The Finances of Regional Organisations in the Global South

Follow the Money

Ulf Engel, Frank Mattheis, Ulf Engel, Frank Mattheis

• Publisher: Routledge
• Year: 2019
• ISBN:
  9780429618901
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

This book addresses a major gap in the longstanding research on regional organisations: how do their finances work and what do they reveal about the region-building process? It brings together an empirically rich collection of chapters written by experts of regional organisations in Latin America, Africa and Asia.

Based on the insights on thirteen regional organisations as well as two chapters dedicated to the influence of external funders, the editors develop typologies to cluster regional organisations according to their financial characteristics: the size of budgets, the sources of funding and the criteria to calculate contributions. Through analysing the process of budgeting and resourcing, the book sheds light on the different nature and functioning of these organisations existing outside of the Global North and puts a specific emphasis on regional organisations in the area of security in Africa and the Global South. It provides explanations to why members pay or do not pay and how budgeting works, and it deals with data availability, the role of donors, overlapping regionalism, cultural transfers between regional organisations and the impact on regional actorness.

This volume will be of key interest to scholars and students of African studies and politics, the Global South, the finances of international organisations, comparative regionalism, international political economy and international relations.

1 The finances of regional organisations in the South

Challenges of studying a neglected facet of regionalism

Ulf Engel and Frank Mattheis¹

Research gaps

The Finances of Regional Organisations in the Global South: Follow the Money addresses a major gap that continues to be found in research on regional organisations (see Engel 2018). This gap consists in a lack of knowledge about how the budgets and resources of regional organisations (ROs) – specifically those located in the Global South – work and what these patterns reveal about regionalism. Research on ‘Northern’- or ‘Western’-based global and international organisations – such as the European Union (EU), the World Bank, the Organisation for Economic Cooperation and Development (OECD) or the United Nations (UN) – can build on rich empirical and methodological traditions (cf., for instance, Singer 1961; Hoole, Job and Tucker 1976; Hoole, Handley and Ostrom 1979). More recently, the academic body the Political Economy of International Organization, established in 2007 (cf. PEIO 2018), and the associated journal Review of International Organizations (Springer) have stimulated critical scholarship on international organisations over the past decade, with finances being one of the thematic issues. Again, however, this research focuses on major international organisations, such as the United Nations or the Bretton Woods institutions. The only regional specialisation that has emerged so far is Europe.

With regard to non-Western international organisations, the use of budgetary figures to compare regional organisations was first suggested under the term ‘services integration’ (Nye 1968; see also De Lombaerde et al. 2010). The term is based on calculating the share of the expenditures by regional administrations – labelled common services – relative to the total economic output in a region. However, this indicator was only applied briefly in an exemplary manner to two cases: the Central American Common Market and the East African Community. In a revised version of Nye’s comparative model, budgetary figures were already abandoned in favour of new indicators, such as elite socialisation (Nye 1970). Subsequently, and for several decades, regionalism studies concentrated on European integration until the ‘new regionalism’ debate of the 1990s and early 2000s, which examined the many regional integration efforts after the end of the Cold War in what, for lack of a better term, is labelled the Global South (see Hettne 1999; Mansfield and Milner 1999; Shaw, Grant and Cornelissen 2011). In addition, the more recent methodological discussions on ‘comparative regionalism’ (Warleigh-Lack 2008; Archarya 2012; Söderbaum 2015; Börzel and Risse 2016) have shed light on many aspects of ROs outside of Europe.

Despite promising methodological findings of comparing regional budgets by Costea and De Lombaerde (2008), first steps at gathering budget and staff figures (UNU-CRIS 2008) and a database that aims to include budgetary figures,² the finances of ROs have usually been treated as a black box, although they are often referred to in research. For instance, Gray (2018) argues that only half of all existing international organisations are actually functioning and includes annual budgets as an indicator of vitality. The neglect of budgets in the current literature on Southern ROs – both in in-depth case studies and comparative work – can be justified by difficulties in the access to data but remains surprising as there is no shortage of works identifying weak secretariats, ineffective policies and superficial institution-building, all of which are directly link to financial capacities (cf. Katzenstein 1996; Fawcett 2004; Börzel et al. 2012; Albers 2014). The politically burdened calculation of ‘net contributors’ – for better or worse – has not found a similar resonance outside the EU (cf. Laffan 1997). In this reading, insufficient funding to ROs is just one of several symptoms confirming the perception that regionalism in the South is largely void of delegating decision-making powers. Both social constructivists (Powers and Goertz 2011) and neo-realists (Buzan and Wæver 2003) argue that ROs – particularly those in the Global South and composed of weak states – do not possess state-like characteristics, such as means of taxation. Accordingly, regional budgets would not constitute a relevant object of study.

Hence, the international state of the art on the political economy of international and regional organisations is characterised by two thematic shortcomings and one irritating epistemological assumption. The first is that no systematic effort has been made in understanding the funding or ‘resourcing’ (Goetz and Patz 2017) of international or regional organisations that are based in and led by African, Latin American, Middle Eastern or Asian countries.³ As a consequence, the finances of policy fields that are of particular relevance in these organisations, such as the field of peace and security, are further sidelined – the second shortcoming. Such an approach continues despite the fact that in recent years, a sizable body of literature has emerged on UN peacekeeping in Africa as well as on the role of the World Bank in what is called post-conflict reconstruction and development (PCRD).⁴ In regard to the epistemological assumption, the bulk of research seems to be guided by conceptual assumptions about the nature of international and regional organisations, which imply a form of ‘bureaucratic universalism’ (Barnett and Finnemore 1999). Thus, there is a prevalent, underlying expectation of a convergence of all organisations towards specific models that historically developed in what could be called the Global North.⁵ This expectation is reinforced by the academic focus on institutional patterns and interstate treaties (Koremos et al. 2001; Dür et al. 2014), which is more interested in legal aspects and ex ante design than in how organisations function in practice.

This gap in the literature unfolds as an empirical and conceptual bias. The aim of this volume is to take into account the institutional and socio-economic elements of regional organisations in the South as we investigate their finances. Notwithstanding, we do not imagine that such a framework is exclusively applicable to Southern regional organisations. While there are several reasons to assume that the finances of regional organisations in the South are subject to different dynamics than those of their Northern peers, they appear to be similar enough to warrant a common research agenda. Accordingly, we endeavour to contribute to a narrowing of the research gaps mentioned earlier by bringing together data and insights in a comparable manner so as to provide a foundation to analyse how different financial patterns influence regional organisations. In the future, such insights should be combined with research on organisations based in the Global North in a joint framework. Furthermore, although we have excluded Western-based organisations from our book, a self-reflexive approach to conceptual Eurocentrism remains essential to our analysis as we avoid taking their finances as the gold standard.

Regional organisations in the Global South

Regional organisations in the Global South are characterised by three recurrent features. First, they are subject to a post-colonial emphasis of their members concerning the principles of state sovereignty and non-interference in each other’s affairs. Institutional structures are predominantly based on intergovernmental – or even interpresidential (Malamud 2003) – governance and consensus mechanisms. As a result, the delegation of power from the national level is limited, and many regional organisations in the Global South rely on informal organisational arrangements, such ad hoc meetings, fluid and non-committal membership, and minimal bureaucracy (Vabulas and Snidal 2013).⁶ This context poses specific challenges to the establishment and implementation of a regional budget.

Second, regional organisations in the South have a membership that is facing daunting socio-economic challenges. This has an impact on the availability of public budgets, and in many instances provides a context that enables development assistance to play an important role in budgets. As noted by Goetz and Patz (2017), the stability and predictability of funding of international organisations is crucial for their existence and functioning. The precarious and/or volatile state of national finances, which is prevalent in many parts of the Global South, is thus a relevant limitation that warrants consideration.

Third, and as a result of the previous characteristics, regionalism in the South is member-driven. Like most international organisations, centralised regional bureaucracies have limited independence and are understood as a principal-agent relationship vis-à-vis member states (Abbott and Snidal 1998, Vreeland 2006; Gutner and Thompson 2010). We expand the understanding of principal by including non-members that provide (often considerable) development assistance. Whether a regional organisation in the South is able to perform its mandate is primarily dependent on the behaviour of its members and donors, of which financial endowment is one facet. Financial contributions (or lack thereof) not only have an effect on the material conditions, such as staffing, but also have influence on the organisational culture by providing incentives for internal decision-making patterns (Reinalda and Verbeek 2004; Barnett and Finnemore 2004). For these reasons, the relevance and impact of extra-regional funding should be particularly focused upon in the case of regional organisations in the South.

The North-South divide is, however, not a clear demarcation, and its broad categorising is not hermetic. In the case of the Community of Portuguese Language Countries (CPLP) for instance, membership comprises one member of the European Union, one of the largest economies in the world and several developing countries. Other ROs are characterised by vast internal asymmetries between member states that can be akin to those found between the Global North and South, such as those among members of the African Union or the Association of Southeast Asian Nations.

The dearth of academic work on the finances of regional organisations in the South can also be related to a methodological challenge. Access to data is particularly troublesome, as many organisations do not publish complete, regular, and/or reliable budgets in a transparent and publicly accessible manner. Figures on revenues and expenditures are often incomplete, and figures on actual (rather than planned) expenses are often lacking. While we interpret this challenge as a call to produce research on this topic, it also limits our findings. We concentrate on data that are published by the ROs, their members, and their donors. These figures are, in some cases, complemented by information gathered through media sources or informal access to practitioners.⁷ In terms of thematic areas, we give particular attention to regional organisations that are active in the field of peace and security. This field fits with our conceptual and thematic ambitions: it is of particular importance in many countries of the Global South (for an overview, see HIICR 2018), entails comparatively costly and visible expenditures, and often requires some form of centralised institutionalisation (Peck 1998; Haftel and Hofmann 2017). Most of our cases are not exclusively or even predominantly security organisations, but they dedicate parts of their efforts to this field. Although traditional, military concerns of state security are sometimes avoided due to sovereignty concerns of member states, all organisations include some provisions for regional security, be it, for example, a defence council in South America (Weiffen, Wehner and Nolte 2013) or disaster management in Southeast Asia (Tercovich 2019). We therefore highlight the activities of regional organisations related to peace and security in order to deepen our analysis. Where the data allow, we assess the situation of security budgets in addition to the general budget.

The finances of regional organisations

Some scholars have shown interest in how regional organisations respond to a financial crisis affecting their member states (Pempel and Tsunekawa 2015), but a closer look at the financial crisis of the organisations themselves is still missing. Studies that dissect one particular RO (for instance, on the Southern Common Market [MERCOSUR], cf. Franca Filho et al. 2010; Gardini 2010; Gómez-Mera 2013) usually inform readers about the size of its budget and the challenges and disputes relating to it. Most of the time, however, the existence of a central budget is taken for granted. In this interpretation, the creation of a new organ within a RO, such as a court or a parliament, or even the creation of an entire RO, is primarily a matter of political will, of regional leadership, or of an emerging problem that warrants a regional response. The question of finances is implicitly subsumed but not tackled upfront. The neglect of regional development banks as objects of study in regionalism studies further underlines the point that finances have been an overlooked topic.

Notwithstanding, we note a recent surge of academic interest in regional development banks from a political economy perspective (cf. Park and Strand 2015; Ben-Artzi 2016; Palestini 2016). Even though comparative perspectives remain scattered, this interest opens up future perspectives based on how regional development banks affect regionalism through their financial capacities, which converge with this book’s concentration on the finances of ROs. That being said, regional development banks play a secondary role in our book as they tend to focus on financing decentralised programmes, such as transnational infrastructure, rather than directly contributing to formal ROs.

Broadly speakin...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Table of Contents
• List of figures
• List of tables
• Notes on contributors
• Foreword
• Acknowledgements
• List of abbreviations
• 1 The finances of regional organisations in the South: challenges of studying a neglected facet of regionalism
• PART I: Africa
• PART II: The Arab World, Latin America and Asia
• Index