Can donors build effective states?

US chat show presenter Jon Stewart’s recent interview with Senator John McCain (here) is interesting for what it says about US perceptions of statebuilding and peace support operations. Towards the end of an interview focused almost entirely on Iraq, Stewart gets one of the bigger audience rounds of applause of the night when he asks McCain with a rhetorical flourish:

How do you quell a civil war when it’s not your country?

Now, what’s really at issue in this debate is not so much the tactics of peacekeeping or peacemaking (though heaven knows the US has made an appalling hash of both in Iraq) nor even the exigencies of immediate post-conflict reconstruction (ditto), but a much longer term set of questions about what external actors can hope to achieve on governance in developing countries. What it really comes down to is this: can donors build effective states?

After all, even peacekeeping’s biggest cheerleaders would allow that at best, all peacekeeping can really hope to achieve is to freeze a conflict while peace negotiations or statebuilding happen. And the problem is, the international community’s record on the long term statebuilding front is starting to look rather ropey – and not just in Iraq or Afghanistan.

For while peacekeeping has proved to be pretty successful in contexts from East Timor and Kosovo to Liberia and the Democratic Republic of the Congo, the underlying statebuilding project looks off track in all four. The soldiers’ part of the piece works, more or less, given adequate resources; the aid agencies’ bit is a science still in its infancy.

Where does aid work?

To start with, take a step back and consider the contexts in which ‘aid works’.

One way is through providing ‘wholesale’ finance on grant or concessional terms to countries that already have effective states, and that are already on successful development paths – countries like Vietnam. Here, aid is a “rocket booster”, that accelerates a process already underway.

Right at the other end of the spectrum, where there are no prospects of development any time soon, money can be spent on meeting basic human needs in a purely palliative care model – whether as support to NGOs, as humanitarian relief, or in direct cash transfers to poor people.

But it’s in the middle space in between those two poles that the vast majority of developing countries lie: the ones that are neither superstars nor basket cases. Here, instead of accepting the status quo (either as ‘on course’ or as ‘beyond hope’), the central challenge is essentially one of transformation of the quality of governance.

And it is this area that is the most contested, least consensual ground in foreign policy and international development – as the contrasting approaches of Europe and the US show.

Venus and Mars all over again?

Many European donors more or less duck the question of how transformation takes place, preferring instead to concentrate on ‘less political’ agendas like supporting service delivery in health and education. Where they undertake governance work at all, it is likely to be relatively technical, focused on the executive branch of government, and geared towards ‘safe’ areas like public service reform or budgetary processes.

The language of their agenda is explicitly realistic and modest in its aims. One of the buzz-phrases in European donor circles is ‘good enough governance’, which according to its (American) originator Merilee Grindle “directs attention to the minimal conditions of governance necessary to allow political and economic development to occur”.

The United States, by contrast, has a far more assertive and ambitious agenda of “transformational diplomacy” aimed at spreading democracy. In a flagship speech at Georgetown University last year, Condoleezza Rice defined the objective of the agenda grandly as being “to work with our many partners around the world, to build and sustain democratic, well-governed states that will respond to the needs of their people and conduct themselves responsibly in the international system”.

While the exact meaning of ‘transformational diplomacy’ is heavily contested (even within the State Department) it is at least clear that compared to the European approach, the emphasis is more political, more focused on the legislative branch, parties and elections, more strident about the need to root out corruption, and above all more optimistic about how much external actors can achieve.

What the US has right

Actually, there’s much to admire in the American approach – in particular its willingness to take an explicitly political approach to development, and its implicit recognition that external actors are – always – political actors themselves.

European donors often seem to promote the idea that they can somehow be apolitical players, and achieve results by limiting themselves to technical areas. Yet donors are inevitably political, whatever they do; it’s when they overlook this that they are in greatest danger of tripping up. Too many donors, perhaps, are willing to believe the ‘theatre’ played out for their benefit in World Bank-mandated Poverty Reduction Strategy processes, and wont to overlook the real political machinations taking place in the ruling party’s backrooms.

As a result, donors can find themselves accidentally propping up systems of patronage that can seed future instability, ethnic discontent or even state failure. Accordingly, the most important tenet of development needs to be clearly stated as: first do no harm, particularly where political systems based on patronage are concerned.

Another welcome element of the US approach is Condi Rice’s emphasis on the importance on aid workers and diplomats getting out of capitals:

“Transformational diplomacy requires us to move our diplomatic presence out of foreign capitals and to spread it more widely across countries… There are nearly 200 cities worldwide with over one million people in which the United States has no formal diplomatic presence. This is where the action is today and this is where we must be.”

By contrast, too many European donors are willing to limit their engagement with partner countries to a few ‘reformers’ – i.e. people who think like them – in capitals, and especially in Finance Ministries.

The US is also right to think (though Rice does not quite say so explicitly) that skills matter more than money. Spending can be important, yes, but where influence is concerned, it is the skills and incentives that underpin the performance of donor agency staff that really matter.

In many ‘progressive’ donors, including the World Bank, what gets staff promoted is the ability to manage programmes and get money out of the door. But when transformation is the aim, the key skills instead become political analysis and what might be termed ‘development diplomacy’: influencing, messaging, agenda-setting, prodding, catalysing.

Finally, the US approach is interesting in its emphasis on closer integration between development and diplomacy. Potentially, this could result in much improved standards of political analysis. But, on the other hand, it could equally well imply that development becomes merely another foreign policy tool with which to pursue the donor’s national interest, rather than the interests of the partner country and its poor. And this is the Achilles heel of the US approach.

What European donors have right

While American ‘transformational diplomats’ will cheerfully roll up their sleeves and plunge into the complexities of politics in developing countries, many European donors fear – rightly – that the US can sometimes not know when to stop.

For the US has never stated clearly where it believes that the limits lie in engagement with other countries’ politics. As a result, many countries (including some major powers like China and Russia) are hugely suspicious of the part played by the US in ‘colour revolutions’ in states like Ukraine, Georgia or Kyrgyzstan.

In other words, the US has yet to set out a clear theory of sovereignty. ‘Progressive’ European donors, on the other hand, have: they say that they will respect “country ownership” in development, and seek to support countries’ own policy decisions and development strategies, even if donors still reserve the right not to support plans they think won’t work.

More fundamentally, the more progressive European donors are also better at building trust because they make it clear that the objectives of their development presence in countries are purely about poverty reduction.

The US, by contrast, is perfectly candid that aid is about the national interest; indeed, its last White Paper is actually entitled Foreign Aid in the National Interest”. This kind of messaging serves only to increase local suspicions that aid is a tool for pursuing US objectives rather than acting as a real partner. It doesn’t make for intelligent public diplomacy, even if it is good politics at home.

Lastly, Europeans are right to take a more realistic approach to development, with a more modest appraisal of how much external actors can achieve.

In the last five years, Washington has been nothing if not prone to underestimating the complexities or time-spans involved in the process of statebuilding. The lesson of UN peacekeeping missions over the last two decades is that peacebuilding and state formation take a long time, and that perhaps the best that external actors can hope for is creating the conditions in which endogenous change can happen safely.

Towards a strategic synthesis?

Can there be an effective synthesis of these two views? Yes. Both agendas have part of the puzzle, but neither is sufficient on its own. External actors can help developing countries to ‘transform’, but offering such assistance is inevitably a highly political process, and the central tenet of such an approach must be to work with the grain of change in countries rather than seek to impose it from outside.

This approach can already be seen in some of the best-performing offices of DFID, the UK’s international development agency, which has successfully pioneered a system for analysing the “drivers of change” in countries and then seeking to work with those drivers.

It’s also essential to recognise – as the US often seems not to – that there will be no one-size-fits-all solutions, including with respect to political systems and economic policies.

What works in one country may well not work elsewhere. Democracy may be the endpoint, but it is certainly not the right starting point for many developing countries.

The same applies to economic liberalisation. Many of the greatest development success stories of the last 20 years – China, India, the Asian ‘tiger economies’ – clearly show that in fact, development success depends on no orthodoxy.

Above all, the single most important component of a successful transformation-oriented approach by international actors will be emphasis on grassroots political culture. Of course effective institutions are crucial. But on their own, they are not enough. Instead of staying in the comfort zone of institutional capability, donors need also to emphasise the need for such institutions to be accountable and responsive, as last summer’s DFID White Paper emphasised.

And in the longer term, donors need to ask – far more thoroughly than they have done to date – how it is that political cultures develop over time, and how they can work with that process.

So: can donors “build” effective states? Of course not. But can they help effective states to grow? Why yes, given sufficient humility, political sophistication, willingness to cast aside standardised models and – above all – the will really to understand the local contexts where they operate.