Erosion of domestic support

10. What is to be done? No one does this well Organization is key; but organizations tend to emphasize their priorities in spending programs -- a problem for multiple purposes Intra-governmental coordination: hq, field Overall policy framework to provide a broad strategic framework Processes that integrate but protect different purposes – e.g., planning, monitoring/evaluation

11. THE END ~~~