EAI Commentary No. 23: Changes in the International Development Aid Regime After the Busan Meeting

Professor Kim Tae-gyun holds a Ph.D. from the University of Oxford and is currently a professor in the Department of Public Administration at Ewha Womans University.

The Significance of the Busan High Level Forum on Aid Effectiveness

The 4th High Level Forum on Aid Effectiveness (HLF-4), hereafter referred to as the Busan Forum, was held in Busan from November 29 to December 1, 2011. This Busan Forum was the final meeting in a series of four High Level Forums on Aid Effectiveness, marking the end of efforts by major donor countries, centered around the Organisation for Economic Co-operation and Development-Development Assistance Committee (OECD-DAC), to enhance the effectiveness of development aid. The High Level Forum on Aid Effectiveness began with the 1st High Level Forum on the Effectiveness of Aid in Rome in 2003, followed by the 2nd Forum in Paris in 2005, which adopted the Paris Declaration presenting concrete measures. The 3rd Forum in Accra, Ghana, in 2008, institutionalized it as an international aid regime. The Busan Forum was tasked with evaluating the activities of the High Level Forums on Aid Effectiveness to date and pursuing a comprehensive expansion into an international 'development' regime. Given that the deadline for the Millennium Development Goals (MDGs), spearheaded by the UN in 2000, is 2015, the Busan Forum signified a re-organization of global governance for aid effectiveness. It was also a testbed for South Korea's 'soft power diplomacy,' linked to the 'development issue' that South Korea, as the G20 chair in 2010, confidently proposed as a means to reduce the income and development gap between developing and developed countries. In this context, it is necessary to evaluate the practical significance of the Busan Forum from the following three perspectives.

First and foremost, the agenda ambitiously pursued by the Busan Forum was a paradigm shift in development aid. The transition from 'Aid Effectiveness' to 'Development Effectiveness' demands changes in the international cooperation system for development aid in various aspects. This calls a halt to the existing donor-centric and supply-driven limited aid approach and reflects the efforts of the international aid community to include broader development issues and diverse aid providers within a more long-term development plan. The draft Busan Outcome Document (BOD), derived from four meetings of the OECD-DAC Task Team on Aid Effectiveness held since early 2011, confirms this re-evaluation of existing aid effectiveness and the fundamental concept of new development effectiveness. However, if the expanded concept of development effectiveness is not filled with concrete and appropriate principles, the Busan Forum risks becoming a hollow celebration with only verbose political rhetoric, repeating the five principles of the Paris Declaration.

Second, it is an attempt to integrate and restore the governance function of the international aid system, which has been fragmented between traditional OECD-DAC-centered donor entities and emerging donors (Non-OECD-DAC Donors: NODDs) pursuing independent paths. NODDs such as China, India, and Brazil, engaged in what is known as 'South-South Cooperation,' are focusing their aid primarily on infrastructure development, emphasizing non-interference in internal affairs, untied aid, and mutual respect and equality, thus receiving widespread welcome from vulnerable countries in Africa and Southeast Asia. This could pose a threat to the existing international aid order. The discussion on aid effectiveness within the Paris Declaration framework in 2010 was confined to aid norms of developed donor countries and the DAC. Therefore, the extent to which emerging donors would be obligated to participate in concrete commitments to deepen aid effectiveness became a matter of paramount interest at the Busan Forum. The initial participation of representatives from emerging donor countries, including China, at the Busan Forum cautiously raised expectations for the expansion of the international aid regime, and developed donor countries also broadened the scope of compromise by proposing 'Triangular Cooperation' involving mutual cooperation among the South, South, and North.

Third, a distinguishing feature of the Busan Forum, compared to the previous three High Level Forums on Aid Effectiveness, was the pursuit of change towards inclusivity, moving beyond the OECD-DAC-led developed donor countries to include a diverse range of actors in development cooperation under the motto of 'inclusive partnership.' The Rome and Paris Forums were attended only by OECD-DAC member states, major multilateral organizations, and some partner recipient countries. It was only at the Accra Forum that Civil Society Organizations (CSOs) were first recognized as independent partners in development cooperation. However, CSO participation in Accra was largely formal, and the proposals put forth by CSOs were not substantially reflected. In contrast, the Busan Forum, hosted by South Korea which had successfully transitioned from a recipient to a donor country, emphasized its role as a bridge between recipient and donor groups. The scope of participation expanded to include a wider range of partner recipient countries, CSOs, NODDs, and private sector actors such as corporations and foundations. Notably, CSOs, through the Better Aid global policy network established after the Accra Forum, organized the Open Forum for CSO Development Effectiveness to represent the voices of global civil society, striving to incorporate policies consistently advocated by CSOs, such as human rights, gender equality, and the creation of decent jobs, into the BOD. For the diversification of participation to lead to substantive outcomes, it depends on how effectively the demands of diverse and multi-layered actors at the Busan Forum are reflected in the final BOD and translated into policy.

A New Development Cooperation Partnership and Embracing South-South Aid

So, what concrete results did the Busan Forum actually yield? To summarize the achievements of the Busan Forum in one sentence, based on the three perspectives discussed above, it can be described as half success and half failure. The Busan Forum contributed to some extent to expanding the scope of the international development regime by adopting an inclusive 'Partnership' in the outcome document (BOD) that embraced South-South cooperation. However, the Busan Partnership has the limitation of being a resolution one level lower than the Paris 'Declaration,' and it concluded with political compromises that partially conceded existing international development cooperation principles to reach an agreement on the outcome document, which can also be pointed out as a limitation.

First, the Busan Forum failed to elevate 'Development Effectiveness' to a major agenda item as planned, showing a limitation of not moving beyond the influence of the 2005 Paris Declaration. By emphasizing broad development issues while simultaneously listing concepts that were not clearly agreed upon, such as development effectiveness, aid as a catalyst, and global development partnerships, it made it difficult to reach substantive agreement on development effectiveness. The Paris Declaration's aid effectiveness was composed of five principles: enhancing ownership, alignment, harmonization, results-management, and mutual accountability. The Busan Partnership concluded with four principles that are almost identical: (1) enhancing recipient-led ownership, (2) results-oriented approach, (3) inclusive development partnership, and (4) ensuring mutual transparency and accountability. Although the inclusive development partnership, which brings together diverse stakeholders, and enhanced mutual transparency through the disclosure of all information related to development aid activities were newly included, the rest largely repeats the content of the Paris Declaration. The gender equality and sustainable environment-centered green development, newly proposed by the South Korean government, and the rights-based approach advocated by civil society were not explicitly included in the Busan Partnership. Ultimately, the very title of the Busan Forum's BOD was changed from the originally planned 'Busan Partnership for Development Effectiveness' to 'Busan Partnership for Effective Development Cooperation,' resulting in the new development paradigm of development effectiveness taking a step back from the forefront.

Second, the effort to incorporate emerging donor countries, led by China, into the international aid system resulted in political compromises that run counter to the principles of international development cooperation. While traditional developed donor countries are experiencing reduced development aid budgets due to continuous financial crises, protagonists of South-South cooperation, such as China, India, and Brazil, are accelerating strategic increases in their foreign aid. Against this backdrop, OECD-DAC donor countries are making efforts to embrace emerging donors. Tony Blair, former British Prime Minister and Chair of the Africa Governance Initiative, stated at the Busan Forum that China's aid to Africa's infrastructure development this year has surpassed the World Bank's support, and China has now become a significant presence in Africa. Furthermore, the indirect changes in the political landscape of the international aid regime can be confirmed in the opening remarks of U.S. Secretary of State Hillary Clinton at the Busan Forum, which hinted at the revival of tied aid. The core argument of her speech was that while the U.S. fundamentally supports the expansion of untied aid, insisting on untied aid carries the risk of diminishing aid effectiveness, and therefore, allowing partial tied aid in exchange for ensuring aid transparency is proposed. Behind these statements lies a strategic calculation to compensate for the shrinking aid from developed countries through an inclusive partnership with NODDs and to control China's development aid, which is pursued as part of resource diplomacy and tied aid for donor interests under the guise of development, by integrating emerging donors, who are difficult to regulate, into the OECD-DAC. In other words, a new framework for the international aid system is being driven by the U.S. in a situation where triangular cooperation with China and South-South cooperation countries is unavoidable, despite facing political criticism for tied aid and support for undemocratic regimes. However, in the process of embracing emerging donor countries, the Busan Forum partially allowed tied aid to elicit cooperation from emerging donor countries, a political transaction that goes against the existing efforts in international development cooperation, by deferring agreement on the expansion of untied aid, a principle of international development cooperation.

Finally, the inclusive partnership can be evaluated as successful in that various actors actually participated in the Busan Forum. The scope of entities signing the BOD and forming the new partnership was expanded from representatives of recipient and developed countries, multilateral and bilateral organizations, to include representatives from various public and private organizations, parliamentary bodies, and local and regional organizations. The Istanbul Principles for CSO Development Effectiveness were officially recognized, and at the opening ceremony of the Busan Forum, a representative from Better Aid, alongside South Korean President Lee Myung-bak, UN Secretary-General Ban Ki-moon, Rwandan President Paul Kagame, and U.S. Secretary of State Clinton, read a joint declaration representing civil society, thus elevating the status of civil society. However, despite this elevated status, the proposals for development effectiveness put forth by these diverse actors were only partially discussed and reflected at the Busan Forum, which is a problem. In fact, issues that were included in the second draft of the Busan Forum BOD, such as achieving untied aid, establishing the International Aid Transparency Initiative (IATI) as a standard for transparency, reducing aid fragmentation, long-term programmatic aid, and establishing a post-Busan monitoring system, were left for future discussion. In particular, human rights, democratic ownership, transparency, and policy coherence, advocated by civil society, were discussed partially but not actively reflected in the Busan Partnership. The fundamental reason for this is that the majority of donor entities were reluctant or took a passive stance towards agreeing to new commitments and establishing concrete action principles or deadlines for their implementation. Therefore, it can be said that the Busan Forum made a practical compromise by facilitating the participation of diverse actors instead of reflecting their diverse voices.

Post-Busan Challenges

Following the Busan Forum, numerous tasks remain to be addressed within the international development aid system. First and foremost, the development of global monitoring indicators to assess the implementation of the Busan Partnership by each donor country is the most urgent issue for the post-Busan development system. At the Busan Forum, only a plan to introduce a monitoring framework for evaluating each donor entity by June 2012 was agreed upon, with no concrete progress made. Furthermore, follow-up work is needed to establish the IATI as a more substantively binding standard to implement the 'transparency' in development aid newly included in the Busan Partnership. Another important post-Busan challenge is how the newly included emerging aid partners, significantly increased under the inclusive partnership, will cooperate with each other and implement international norms. The situation has already reversed from the Busan Forum's decision not to set a timeline for untying aid, and instead, a climate of partially allowing tied aid has emerged, making it difficult to dismiss the possibility that commercial aid focused on donor interests, including tied aid, may regain prominence after the Busan Forum. To secure global governance functions, appropriate international cooperation must be discussed to respond to the changes in the international development regime landscape caused by the allowance of tied aid. Establishing a triangular cooperation consultation body to discuss policy coordination on development effectiveness with the expanding NODDs could be one approach. The discussion on innovative development financing, such as the Tobin tax and global environmental taxes, proposed by the OECD in its development strategy policy during the Busan Forum, is also a task that warrants serious consideration in the post-Busan aid system.

The Busan Forum has clear limitations in that it failed to provide an accurate assessment of the Paris Declaration, did not achieve sufficient consensus on new development effectiveness, and, by emphasizing only the democratic participation of various aid-related actors, failed to fill the international development aid system with substantive content. Therefore, unless the Busan Forum is supplemented with concrete and substantive implementation programs, the promises agreed upon at the Busan Forum will ultimately prove to be empty words. In particular, it is time to actively explore concrete directions for how the UN MDG system, which concludes in 2015, and the post-Busan development aid system can organically link and reconstruct the fundamental principles of development aid for achieving common objectives of the international community.

Enhancing South Korea's Soft Power

Despite the various limitations of the Busan Forum, it can be assessed that South Korea's soft power diplomacy has been further enhanced through this High Level Forum on Aid Effectiveness. South Korea demonstrated its ability to invite a diverse range of aid actors—donor and recipient governments, civil society organizations, private companies, and multilateral and bilateral organizations—to the Busan Forum, an unprecedented feat at any previous aid effectiveness high-level meeting. It can be said that South Korea effectively played a bridging role for a true development aid regime, encompassing emerging donor countries, including China. The question is whether South Korea can continue to play this bridging role between developed and emerging donor countries in the post-Busan system. To achieve this, wisdom is needed to understand the changes and trends in the international aid regime from a more holistic perspective, rather than focusing on technical and localized aspects. In the future, rather than expanding the scope, efforts should be made to produce substantive outcomes in terms of content, such as Capacity Development for vulnerable countries and ensuring Accountability for long-term development programs. South Korea's case, transforming from a least developed country to a member of the OECD-DAC, a group of developed donor countries, can offer valuable lessons to least developed countries. Indeed, there are development agendas unique to Korea, such as the Saemaul Undong (New Village Movement), and Korea possesses the know-how to implement development in this area more effectively than other developed donor countries. However, rather than advocating for an overly Korean development model and claiming universality and publicness for its aid policies, falling into self-contradiction, it is time to find contexts where Korea's development content can be shared with the development principles recommended by the international aid community and re-export them to the international community.

Many people say that aid is an important tool of soft power. However, upon reflection, development aid is a combination of soft power and hard power, not merely a tool that unilaterally generates soft power. If development aid is recognized not just as secondary soft power, but rather as an element of hard power representing the primary economic and political interests of donor countries, it will be possible to actively respond to the changing landscape of the international aid regime, escaping the dichotomy between the universality of development effectiveness and the pursuit of national interest. In the confrontational structure between China's national interest-centered aid policy and the universal cooperation system of European developed donors represented by aid effectiveness, the United States is already attempting a pragmatic approach by partially allowing tied aid and fostering cooperative relationships with emerging donors to embrace China. Amidst this, South Korea must overcome the logic of choosing between development effectiveness and the pursuit of national interest, and take the lead in building a development aid regime in a comprehensive and flexible manner. ■

The East Asia Institute (EAI) is a core research institution for the MacArthur Foundation's 'Asia Security Initiative' program and receives financial support. 'EAI Commentary' aims to provide in-depth analysis and practical alternatives through a balanced perspective on major domestic and international issues. Please cite the source when quoting 'EAI Commentary.' This manuscript represents the personal views of the author and does not necessarily reflect the position of the East Asia Institute.