It’s the structure, stupid. Where is German Development Cooperation headed?

Development Policy28 Nov 2009Daniel Brombacher

Politics or policies? Debating the structural reform of German Development Cooperation

Emotions were running high in Germany when the reform of the German development cooperation system was once again fiercely debated in the weeks and months before the past federal elections on September 27th. In expectation of a window of opportunity cracking open during the negotiations of the next governing coalition, political parties, NGOs, publicly known activists, newspapers and think tanks rallied their forces to charge into a debate in which political and emotional reactions often prevail and technical considerations are easily trampled underfoot.

However, this time it seemed as if there was broader consensus than usual among experts and campaigners; a broad array of experts from left and right, government and NGOs, subscribed to the Bonn Call for “a different policy for development”, calling for radical changes in the German development approach, such as concentrating on counterparts from civil society and delegating development responsibilities to embassies, away from headquarters in Bonn and Berlin. At the same time, conservative media flagships such as the Frankfurter Allgemeine Zeitung and leftist spearheads such as Die Tageszeitung became unlikely allies as they agreed on the need for deep structural reforms in German development assistance. Technically, the debate was backed by the findings of the last OECD peer review of the federal development system. The review dated back to 2005 and urged that equally profound organizational changes be taken to changing German development efforts, including long overdue reforms and bridging the artificial compartmentalization of technical and financial cooperation.

The debate was underpinned by relevant global declarations such as the 2005 Paris Declaration on Aid Effectiveness. Reform principles like donor harmonization and alignment set down in this and other documents are highly problematic for the sometimes confusing system of today’s German development assistance. Even though Germany has an autonomous development ministry, alignment of aid is hampered by notoriously fragmented political leadership and a colourful spectrum of about 30 implementation agencies. In short, a vast coalition of national and international development stakeholders have pointed their fingers squarely at the major lack of coherence and coordination in German development.

At the same time, the liberal FDP, now the smaller, but louder partner in the governing coalition, has continuously called for an overhaul of both the political orientation and administrative structure of the federal development system. The FDP stipulated that development be subordinated under the general umbrella of German foreign policy, putting an end to what the FDP calls a Nebenaußenpolitik. The term refers to an alleged secondary line of foreign policy run by the Federal Ministry for Economic Cooperation and Development (the so-called BMZ), in addition to the official foreign policy guidelines set and executed by the German Foreign Office (usually referred to as the AA). Therefore, merging the BMZ into the AA has been a long-standing demand of the liberals.

However, the outcome of the coalition-building negotiations between conservatives and liberals was quite different to what most observers would have expected. Basically, after the elections two options were widely considered to be feasible. The more probable one was that the Bavarian branch of Angela Merkel’s CDU – the CSU – would preside over the BMZ. Germany’s party system logic has historically required that each governing party would receive a foreign policy portfolio; since the liberals consider the foreign ministry to be their stomping grounds, the Bavarian CSU usually obtained the BMZ. The less probable outcome is that the liberals would be allowed to follow through with their demand and fuse the cooperation portfolio into diplomacy. The worse-than-expected performance by the CSU and the triumphant results by the FDP in the past elections made the merging more probable. Still, observers and experts believed the distributive logic of the German party system to be stronger than the liberal leeway.

Quite astonishingly, both scenarios flew out the window and an unexpected third option emerged. The CSU got the defence portfolio and the BMZ is now in liberal hands with the former party secretary general, Dirk Niebel, the cabinet-member leading the house. Apparently when the chips came down, the liberals couldn’t resist the temptation of controlling a ministry with over 5 billion € worth of activities. The promises of merging or abolishing the office quickly evaporated. Still, this is the better solution since a fusion of both ministries would have tended to resemble a takeover of aid by diplomacy and instead of the desired mainstreaming of development into foreign affairs.

The whereabouts of German Development Cooperation

How will a former advocate of eliminating the BMZ lead it? Is it time to call John Bolton? The goods news for advocates of an autonomous Ministry of Cooperation is that upon becoming the head of a ministry, your utmost interest moves to defending the ministry’s interests, so neither a gradual abolishment nor the subordination of development under diplomacy is likely to take place. Just based on the past four weeks since the incoming Minister took office, the German public can already piece together a few ideas about what the new guidelines of German Development will be. Put briefly, as everyone expected, no further official development assistance funds will be channelled to China. However, the federal government proposes that Chinese authorities execute joint development projects in Africa – as well as Israel – two rather strange and politically high-risk endeavours. Additional funds are going to be directed to Afghanistan, where more than 4000 German troops are deployed. Increased funding has also been announced to assist Colombia – a country that will be dealt with less ideologically, as Mr. Niebel put it.

The federal government will not adhere to the EU agreement on development finance for reaching the intermediate goal of spending 0.51% of GDI on development by 2010. This is quite realistic in light of the tight budgets and exploding public debt brought on by the global economic crisis. However, the new Minister sticks to the overall aim of achieving an ODA rate of 0.7% of the GDI by 2015.

But what about organizational reforms? A Policy Planning Staff will be established in the BMZ, a sort of advising and strategic planning body, which is already well known to Germans based on the existence of such bodies in the diplomacy and defence portfolios. Technical cooperation is going to be structurally reformed and concentrated as announced in the coalition agreements. This will probably imply the merging of smaller German implementation agencies such as the human resource development agency, Inwent, into the main German technical cooperation agency, GTZ. Political and charity foundations, agencies, and NGOs will receive more funding for development projects. At the same time, the BMZ is finally going to expand its staff levels and external personnel within the Ministry are going to be substituted with in-house human resources in order to improve the steering capacities of the lead Ministry in development affairs.

There are two further core national and international demands – the merging of technical and financial cooperation and the decentralization of aid: The coalition agreement does not mention decentralization of assistance efforts as an issue and only refers to an improved entanglement of technical and financial cooperation. Following the former government’s failure to fuse the GTZ with the development bank KfW (assigned to the portfolio of the Ministry of Finance and in charge of financial cooperation), it seems that the incoming government has abandoned the planned far-reaching organizational overhaul in the field of development. Still, the coalition agreement declares the government’s will to address so-called double structures. At the same time, the diversity of German implementation agencies offers a broad array of instruments to German policy-makers and is definitely an asset to German development cooperation. Therefore, organizational reforms are necessary but should be undertaken cautiously.

What can we learn from the others?

Donor governance in Germany may indeed be improved by adopting some of the structural items on the new development agenda. The introduction of a Policy Planning Staff to assist BMZ leadership in planning and coordination may enhance the efficiency of the overall development management, improve coordination with the other development-related entities, including the Ministries of Foreign Affairs, Finance and Environment as well as the Federal Chancellors Office. It may also help to achieve improved oversight and political steering of the multiplicity of German implementers. The concentration and merging of technical cooperation agencies could help to clear up the confusion over responsibilities, improve coordination with other donors, and the overlap of efforts in partner countries.

Contrary to pre-election expectations, these reforms do more to attenuate some of the most urgent organizational weaknesses of German development, than to address the root problems of what is currently the world’s second largest single donor. Political leadership in development issues is still scattered between a fistful of ministries that do not have any clear leadership on development issues and who have yet to divvy up the responsibilities between themselves. Development has neither become part of diplomacy nor has development been mainstreamed and converted into a clearly BMZ-lead cross-governmental issue. Humanitarian aid is up to the AA; technical cooperation is governed by the BMZ; financial cooperation channelled through the Ministry of Finance; police missions such as the one in Afghanistan are executed by the Ministry of the Interior, and a good part of the rapidly expanding climate and environment related ODA is administrated by the Ministry of Environment.

Most OECD donors have undergone major reforms of their respective development structures. Putting the political and rather party-driven debate aside for a moment, a clear look at what could be learned from the organizational overhauls undertaken by Germany’s OECD-donor mates could be helpful, especially in regards to the issues of (1) political leadership, (2) the structure of implementation agencies and (3) the decentralization of planning and decision-making in foreign assistance programs and projects.

  1. The British DFID, which since 1997 is once again an autonomous Cooperation Ministry at the cabinet level just as its German counterpart, is much better at fulfilling the role of a true coordinator of development issues across the government. This is not because British Ministers are harder headed than German ones – actually, Mr. Niebels’s predecessor, Ms. Wieczorek-Zeul was quite successful in waving the development flag in cabinet. The difference is that the DFID possesses a broader set of institutional mechanisms enabling it to coordinate development issues across the government. For example, it has a strong voice in development-related policies such as commerce, foreign policy, environment, health, drugs and conflict prevention. There are joint public service agreements between DFID and other portfolios defining common policy guidelines and targets: In the framework of two conflict prevention pools, one for Africa, one for global issues, DFID cooperates closely with the Ministries of Defence and Foreign Affairs to address conflicts coherently. The underlying idea of a joint approach to government development policies is still missing in Germany, where the respective ministries defend their stakes in development and where cross-governmental coordination is hindered by the absence of an overall administrative or leadership mechanism – even though the BMZ by name and position would be the right institution to fulfil that task. The Netherlands and France opted for the opposite option: Merging development into the Ministry of Foreign Affairs, a policy, which is now quite unlikely to take place in Germany since the ministerial pack was reshuffled during the coalition-building negotiations and no further changes are to be expected.
  2. A politically stronger lead ministry would also be important for more efficiently controlling the plurality of German implementation agencies, especially the more powerful ones. During the current administration, the GTZ will grow even bigger since smaller technical implementers will be merged into it. The model of the United States, where no central agency maintains oversight or control over around 50 implementing agencies with more than two dozen government agencies administrating ODA-accountable funds, is an extreme example of fragmented donor governance. There, the creation of the office of the Director of Foreign Assistance (DFA) in the State Department in 2006 was unable to improve the lack of coherence in American development policies. Quite clearly, Germany’s development cooperation governance system is performing a lot better. However, proposals aimed at concentrating German technical implementing agencies are definitely a step in the right direction. Such endeavours should be accompanied by an effort to strengthen the control and leadership capacities of the BMZ, in order to prevent the Swedish case from occurring. In Sweden, the monopolist development implementer Sida has assumed more and more political influence on the development policies issued by the Ministry of Foreign Affairs that Sida was subsequently supposed to be in charge of implementing. In other words, Sida had started to steer itself. Today, a clearer control of political leadership has been established in Sweden, monitored by the parliament. This could also be a feasible solution for Germany. The substitution of external staff within the BMZ is a step in the right direction in order to strengthen the Ministry’s capacity and resources for policy-making and establishing political guidelines.
  3. Even though it’s not on the agenda of the new government, a further decentralization of German development, delegating more responsibilities over funding and planning to the embassies, is vital if the 2005 Paris Declaration principles, especially alignment, ownership and harmonisation, are to be achieved. The former government made considerable progress in this regard. There are now single-country strategies for all German implementers and joint country teams are supposed to enhance coordination efforts. German organizations in the field are concentrated in so-called German houses and there is a growing number of BMZ staff delegated to embassies as development officers. However, compared to states such as Denmark and Norway, which have delegated comprehensive decision-making authorities regarding funding and planning from the capitals to their embassies, the decentralization performance of the federal government is still rather modest. Delegation of responsibilities to the field and increasing the secondment of BMZ staff to embassies will not only improve the quality of foreign assistance, harmonisation with other donors and alignment with partners, but also strengthen the leadership in development affairs vis-à-vis diplomacy and implementing agencies.