Can Foreign Aid Buy Cooperation?External Funding and International Organizational

Adaptation

Julia GrayAssistant Professor

University of Pennsylvania

November 12, 2013

Abstract

As international organizations endure, they often must adjust to changing circumstances.Yet when organizations expand their scope or change their mandates, is this evidence ofuseful adaptation or of overextension? Furthermore, is the motivation for those changescoming from the needs of member states, or is it simply an effort on the part of the insti-tutional bureaucracy to survive? This paper demonstrates, as some have suggested, thatmany regional economic organizations (REOs) have expanded their scope and increasedtheir institutionalization in the past several years. But many have done so in a bid toattract external financing, thereby prolonging the life of organizations that are sometimesinefficient. These expansions are often infrequently implemented, and they may be morereflective of donor interests than of member-state initiatives. This implies that organi-zational design, as it evolves, may stem less from the needs of member states and morefrom the survival instincts of bureaucracies — thereby challenging the predominant viewthat international organizations center on member-state bargains, and offering insight asto why some organizations persist despite poor records of implementation.

Early Draft. Please do not cite without permission. Many thanks to Raymond Hicks for comments on

this version.

1 Introduction

How do international governmental organizations (IGOs) persist in the face of changing

circumstances? The classic theories of bureaucracy assume that organizations, once es-

tablished, adapt in order to survive. They seek to expand their budgets (Tullock, 1965;

Niskanen, 1971); they will adapt or shift their mandates in the face of changing circum-

stances (Olson, 1984; Haas, 1990); and at times their adaptations may veer in unexpected

or suboptimal directions (Barnett and Finnemore, 1999; Pauly, 1999). But much of the

literature in international relations assumes that these changes emerge as the result of

bargains among member states, or at least that organizations evolve in ways that reflect

the interests of the member states.

Yet this assumption overlooks an important development in the landscape of IGOs:

namely, the presence — and, potentially, the influence — of external powers on the

programming, institutional design, and financing of those IGOs. Particularly in the de-

veloping world, which is long on IGOs but short on member-state funds to support them,

external actors — particularly from the EU, Japan, and various strains of development

assistance through national governments as well as the World Bank and the UN — have

bankrolled up to half of the operating budgets of many of the same IOs that we tend

to assume are the products of member-state interests. External donors have built secre-

tariat buildings, established institutions such as courts and parliaments, and supported

various projects that often extend beyond the initial scope of the organization. But this

form of influence — which could potentially have big consequences for the ways that

IGOs work and their attendant impacts on international cooperation — has been largely

unacknowledged in the literature.

Accordingly, this paper argues that the evolutions and expansions of scope in some

international organizations frequently do not reflect the preferences or needs of member

states per se, in contrast to what the literature on rational design of institutions might

assert (Koremenos, Lipson and Snidal, 2001); rather, that they are merely evidence of

organizational adaptation in the face of budget constraints, and that the institutions that

1

form are less representative of member-state concerns and more of the concerns of exter-

nal actors. Many organizations expand their scope in an effort to secure external funding

from donors outside the region. In recent years, the EU as well as many international

development agencies have provided international governmental organizations with fund-

ing and program input. This can result in IO overextension (Pauly, 1999; Eberwein and

Schemeil, 2010), as organizations sometimes take on projects or institutions that might

not be appropriate to the needs of their members (Cardenas, 2003; Dutton and Dukerich,

1991).

I demonstrate this proposition using data on donor funding of regional economic or-

ganizations (REOs) from 1980 to the present. REOs are a good test case because the

majority of them started out as economic agreements alone, but many of them over recent

years have both expanded their scope and added on features of deeper institutionalization.

I show that changes in the scope of those organizations often track external grant pro-

grams, using case illustrations of two economic agreements in Africa that expanded their

scope (by adding on peacekeeping) and institutionalization (by adding a court) — but

one was initiated on the behest of the most powerful member, while the other resulted

from an EU-funded initiative. The source of funding and design can have important

implications for the ultimate effectiveness of the design features of an agreements.

This goes against many of the conventional understandings of the design of interna-

tional agreements as bargains that are negotiated among member states advocating for

their own interests. While this may be true at the initial stages of organization formation,1

over time, agreements that may for whatever reason not meet their initial purpose will

endeavor to survive through other means. This argument about institutional adaptation

is particularly germane in the study of international organizations in the less-developed

world. Many of the world’s oldest REOs, such as the Caribbean Community (CARI-

COM), the Association of Southeast Asian Nations (ASEAN), and the Common Market

for Eastern and Southern Africa (COMESA) were founded in the postcolonial era, at a

1But see Johnson (2011) for an account of how international bureaucrats, not states, shape the designof IOs.

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time of optimism about the potential for regional as well as domestic markets to expand

through import-substituting industrialization. Most of these organizations were founded

with a secretariat, permanent staff, and operational budgets that hinged on the contri-

bution of member states. But over time, with advances on the multilateral regime for

trade on the one hand and persistent low growth on the other, many countries began

to focus their economic attentions outside of their region. With the gains from trade

holding more potential at the multilateral level than at the regional level, and with many

countries in arrears of their budget obligations, many organizations faced the prospect

of extinction or reorientation. As international donors expressed preferences to channel

their funding through organizations already established on the ground (Dietrich, 2012),

some organizations were able to reorient to attract donor funding for specific projects or

for building infrastructure.

Furthermore, cooperation and utilization of various features of an agreement might

be less likely if the primary motivation for including those features stemmed not from

the preferences of member states per se, but rather reflected the interests of external

actors who fund those organizations. This phenomenon has been widely observed among

regional economic organizations. Just as some champion those organizations’ emulations

of various design features that seem to indicate deep institutionalization, others note that

those features are rarely implemented. For example, although the Andean Community’s

dispute settlement mechanism has been lauded for its similarity in structure to the EU

(Alter, Helfer and Guerzovich, 2009), others have noted that the court rarely sees cases

and that the legal principles are not implemented domestically (Phelan, 2013), perhaps

as a function of that organization’s mismatch with the needs of member states. Similarly,

between 1992 and 1994 alone, the European Commission initiated projects for increased

institutionalization of various regional economic organizations — most in its member

states’ former colonial orbits — worth 24 million Euros (Botto (2009), quoted in Lenz

(2012)). But Lenz (2012) shows that many of the institutional features of the South

African Development Community and Mercosur were undertaken at the behest of the

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EU, even though different institutional forms might have been better suited for those

countries’ purposes. This implies that as the bureaucracies of organizations interact with

economic opportunities for expansion, they may undertake mandate changes that are

inappropriate or costly (Acemoglu, Ticchi and Vindigni, 2007).

This paper proceeds as follows. The next section situates this argument in the liter-

ature on the rational design of institutions as well as theories of organizational adapta-

tion. I argue that we would expect high levels of donor funding to be associated with

higher levels of designed scope and institutionalization of these agreements, though there

is potential for endogeneity in that relationship. Section Three discusses the empirical

evidence on donor funding to regional economic organization and shows patterns of as-

sociation that support the hypotheses. Section Four explores the potential endogeneity

of the relationship between scope and funding by examining two cases: SADC’s estab-

lishment of a Tribunal at the behest of EU funding, and ECOWAS’s initial peacekeeping

mission, which was initially conceived of and financed not by donors but by the largest

member-state, Nigeria. The final section concludes.

2 Organizational Adaptation

When do the shapes of organizations reflect members’ desires, and when do they reflect

their own bureaucratic culture? The literature on the rational design of institutions

(Koremenos, Lipson and Snidal, 2001) posits that members bargain over the the scope

and institutionalization of international organizations.2 This assumption underlies much

of the empirical work on economic agreements; work that examines the impact of the

design of, for example, preferential trading arrangements (Baccini and Dur, 2009; Kucik

and Reinhardt, 2008; Kucik, 2012) and its impacts on cooperation in practice. Much of

this work has centered on the political and economic determinants of agreement formation

(Mansfield and Milner, 1997; Mansfield, Milner and Pevehouse, 2008).

2But see Johnson (2011); Urpelainen (2011) on the role of international bureaucrats in IO design.

4

But this literature does not explicitly address the ways in which organizations might

evolve over time, and how that evolution might reflect different interests and mechanisms

than simply the initial constellation of member-state bargaining. Yet this is a common

line of inquiry in the vast literature about institutional reforms over time, both in the

managerial tradition (Tullock, 1965; Niskanen, 1971; March, 1981; Haas, 1990; Weingast,

1996; Grief and Laitin, 2004) as well as in the literature on historical institutionalism

(Thelen, 2009; Mahoney and Thelen, 2010; Farrell and Newman, 2010; Fioretos, 2011).

This literature assumes that organizations, once formed, seek to maximize their budgets

and to survive by any means, and this can often take the form of adaptations that expand

the mandates of those organizations — expansions that are not always optimal for the

members in question.

While much research in international organizations does account for bureaucratic ex-

pansion of IOs (Mitrany, 1933; Keohane and Hoffmann, 1991), the sources of preference

for those expansions is usually assumed to be endogenous either to the bureaucracy itself3

or to the member states (Brusis, 2010). At the same time, however, others have noted

the influence of external actors on various aspects of state policies (Finnemore, 1996;

Cardenas, 2003).

Yet the links between external actors, international organizations, and mandate ex-

pansions have not been fully established. Some authors have noted that external actors

can influence regional organizations, usually implicitly through emulation of design prac-

tice (Boerzel and Risse, 2009b; Jo and Namgung, 2012; Jetschke and Lenz, 2013). But

others have noted that the influence may be more explicit, as external actors make mon-

etary contributions to various forms of international organizations, particularly regional

ones. Research on this topic tends to focus on donor preferences (McLean, 2012) or the

efficiency of the aid structure (Dietrich, 2012). But none has systematically linked ex-

pansions of scope and institutionalization with external funding as a systematic pattern

among organizations.

3See, for example, Babb (2003); Chwieroth (2010) on organizaitonal culture in the IMF and Weaver(2008) on the World Bank

5

These changes have been noted in many types of international organizations, such as

the International Monetary Fund (IMF) (Chwieroth, 2010; Grabel, 2011) and the Bank

of International Settlements (Bernholz, 2009). But this phenomenon has not been sys-

tematically studied in the area of regional economic organizations (REOs), despite those

groups’ changes over time and their prominence in the study of economic cooperation.

Just as many scholars have noted the rise of regional economic organizations (Solingen,

2008; Mansfield and Milner, 1999) and argued as to their positive benefits for coopera-

tion (Goertz and Powers, 2012), others have noted that REOs often do not live up to

their commitments (Haftel, 2012), and that these organizations tend to persist even if

they have outlived their original mandate (Gray, 2013). Member states often fail to pay

their membership dues to organizations, such that staff go without salary payments. Yet

at the same time, many REOs have expanded the scope of issue areas that they cover

(Goertz and Powers, 2012) and added features such as courts and parliaments that are

hallmarks of the stronger institutionalization that many associate with deep cooperation

(Alter, Helfer and Guerzovich, 2009).

If REOs often fail to fulfill their original mandates of trade promotion, why do they

add on even more areas of potential cooperation and building what look on their face to

be stronger institutions? That is, if cooperation failed to materialize under organizations’

original sets of goals, and if the original institutional setups proved lacking, why would

they add new ones? There are a few possible answers to this puzzle. One is that, having

struggled with meeting their initial goals, the organizations turn to new areas where they

might have more traction. This seems to be the case with the Economic Community of

West African States (ECOWAS); although it had a poor record of economic cooperation

(Hanink and Owusu, 1998), it subsequently reoriented toward the area of regional peace-

keeping with notable success (Levitt, 1998). Yet others seem to add institutional features

only to abandon them; twelve years after it was founded, Mercosur (a trade agreement

among Brazil, Argentina, Uruguay, and Paraguay) established a parliament with the aim

of incorporating more involvement of member-state legislators (Lenz, 2012). However, the

6

parliament went from having 10 sessions in 2008 to one in 2011, and none at all in 2012

or 2013 (Lucci, 2012). Why bother to design and build institutions that are subsequently

abandoned, or not used for their original purpose? This example suggests a second possi-

ble answer: that changes in the scope and institutional arrangements of agreements might

be exogenously determined, by actors that are not part of the member-state configuration.

Indeed, just as many organizations have expanded their competencies, many of them

do so explicitly to attract external funding so that their bureaucracies can survive, and

in attempts to draw in development aid for their regions. For example, the Organization

for Eastern Caribbean States (OECS), an economic organization founded in 1981, had

long faced budgetary constraints, as many member states were in arrears of their mem-

bership dues.4 In 2010 it revised its treaty to deepen cooperation but also to establish a

parliamentary assembly and to strengthen the institutionalization of its secretariat. The

European Commission provided funding and design guidance on that institutionalization.

“We absolutely undertook these reforms in compliance with the EU. First of all, it is a

model that works ... but secondly it was necessary for them to view us as a partner that

they could continue to support and to work with,” said one OECS representative.5

This phenomenon is worth exploring, since external funding of some forms of inter-

national organization is a widespread and systematic occurrence. This is particularly

true in the area of regional economic organizations, most of which are in the developing

world, and many of which were established with buildings and employees but currently

face significant financing constraints. Many of them comprise member states that are

both relatively poor and that are also simultaneously members of many similar organi-

zations with overlapping mandates; one study note that poor countries would have to

triple their income every ten years to fund their representation to all of the IOs to which

they belong (Shanks, Kaplan and Jacobson, 1996). This leads to budgetary shortfalls

in many organizations. For example, in the Economic Community for the Great Lakes

4“Organization of Eastern Caribbean States issues communique,” Caribbean Media Corporation, May26, 2007

5Author interview, Beverly Best, OECS Head of Programs, 8 March 2012.

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(CEPGL), an economic organization founded in 1976 and comprising Rwanda, Burundi

and Democratic Republic of Congo, in the past several years only Rwanda has made its

required membership contributions, leaving the organization falling short of 45 percent

of its over $3 million budget 6

In the face of those budget constraints, and with the intention of survival (Olson,

1984), the bureaucracies of many of these organizations have adapted their mandates in an

effort to attract external financing. One such organization is the Caribbean Community

(CARICOM), a regional integration initiative founded in 1972 that currently finances

almost 70 percent of its budget through donor contributions. Much of this is program

funding in the areas of health; the UN, the World Bank, the Bill and Melinda Gates

Foundation, and several bilateral donors have run HIV-AIDS awareness and prevention

programs through CARICOM since the early 2000s.7 But often those programs are finite

and must be discontinued once the funding dries up or if donor priorities shift elsewhere.

One official representative to CARICOM describes a program initiative to coordinate

central bankers in the region. “The program was a success, and we established very

good mechanisms [for cooperation] ... but once the program ran its course there was no

financing to continue the meetings and reports, so the whole initiative stopped as though

it had never happened.”8

While many have lauded the expansions of these organizations as proof of their ef-

fectiveness (Goertz and Powers, 2012), and signs that these international institutions

are positively impacting cooperation among their members, the motives for and appro-

priateness of those advances have not been systematically investigated. This also has

implications for the performance of those designs in terms of overall organizational ef-

fectiveness (Gutner and Thompson, 2010). We might anticipate that organizations that

undertake design measures at the behest of external actors would potentially have less

ability to fulfill their original mandate. If organizations were simply taking on new ini-

6“Rwanda: Financial Woes Threaten CEPGL Operations.”7“Caribbean region urges continued funding for HIV/AIDS programmes,” BBC Monitoring, 30 April

2013.8Author interview, Dr. June Soomer, St Lucia Ministry of Foreign Affairs, 2 March 2012.

8

tiatives to fulfill a program requirement of external actors, those expansions might not

be fully implemented if the member states themselves were not on board.

Additionally, externally funded programs usually stem from the agendas of donors

themselves and may not coincide with, or at least may be complicated by, activities that

an organization is already undertaking. Anecdotal evidence supports this conjecture. An

official at CARICOM’s technology unit describes a situation when, following a donor

conference, CARICOM representatives “came back and set down a whole new agenda for

IT coordination that they had agreed on with donors. They just put it on my desk and

said, ‘this is what we’re doing now.’ But we already had several programs well underway

in the areas of IT that had different timelines and goals — but now we were supposed

to just stop all of that and redo everything according to the new agreement.”9 Situations

such as this one, when organizations must overlay or discard initiatives to keep apace

with donor funding prerogatives, would also lead to poor implementation in the long run.

Scholars of institutional design often discuss the various features of international agree-

ments in terms of their scope (typically thought of as the number and variety of issue

areas covered by the agreement) as well as their institutionalization (the strength and au-

tonomy of their bureaucracy, as well as the presence of mechanisms such as supranational

status, dispute-settlement mechanisms, or parliaments). However, many acknowledge

that there is frequently a gap between the designed scope and institutionalization, and

the degree to which those features are actually put into effect (?Boerzel, 2005; ?; Gray

and Slapin, 2011). Thus, it is important to conceptualize the implemented scope and

institutionalization as well as the way those features look on paper. We might expect

that, while external financing of IGOs would be associated with changes in the de jure

features of an agreement, those features might not have much of an impact de facto.10

9Author interview, Jacqlyn Joseph, Executive Director of the Strategic Planning and Monitoring,and Evaluation Sub-Programme of Information Communication Technology at CARICOM Secretariat,7 March 2012.

10This conjecture taps into a vast literature on the effectiveness of foreign aid; see, for example, Alesinaand Dollar, 2000; Meernik, Krueger, and Poe 1998; Schraeder, Hook, and Taylor, 1998; Svensson, 1999;Wright, 2007; Bermeo, 2007; Dunning, 2004; Neumayer, 2003; Burnside and Dollar, 2000; Bearce andTirone, 2010.

9

We can express these ideas in the form of testable hypotheses:

• H1: Organizations that receive more external program funding will be associated

with broader designed scope.

• H2: Organizations that receive more external program funding will be associated

with higher levels of designed institutionalization.

• H3 Organizations that receive more external program funding will be associated

with lower levels of implemented scope and institutionalization.

Yet empirically, these relationships are tricky to untangle. First, it is difficult to

establish decisively the intent behind organizational expansions, as well as to unpack

the many factors that might make a reform successful or not. That is, even the best-

intentioned reforms may be difficult to implement, if there are infrastructural or capacity

issues surrounding their implementation (Gray, 2014). Additionally, the donor funding

may be deployed with the intent of improving capacity in the organization as well as the

member states themselves. If we observe low implementation, it might be attributable

simply to the fundamental inability of many regional organizations to accomplish their

goals (Haftel, 2012), not necessarily to coordination failures on the part of donors.

Similarly, there is a potential endogenous relationship between donor funding and

levels of scope and institutionalization. It could be the case that donors target organiza-

tions that have at least the trappings of some institutional structure to carry out their

programs, or where program scopes are sufficiently broad that there might be some level

of competence to undertake the programs. If that were true, program scope would be the

main driver of funding and not the other way around. These concerns will be addressed

in the empirical sections, particularly in the case illustrations.

The next section describes the patterns of funding, across donors as well as recipients.

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2.1 Patterns of External Funding

The most comprehensive source of data on funding of organizations comes from AidData,

which relies on self-reporting from 71 donors as to their projects over time. However,

those reports vary in terms of their quality and the consistency of their observations.

Additionally, many of the projects span multiple years, so the exact time stamp on them

is difficult to assess. The earliest observation is from 1955, though the majority of the

project activity began in the mid-1980s and picked up in the 2000s. These data are far

from exhaustive, but they are the most complete that are available.11 Nonetheless, they

serve as a first cut for establishing patterns of association between aid and agreement

effectiveness. Although the theories above could apply to many types of international

organizations, the empirics here focus on aid to regional economic organizations.

The big donors — the EU (as well as EU countries), the US, and Japan — have

differing foreign policy objectives, and their funding patterns reflect those objectives. The

EU in particular has a tendency to both grant funding to organizations in its members’

former colonies, and it also tends to encourage the structure of regional institutions that

look similar to its own (CARICOM and the Andean Community are particular examples

of this) (Jetschke and Lenz, 2013; Boerzel and Risse, 2009a; Lombaerde and Schulz,

2009). For its part, the US gives little infrastructural support and leans toward funding

of specific programs, many of which have nothing to do with trade promotion per se but

instead concentrate on development and security. By contrast, Japan invested heavily in

ASEAN so that it would secure a vertical integration network for its own foreign direct

investment (Baldwin, 2007; Manger, 2009), although its investments have both declined

in volume and shifted in scope, addressing terrorism, piracy, and other transnational

issues.(Hattori, 2007) Nonetheless, Japan still provides around 60% of project financing

to ASEAN (Kwon 2003), although it does not fund other parts of the world. China is

also beginning to fund regional economic organizations as well; in 2011 it contributed

11Other data-collection options would be gathering project and funding data from every recipient, andthe organizations themselves keep extremely poor records.

11

$200 million to build a new headquarters for the African Union.12

Table 1 shows a breakdown of projects and other types of support in the AidData

system that are funded by donors and carried out by other IGOs.

TABLE 1 ABOUT HERE

Indicative of the imprecision of the data categories, the largest category is for uncate-

gorized projects. We see, however, that most of the categorized projects have to do with

health, social or peacekeeping initiatives. This database reports five categories of funding

that directly relate to trade,13 totalling 48 projects at around $46 million — around $20

million less than program initiatives regarding HIV/AIDS that are channeled through

these economic agreements. This indicates that many agreements might be taking on

competencies that strayed far from their initial intent.

Table 2 shows a breakdown of organizations in the AidData system that are listed as

having received funding, by the amount over the years as well as the number of projects.

TABLE 2 ABOUT HERE

It is worth noting that some REOs receive no outside funding per se. For example, the

three members of NAFTA each cover the costs of day-to-day participation separately, with

no central secretariat but rather small sections in the respective trade ministry of each

country. Of those that do, however, the Organization of American States and the Andean

Community are among the organizations that has received the most funding (around $4

million each). The Andean Community is particularly worth noting because its high levels

of institutionalization and its dispute-settlement mechanism have caught the attention

of scholars (Alter, Helfer and Guerzovich, 2009). In Africa, ECOWAS and the East

African Community receive the majority of funding relative to other organizations in the

region. Of course, the sheer fact of its receiving funding does not on its face indicate the

effectiveness or ineffectiveness of the agreement; it could be the case that donors fund the

12“African Union Faces Multiple Crises as Dlamini-Zuma Takes Over,” allAFrica.com, 20 July 201213Multilateral trade negotiations; Trade facilitation; Regional trade agreements (rtas); Trade policy

and admin. management; Trade education/training

12

best or most effective organizations.

To examine preliminarily the relationships between funding and agreement design and

effectiveness, I use data from Haftel (2012), who codes regional economic organizations

in terms of both the design of their institutions as well as the implementation of that

design. He codes agreements in terms of the broadness of their scope and the depth of

their institutional commitments, on a scale of 1 to 23 for scope and 1 to 28 for institution-

alization, with higher values indicating stronger de jure commitments. The mean values

of designed scope and institutionalization across agreements are 13 and 16, respectively,

with standard deviations of around 5 points for both. Haftel’s data are only coded in

five-year increments, and thus the exact moments of organizational change are difficult

to pinpoint; furthermore, Haftel’s data only tracks treaty revision, whereas many of the

expansions in scope to include new issue areas take place without a formal renegotiation;

thus, the changes in scope are actually more numerous than they appear in these data.14

However, as a preliminary look at the overall patterns among aid, design, and effective-

ness, the figures below show the relationship between designed agreement variation and

external funding (logged to normalize the distribution and to ease in visualization).15

FIGURES 1, 2 AND 3 ABOUT HERE

As expected, and in preliminary support of Hypotheses One and Two, we see that

higher levels of outside funding tend to be associated with higher designed levels of

institutionalization. As evidenced in Figure 1, except for the Indian Ocean Council

and the Bangkok Agreement (the latter of which has very little formal structure but

is heavily funded by China), external funding tracks higher levels of institutionalization

quite strongly. External funding also corresponds for the most part with changes in scope

as well as changes in institutionalization, as shown in Figures 2 and 3 — although, as

14Data are currently being gathered that code in a more detailed manner initiatives to expand the scopeor institutionalization of organizations and the member-state ratifications of those amendments, as wellas on the number of meetings that mention or include donors, as a way of establishing the intentionalitybehind these changes in scope.

15For ease of visualization, the unit of analysis is at the REO level.

13

mentioned, Haftel’s dataset underreports the changes in scope that can arise as a function

of adding new issue areas to support externally funded projects. And of course, these

relationships do not indicate causality, merely association.

We would additionally want to know whether lending was associated with not only

changes in design, but also levels of implementation. Haftel codes implemented design

and scope for each agreement, and the scores for implementation are systematically lower

than those for design, indicating an “implementation gap” (Gray, 2014) across the ma-

jority of agreements. Average levels for implemented scope and institutionalization are 7

and 10 respectively, with standard deviations of around 5. Most agreements’ implemen-

tation levels score five points below their design values. Hypothesis Three indicated that

initiatives that stemmed largely from donor priorities and not from the needs of member

states would be less likely to be successfully implemented. Again, Haftel’s metrics can-

not show the intentions behind a change in institutional design, but we can still gather

associations between those changes and levels of external funding.

FIGURES 4 AND 5 ABOUT HERE

A handful of organizations in the bottom right quadrant of the graph — including

ASEAN, the Southeast Asian Association for Regional Cooperation, and the Bangkok

Agreement — receive high amounts of external funding and maintain a good record of

implementation. But excluding these observations, consistent with Hypothesis Three,

we see that many organizations receive high levels of donor financing despite having a

significant gap between their stated goals and the implementation of those objectives. The

section below explores these dynamics in greater detail, positing that when organizations

undertake scope and institutionalization features at the urging of donors, they are more

likely to be infrequently implemented.

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3 Two Examples of Mandate Expansions, With and

Without Donors

As mentioned previously, the above empirics do not decisively establish the direction of

causality in the relationship between donor funding and agreement scope and institu-

tionalization. The cases below, however, detail the process through which two different

expansions of scope and institutionalization took place. The case of SADC illustrates

an example of an organization that was itself designed in part to attract and coordinate

development aid, but when one donor initiative of institutionalization directly conflicted

with member-state interest, it was actively dismantled. By contrast, the case of ECOWAS

— an organization that also receives a significant amount of donor aid — initially broad-

ened its scope to undertake peace-keeping initiatives that were in line with member-state

interests. Those initiatives have subsequently been funded by external actors, but their

original intent sprung from member-state needs and not program objectives. This indi-

cates that implementation of organizational goals might interact with the original suit-

ability of the goal in the first place, along with external support when internal funding is

lacking.

3.1 The SADC Tribunal: Added by Donors, Overturned by

Members

The South African Development Community was originally put into place in part to

coordinate aid and to attract additional development funding (Mandaza, Tostensen and

Maphanyane, 1994), as well as to establish economic ties that excluded then-apartheid

South Africa. But throughout that organization’s existence, it has relied heavily on

donor financing.16 In SADC’s 2011 budget, for example, only $31 million was slated from

member states; the remaining $52 million came from external donors 17. Furthermore,

16SADC Executive Secretary, ‘Talking Notes for the Post-Council of Ministers Diplomats Briefing,’February 2006

17“Regional Integration Key - SADC Leaders,” The Herald (Harare), August 18, 2011

15

that official figure for member contributions fell far short of the realized totals: only

eight of the organization’s 14 members actually paid their contributions, to a total sum

of $5 million.18 Crucially for the illustration below, however, Zimbabwe is one of those

countries that has over the years consistently paid its $1.8 million annual member dues,

even despite several years of economic hardship and international sanctions.

SADC undertook several institutional reforms over the years, particularly encouraged

by the EU, which was hoping to develop institutions in its former colonies that not only

resembled the EU in structure, but also that would enable it to more easily conduct

negotiations for its Economic Partnership Agreements, the proposed successors to the

expiring colonial preference that had been granted under the GATT/WTO (Lenz, 2012).

According to a 2006 report by the Botswana Institute for Development Policy Analysis,

“Foreign donors remain a crucial source of funding for SADC and its operations ... Ex-

ternal development finance and foreign donor agencies have played a critical role in the

evolution of SADC,” with the most prominent donors being the European Union, the

Nordic countries, Finland, the UK, Germany and Switzerland (Tjonneland, 2006).

Among those changes was the establishment of a tribunal, which was put into place

in 2005 thanks to funding from the Commission. The Tribunal was intended for member-

state disputes, but none was ever brought to the court. Individuals, however, could bring

cases to the tribunal, and in 2007 the court’s second-ever ruling was cast in favor of a white

farmer, in a case brought against the Zimbabwean government.19 After the land reform

in Zimbabwe that nationalized property owned primarily by whites, the court ruled that

the Zimbabwean government had discriminated against the plaintiff on the basis of race,

as well as inadequately compensating for the land and denying proper access to domestic

courts. The court further declared that the government’s actions had infringed on the

rule of law as well as of human rights (Hulse, 2012). After this ruling, 78 additional white

farmers brought cases of their own to the court on the same grounds.

Zimbabwe immediately contested the initial ruling and declared it was not bound by

18Ibid.19“Zimbabwe: White Farmers Appeal to SADC,” Zimbabwe Independent October 12, 2007

16

the court’s jurisdiction, since it had not ratified the treaty establishing the tribunal.20

Meanwhile, the court continued to hear the additional cases, and after making similar

rulings in three similar ones, SADC halted the hearings while an independent review of

the legality of the court was conducted — a review that was itself funded by an external

actor, Germany.21 After the report found that the Tribunal’s establishment was in keeping

with legal principles, SADC suspended the tribunal — under pressure from Zimbabwe

and with implicit consent from South Africa, which was not eager to have its own human-

rights record open for investigation.22 Other heads of state agreed; Tanzanian President

Jakaya Kikwete stated at a SADC summit discussing the tribunal, “We have created a

monster that will devour us all,” (quoted in Christie 2011).

External funding was directly implicated in this discussions. “The European Union

and other donors (funded) the SADC Tribunal. This is why (the SADC) Secretariat

was eager to make the Tribunal stand. It was all to please someone,” Zimbabwe’s Justice

Minister Patrick Chinamasa was quoted as saying. “In Swapokmund [Namibia, in a SADC

meeting May 2011] we all agreed with the position but suddenly the (SADC) Executive

Secretary said, ‘what will the European Union say?’ ... This has been the problem as in

all meetings we have had on the SADC Tribunal: donors would be following and being

in the corridors asking what we would have deliberated on.” 23 The five judges were also

widely disparaged as being coopted by funders, with one article charging that they had

“found succour and funding from Germany.”24.

Although some appealed for the revival of the court — and the EU halted its funding

of the tribunal until the body was reinstated according to its original tenents25 —- the

form of tribunal that many proscribed seemed not in keeping with international law. One

paper called on any court to be “people-friendly and sealing any loopholes so that a new

20“Southern Africa: Nation Wants SADC Tribunal Rulings Nullified,” All Africa, 19 May 2011.21The review was conducted by WTI Advisors Ltd, an affiliate of the World Trade Institute, through

a German Technical Cooperation Programme towards Governance Reform Effectiveness of SADC Struc-tures.

22“Zuma handed ‘poisoned chalice’ by EU on Zimbabwe,” Business Day, 23 July 201323“SADC should put its money where its mouth is,” The Southern Times, 31 August 201224“Regional Integration Key - SADC Leaders,” The Herald (Harare) August 18, 201125“Help revive SADC court, EU told,” The Witness, 28 Sep 2012

17

tribunal is not again amenable to infiltration and abuse by imperialists. SADC ... not in

[the] future hold out a begging bowl to proverbial ‘sleeping dogs,’ but dig deep into the

regional organisation’s own coffers, however meagre these might be, as seed money for

any regional institution the organization might wish to set up in future. At least none

but themselves will claim ownership of that body and use it to fulfill the aspirations of

the people of the region.”26

This example illustrates the tension between the efficacy of donor projects and their

legitimacy in the eyes of member states, particularly when those initiatives run counter

to member-state interests. Zimbabwe — which continued to secure its influence in SADC

by keeping abreast of its annual dues — particularly objected to the tribunal, but it was

clearly not in the interest of any of the other member states to override those objections,

since they would have also been potentially compromised by such a court’s future rulings.

Thus, this example is indicative of the origin of an institutional reform that was conceived

as well as funded by donors — and this expansion subsequently proved illegitimate in the

eyes of member states. The SADC case was rare in that it was actually disbanded, but

other EU institutional initiatives have met quieter but similar fates; as mentioned above,

the EU-funded Mercosur parliament went from meeting 10 times the year of its founding

to not at all in the past two years. This indicates that institutional initiatives that are

conceived and funded solely by donors will have little chance of effectiveness.

3.2 ECOWAS’s Peacekeeping Expansions of Scope: Initiated

by Members

This case illustrates the start of an initiative that expanded the initial scope of an eco-

nomic agreement — an expansion that was subsequently supported by external funding.

ECOWAS continues to receive a large portion of its budget from donors,27 largely for

peacekeeping, election monitoring and human rights interventions (Levitt, 1998; Donno,

26“Zimbabwe: Solidarity Call As SADC Kangaroo is Killed,” Africa News. May 29, 201127“ECOWAS Raises Funds for Guinea Bissau Elections,” BBC Monitoring, November 24, 2012

18

2010). ECOWAS has revised its treaty significantly since its founding in 1975 and now

has a broad scope of competencies and a high amount of institutionalization (in Haf-

tel’s dataset, it scores among the highest in terms of design on both fronts). But those

programs have consistently been funded by donors, due to ECOWAS’s “unendingly dire

financial circumstances” (Bamfo, 2013), and UN peacekeeping forces tend to supplement

the regional ones.28

ECOWAS was initially established as a trade agreement among 15 western African

states, but due to factor similarities, it did not on its own produce much intraregional

trade (Hanink and Owusu, 1998). But what started out as a purely economic agreement

has turned into a far broader endeavor, with regional security cooperation as its primary

function. It also includes a court designed after — and funded by — the European Court

of Justice (Alter, Helfer and McAllister, 2013; Voeten, 2010), established in 1991 but

enacted in 1996, and subsequently expanded in 2004.29 Since its inception, ECOWAS

has expanded its scope three times, first in 1993 to include provisions for cooperation on

a broader set of issue areas, including cultural and social affairs, women, and the press

(Robert, 2004) along with security, as will be discussed below. In 2007 its secretariat

changed into a Commission, in the style of the EU, and added six more competencies

— Human Resources Management; Education, Science and Culture; Energy and Mines;

Telecommunications and IT; Industry and Private Sector Promotion; and Finance and

Administration — as well as sports and an annual beauty pageant.30

On its surface this might appear to be overextension of organizational competencies,

and each provision would have to be examined in turn to establish its effectiveness as

well as its ideological origin. But this section investigates the origin of ECOWAS’s first

expansion into regional peacekeeping, and argues that a prominent state in the group was

the one responsible for that initial mandate enlargement. Although donors subsequently

stepped in to fill the financing gaps, the initial expansion were conceived of and funded

28“EU, Sweden provide N17.9bn grant to ECOWAS, BBC Monitoring, April 9,201329“Council of Ministers expand powers of ECOWAS Court,” PANA, 20 July 200430“I Am Desperate to Touch Lives - MBGN Universe,” Leadership (Abuja), August 16, 2013; “A West

African beauty pageant: Miss ECOWAS 2010,” The Economist, 28 Nov 2010

19

by the member states themselves, which had an impact on their effectiveness and their

legitimacy.

The initial incident that prompted the development of peacekeeping in the region was

the civil war in Liberia, following a coup in 1980 of Samuel Doe’s military regime and a

subsequent incursion in 1989 from Charles Taylor’s National Patriotic Front of Liberia

(NPFL). At the time, ECOWAS had no mandate at all for peacekeeping, aside from a

1978 Protocol for Nonagression.31 In fact, ECOWAS members Burkina Faso and the

Ivory Coast had provided support for Taylor, including military training for his forces.

But the largest member of ECOWAS, Nigeria, was strongly in favor of intervention.

Nigeria’s GDP is larger than that of all the other ECOWAS countries combined, and it

contributes the majority of the annual ECOWAS budget (31%, with the Ivory Coast as

the second-highest contributor at 12.6%).32 Nigeria’s then-President Ibrahim Babangida

had a personal relationship with Doe, who had even named a road and a school in Liberia

after him. Nigeria had also wanted to establish a role as a regional power in ECOWAS;

additionally, Babangida decided that unilateral intervention would be politically unac-

ceptable both domestically and abroad, and that “the legitimizing umbrella of ECOWAS”

would be a more palatable way to intervene (Ofuatey-Kodjoe, 1994).

In August 1990, ECOWAS dispatched a 3,000-man Military Observer Group (ECO-

MOG) to Liberia. The intervention was by most accounts underfunded, with Nigeria

putting forward the majority of the soldiers as well as financing, at $12 billion. But the

intervention did prevent Taylor from seizing Monrovia as well as settling the war through

negotiations and elections. One report noted that member-state soldiers from Nigeria

were the most active participants in the early stages of peacekeeping, including supplying

the worse-funded troops, like those from Sierra Leone, with financing and supplies.33

Based on this initial success, ECOWAS’s peacekeeping efforts were subsequently sup-

31“ECOWAS and the Subregional Peacekeeping in Liberia,” 28 Sept 199532“ECOWAS Imperative for Nigeria, Nigeria Development and Finance Forum,” 12 August 199533“The Nigerians were the hard men of the Ecomog force. On checkpoint duty they were considered

rude and arrogant, but when there was fighting to be done they were usually the ones who did it, evenif they were not too fussy about the finer points of their peace-keeping mandate.” Quoted from “Theperils of Liberian peacekeeping,” BBC 4 August, 2003.

20

ported almost entirely by external funding, with the UN and the EU contributing the

majority. The external financing is somewhat controversial in the region.34 But it proved

to be the cornerstone for further expansion of ECOWAS’s mandate, and peacekeeping

remains one of the more successful of the initiatives of all the African regional integration

agreements (Soderbaum, 2005). This expansion of scope was initially put forward and

financed by Nigeria, which might have made a difference in terms of the legitimacy of the

expansion for the member states as well as for subsequent implementation.

This example offers some insight as to the mechanisms behind agreement scope and

implementation. When member-states initiate the changes, they might be more likely to

be successful, since they arise directly from the needs of the countries in an organization.

However, the duration of this effect is unclear, since donor funding may subsequently

shift the scope expansions in a way that is not optimal for member states.

4 Conclusion and Continuing Research

The role of external actors in shaping the institutional structure of international orga-

nizations is an area that has been largely underexplored. Yet outside funding from the

EU, the United States, the Scandinavian donors, and Japan — and, increasingly, China

— has been a key source of financing, and possibly influence, in many of the IGOs across

the world. These actors often provide not only funding but also inspiration — direct and

indirect — for the structure of the institutions, the language of treaties, and the shape

of program activities. External funding is often specifically linked to the development of

certain competencies or the emphasis of a certain type of institutional structure. Fur-

thermore, when external funding is renewed without an emphasis on the performance

of a given agreement, it may change the incentives of member states in terms of the

administrative resources that they themselves spend on those organizations.

34One report writes“Another solution to the problem of meagre resources is to raise funds from outsidethe region. ... There is always the danger that the entire operation could be controlled by the outsidepowers that are paying for it. ... However, there does not seem to have been any choice.” Ofuatey-Kodjoe(1994).

21

This phenomenon has been largely left out of most accounts of comparative institu-

tional design and effectiveness. This paper attempts to fill this gap by making two key

arguments. First, I address variation in the supply side of outside funding to REOs.

I argue that outside funders of regional organizations are driven primarily for internal

political reasons that may not center on the effectiveness of the organizations themselves.

We can expect these different motivations to lead to differing performance of the REOs

under study.

Overlooking the role of these forces on the character and composition of regional

agreements is detrimental to our understanding of how those agreements work. We risk

misattributing, for example, a thick institutional design to a show of will and commit-

ment on the part of member states, when in fact that design may be simply a function

of some EU directive, where funding is conditional on the formation of a certain type

of (EU-like) institution. This omission also overlooks the role of power politics in the

shape of international cooperation today. Many describe the predominance of regional

organizations as evidence of a globalized, multipolar, post-hegemonic world, in which

myriad and discrete spheres of influence prevail over one central core. But if these orga-

nizations are bankrolled and shaped by a few dominant actors, the world does not look

so different from the classic makeup of traditional power politics. Thus, any evaluation

of REO performance Gutner and Thompson (2010) should take external actors in REOs

into account.

This has implications for the literature on international cooperation and institutional

design more generally. Many tout regional organizations as potentially the more effective

forms of international organization in a variety of issue areas, including development banks

(Desai and Vreeland, 2011), democratization (Pevehouse, 2002; Donno, 2010), and peace-

keeping (Barnett, N.d.). Investigating the motivation for these organizations’ changes in

design, and acknowledging the role of external financing in those changes, will complicate

our expectations of the effectiveness of those agreements.

Donors have different funding priorities, and we can imagine that variation in these

22

funding strategies might lead to variance in the structure efficiencies in regional economic

organizations. In the case of blanket infrastructural funding, such as what the EU pro-

vides, member states of a given REO would have no incentive to make the agreement

run effectively. If the EU, for its own strategic or ideational reasons (including the pro-

motion of its own model beyond its borders), will fund agreements regardless of how well

they work in terms of trade-generation, the agreements will tend to be mere bureaucratic

structures. Member states would have no incentive to extend resources in making these

agreements work, since they will be funded unconditionally. Similarly, in the case of pure

programmatic funding, such as what the EU provides, we might expect that the organi-

zations will become less and less focused on trade promotion and will increasingly stray

from their initial missions.

It is also worth looking at how variance in funding patterns by programs corresponds to

variance in both the effectiveness of the agreements but also in the influence of external

actors in those agreements. An organization for whom the bulk of their funding goes

into program activities (such as COMESA and Mercosur) might work differently than

organizations that receive their main support in the form of infrastructural funding to

the secretariats (such as the Andean Community and CARICOM). In the case of blanket

infrastructural funding, such as what the EU provides, we can imagine that member states

of a given REO would have no incentive to make the agreement run effectively. If the

EU, for its own strategic or ideational reasons (including the promotion of its own model

beyond its borders), will fund agreements regardless of how well they work in terms of

trade-generation, the agreements may tend to be mere bureaucratic structures with little

chance of effectiveness.

23

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30

Table 1: External Funding of REOs, by Purpose

Purpose Commitment Amount (USD) No. of Projects

Other 6,600,000,000 464

Public sector policy and adm. management 13,300,000 39

Civilian peace 28,300,000 26

Multisector aid 8,845,084 26

Democratic participation and civil society 11,100,000 17

Std control including hiv/aids 74,000,000 17

Regional trade agreements (rtas) 21,200,000 14

Education policy, admin. management 9,246,333 13

Environmental policy and admin. mgmt 16,800,000 11

Promotion of development awareness 2,794,810 10

Trade facilitation 7,854,822 10

Administrative costs 729,073 9

Business support services, institutions 3,095,346 9

Human rights 5,051,827 9

Trade policy and admin. management 6,569,104 9

Biodiversity 5,719,996 8

Health policy, admin. management 3,017,843 8

Public finance management 1,219,895 8

Trade education/training 813,310 8

Agricultural policy 2,944,893 7

Multilateral trade negotiations 9,360,158 7

Sectors not specified 757,297 6

Security system management and reform 4,211,616 6

SME development 4,376,608 6

31

Biosphere protection 6,673,658 5

Early childhood education 176,716 5

Higher education 1,301,555 5

Disaster prevention and preparedness 408,696 4

Elections 2,981,280 4

Employment policy and admin. mgmt. 9,779,987 4

Energy policy and admin. management 11,100,000 4

Environmental research 3,175,285 4

Narcotics control 2,541,967 4

Population policy and admin. mgmt 754,812 4

Water resources policy/admin. mgmt 8,232,582 4

Emergency/distress relief 419,300 3

Information and communication technology 353,629 3

Land mine clearance 1,857,289 3

Water transport 3,805,336 3

Agricultural education/training 2,937,731 2

Anticorruption 1,132,687 2

Basic life skills for youth, adults 2,142,465 2

Culture and recreation 1,319,285 2

Educ./trng in transport, storage 506,893 2

Environmental education/training 191,973 2

Food crop production 69,700,000 2

Infectious disease control 1,033,562 2

Legal and judicial development 433,554 2

Livestock/veterinary services 1,983,635 2

Multisector education/training 23,302 2

Research/scientific institutions 97,829 2

Site preservation 4,316,948 2

32

Social/welfare services 3,202,508 2

Support to international ngos 179,573 2

Urban development and management 714,899 2

Women’s equality organisations and institutions 306,364 2

Agricultural co 445,146 1

Agricultural development 1,076,460 1

Agricultural water resources 1,886 1

Decentralisation and support to subnational govt. 278,513 1

Education facilities and training 41,777 1

Emergency food aid 881,510 1

Flood prevention/control 1,179,214 1

Food security programmes/food aid 4,874 1

Forestry development 569,250 1

Forestry policy, admin. management 8,355,383 1

Forestry research 716,743 1

General budget support 390,625 1

Industrial crops/export crops 373,856 1

Informal/semiformal financial intermediation 100,000 1

Legislatures and political parties 974,795 1

Malaria control 696,282 1

Medical research 267,257 1

Medical services 33,830 1

Mineral/mining policy, admin. mgmt 114,201 1

Monetary institutions 2,026,764 1

Power generation/renewable sources 9,747,946 1

Primary education 92,837 1

Reintegration and salw control 417,769 1

Reproductive health care 139,256 1

33

Rural development 4,151,675 1

Solar energy 946,943 1

Teacher training 389,918 1

Vocational training 13,926 1

Water supply, sanit. 1,000,000 1

Table 2: External Funding of REOs, by Donor

Organization Commitment amount No. of Projects

OAS 390,000,000 86

ANCOM 382,000,000 35

IOC 340,000,000 7

CEMAC 217,000,000 7

ECOWAS 205,000,000 74

EAC 199,000,000 41

BA 119,000,000 24

GCC 100,000,000 17

WAEMU 96,400,000 22

MERCOSUR 70,000,000 21

SADC 67,600,000 58

CIS 60,000,000 23

CARICOM 56,000,000 72

SAARC 35,000,000 6

EURASEC 26,000,000 11

CACM 25,000,000 7

PIF 20,400,000 105

IGAD 15,000,000 12

APEC 14,700,000 19

34

OECS 14,200,000 43

ALBA 11,000,000 1

SICA 8,355,383 18

COMESA 5,660,000 7

MRU 5,000,000 3

ASEAN 4,177,691 74

ECCAS 2,500,000 4

SELA 977,000 5

CEPGL 660,000 1

CAFTA 655,380 4

SCO 500,000 1

CEFTA 215,023 2

LAIA 71,000 1

AMU 34,864 2

35

Figure 1: Institutionalization Associated with Funding

Figure 2: Changes in Institutionalization Associated with Funding

Figure 3: Changes in Scope Associated with Funding

36

Figure 4: Funding Does Not Improve Implementation of Institutionalization

Figure 5: Funding Does Not Improve Implementation of Scope

37