International assistance, donor interests, and state capture in the Western Balkans

ABSTRACT

Despite the enormous inflow of international assistance to the Western Balkans over the last 25 years, the intended state-building efforts have only had partial success and great concerns have been raised over the problems of state capture, weak governance, poor rule of law and widespread corruption at a high level throughout the region. The paper identifies the patterns of international assistance and examines the extent to which donor aid allocations have been driven by concerns for recipients’ need and merit, or by donor self-interest. The analysis reveals that while donor allocations have on the whole reflected need, they have not reflected merit to the same extent, suggesting that international assistance may have facilitated domestic political elites’ engagement in practices of rent-seeking and state capture. With a few exceptions, EU donors and EU Institutions have not allocated their aid to motivate adherence to EU norms in candidate and potential candidate states in the region. The paper concludes that the ‘Samaritans dilemma’ is alive and well in the Western Balkans, and that donors have chosen to mostly overlook poor governance behaviour among recipients in order to prioritise assistance to the neediest countries while pursuing their own foreign policy concerns.

KEYWORDS:

• International aid
• state capture
• corruption
• western Balkans
• EU enlargement

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

1. Source: OECD International Development Statistics database; see Table 1 below.

2. Genuine compliance is a form of social learning in which accession states internalise EU norms and wish to undertake reforms on their own behalf because they see them as valuable policy orientations in themselves. Rationality-based compliance reflects the external incentives model, in which accession states do not internalise EU norms but comply with them so long as they see positive net benefits in doing so. Fake compliance reflects a situation in which accession states tick the boxes and meet the formal conditions set down but fail to implement the policies in an effective way. Imposed compliance concerns the case of semi-protectorates such as Kosovo where the EU has extensive influence over the reform process.

3. I use these terms in the sense of Baumol (1990).

4. Substantial assistance was provided to Albania in the early 1990 s at the start of the transition process.

5. Going forward, the European Commission has proposed merging IPA into a single instrument for global external assistance to be known as the Neighbourhood, Development and International Cooperation Instrument (NDICI) in the next Multi-annual Financial Framework budget for 2021–2028.

See: https://eeas.europa.eu/sites/eeas/files/eu_global_strategy_2019.pdf.

6. In the account that follows, the contributions of IMF loans are excluded, since although they are often concessional, they amount to general budget support which responds to different drivers than conventional ODA flows, i.e. to balance of payments difficulties rather than to pre-accession needs or developmental aims.

7. Article 5.4 states that ‘The Commission and the Member States and the EIB shall ensure coordination of their respective assistance programmes to increase effectiveness and efficiency in the delivery of assistance … in line with established principles for strengthening operational coordination in the field of external assistance … in particular the international principles on aid effectiveness’. Article 5.5 further states that ‘In order to increase the effectiveness and efficiency in the delivery of assistance … the Commission, in liaison with the Member States, shall take the necessary steps to ensure better coordination and complementarity with multilateral and regional organisations and entities, such as international financial institutions, United Nations agencies, funds and programmes, and non-Union donors’.

8. These stem from the Paris Declaration on Aid Effectiveness (2005) and the Accra Agenda for Action (2008), see: https://www.oecd.org/dac/effectiveness/parisdeclarationandaccraagendaforaction.htm.

9. The EU Code of Conduct on Complementarity and the Division of Labour in Development Policy is available at: http://europa.eu/legislation_summaries/development/general_development_framework/r13003_en.htm.

10. On the motives for Chinese aid flows see Woods (2008).

11. The data are gathered from a number of survey institutes, think tanks, non-governmental organizations, international organizations, and private sector firms.

12. For evidence that individual donor’s aid allocations may be driven by trade policies see for example Martinez-Zarzoso et al. (2009).

13. An alternative would be to specify the dependent variable as ODA per capita, which would normalise by the population size; doing this yields similar results. The adopted approach is more relevant as ODA is a financial flow.