Interaction between actors in International Cooperation: towards flexibility and trust

July 11, 2013 - nr.82
Summary

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 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.

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 ininternational 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.

One possible consequence could be to examine whether the way current official development assistance (ODA) modalities are defined form an obstacle to effective international cooperation. That may entail redefining the ODA criteria or aggregating External Financing for Development, which comprises both current ODA and other, innovative forms of aid.3 The Ministries of Finance and Foreign Affairs will shortly be publishing a report on the definition of ODA. The AIV recommends reserving ODA mainly for socially-oriented global public goods and innovative funding for other global public goods. However, it is important that innovative funding should serve the purpose for which it is intended (international cooperation) and not be swallowed up by general funds. Maintaining as far as possible the 0.7% target for ODA makes an important contribution to the Netherlands’ international profile. This could be the subject of a separate AIV report.

Another consequence of this paradigm change is a greater emphasis on trustworthy, well-motivated, expert staff making and implementing policy. This recommendation is at odds with the current cuts to expert staff.

Conclusions
Lastly, chapter VI presents conclusions on:

  • future cooperation with bilateral actors;
  • future cooperation with multilateral actors;
  • future facilitation of the private sector and coherence between aid and trade;
  • future facilitation of civil society organisations;
  • international security budget: an integrated approach;
  • the importance of public implementation and preservation of the mission network.

Structure of the report
Below is a summary of the questions asked in the request for advice, showing which chapter deals with each question.

  1. To ensure a sound basis for the advisory report, I would request that you elaborate the concepts of ‘complementarity’ and ‘synergy’ in detail. (See annex IV: Definitions of complementarity and synergy.)
  2. Are there more opportunities for synergy at thematic level and at the level of individual partner countries? What limiting factors play a role? (See chapter III: Synergy: combinations of actors that generate added value.)
  3. Where are the limits of complementarity across the various channels? (See chapter II: From aid channels to actors: capitalising on added value: see sections on possible limitations.)
  4. What are the implications of seeking greater complementarity for the management (central or otherwise) of policy implementation? (See chapter V: The complexity of governance in a turbulent world – exploring flexibility and trust.)
  5. Which experiences of other donors provide lessons for Dutch development cooperation? Are there examples of efforts to identify either positive effects (e.g. greater efficiency and effectiveness) or complicating factors (e.g. increased bureaucracy)? (See chapter III.6.2: How the government uses NGOs’ added value (Swedish model for facilitating civil society), chapter III.2.3: Multilateral institutions, other donors and local actors, and chapter IV.3: Selecting actors for specific components of international cooperation (DFID and other donors.)
  6. One question in this connection is what opportunities or obstacles the AIV sees in regard to further strengthening theme-based management (see former minister Ben Knapen’s letter presenting the spearheads of development cooperation). Which channels have a potential role in achieving the intended results? (See, for example, chapter III.1.1 (bilateral cooperation) and III.1.3: Synergy in bilateral cooperation with other actors.)
  7. What specific ‘typical’ added value can the various channels offer? What are their respective strengths and weaknesses? How do the channels complement each other in this respect? What synergies could we be striving for?(See chapter II: From aid channels to actors: capitalising on added value: see sections on potential added value.)
  8. How does theme-based management square with the policy applicable to the various channels? For the multilateral channel, for example, policy decisions are determined in part by a global governance policy. (See chapters I.3: Need for frameworks, I.5: Global governance, I.6: Global public goods, together with chapter II.1: From aid channels to actors and chapter III.2: Cooperation with multilateral institutions). Increased use of the business sector is currently a priority for all policy themes. (See chapter IV.2: Coherence between trade policy and development cooperation). The policy themes will differ according to the relevance and activities of each channel. The AIV has reformulated the question to address cooperation between equal actors on various themes. It also refers to the forthcoming IOB evaluation of channel choice for an optimal funding mix. (See chapter IV.3: Selecting actors for specific components of international cooperation; for the perspectives on LICs, MICs, Fragility and GPGs, see chapter IV.4.)
  9. To what extent could efforts to achieve complementarity and synergy between and within aid channels affect the delegation model employed by the Ministry of Foreign Affairs and the desire of NGOs, multilateral forums and businesses to determine for themselves how (and where) they operate? (Between channels: see chapter III: Synergy: combinations of actors that generate added value; Within channels: see chapter III.1 (governments), III.2.2 (multilateral institutions), III.6.1 (civil society organisations), III.4.1 (businesses).)
  10. Is it easier to define and achieve complementarity and synergy when they are viewed from the perspective of aid recipients (i.e. the partner countries) rather than donors (taking due account of considerations of harmonisation, etc.)? (See chapter II.1: From aid channels to actors, chapter III.1.3: Synergy in bilateral cooperation with other actors, and chapter VI.6: The importance of public implementation and preserving the mission network. The AIV has proceeded on the assumption that experts at the missions are in the best position to promote synergy between equal actors in recipient countries.)

_________________________________

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.
3 ECDPM, ‘Reporting for Development: ODA and Financing for Development’, Maastricht, April 2012.
Advice request

Mr F. Korthals Altes
Chairman of the Advisory Council
on International Affairs (AIV)
P.O. Box 20061
2500 EB The Hague

Date  16 March 2012
Re   Request for advice on complementarity of aid channels

Dear Mr Korthals Altes,

The Netherlands provides development aid through various channels: the bilateral and multilateral channels, civil society organisations and the business community. Each of these channels has specific advantages as well as specific limitations.

In its response to the report by the Advisory Council on Government Policy, ‘Less Pretension, More Ambition’, the AIV discusses the growing role of other actors besides government in international cooperation. It also distinguishes between bilateral and multilateral channels, urging closer examination of the division of roles among the various actors and channels with a view to combating fragmentation.

The AIV’s recommendations on this point relate mainly to individual actors and channels and not so much to the complementarity, synergy and coherence of aid efforts carried out by or through them.

The main feature of the government’s new development policy, set out in two letters to the House of Representatives, is a strong focus on four themes and on a limited number of partner countries. The policy has now been fleshed out in a series of multi-annual strategic plans (MASPs), programmes and projects by the Ministry’s policy theme, regional and multilateral departments and by the missions in partner countries.

In light of the above, I would request the AIV to produce an advisory report on the complementarity of the various aid channels deployed. Are there more opportunities for synergy at thematic level and at the level of individual partner countries? What limiting factors play a role? What are the limits of complementarity across the various channels? What are the implications of seeking greater complementarity for the management (central or otherwise) of policy implementation? Which experiences of other donors provide lessons for Dutch development cooperation?

To ensure a sound basis for the advisory report, I would request that you elaborate the concepts of ‘complementarity’ and ‘synergy’ in detail. I would also ask you to base the report in part on a literature study that considers how other donors have engaged with the development cooperation architecture in respect of the channels and choices available. How have others gone about it? Are there examples of efforts to identify either positive effects (e.g. greater efficiency and effectiveness) or complicating factors (e.g. increased bureaucracy)?

At this stage, an advisory report in the form of an exploratory study would be most useful, though I would like to retain the option of requesting a follow-up report at a later stage.

In accordance with the advice of the Advisory Council on Government Policy, current policy is aimed at increased goal-centredness and effectiveness, achieved by focusing clearly on four priority policy themes and by concentrating bilateral aid on 15 countries. The policy theme departments are responsible for fleshing out and then implementing policy in each of the priority areas. The missions’ task is to flesh out policy at partner-country level in their MASPs for 2012-2015.

One question in this connection is what opportunities or obstacles the AIV sees in regard to further strengthening theme-based management. Which channels have a potential role in achieving the intended results? What specific ‘typical’ added value can the various channels offer? What are their respective strengths and weaknesses? How do the channels complement each other in this respect? What synergies could we be striving for?

The answers to these questions should form the basis for recommendations on various policy issues:

  • How does theme-based management square with the policy applicable to the various channels? For the multilateral channel, for example, policy decisions are determined in part by a global governance policy. And increased use of the business sector is currently a priority for all policy themes. The policy themes will differ according to the relevance and activities of each channel.
  • To what extent could efforts to achieve complementarity and synergy between and within aid channels affect the delegation model employed by BZ and the desire of NGOs, multilateral fora and businesses to determine for themselves how (and where) they operate?
  • Is it easier to define and achieve complementarity and synergy when they are viewed from the perspective of aid recipients (i.e. the partner countries) rather than donors (being somewhat constrained by considerations of harmonisation, etc.).

In closing, a request regarding time scales. In spring 2012 I opened discussions with civil society organisations on the future set-up of the civil society aid channel. I shall be briefing the House of Representatives on the outcome and recommendations resulting from that dialogue before the autumn. These findings will be an important input in the context of an advisory report on complementarity. It therefore seems sensible that the AIV wait until this information is available before drawing up the report.

The AIV has already been requested to produce two other advisory reports that seem relevant in the context of aid channel choices and architecture: ‘Poverty reduction and shifting patterns of poverty’ (no. 4, Work Programme 2012) and ‘International public goods in the area of the environment’ (no. 6, Work Programme 2012). Both requests for advice could serve as a basis for the AIV’s advisory report on complementarity of aid channels. The first centres on how, in a climate of shifting patterns of poverty, different aid channels can be used to ensure that the Netherlands’ contribution to poverty reduction is (or remains) effective. The second could offer an interesting perspective on the viability and employability of the various aid channels in efforts aimed at international public goods.

I therefore propose that the AIV base its advisory report on complementarity on the requests for advice on shifting patterns of poverty and on international public goods.

Finally, I would ask that you complete the report by December 2012.

Yours sincerely,

 

Ben Knapen
Minister for European Affairs and International Cooperation
 

Government reactions

To the President of the House of Representatives
of the States General
Binnenhof 4
The Hague


Date 22 April 2013
Our reference BIS-054/2013
Re Government’s response to AIV advisory reports 80 and 82


I am writing in response to two advisory reports by the Advisory Council on International Affairs (AIV): Unequal Worlds: Poverty, Growth, Inequality and the Role of International Cooperation (No. 80) and Interaction Between Actors in International Cooperation: Towards Flexibility and Trust (No. 82).

I made grateful use of both advisory reports in drawing up the policy document A World to Gain A New Agenda for Aid, Trade and Development, which I sent to the House of Representatives on 5 April 2013. Much of this response is therefore already implicit in that document, but for the record, I will explicitly elaborate on the reports’ main lines in this letter.

The Council’s most recent advisory report, Interaction, builds to an significant degree on insights presented in its earlier report Unequal Worlds, such as the desirability of being more flexible in the choice of partner countries and the shifting links between aid channels. Therefore, in what follows I will first comment on the most recent report and subsequently deal with the remaining subjects dealt with in the earlier advisory report.

In March 2012 the government sought the advice of the AIV about the complementarity of aid channels. The central question was what opportunities and limitations there are in striving for greater synergy in deploying the various aid modalities, against the background of an increasing number of actors involved in international cooperation efforts.

In its advisory report Interaction the AIV prefers to talk in terms of ‘actors’ rather than ‘aid channels’. I agree that the concept of ‘channels’ is now outdated. Indeed, as stated in the policy document A World to Gain, people now tend to work much more with alliances of actors whose composition may change over time. It seems reasonable to assume that this practice will become more common in the future. In its advisory report, the AIV distinguishes four principal groups of actors: governments, multilateral institutions, businesses and non-governmental organisations. The added value and limitations of each individual group of actors are identified in turn. Working from this basis, the AIV gives examples of combinations of actors that generate added value. However, as it indicated when presenting the advisory report to the Ministry of Foreign Affairs, it was unable to find a suitable model for ranking the various possible forms of synergy. Moreover, this is consistent with the AIV’s principal finding that reality is too complex to encapsulate in preconceived plans and rules. Synergy and complementarity can best be achieved by looking at the most appropriate combination of actors in each situation.

The AIV recommends that embassies try to improve cooperation among the actors involved, with the bilateral country policy framework as the decisive factor. I endorse this approach. The AIV also recommends working towards abolition of country lists, as each country follows its own path to transition. Furthermore, in Unequal Worlds, which is discussed in greater detail below, the AIV advocates greater flexibility in selecting partner countries. Country lists will indeed be used more flexibly and, as also recommended by the AIV, more emphasis will be placed on the regional approach. The AIV advises phasing out bilateral aid to middle-income countries, replacing it with cooperation on global public goods and strengthening rights through NGOs and multilateral institutions. We are already winding down bilateral development cooperation with these countries and will be focusing more on economic cooperation. However, there is no budgetary scope for stepping up efforts to strengthen rights through NGOs and multilateral institutions beyond the current level.

I readily acknowledge the significance of multilateral institutions for global public goods. As the AIV recommends, the Netherlands is seeking ‘value for money’. Multilateral institutions are regularly assessed with scorecards. We regularly remind the EU and our fellow member states of their accountability on coherence issues and we would like to see the European External Action Service (EEAS) play a bigger role in boosting coherence for development. In proposing that the EU play a leading role with regard to fragile states the AIV is right to add the modifier ‘in the long term’. Much of the current support to these countries is delivered within the 3-D framework, jointly with EU member and non-member states.

With reference to the revolving SME fund, now known as the ‘Dutch Good Growth Fund’, the AIV recommends that all activities financed from the Dutch development budget should continue to be in the interest of development. I fully agree. The House of Representatives will be informed of plans for the further development of private sector instruments before the summer, as indicated in the policy document.

Naturally I agree with the AIV that civil society organisations should be fundamentally independent. The AIV recommends replacing the generic cofinancing system (MFS) with financing on the basis of strategic frameworks. I intend to put this into practice. I have also noted the AIV’s point that there is a growing call for flexibility and trust within clear, but broad frameworks. As indicated in the policy document, the implementation of these strategic partnerships with civil society organisations and my position on private initiatives will be explained in a separate letter to the House of Representatives this summer. A key priority in these new partnerships will be to sharply reduce the regulatory burden.

The AIV stresses that a dynamic, high quality mission network is an important factor in the success of international cooperation. I understand this, and will of course make every effort to ensure that our cutbacks do not compromise quality.

In March 2012 the AIV was asked to produce an advisory report on the possible consequences of shifting patterns of poverty for the post-2015 agenda – and possible, related changes in inequality within and between countries.

In its report Unequal Worlds the AIV gives an extensive analysis of these shifting patterns of poverty. It argues that many countries that have achieved middle-income status have sufficient governance and financial capacity to take on more responsibility. For these countries the AIV recommends a shift from pure bilateral development policy to a policy of international cooperation, based more on multilateral cooperation and the civil society and private sector channels. I agree with this view, and this is reflected in the policy document. I also share the AIV’s interest in promoting trilateral cooperation with middle- and low-income countries, including on global public goods. This could certainly provide added value.

I share the AIV’s concern that persistent income inequality in middle-income countries could continue to impede poverty reduction in the future. We will continue to draw attention to this issue, including in the framework of the post-2015 development agenda.

I agree with the AIV that Dutch policy must continue to help reduce the income gap between the richest and poorest countries. The AIV rightly points out that the most effective way to contribute is to step up trade and investment relations on a fair basis. That is the thrust of our policy document A World to Gain – A New Agenda for Aid, Trade and Development.

Finally, I would like to thank the AIV for its advice.

Yours sincerely,


Lilianne Ploumen
Minister for Foreign Trade and Development Cooperation

 

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