Science and Politics of Foreign Aid: Swedish Environmental Support to the Baltic States

228 Pages·2003·1.245 MB·English

by  Björn Hassler (auth.)

SCIENCE AND POLITICS OF FOREIGN AID
Science and Politics of
Foreign Aid
Swedish Environmental Support to the
Baltic States
by
Bj6rn Hassler
SodertOm University,
Huddinge, Sweden
SPRINGER-SCIENCE+BUSINESS MEDIA, B.V.
A C.I.P. Catalogue record for this book is available from the Library of Congress.
ISBN 978-94-010-3969-7 ISBN 978-94-010-0123-6 (eBook)
DOI 10.1007/978-94-010-0123-6
Printed on acid-free paper
AH Rights Reserved
© 2003 Springer Science+Business Media Dordrecht
OriginalIy pubIished by Kluwer Academic PubIishers in 2003
Softcover reprint ofthe hardcover Ist edition 2003
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TABLE OF CONTENTS
PREFACE..................................................................................................................................VII
CHAPTER1...............................................................................................................................1
INTRODUCTION......................................................................................................................1
1.FROMREALISMTOENVIRONMENTALINTERDEPENDENCE.............................1
2.ALTRUISMANDSELF-INTEREST:THEAIMOFTHESTUDY................................3
3.THEENVIRONMENTALISSUES...................................................................................5
4.CURRENTRESEARCH....................................................................................................7
5.THEORETICALDEPARTURE......................................................................................14
CHAPTER2.............................................................................................................................23
MODELINGSWEDISHENVIRONMENTALASSISTANCE.........................................23
1.CHAPTEROUTLINE......................................................................................................23
2.PERCEPTIONOFCOLLECTIVEGOODCONTENT..................................................24
3.DEFINITIONOFACOLLECTIVEGOOD....................................................................24
4.THECOSTOFENVIRONMENTALINVESTMENTS.................................................26
5.COLLECTIVEACTIONONCOLLECTIVEGOODS...................................................27
6.POTENTIALGAINSFROMBILATERALSUPPORT.................................................29
7.ANON-FORMALBILATERALGAMEONENVIRONMENTALASSISTANCE....32
CHAPTER3.............................................................................................................................45
ROOTSOFCONTEMPORARYSWEDISHENVIRONMENTALASSISTANCE.......45
1.VALIDATINGASSUMPTIONSONPREFERENCES..................................................45
2.DICHOTOMIZATIONOFSWEDISHFOREIGNAID.................................................46
3.THEPRACTICEOFTYINGAID...................................................................................47
4.EARLYSWEDISHFOREIGNAID................................................................................49
5.SWEDISHENVIRONMENTALCOOPERATIONINTHE1970S...............................59
6.FOREIGNAIDINTHE1970S:TOWHOMANDINWHATWAY?............................64
7.ENVIRONMENTALCOOPERATIONINTHE1980S..................................................67
8.DEVELOPMENTAIDINTHE1980S:GETTINGINLINE..........................................73
9.CONCLUSION.................................................................................................................81
CHAPTER4.............................................................................................................................85
THESWEDISHENVIRONMENTALASSISTANCECONSENSUS...............................85
1.THEIMPORTANCEOFHOMOGENEITYOFPREFERENCES.................................85
2.POLITICALCHANGESINTHEBALTICSTATES.....................................................88
3.THEFIRSTTHREE-YEARASSISTANCEPROGRAM...............................................89
4.THEPOLICYOFTHENEW,NON-SOCIALISTGOVERNMENT.............................94
5.THEEUROPEANIMPERATIVE...................................................................................97
6.THESWEDISHCLIMATESTRATEGY.......................................................................98
7.SAPAPPROVALOFTHEGOVERNMENTSTRATEGY...........................................99
8.THEREVISEDASSISTANCEPROGRAM.................................................................101
9.REFORMULATIONOFTHECEE-ASSISTANCEGOALS.......................................102
10.THENEWSAPGOVERNMENTINTENSIFIESTHEASSISTANCE.....................104
11.ADMINISTRATIVEREORGANIZATION...............................................................105
V
12.MINORDIVERGENCES............................................................................................107
13.DIVERSIFICATIONAMONGTHEBALTICRECIPIENTSOFSWEDISH
ASSISTANCE....................................................................................................................108
14.CONCLUSION.............................................................................................................110
CHAPTER5...........................................................................................................................112
PRIORITIZEDENVIRONMENTALISSUE-AREASINESTONIA,LATVIA,AND
LITHUANIA...........................................................................................................................112
1.FOCUSONTHESWEDISHSTRATEGY....................................................................112
2.BACKGROUND............................................................................................................112
3.PRIORITIZEDENVIRONMENTALISSUE-AREAS.................................................119
4.CONCLUSIONS............................................................................................................157
CHAPTER6...........................................................................................................................159
THECONTENTANDADMINISTRATIONOFSWEDISHASSISTANCETOTHE
BALTICSTATES..................................................................................................................159
1.DECENTRALIZEDDECISION-MAKING..................................................................159
2.THESIGNIFICANCEOFTHEBALTICSEAENVIRONMENTALACTION
PROGRAMME...................................................................................................................160
3.BITSFIELDOFACTIVITYBEFORE1995.................................................................166
4.SIDAGETSTHEMAINRESPONSIBILITY...............................................................167
5.ASSISTANCEADMINISTEREDBYOTHERAGENCIES........................................169
6.CONCLUSION...............................................................................................................175
CHAPTER7...........................................................................................................................176
ANALYSISANDCONCLUSIONS.....................................................................................176
1.INTRODUCTION..........................................................................................................176
2.CLASSIFICATIONOFENVIRONMENTALISSUE-AREAS...................................177
3.THESWEDISHPROJECTPORTFOLIO.....................................................................185
4.STABLESOCIALPREFERENCES?............................................................................189
5.SELF-INTERESTANDJOINTGAINS........................................................................191
6.ASSISTANCEDYNAMCIS..........................................................................................194
7.LEARNINGFROMEXPERIENCEANDDECREASINGINFORMATIONGAPS..195
8.GEOGRAPHICALPROXIMITYASAPOTENTIALEXPLANATION....................196
9.VARYINGSTAKESINTHEENVIRONMENTALSTATUS OFTHEBALTICSEA
.............................................................................................................................................198
10.SWEDISHASSISTANCETOTHEBALTICSTATES;RECENTDEVELOPMENTS
.............................................................................................................................................200
11.SUMMARYANDFUTURERESEARCH..................................................................204
12.TENTATIVEPOLICYIMPLICATIONS...................................................................207
REFERENCES.......................................................................................................................209
SWEDISHPARLIAMENTBILLS,COMMITTEEREPORTS,ANDGOVERNMENT
DECISIONS........................................................................................................................209
PRINTEDSOURCES.........................................................................................................210
VI
PREFACE
The increasing interdependence between nations in the modern world is one of the
most discussed issues in contemporary studies of international relations. The interac-
tion between countries, corporations, organizations, and people across country
borders tends to increase wealth and a multitude of various personal and collective
benefits, as well as creating friction and conflicts of interests. This book concerns
the potential conflict between national self-interest and morality, in terms of provi-
sion of foreign aid. More specifically, it concerns the Swedish environmental
support to the Baltic States during the first half of the 1990s. This particular support
is of extraordinary interest for several reasons. Not only is it an example of the diffi-
culties in keeping trade and aid issues apart. It is also a case where the gains at stake
are tangible for both the recipient and donor countries. The trans-boundary nature of
some of the most important environmental issues of our time makes the fruits from
such cooperation important to the donor as well. Finally, the rapid transformation of
the Baltic States from Moscow-controlled satellites to modern liberal democracies
makes the study of the potential for joint gains from cooperation in this region po-
litically important, as well as scientifically tantalizing.
When approaching the most important issue in this study – the rationales behind
the Swedish environmental assistance to the Baltic States - it became increasingly
clear to me that in order to produce a scientifically proficient study in social science
it would be necessary to combine theoretical rigor with empirical depth. The ease
with which one could fall into the mire of empirical bookkeeping that had little bear-
ing on the production of scientific knowledge, was as great and apparent as the
temptation to endlessly dwell on theoretical puzzle solving. Therefore, my ambition
has been to find a middle-road, where theory is used as a sharp instrument to discern
reality. Without theoretical rigor, the work would have been extremely cumbersome
and probably less successful than what has been achieved. Without attempts to ex-
plain real-world events, nothing of scientific interest would have been accomplished.
This ambition did, however, require a significant personal effort, as well as help and
advice from many colleagues. Fortunately, I have not lacked assistance from a large
number of people.
This book has, to a large extent, been based on the findings of my PhD studies at
the Department of Water and Environmental Studies (1995-2000), at the University
of Linköping in Sweden. The person to whom I feel most deeply indebted is Profes-
sor Elfar Loftsson, my advisor. Since my arrival in the department, he has always
been a very good friend. Numerous are the times we have discussed issues concern-
ing, for example, science and politics over a cup of coffee or a glass of beer. Such
conversations always left me with a sense of increased commitment and a fervent
desire to continue my work. Elfar’s thorough reading of my manuscripts at countless
stages of completion has been of the utmost importance to me. His sharp observa-
tions of inconsistent arguments and empirical fallacies have forced me to reconsider
previous lines of thought, and thus increased the quality of the study.
This book has been written within the research project Social Change and
Democracy in the Baltic Sea Region. I feel very grateful to the other members of this
VII
research group for their support as well as for their critical remarks. In addition to
Elfar Loftsson, who has headed this research project, Wojciech Szrubka and Yon-
hyok Choe have made significant contributions to my work, and have also ensured
my social well-being.
During the work on this book, I have had the pleasure of being employed by
Södertörns högskola. Being a member of the large political science team at
Södertörn has been an inspiration. From the first day, I felt very welcome. It is a
young University/College where everyone has been excited about the prospect of
building a new academic center. I am thankful that I had the opportunity to be a part
of this important endeavor.
A number of external professionals have been of great importance to my work,
as readers of early parts of the manuscript. My brother John made several sugges-
tions for improvements in the theoretical parts of this study. His sharp observations
from an economist’s perspective have been most valuable. Additional insightful
comments from various disciplinary perspectives have been given to me by Jan
Lindvall and Örjan Widegren at the University of Linköping, Kenneth Kollman at
the University of Michigan, and Lasse Ringius at the UNEP Collaborating Centre on
Energy and Environment. I would also like to give a special thank you to Åsa
Danielsson and Charlotta Pers for their contribution to the development of my skills
in statistical methods. The anonymous reviewer assigned by Kluwer Academic Pub-
lishers has provided me with numerous valuable comments and suggestions on how
the text could be improved, for which I am deeply grateful. Working in cooperation
with the staff at Kluwer Academic Publishers in general, and Mrs. Gloria Verhey in
particular, has been a pleasure. The encouraging and constructive dialogue during
the process of writing has been valuable to me. The kind and helpful assistance
given to me when making the final preparation of the manuscript has been especially
useful.
Finally, I would like to thank the administrative staff of both the Department of
Water and Environmental Studies and Södertörns högskola for their kind and pro-
fessional assistance. This research study was originally financed by the Department
of Water and Environmental Studies and the Baltic Sea Fund (Östersjöstiftelsen). I
am very grateful to them both for their support.
VIII
CHAPTER 1
INTRODUCTION
1. FROM REALISM TO ENVIRONMENTAL INTERDEPENDENCE
The Second World War shaped the modern study of international relations in several
important ways. The destruction and evil demonstrated by the war convinced most
scholars that the idealistic approach was not in accordance with reality. Realism was
essential in order to find a more accurate description of the interaction between sov-
ereign states in a world without institutions above the state level with coercive
power. The outcome of the interaction was determined not so much by ideological
or moral standpoints as by the power of individual states or coalitions. The devel-
opment in international relations studies in the 1950s seemed to confirm this
conviction. The need to understand the processes in the international system as a
struggle between sovereign states was epitomized for example by Hans J. Morgen-
thau in his seminal work Politics among nations: the struggle for power and peace,
first published in 1948.
During the 1950s, the international scene became increasingly dominated by the
tension between East and West, between the Warsaw Pact and NATO. Scholars in
international relations described this dichotomization as the emergence of a bipolar
international system. Kenneth Waltz emphasized the important distinction between a
bipolar and a multipolar world system. The issue was still about power and military
capability. According to Waltz’ analysis in his Theory of international relations,
published in 1979, a bipolar structure was preferable to a multipolar structure, since
the power balance would be more stable in the former.
The occurrence of periods of détente between East and West as well as the in-
creasing importance attached to the interdependent nature of the relations between
nations in the late 1970s and early 1980s, indicated that the classical power-
approach in studies of international relations could only partially explain observed
behavior. Although military capability was still very important, it was argued, by for
example Robert Keohane (1977) and Robert Gilpin (1981), that the incentives for
choosing different strategies had to be added to the capability parameter. It was not
reasonable to assume that states would act as expansionistically as their military
capability allowed them, without regard to the cost of such policies. In the age of
nuclear devices, it was also appreciated that even if a state possessed superior
strength, this superiority could not easily be converted into influence over other
states’ behavior.
Instead of relying only on military capability as the explanatory variable, a more
reasonable assumption seemed to be that states choose strategies from expected
cost-benefit ratios. States choose strategies to increase the welfare of dominant do-
1
B. Hassler, Science and Politics of Foreign Aid
© Kluwer Academic Publishers, 2003
2 CHAPTER 1
mestic interests. Not necessarily because of the benevolence of the governments, but
rather due to the power and preferences of national interest groups. It seemed to be-
come more and more obvious that the interest of the states was not confined to is-
sues of war and peace. As the volume of trade and mobility of capital kept
increasing, the economic interdependence in the international system became a pro-
gressively imperative feature. Larger trade volumes meant increased prosperity and
thereby amplified economic power.
In the late 1970s and early 1980s, the transnational nature of many kinds of envi-
ronmental issues became apparent to scientists as well as to electorates. The United
Nations Environment Programme (UNEP) had been created as a direct outcome of
the 1972 Stockholm Conference on Human Environment. In the 1980s, the World
Bank (IBRD) began to change its policies in a more environmentally adapted direc-
tion, due to criticism from several of its member countries and Non-Governmental
Organizations (NGOs). Slowly, these changes began to change practices in the field.
At the regional level, several conventions were formulated at about the same time as
UNEP was created, for example the Helsinki Convention on the Protection of the
Marine Environment of the Baltic Sea Area. Increasing resources were allocated to
studies of environmental disturbances crossing national borders in most Western
countries. Negotiations targeted towards joint action to tackle transnational environ-
mental issues are seldom a zero sum game. There is almost always a potential for
Pareto-sanctioned improvements, where at least one participant gains without others
losing. This does not mean, however, that the benefits will be equally distributed, or
that there are no incentives to free-ride, to let others bear the costs while benefiting
from their action. On the contrary, typically the action taken will benefit the actors
unevenly and there will be serious incentives to free-ride. Both factors tend to in-
duce strategic behavior that might cause inertia, despite the potential for joint gains.
The classical approach emphasizing power and military capability as the main
explanatory variable has proved to be unsuitable for the analysis of state interaction
on environmental issues. Brute force is seldom a feasible instrument, thus making
such threats less credible. Interest has instead been focused on two different paths
propounding the explanation of successful, as well as unsuccessful, initiatives to
joint action. The first is based on the incentive approach. To explain outcomes in,
for example, transnational environmental negotiations the interests of the involved
actors have to be analyzed. Based on these interests, hypotheses about preferred
strategies of the actors can be inferred. The other broad category does not focus on
the incentives facing the actors, but rather on the potential to reach a cognitive mu-
tual understanding of the problem at hand. It is a priori assumed that there exists a
solution acceptable to all actors. If such an understanding of an acceptable solution
can be reached, it is assumed that the actors will work towards this solution.
In this study, the Swedish environmental assistance to the Baltic States in the pe-
riod 1991-1996 is analyzed, using the approach based on the interests of the actors.
This assistance will be interpreted as a mechanism to alter the behavior of the Baltic
States, when the use of force is neither available, nor desirable. It is assumed that the
transfer of Swedish resources is used to change the preferences of the Baltic States
over potential environmental investments, in directions desirable to Sweden. When
Sweden is covering some of the investment costs in particular environmental sec-
INTRODUCTION 3
tors, the governments of the Baltic States are induced to cover the remaining costs in
order to get the investments implemented. It should be emphasized, however, that
since the realization of a particular cooperative project requires consent from both
the donor and the recipient, the outcome is expected to be mutually beneficial. In
other words, the “game” being played is not zero sum, but one with a positive over-
all sum.
2. ALTRUISM AND SELF-INTEREST: THE AIM OF THE STUDY
As a starting point it seems reasonable to assume that the Swedish environmental
support to the Baltic States is perceived as being part of general foreign assistance
and thus primarily guided by an intention to help people suffering from poverty,
oppression, diseases, environmental hazards and similar hardships. The Swedish
assistance to Central and Eastern Europe (CEE) was, in the first years, financed
from the aid budget, and the need to support the countries in transition in their strug-
gle to become de facto sovereign states was expressed time and again in government
propositions and declarations, as well as in parliamentary bills by the political par-
ties in opposition. Although there were certainly also other less altruistic aspects
influencing Swedish foreign aid in general, the official ambition as well as the per-
ception of the public was that foreign aid should primarily benefit poor people in
poor countries. From this perspective, the apparent aspects of self-interested consid-
erations in the Swedish environmental assistance to the Baltic States seem sur-
prising. This observation forms the basis of this study, where the primary objective
is to analyze to what extent this particular assistance can be explained by self-
interested Swedish behavior. It should be emphasized that self-interested behavior
does not necessarily mean that the interests of the recipient country are compro-
mised. A self-interested actor finds no pleasure in obstructing the policies of other
actors per se. Self-interest here means that the interests of the other actors are not
taken into consideration. But if it is, for example, the case that mutual gains might
be realized, a self-interested actor would have no problems at all with the fact the
others also gain from a particular initiative.
Foreign aid is defined as purely altruistic if the only determinant of relevance to
the donor country is its perception of the recipient’s utility from the assistance un-
dertaken. The donor country in this case only cares about the recipient’s gains.
Domestic interests are only addressed if this does not negatively affect the utility
derived from the assistance to the recipient. This does not imply, however, that effi-
ciency issues are irrelevant. The common notion of cost-benefit ratio may still be
used, but only the utility of the recipient and only the cost for the donor country
would be relevant. Trying to maximize recipient utility to a given cost does not vio-
late the definition of altruism above.
In contrast to this truly philanthropic donor, the ideally self-interested one only
cares about the effect on domestic considerations. It is difficult, indeed, to imagine
any aid policies at all under such auspices, since the money spent on assistance
would almost always be of more utility to the donor not taking the path through aid
disbursements. Why not allocate the resources directly into the domestic economy,