"Open strategic autonomy": An assessment and positioning for German development policy

Klingebiel, Stephan Research Report "Open strategic autonomy": An assessment and positioning for German development policy IDOS Policy Brief, No. 27/2024 Provided in Cooperation with: German Institute of Development and Sustainability (IDOS), Bonn Suggested Citation: Klingebiel, Stephan (2024) : "Open strategic autonomy": An assessment and positioning for German development policy, IDOS Policy Brief, No. 27/2024, German Institute of Development and Sustainability (IDOS), Bonn, https://doi.org/10.23661/ipb27.2024 This Version is available at: https://hdl.handle.net/10419/300633 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ “Open Strategic Autonomy”: An Assessment and Positioning for German Development Policy Stephan Klingebiel Summary This policy brief provides an overview and assessments of debates on development policy. In view of changing international contexts, it addresses the need to reorient German development policy in the long term and initiate reforms. Five recommendations for decision-makers are formulated: 1. “Open strategic autonomy” for development policy: Development policy should play an independent and complementary role when supporting partners from the Global South and providing global public goods. “Open strategic autonomy” could integrate different policy areas and actors, but at the same time maintain a certain degree of autonomy in order to act effectively. 2. Redefining goals: Development policy is often seen as purely altruistic and humanitarian, but it should rather be understood as a soft power instrument. Such an understanding could help to break away from the restrictive discourse on values and interests. 3. Interface management and ministerial customisation: There are debates about coordination between ministries and whether an independent development ministry (BMZ) is necessary. More effective interface management and the bundling of humanitarian aid and development cooperation could increase efficiency and effectiveness. The current coalition agreement provides for greater coordination of development policy funds, but progress so far has been limited. In principle, there are reasons in favour of an independent development policy department in Germany. 4. Strategic orientation during implementation: Policy-based financing should play a greater role in order to provide more comprehensive support for reforms and transformations. It is advisable to switch from supply-orientated to demandorientated development cooperation. By critically scrutinising tied services, competition and choice for partner countries can be strengthened. As is shown by the Just Energy Transition Partnerships and the European Global Gateway Initiative, more new solutions are needed. 5. Dealing with populist and right-wing nationalist movements: Development policy is increasingly under attack from right-wing and populist movements. These attacks are intended to undermine social consensus. In response, these attacks can be ignored or the bogus arguments can be invalidated. In order to counter the changed situation, the democratic parties in the German Bundestag should strive for a new cross-party consensus on development policy. To summarise, it is necessary to focus less on the populist project-related debates. What is needed is a more strategic and long-term perspective on development policy that systematically integrates various political and social interests and offers the prospect of flexible and partnership-based implementation. IDOS POLICY BRIEF 27/2024 IDOS Policy Brief 27/2024 2 Introduction This policy brief provides an overview and assessments of debates on development policy. With a focus on Germany, ongoing international discussions are also taken into account. This is done selectively and deliberately highlights individual aspects – not all relevant topics are given space. In recent months, several triggers in German politics have led to lively debates on development policy. It has been widely discussed whether individual projects (a notable example: “Cycle paths in Peru”) are necessary and effective. The pressure to make savings in the German federal budget is currently giving rise to discussions. Structural issues, however, receive comparatively little attention: What is the role of development policy today and in the future? What will the changes look like in the coming years? What challenges does German development policy face? Some indications are formulated below. It is argued here that development policy makes and should make an independent contribution to the management of central challenges. The concept of “open strategic autonomy” is based on positioning debates in the European Union (EU). It can be helpful on the one hand to open up perspectives of different policy areas in development policy, but on the other hand also to maintain a certain autonomy in order to act successfully in this policy field. Trends in partner countries The changes in development policy are reactions to dynamics in partner countries, changing roles of actors in the Global South and upheavals in global politics. 1. On average, living conditions for developing countries and their populations have improved in recent decades. The Human Development Index (HDI) is a good indicator of this. The HDI was introduced in the Human Development Report in 1990 and goes beyond simply measuring the economic strength of countries. On average, the global HDI value and the HDI value for developing countries have improved. Nevertheless, there are exceptions. On the one hand, these are due to the Covid pandemic, and on the other hand due to the regional and global impact of Russian aggression in Ukraine – such as effects on food and energy prices, etc. In addition, there are individual countries – such as the Central African Republic, Sudan and the Democratic Republic of the Congo – where there has been little or no long-term progress. This applies in particular to fragile countries. Despite average improvements in living conditions, there are still many structural and acute challenges for many developing countries. For example, the enormous burdens of recent years due to the external debt of numerous countries (such as Malawi and Zambia), climate-related – often fundamental – socio-economic crises (such as Tuvalu) and inequality within countries (such as Mozambique and Colombia). 2. Over a long period of time, countries that were previously categorised as developing countries have been able to graduate. They are no longer counted as developing countries in most international statistics. The DAC (Development Assistance Committee) of the OECD (Organisation for Economic Co-operation and Development) regularly reviews the list of countries that can receive ODA (Official Development Assistance). Countries that move up into the high-income group are removed from the list. This process is known as graduation. South Korea (until 2010) and Chile (until 2018), for example, were previously ODA recipient countries. An important stage will be reached with the graduation of China. According to the DAC rules, China will probably no longer count as a developing country in September 2029. The requirement is that income above the defined threshold has been earned for three IDOS Policy Brief 27/2024 3 consecutive years (currently: per capita income of more than USD 13,845 (2022)). 3. Dependence on ODA funds has decreased for most developing countries over long periods of time. As a middle-income country, India has only 0.1 percent dependence on ODA (2021), while Ethiopia has a rate of 3.6 per cent and is comparable to Tanzania (3.8 per cent). However, there are still countries such as Burundi (20.3 per cent) that are dependent on ODA for 20 per cent or more of their economic power. 4. One of the most important changes is that in recent years the importance of actors of the Global South has increased enormously for international co-operation relations in German and European politics. This applies to individual countries, above all China and India, but ultimately to every vote in the UN General Assembly. However, it also applies to important alliances such as the growing group of BRICS+ countries or the African Union. The Global South is increasingly developing into a fiercely contested strategic partner in a fluctuating geopolitical situation (Klingebiel, 2023). The Global South as a category suggests the homogeneity of a group of countries that does not exist in reality. The sheer number of countries with their very different conditions – for example in terms of population figures, government systems and economic performance – shows how blurred or even misleading a simplistic categorisation can be. Nevertheless, the group (for example in the form of the Group of 77) is united by similar historical experiences, under-representation in global institutions, and their positioning with respect to Western states. The Global South is to a large extent the scene of political, economic and often military conflicts. However – and this is a significant difference in comparison with earlier periods: Countries and organisations from the Global South are now key players in international relations. This applies above all to China, but also to India and other players. For example, when it comes to voting in the United Nations General Assembly, it is of considerable international importance how South Africa or Brazil, but increasingly also smaller states (such as Rwanda), behave towards Russia and China. The geopolitical upheavals affect all policies. Development policy focusses on the Global South – this is a fundamental characteristic of the policy field. In this respect, the question is very important: What does all this mean for development policy concepts, narratives and operational implementation? Changed development policy Development policy in Germany, the EU and other Western countries has changed considerably in recent years. This is largely due to the very changeable international context and has four main reasons: 1. The new significance of geopolitical and geo-economic issues (systemic competition between the USA / Western players and China; the impact of the Russian invasion of Ukraine; access to key raw materials, etc.) as well as escalating violent conflicts and the resulting humanitarian emergencies (such as the situation in Gaza following the terrorist attacks by Hamas on Israel on 7 October 2023). For example: since the end of 2021, the EU has been planning to offer alternatives to the Chinese infrastructure programmes (the Global Gateway Initiative). ODA is a central pillar for the public financing share of this initiative. 2. The climate crisis and the relevance of CO2 reduction and adaptation measures: in 2009, the industrialised countries pledged to support the developing countries with at least 100 billion US dollars annually to reduce CO2 and emissions and take adaptation measures. The climate financing architecture is to be placed on a new footing by the end of 2024. On the one hand, wealthy countries have a major responsibility in climate financing. On the other hand, they are also pursuing an enormous self-interest, as the consequences IDOS Policy Brief 27/2024 4 of climate change are being felt not least in Germany. Climate financing is an important reason to provide global public goods and thus serves direct self-interests. Insofar as this money comes from public budgets, these funds are predominantly recognised as development cooperation. 3. The approach of actively managing migration has also been an important trigger for development policy changes since 2015. For example: the EU has had migration management agreements with Tunisia, Egypt and Mauritania since 2023. They build on a first agreement of this kind (2016) with Turkey (Keijzer, 2024). They are controversial for a variety of reasons, and yet development cooperation is an element of these agreements. 4. Populist and right-wing nationalist movements, which are increasingly represented in parliaments and governments, where to some extent they shape public debates and strongly influence the discourse on the meaningfulness of development cooperation. This is increasingly the case in Germany. These reasons have affected politics, political decisions and social perceptions in a variety of ways. This applies to development policy and other policy areas (diplomacy, defence policy, foreign trade policy, etc.) that focus on meeting international challenges. In development policy, this can be recognised at various levels: Motifs and narratives: In principle, development policy is increasingly pursuing geopolitical and geo-economic self-interests, climate-related and migration-related goals, but also increasingly other self-interests. This applies, for example, to the promotion of its own economy and companies. Accordingly, values such as justice and solidarity, partner country interests, the global sustainability agenda (Agenda 2030) and traditional discourses on the effectiveness of development cooperation are less prominent. Strategies and actors: The changed motivations and narratives become clear at the level of strategic approaches, in the actions of development policy actors (related to policies and implementation) and in the joint or coordinated approach of policy areas. Decisions to provide massive civilian support to Ukraine or, in view of the humanitarian catastrophe in Gaza, to provide external aid, are generally likely to be of overriding political importance and (co-)determined by other actors outside of development policy. Other examples include the first German national security strategy, strategies relating to the IndoPacific region and China-related strategies. Managing the interface between development policy and other policy areas is becoming increasingly relevant. Implementation: Projects and overarching programmes continue to play a role in the operational implementation of development policy. By and large, however, the approach of tackling multi-layered issues such as “climate change” and “geopolitical competition” or “migration management” has led to development policy becoming an important pillar of more complex political responses in recent years. Politicians are increasingly endeavouring to put together larger “packages” that combine various public and private financing options. Development policy is a central pillar of public financing. For Germany and the EU, such approaches are particularly evident in (i) Just Energy Transition Partnerships (JETPs), (ii) the Global Gateway Initiative and (iii) the EU and German migration agreements. IDOS Policy Brief 27/2024 5 Box 1: What is development policy and what is development cooperation? In order to answer the question of how the development policy debate is conducted in Germany, it is useful to discuss the conceptual foundations. The term development policy goes beyond development cooperation and encompasses three things (Ashoff & Klingebiel, 2014): 1. The improvement of living conditions in partner countries through development cooperation. The focus here is therefore on measures designed to support the socio-economic development of developing countries. There is an important international understanding on what is meant by development cooperation. The DAC is the key platform in which Germany has joined forces with 31 other OECD members. The DAC maintains a list of countries that are recognised as developing countries and are entitled to receive ODA. The list distinguishes between four categories of developing countries – from least developed countries to more advanced developing countries. The conditions vary for many services provided by German development cooperation or the World Bank Group. Poorer developing countries, for example, receive very favourable loans or full grants from KfW Development Bank’s Financial Cooperation. For betteroff countries, although development loans are subsidised, they are much closer to the conditions on the financial markets. GIZ’s Technical Cooperation is generally organised as a grant. This has advantages for partner countries (no impact on the debt situation), but also disadvantages (no alternatives to GIZ; hardly any opportunities to compare quality and price). Policy-based approaches can be used to address major reform issues with partner countries. The World Bank and regional development banks are primarily recommended for associated financing approaches. 2. As development policy helps to shape global framework conditions and regulations, it goes beyond specific projects in partner countries. The 2030 Agenda and with it the 17 Sustainable Development Goals (SDGs) are a universal target for all countries, and development policy stakeholders have played a key role in shaping them. Accordingly, development policy is also pursued in accordance with the norms and rules of global governance structures. It also entails fairly involving actors from the Global South in global governance structures. One such step was taken in 2023, when it was decided to add a seat for the African Union to the G20. In other international bodies – from the World Bank Group to the UN Security Council – developing countries continue to be under-represented. Other debates concern the need for coordination with stakeholders who influence development issues. China is known to be a highly relevant player in numerous developing countries through its development initiatives (the Belt and Road Initiative) or the Global Development Initiative (GDI)). It is in the interest of Germany and the EU to exchange on these topics with China. 3. Development policy also includes issues of coherence in favour of global sustainable development. The focus here is on the impact of other policy areas on the development opportunities of the Global South (such as the consequences of the EU’s agricultural and trade policy). In this sense, development policy is increasingly expected to support the objectives of other policy areas – such as EU migration policy. IDOS Policy Brief 27/2024 6 Germany’s performance in 2023, the volume of Germany’s ODA amounted to USD 36.7 billion, which corresponds to 0.79 per cent of Germany's economic strength (gross national income, GNI) (the so-called ODA ratio). This puts Germany in second place among DAC donors in terms of volume behind the USA and in fourth place in terms of ODA / GNI ratio behind Norway, Luxembourg and Sweden. All federal governments in recent decades have committed to at least the 0.7 per cent target for Germany. This target was achieved for the first time in 2016, then again in 2020, 2021, 2022 and 2023. Some background information is relevant for assessing the German performance: 1. Development cooperation often goes beyond the goal of supporting partner countries in their socio-economic development. This is particularly true for Ukraine. The consequences of Russian aggression go far beyond Germany's specific development policy interests or those of other DAC members. Ukraine is currently by far the largest recipient country for DAC donors. In 2023, they made USD 20 billion or nine per cent of their ODA available to it for civilian purposes. Ukraine received a good two billion US dollars from Germany in both 2022 and 2023. This makes Ukraine the main partner country. The situation is similar for other topics that often attract a great deal of political attention outside of development policy. This applies, for example, to the EU’s Global Gateway Initiative. Its main aim is to limit Chinese influence in developing regions. It also relates to funds for international climate financing, which is of overall political interest beyond a specialised development policy department. In this respect, development policy promotes overarching political agendas. 2. A significant proportion of German ODA is of an imputed nature. These are not funds from the federal budget that are earmarked for development policy purposes – i.e. transfers to partner countries. Rather, many efforts are of an imputed nature or market funds. Three examples: (i) Services for refugees who are accommodated in Germany can be reported as ODA according to certain criteria. These so-called in-donor refugee costs are not available for development measures in partner countries. This applies to 19.5 per cent of German ODA alone (2023). There is an international debate as to whether the donor countries are artificially “inflating” their ODA payments with refugee expenditure in their own countries. (ii) The situation is similar for the university place costs which the federal states report as ODA for students from developing countries. In Germany, these imputed costs are borne by the federal states and amounted to 5.3 per cent of ODA in 2022. (iii) Capital market funds can be used as ODA. These can be mobilised by KfW and offered to partner countries on favourable terms as promotional loans. Using KfW’s excellent rating on the capital markets, the German government can take advantage of favourable conditions for international cooperation projects without having to use funds from the federal budget. In 2022, these market funds corresponded to a share of 4.2 per cent of German ODA. 3. Finally, part of German ODA comes from federal budget funds. A total of 17 federal budget sections (2021) have funds that can be counted as ODA. Two ministries stand out in particular: Firstly, the Federal Ministry for Economic Cooperation and Development (BMZ), which accounts for around one third of total German ODA. The EUR 11.2 billion planned in the BMZ budget for 2024 corresponds to 2.35 per cent of the federal budget. It should be noted that many investments are provided as loans via Financial Cooperation (FC), which are later returned to the federal budget. The 2024 IDOS Policy Brief 27/2024 7 federal budget anticipates corresponding repayments totalling EUR 661 million. Secondly, the Federal Foreign Office (AA), which has been responsible for humanitarian aid since May 2012. A total of 3.5 billion euros were planned in the 2024 budget of the Federal Foreign Office for the area of peace and security, which includes humanitarian aid. This makes humanitarian aid a central pillar for particularly difficult emergency situations (Gaza or Ukraine). These benefits are reported as ODA. Strategies and reforms The changed international contexts and new debates in Germany call for a different long-term perspective on development policy that takes a closer look at its foundations (objectives, need for structural reform, etc.) and the need for modification. Five recommendations follow: (i) “Open strategic autonomy” for development policy In recent years, German and European development policy has responded to the highly dynamic international context. Direct self-interests are now playing a greater role. In addition, there is participation in the provision of global public goods from which all countries benefit, regardless of whether these countries are in the EU or the Global South. This applies in particular to the goal of combating the climate crisis by reducing emissions or to global health issues (such as Covid and Ebola). This policy brief argues that development policy makes and should make a significant independent contribution to these key concerns. (i) The conceptual contribution of development policy consists of a systemic view: Issues of global sustainable development are addressed with a focus on countries and societies in the Global South. This takes into account Germany’s and Europe’s own concerns, but goes beyond them. (ii) The concrete contribution results from a combination of operational knowledge (how to achieve change with partners even under difficult conditions) and structural approaches (reforms of global policies, for example at the multilateral development banks or the United Nations) or even individual partner countries (such as working with partners outside of governments, for example in an autocratic context). “Open strategic autonomy” (based on EU positioning debates) makes it clear that openness is needed for different policy areas and stakeholders and their respective concerns. At the Box 2: Effects In principle, German development policy has a close-meshed control, monitoring and evaluation network to oversee the substantive and fiduciary use of budget funds. With regard to risks of misuse of funds, it can be stated that these only occur occasionally and that prevention and control approaches are effective (response of the Federal Government to a minor question in the Bundestag; Drs. 20/11363). Some important bodies – with different mandates – are the specialised committee of the German Bundestag (Committee on Economic Cooperation and Development), the audits of the Federal Audit Office and a comprehensive evaluation system. In addition, there are international mechanisms that are often not acknowledged very well, such as the regular Peer Review by the DAC and the monitoring rounds by the Global Partnership for Effective Development Cooperation. Further analyses by independent institutions provide additional insights, such as the annual Commitment to Development Index of the Center for Global Development (CGD). It would make sense to further optimise German development policy. One way could be through greater evidence orientation in decision-making processes and by making greater use of international learning experiences (Esser & Janus, 2023; Marschall, 2022). International and comparative country analyses should be used more systematically in decision-making processes in order to set strategic goals (such as the reduction of tied services in development cooperation). IDOS Policy Brief 27/2024 8 same time, however, a certain degree of autonomy is required for the policy field to be successful. This means, for example, that a European offer to cooperate with African partners takes into account the endeavours of China and Russia to expand their spheres of influence. It also means that great importance is attached to other perspectives (interests of the partner countries and populations that see an advantage in a multi-alignment) and added value is created (for example networks in countries beyond intergovernmental relationships). Against this backdrop, development policy is an element of political organisation that serves important German and European interests. This is particularly true in an environment that is increasingly defined by geopolitics. It contributes its own long-term perspectives in comparison to other policy areas. This is an added value that open strategic autonomy can support. It is important not to slip into a crude policy of interests through development policy, but to utilise the open strategic autonomy in such a way that it centrally takes the interests of the partners into consideration. Recommendation: Political actors (especially BMZ, AA, Bundestag, think tanks, civil society) in Germany should reflect much more strategically on the structural expectations of the policy field and incorporate them into their programmes. However, the German discourse has so far only done limited justice to this approach. (ii) Redefining goals Although the reality of development policy has changed considerably in recent years, development policy is still perceived in public and political discourse with a narrow focus on its altruistic, humanitarian goals. The policy field has been insufficiently able to present itself as a design instrument that serves to meet global challenges and as a central cooperation approach with partners from the Global South. Development policy should be able to define more precisely what potential lies beyond partnership support. Development policy is a central element of soft power. This applies to China, Turkey, the USA and Germany. Soft power, as defined by Joseph Nye, is a form of exercising power and of shaping opportunities through the persuasive power and appeal of an actor. It is demonstrably advantageous for influencing international political decisions, but it is also a competitive economic advantage. Alongside other approaches (such as students from abroad), a country’s development policy is demonstrably a central pillar of soft power (Singh & Macdonald, 2017). In an international political environment that is increasingly dependent on “mixed alliances” of countries with different identities (“West”, “Global South”, regional attributions, etc.), it makes sense to emphasise how development policy can make better use of its intergovernmental relationships, but also non-governmental networks (such as political foundations and think tanks). Such potential exists not least with regard to more advanced developing countries (such as India) or even countries which in the foreseeable future will no longer be internationally categorised as developing countries (especially China, but also countries such as Turkey and others). It is important to open up opportunities for dialogue with these countries in order to be able to exchange views on norms and standards (e.g. with regard to Chinese development initiatives). Recommendation: In development policy in particular, there is a discourse in Germany that is almost impossible to resolve and only opens up choices between “values” and “interests”. However, if development policy is understood as a soft power approach, it follows that the interests and perspectives of partners do not have to conflict with one’s own motives. However, the German debate has so far only done limited justice to this approach. (iii) Interface management and divisions of ministerial responsibilities The issue of the ministerial division of policy areas and the management of interfaces between