The changing donor landscape in Nicaragua: Influence on Development cooperation relationships and practices

1. The changing donor landscape in Nicaragua: Influence on Development cooperation relationships and practices Lauren Walshe-Roussel International Development Research Centre November 3, 2012

2. Research questions and methodology • What influence are emerging donors having on the recipient government and traditional donors? • What direction does this influence suggest for the future of development cooperation in Nicaragua? Multistakeholder approach comprised of interviews conducted in June-July 2012

3. Background : Influence on the Existing AID System • ‘Silent revolution in development assistance’ : • Emerging donors are challenging the existing system and its development paradigm • Emerging donors’ influence on the existing aid system is poorly understood “Emerging donors are not overtly attempting to overturn rules or replace them. Rather, by quietly offering alternatives to aid-receiving countries, they are introducing competitive pressures into the existing system” (Woods, 2008; 17) ÷ • Common threads: donor distinctiveness, • the donor divide

4. Background : Competitive Pressures &the Balance of Power • What direction does this suggest for the future of development cooperation in Nicaragua? • What influence are emerging donors having on the recipient government and traditional donors?

5. Nicaragua Case Study: Introduction Strong Donor Presence & Aid Dependency

6. Nicaragua Case Study: Introduction Nicaragua’s Changing Donor Landscape since 2006 • Emerging donors: • Argentina, Brazil, China (Taiwan), Cuba, Korea, Mexico, Russia, Venezuela • Nicaragua = greatest recipient of bilateral south-south cooperation projects from Ibero-American states after El Salvador in 2010 (SEGIB, 2011) • Traditional donors: • Canada, EU, Finland, Germany, Japan, Luxembourg, Netherlands, Spain, Switzerland, (USA) Main Bilateral Actors at Present

7. Findings: Influence on Development Cooperation Relationships and Practices • Alternatives and Empowerment for the Government Nicaraguan government back in the driver’s seat of its development agenda, Emerging donors facilitating this process • National Human Development Plan for 2012-16 • “Financing for Development” : • Gvt. priority & reflection of available resources • Brazil – Hydroelectric plant, • US$ 1,126 million • Mexico – Telecommunications, US$ 405 million • Venezuela – Refinery, • US$ 3,939 million • Diversified investment = fuel and leverage for • gvt’s development agenda

8. Findings: Influence on Development Cooperation Relationships and Practices • Alternatives and Empowerment for the Government • Technical cooperation: enhancing the government’s ability to manage its development priorities • Venezuela – US$ 111.3 million to state administered social programs in the first half of 2011 alone (BCN, 2011; 11) • Terms of engagement based on respect for national priorities “the influx of funds has allowed Nicaragua to talk to the traditional donors in another way, because it no longer depends, in any kind of way, on what we do or do not want to fund”

9. FINDINGS: INFLUENCE ON DEVELOPMENT COOPERATION RELATIONSHIPS AND PRACTICES • Alternatives and Empowerment for the Government “We cannot say ‘can we do this project, please sign here anymore’. And that’s okay.” “We were basically told ‘this is your money…we can talk about it, and if I agree and you agree, then let’s do it, and if not, just take your money home’. (…) This is a new attitude or a new strength of the government that they didn’t show before.” • Donor pluralism has empowered the government to pursue a development agenda of its own on its own terms • Resulting approach - foreign investment à la Washington Consensus - consensual cooperation priorities with bilateral donors • - state-led social programs that target the poor

10. Findings: Influence on Development Cooperation Relationships and Practices • Reality Check for Traditional Donors No change in traditional donor relationships with other bilateral development actors • Traditional donors agree that impact of emerging donors in Nicaragua is huge • No cooperation/direct competition, but subtle & strong competitive pressures spurred by emerging donors Thinking about new development strategies • Strategic sectors that are consonant w/ national priorities (e.g. renewable energy) • Public-private alliances, development component for private sector interventions • Investment and exchange-based cooperation in areas like education • Triangular cooperation projects with objective to strengthen the aid delivery capacity of Mexico (Japan-Mexico-Nicaragua) “We (traditional donors) are less important...which is good, very good; but this obliges us to use different instruments and to look to different sectors, strategic sectors, for a different development cooperation context”

11. Findings: Influence on Development Cooperation Relationships and Practices • Breaking the Ice of Isolation Traditional Donors Emerging Donors “We already know that we work differently (from traditional donors), that we are not competing. It would be good to have dialogue to potentially maximize development results and minimize costs.” “Making the link between bilateral donors is the single most important challenge for the development community in Nicaragua” Will Discussion on inviting emerging donors to the donor roundtables Demonstrated willingness to engage in cooperation beyond bilateral relationships with UN bodies Initiative

12. Concluding Remarks: Broadening our Understanding of the Changing Donor Landscape • Empowerment for Recipient Government • Modalities, principles & leverage of emerging donor cooperation→ ownership • Empowerment evinced by government’s ability to stand by its unique development agenda, demonstrated by assertiveness with traditional donors • Reality Check for Traditional Donors • Traditional donors re-evaluating approaches, toward common ground w/ emerging donors • “Silent Revolution” • Constructive not disruptive processes – emerging donors present opportunities for development as opposed to threats • Donor Divide • Increasingly blurry – unhelpful framework for capturing dynamic processes • Need to broaden and contextualize assessments of changing donor landscape