political economy of continental integration - peria and the cfta: conceptual framework and issues
TRANSCRIPT
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Addis Ababa, 22 September 2016Jan Vanheukelom
POLITICAL ECONOMY OF CONTINENTAL INTEGRATION –
PERIA AND THE CFTA
Conceptual framework and issues
STRUCTURE
1. By way of introduction … the PERIA framework
1. Ten key PERIA observations & examples
1. So what? Overall implications for CFTA related questions
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1. By way of introduction
“lack of staff”, “lack of powers to enforce decisions”, and “dreadfully slow decision-
making procedure” meant the treaty was “not being applied”
“When it comes to elevating form over substance, and confusing a proliferation of
meetings and acronyms for a deepening of ties, [this regional organisation] is the
master”
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“lack of staff”, “lack of powers to enforce decisions”, and “dreadfully slow decision-
making procedure” meant the treaty was “not being applied”
The Economist on European integration, 1982
“When it comes to elevating form over substance, and confusing a proliferation of
meetings and acronyms for a deepening of ties, [this regional organisation] is the
master”
The Economist on ASEAN, 3 Sept. 20164
These quotes illustrate that regional integration is:
• A “universal” challenge
• A complex challenge
Five reasons why the PERIA analytical framework is relevant for
a “deep reflection to bring about the CFTA”
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The political economy analytical framework
Foundational & structural factors
Institutions - formal & informal rules of the game
Actors and agency – power, interests, incentives and ideas
Sector or issue specific characteristics
External factors that shape the incentive environment - financial and other6
1. The five lens framework helps unpack and explain the complexities and
challenges of regional integration
2. The framework helps explain why things are as they are - rather than speculating about ideal type models
3. It does so by identifying key drivers and obstacles in:
• Shaping regional agendas: policy decisions, commitments, agreements, protocols, etc…
• AND putting in place the implementation arrangements for these agendas
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4. It helps explain the following riddles:
• Why is there such a wide gap between agreed policy agenda and implementation?
• Why do certain agenda items get implemented?
• Why is there so much agenda overload with regional organisations?
5. The PERIA framework and findings echo the concepts and findings of the work from
Andrews et al (see concept note reference to the Problem Driven Iterative
Adaptation)
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10 Key observations about drivers & constraints
1. Foundational & structural factors...
Foundational and structural factors continue to shape the environment in which African
continental and regional organisations define and implement their agendas.
• AU: historical background, inclusive and large membership (54 members), geography (15 LLCs)
• ECOWAS - franco-anglo colonial and linguistic heritage, trade Sahel and coastal countries, P&S
• IGAD – response to common climate challenges, facilitated cooperation on conflicts
• Trade Complementarity Index: EC 42 in 1962, SADC 11, COMESA 12, .. (similar production outputs)
• All countries: High levels of dependence on exports of primary products
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THE STRUCTURAL LENS: IMPLICATIONS FOR CFTA
- Deep rooted structural features are hard to overcome –
- They cannot be wished away but require appropriate set of home grown institutions that help overcome
related infrastructure, regulatory and other challenges
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10 Key observations
2. Formal and informal institutions – the issue of form and function
WYSINWYG… While regional organisations adopt the institutional forms to foster regional cooperation or integration, these do not always serve the stated functions.
• AU: formal budget institutions in place – yet poor functionality
• AUC: formal RBM system – yet poor transparency and accountability functions
• Regional Courts: form and function
WHY? There are strong incentives for reformers to make Regional Organisations and their policies look good rather than make them perform better.
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THE INSTITUTIONAL LENS: IMPLICATIONS FOR CFTA
Regional trade agreements, Custom Unions, etc. – even with best-practice institutional forms may not
function as projected
Consider during the design/negotiation phase those political economy actors and factors that encourage
signaling (widening gap between form and function) rather then implementation
Such considerations may help tailor the negotiation phase and help design feasible adjustment measures
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10 Key observations
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3. Actors – member states and signalling
Member states may signal their support for regional organisations or regional
programmes even when implementation is not a political priority.
• PIDA, CAADP, gender, etc.…
10 Key observations
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4. Actors – national political elites
Ruling elites define ‘national’ interests – and this influences whether, when and how countries implement regional agendas.
• SADC industrial policy - South Africa and Zimbabwe• National level analysis is still underdeveloped: Therkildsen - Tanzania• New work on political settlement, low and open access orders, prominent
analysis to composition of ruling elites and how to gain and hold on to power • Etc…
10 Key observations
5. Actors – swing states (regional ‘hegemons’)
Swing states are able to influence the shape and scope of the regional agendas as well as
what gets prioritised for implementation.
• Ethiopia in AU, EAPP, IGAD,.. and in a range of policy areas or sectors
• Nigeria in ECOWAS P&S - CdI
• Kenya on transport issues in EAC
• South Africa informal talks on CFTA with Egypt, Kenya, Nigeria
HOW? Using reputational, diplomatic, economic, political, financial channels – and
strength of a range of institutions… (21)
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10 Key observations
6. Actors – individual leadership
Individual personalities and quality of leadership – political and bureaucratic - within regional organisations tend to shape the functioning of the organisation.
• From OAU to AU – Gadhafi, Obasanjo, Mbeki, ..
• Heads of State and Government have decision power across RECs
• SAPP – technical and bureaucratic leadership
• SADC Transfrontier Conservation Areas – political and civilian leadership
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10 Key observations
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7. Actors - private sector & civil society actors
The diversity of private sector and civil society interests – and the diversity of political contexts – affect how business & CSOs engage with national governments and ROs
• SADC – Rules of Origin: SA organised labour and business community –COMESA/EAC – TFTA – CFTA
• Transfrontier Conservation Areas - Peace Parks Foundation
• SADC Gender Protocol Alliance
• PIDA – (late) private sector engagement
• ECOWAS: rice and livestock (see also next point)
THE ACTOR LENS: IMPLICATIONS FOR CFTA
• It is important to analyse and understand the regional swing states that will push (or resist) the CFTA.
• This involves identifying the benefits regional swing states prioritise in different phases of CFTA, the interest they may have in building coalitions, and the type of influence they have on other countries, AU and CFTA process
• Not every non-state actor has a stake in CFTA – and their interests in the CFTA process and outcome differ substantially. Hence the need to identify effective non-state actors for dialogue and cooperation.
• Engage in a timely and qualitative manner with key non-state stakeholders – if not involved in design, no commitment to implementation (or financing)
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10 Key observations
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8. Sectoral features
The political interests and incentives of political elites vary substantially according to the sector and affect policy choices and choice of implementation arrangements.
• P&S: immediate costs or threats, clear benefits, negative externalities and regional spill-overs
• Trade: less immediate and harder to calculate costs and benefits, future potential
• Rice and livestock value chains: national versus cross-country interests
WHY?
- Costs and benefits to political elites in other sectors than peace and security may be harder to
identify or calculate
THE SECTOR LENS: IMPLICATIONS FOR CFTA
Not all sector or sub-sector issues in the CFTA negotiations and implementation phase are equally
politically salient for national political elites and leaders
Trade covers a wide range of sub-sectors and issues – hence the importance to prioritise those
challenges/problems with political buy-in or the potential for political coalition building
Again, this consideration is key for assessing the roles and potential of hegemons.
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10 Key observations
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9. External factors
The quality and volume of donor support and regional trade deals such as those with EU shape the incentive environment for national and regional actors.
• Quantity of aid: All ROs – except ECOWAS - depend heavily on donors
• Quality of aid: preferences, conditionalities, fragmentation, predictability
• Risk 1: reduce transparency, accountability and ownership by key regional stakeholders –negative impact on institutional development
• Risk 2: donors move from supporting regional processes to driving them – agenda overload
• External partners tend to prioritise – and hence further strengthen – support for powerful actors: - EU and TDCA; EPAs; …
THE LENS OF EXTERNAL FACTORS: IMPLICATIONS FOR EXTERNAL PARTNERS IN CFTA PROCESS
- Prioritise institutional strengthening, yet..
- Avoid best practice models and overemphasis on institutional forms and incentivizing empty
signaling
- Interpret and apply principles of good donorship: harmonisation, alignment, MA, ..
- Refrain from driving the process - stay at arms length
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10 Key observations
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10. Critical junctures
Critical junctures such as natural disasters and major political events/crises can trigger progress but also block regional organisations and dynamics.
• From OAU to AU, end of Cold War, etc.
• SAPP: 1992 - drought, post-apartheid
• ECOWAS: 2008 food crisis and CAADP
THE LENS OF CRITICAL JUNCTURES: IMPLICATIONS FOR CFTA
- Critical junctures may result in shifts in opportunities, in the incentive environment, in the power
distribution, in awareness about costs and benefits of particular policy options, ..
- And hence such changes may create opportunities for coalition building behind particular continental
trade options
- So factor in the need for adaptation to contingency and critical junctures: Plan for sailboats, not trains
(Kleinfeld, 2015)
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So what? Overall implications of PERIA
The implications of these findings can be summarised in the following ABC for reformers,
policy makers, negotiators and partners:
- Ambition: rightsize the level of ambition, go for “good fit” – adapt to political traction and technical feasibility
- Brokerage: pay attention to the need for multi-stakeholder and multi-level facilitation and brokerage during negotiations and implementation, with particular attention to:
* To winners and losers, drivers and blockers, in particular the swing states
* To the potential for coalition building around specific problem areas or shared challenges
* To institutional development and capacities to sustain implementation, to solve problem, resolve disputes, etc.
- Champions: factor in the roles and influence at different levels of state and non-state champions
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So what? Overall implications for CFTA
The PE analysis matters for both the CFTA negotiations as for the implementation
In fact, the nature of these negotiations and the quality of the participation will affect the agreed agenda and the degree and quality of implementation
Example: Consider during the design/negotiation phase those political economy actors and factors that encourage signaling (widening gap between form and function) rather then implementation
In other words: If a regional agenda is not owned by MS or does not represent key interests of these MS –especially the hegemons and key private sector stakeholders - it will not or poorly be implemented
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High level political signals in support of an agenda cannot be taken at face value
And clever, best-practice institutional designs don’t guarantee implementation
Hence the relevance of the ABC for the CFTA process
And the importance of PE analysis to provide insights on technical and political feasibility of envisaged reforms
Factor in the need for adaptation to contingency and critical junctures: Plan for sailboats, not trains (Kleinfeld, 2015)
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Options?
Even once you decide on policy objectives, what margins of manouvre are there?
Alter? Very hard for FFs. Tip the balance? Boost demand? Compensate?
Change own incentives?
Adapt? Tricky! Function not form? Follow interests? Build on informal?
Individuals? Iterative adaptation? Within/between MS traction?
Avoid? Maybe easier, by-passing for same outcome? Build on Sub-
regional groupings? Political legitimacy?
Await? Can you wait? Long-term thinking & preparing?30
GENERAL IMPLICATIONS BEYOND ARIA
- Thinking outside of the box of Regional Organisations
- Identifying (sub)sectors with clear incentives and aligned interests
- Building on national and regional champions
- That may involve regional swing states, charismatic leaders, and
non-state interests
- With the potential to broaden coalitions31