International Aid and Democracy Promotion

Liberalization at the Margins

Bann Seng Tan

• Publisher: Routledge
• Year: 2020
• ISBN:
  9781000199529
• Edition: 1
• Topic: Economics
• Subtopic: Development Economics
• Index: Economics

International Aid and Democracy Promotion investigates the link between foreign aid and the promotion of democracy, using theory, statistical tests, and illustrative case studies.

This book challenges the field of development to recognize that democracy promotion is unlike other development goals. With a goal like economic development, the interests of the recipient and the donor coincide; whereas, with democratization, authoritarian recipients have strong reasons to oppose what donors seek. The different motivations of donors and recipients must be considered if democracy aid is to be effective. The author examines how donors exercise their leverage over aid recipients, and, more importantly, why, using selectorate theory to understand the incentives of both aid donors and recipients.

International Aid and Democracy Promotion will be of great interest to academics and students of development and democratization, as well as policy makers with authority over foreign aid allocation.

"The Open Access version of this book, available at http://www.taylorfrancis.com/books/e/9781003050438, has been made available under a Creative Commons Attribution-Non Commercial-No Derivatives 4.0 license.

Open Access for this book is generously supported by the Ashoka University.

1 Looking for democracy in all the wrong places

Introduction

When Egypt’s President Mohamed Morsi was ousted in a military coup in 2013, the United States refused to cut aid to Egypt. By contrast, when Fiji’s Prime Minister Laisenia Qarase was overthrown in a military coup in 2006, the United States was quick to rescind aid, citing concerns over Fijian democracy. Both countries were aid recipients who suffered setbacks in democracy, yet donors were noticeably more willing to assert their leverage on one but not on the other.¹ Within the aid dynamic, what accounts for the willingness of aid donors to exert pressure only on some recipients? If we can systemically differentiate between the “Egypts” and “Fijis” in the world of foreign aid, we can identify those that are susceptible to donor pressure. What is more, we can then use this information to nudge authoritarian aid recipients towards democracy. This book articulates a strategy to do just that.

At first glance, the need for an analysis of the role of foreign aid in democracy promotion may not be obvious. If we treat aid-giving between states as an exercise in inequality, we may assume the donors have leverage. After all, the donors have a precious resource – foreign aid – that recipients desire. Donors can simply attach political conditions, such as the holding of multiparty elections, to the delivery of aid. Authoritarian recipients who refuse to shape up and democratize will be defunded. Yet the empirical record suggests otherwise (Bush 2015a; Carothers 2015). According to Diamond (2015), instead of the gradual spread of democracy, we are heading towards a democratic recession.

Five systemic trends help to explain why the state of democracy aid has been in the doldrums. By democracy aid, I mean international assistance with the specific goal of fostering and advancing democratization (this shorthand is from Carothers 2015: 59). First, there has been a global loss of democratic momentum. The end of the Cold War ushered an expectation, best articulated by Fukuyama’s End of History (Fukuyama 1992), that every country would eventually become democratic. The steady expansion of democratic states appeared to have peaked in 2006 (Diamond 2015). Since then, we witnessed the rise of electoral authoritarian regimes (Schedler 2013), democratic backsliding in many prominent countries including Turkey and the Philippines, and the failure of the United States to promote democracy and stability in Afghanistan and Iraq. In the current international context, expecting the further spread of democracies seems unrealistic. Since democracy aid “gains credibility by association” (Carothers 2015: 67), the loss of democratic momentum hurt the credibility of democracy aid.

Authoritarian regimes are getting smarter at nullifying the impact of democracy aid. A traditional avenue of democracy aid is to fund non-governmental groups in the recipient country. This creates a civil society that can in turn facilitate a democratic transition. Such a bottom-up approach to democracy promotion could work if such groups are left alone to conduct their activities. Authoritarian regimes understand the Achilles heel of this type of democracy aid and act accordingly. They can co-opt such groups into the regime. The regimes can pass laws blocking the foreign funding of such groups or outright ban the existence of such groups. They can increase state surveillance of such groups and use criminal elements to intimidate the staff of non-governmental organizations. Faced with systemic harassment, non-government groups become understandably defensive and do not threaten their authoritarian hosts (Bush 2015a).

The rise of non-liberal aid donors has increased the options available for the aspirant dictator. The end of the Cold War helped democracy promotion by the West by removing the Soviet Union as a potential patron for the would-be dictator. Now, the rise of authoritarian bulwarks (Russia and China) and oil-based donors (Iran, Venezuela, Saudi Arabia) gives countries under Western pressure an alternative source of funding. Of those alternatives, China has attracted the most attention since its economic strength means it has the spending power to compete with Western donors should it choose to. The recent setup of the Asian Infrastructure Investment Bank, where many countries joined against the objections of the United States, is a testament to the extent of China’s economic influence (New York Times 2015).

It does not help that the West is itself less committed to democracy promotion than before (Carothers 2015: 70–71). The heyday of democracy promotion was during the 1990s (Levitsky and Way 2005: 22), when democracy promotion was a national security priority in both the Bill Clinton and George W. Bush administrations. Since then, the West acquired new priorities such as counterterrorism. As far as the West is concerned, political stability in useful nondemocratic regimes aligned with the West is more important than democracy promotion in those same regimes (Carothers 2015: 71).

Lastly, the idea of democracy is itself under challenge. Skepticism about the normative value of democracy stems from two sources. The first is from the policy failures of liberal democracy in recent times (Diamond 2015: 152–153). Exemplar democracies such as the United States developed a polarized society. The United States struggles to deliver economic opportunities for its citizens after the financial crisis of 2008. Likewise, with European democracies, the Greek financial crises and Brexit has created uncertainty over the long-term viability of the European Union. The European Union is dealing with the fallout of an integration process that emphasizes political union instead of a proper fiscal union. In both America and Europe, there has been a rise in xenophobia, anti-free trade sentiments, anti-system parties, and anti-establishment politicians. The economic malaise of Western democracies compares unfavorably with the economic performance of prominent authoritarian regimes such as China and Singapore. As Fukuyama (2015: 13–14) observes:

Or to put it slightly differently, the development of modern states has not kept pace with the development of democratic institutions, leading to unbalanced situations in which new (and sometimes even well-established) democracies have not been able to keep up with their citizens’ demand for high quality government services. This has led, in turn, to the delegitimation of democracy as such. Conversely, the fact that authoritarian states like China and Singapore have been able to provide such services has increased their prestige relative to that of democracy in many parts of the world.

All five trends work against democracy promotion.² The question is, what can we do about it?

The reaction of Western donors

Western donors appear to have reacted in three ways. They gave up democracy promotion altogether, they chose the easy targets, and they narrowed the scope of democracy promotion.

Part of the problem is that donors have other policy priorities in addition to democracy promotion. Consider the question posed by Carothers (2015: 72):³

How can Western governments insert an effective prodemocracy element into their dealings with democratically deficient but strategically useful governments without sacrificing a broader cooperative relationship with them?

Carothers represents the orthodox American view on international democracy promotion and by extension, the Western view towards democracy promotion. Securing a useful ally and promoting democracy are two different goals. By seeking both, the West, as it were, want to have their cake and to eat it too. The problem emerges when political realities force Western donors to choose between the two objectives. Rather than promoting democracy, Western donors favor allies who are anti-democratic – think Egypt under Hosni Mubarak – over democracies who are anti-Western – think Egypt under Mohamed Morsi (Bueno de Mesquita and Smith 2009a). This becomes a Faustian bargain when sponsored autocratic allies collapse, leaving donors to face the inevitable democratic backlash. Ratner (2009) observed, for example, that when the United States supported the prior autocratic regime and the client subsequently democratized anyway, the foreign policy of the regime post-transition is more likely to be aligned against the United States. This helps to explain the political fallout from the Arab Spring. The Arab dictators who received support from the United States were overthrown only to be replaced by regimes that were more democratic compared with their predecessors but also more anti-American in their orientation.

The second reaction by donors is to play it safe. Donors can select countries that are already liberalizing, such as Malawi (Emmanuel 2013) or Mali (Carothers 2015: 67) and allocate aid to them. This approach allows donors to claim political credit for a transition that is already underway. There are understandable reasons for this. At the organizational level, aid agencies and non-governmental groups need cases of policy success to justify their funding. The broader issue with this approach is that it is opposite of what democracy aid is meant in principle to achieve. Instead of using aid to induce democratization, aid now follows political change.

A third reaction by donors is to limit the ambit of democracy promotion to quick fixes. Western donors tend to use democracy aid to hold multiparty elections instead of promoting the deeper political reforms that could entrench liberal democracy (Crawford 2001).

The issue is the uneven political playing field between the incumbent party and the opposition parties in authoritarian recipients. Incumbent parties endowed with the aid resource could develop in one of three quasi-democratic directions. The authoritarian incumbent could retain power through repeated elections (Dietrich and Wright 2015: 23). It could develop into electoral authoritarianism (Schedler 2013), or a type of authoritarian regime where elections are held in such a way as to guarantee the victory of the incumbent. Finally, it could simply end the multiparty system and revert back to authoritarianism (what Dietrich and Wright 2015 described as multipartyism failure).

The reaction of donors to secure allies instead of democracies, to pick only the safe bets, and to settle for lesser objectives suggests donors do not know quite how to use democracy aid effectively. This lack of a coherent strategy explains why the outcomes are lopsided. The few cases of aid-induced liberalization pale in comparison with the longer list of recipients where democracy is in retreat. For every case of limited success, such as Malawi (Emmanuel 2013), Mali (Resnick 2013), or Fiji (BBC 2014), an honest assessment has to recognize such failures as China (Neier 1997), Pakistan and Russia (McFaul 2004: 158), Iraq (Diamond 2004), Ethiopia (Guevara 2007) and more recently Egypt (Brownlee 2012), where donors are reluctant to use aid as leverage to push for political liberalization.

To be clear, my objective is not to indict Western efforts to promote democracy. Rather, the aim is to recognize the real constraints imposed on democracy promotion nowadays, such as they are, and find a way to work around them.

The first step towards resolution

I argue that donors are looking for democracy in the wrong place. Countries such as Egypt, whose democratization would provide the greatest value to the donors, are least likely to do so but, others like Fiji, whose overall value to donors are smaller, are more susceptible to pressure to liberalize their governance. This is expected to be true because recipients with value to donors can offer alternative policy concessions as a way to mitigate Western pressure to democratize.

To elaborate, I take the lower priority that Western donors themselves accord to democracy promotion as a theoretical starting point. Within political science literature, the selectorate theory (Bueno de Mesquita et al. 2003) helps us understand the aid allocation priorities of Western donors. The selectorate theory focuses on the incentives of political leaders to seek political survival and how that in turn affects the policies that the state adopts. All leaders, regardless of regime type, need the political support of some important segments of society. The selectorate is comprised of those supporters who have some say in leadership selection. The winning coalition is that subset of the selectorate whose political support is crucial for the leader to retain office. The combinations of these two support groups can be used to derive different regime types. Democracies have a large selectorate and large winning coalition while autocracies have a large selectorate but small winning coalitions. Leaders offer supporters governmental policies consisting of a mix of public and private goods. Publ...

Table of contents

• Cover
• Half Title
• Series
• Title
• Copyright
• Dedication
• Brief table of contents
• Detailed table of contents
• List of figures
• List of tables
• Preface
• Acknowledgments
• 1 Looking for democracy in all the wrong places
• 2 The big picture
• 3 The components of salience
• 4 The regional picture
• 5 Myanmar and donor switching
• 6 Egypt and Fiji
• 7 No golden age, no silver bullet
• Index