Can foreign aid donors credibly threaten to suspend aid? Evidence from a cross-national survey of donor officials

Haley J Swedlund

doi:10.1080/09692290.2017.1302490

Abstract

ABSTRACTUnder what conditions are foreign aid donors willing to suspend foreign aid to punish political transgressions, such as election fraud, corruption scandals or political repression? Prior scholarship has emphasized that political sanctions, including foreign aid suspensions, are constrained by the geostrategic considerations of donor countries. However, foreign aid suspensions often occur in strategically important countries, and donors respond differently to different types of political transgressions within the same county. To shed light on this puzzle, in this article, I present evidence from an original survey of top-level donor representatives in 20 African countries, including a list experiment designed to elicit truthful responses about the conditions under which donors are willing to suspend foreign aid. I argue that the likelihood of a foreign aid suspension depends not only on the strategic considerations of the donor government, but also on the institutional incentives of the donor agency. A donor agency's institutional incentives are shaped by the agency's organizational design, as well as by its foreign aid portfolio in the recipient country.

Highlights

Citizens in donor countries have a strong preference for conditioning foreign aid on good governance
I argue that political conditionality, or the willingness of donors to condition foreign aid on governance (Baylies 1995), only works when the institutional incentives of donor agencies are aligned to allow the threats of donor agencies’ to be credible
If institutional incentives matter for the willingness of donor agencies to uphold political conditionality, I predict that donor agencies will be more likely to suspend foreign aid in three circumstances: (1) if the political transgression committed directly affects the agency’s aid portfolio in the recipient country, (2) if the donor agency provides direct budget support to the recipient government, and (3) if there are fewer veto players that can block an aid suspension

Summary

Introduction

Citizens in donor countries have a strong preference for conditioning foreign aid on good governance. Respondents are more likely to report that their agency would suspend aid, if the political transgression directly affects the donor agency’s aid portfolio1 in the recipient country; for example, if there is corruption in a project their agency is supporting.

Results

Conclusion