The tug of war over CIDA reform

The Lester B. Pearson Building — the brown structure that sits on the banks of the Rideau River in Ottawa — houses Canada's Department of Foreign Affairs and International Trade. The plan to merge the Canadian International Development Agency with the DFIAT has been ratified by the country's parliament. Photo by: kriscip / CC BY-NC-SA

Canada’s development and foreign affairs agencies are set apart — separated physically by the Ottawa River that cuts across the French and Anglo soils of the country.

On the French-speaking province of Quebec sits the Canadian International Development Agency, while across the river stands the Department of Foreign Affairs and International Trade, planted in the English-dominated part of Ottawa, Ontario.

The distance may reflect the reality on the ground. For the longest time, Canada’s diplomats and aid officials have pursued different agendas, even engaging in turf wars at times, NGO leaders tell Devex.

Fully aware of this problem, the conservative government led by Stephen Harper has been pushing to streamline Canada’s foreign affairs, and this week it may book its biggest success yet: The ratification by parliament of a plan to merge the country’s diplomatic, trade and aid arms, a vast reform that would place CIDA — one of the world’s largest bilateral aid agencies, despite being bogged down by its own bureaucracy and recent scandals surrounding some of its funding decisions — closer to the government’s nerve center in Ottawa.

The move could streamline operations and even raise CIDA’s profile within the government, but it could also result in the subordination of humanitarian values to the administration’s political and mining interests, as some skeptics fear.

CIDA officials, to be sure, have been trying to calm the aid community over the past few months in which the government proposal made its way through parliament, insisting that the agency’s programmatic focus won’t change.

“For the first time, international development has an elevated place at the table besides trade and diplomacy,” Canadian minister for international cooperation writes in an exclusive opinion for Devex where he adds: “Canada is enshrining the mandate of international development in law.”

But implementing the merger — or “amalgamation,” as Canadian officials like to call it — presents many tough challenges, and questions around how exactly the new government entity will be organized and staffed, and how programmatic and funding decisions will be made, are sure to resurface.

‘One team’

The current amalgamation effort started seven years ago, when Harper’s transition team floated the idea to combine CIDA and DFAIT.

At the time, the reform initiavite didn’t take off amid resistance from within government and the aid community. Instead, the administration focused on rejoining the foreign affairs and trade agencies.

The intention of amalgamation has always been policy coherence: Building synergies among institutions, linking one priority to another.

“Amalgamation will encourage greater coherence by making the senior management of the new department, including ambassadors and high commissioners working outside of Canada, jointly responsible for implementing all of the priorities of the department,” a CIDA official told Devex. “Planning, priority-setting and reporting to parliament will be done jointly.”

However, views differ on its effect on development cooperation.

Scott Gilmore, CEO of social enterprise Rebuilding Markets, is among the growing number of industry veterans who think amalgamation can be positive for Canada’s aid program.

“It’s probably going to end up doing is focusing its aid program more carefully on countries where it also has trade and diplomatic interests,” Gilmore told Devex. “I think it will make CIDA more relevant to the Canadian government and more relevant to Canadians.”

Gilmore recalled that when he was a foreign affairs bureaucrat a decade ago, DFAIT and CIDA could not meet eye to eye: “Repeatedly, you would have problems where Canada’s foreign policy was moving in one direction in a country and its aid program was moving in another.”

Others sources have raised fears that CIDA will lose out with the merger.

Nilima Gulrajani, a senior researcher at the University of Oxford, for instance, explained she believes development cooperation could be squeezed out and used as a pawn to achieve diplomatic and trade gains.

“Merging has transaction costs, and ‘effectiveness’ and ‘policy coherence’ expected from the merger actually derive from subordinating development priorities to foreign policy ones,” she suggested.

Canadian values and priorities

One provision in the reform bill, in particular, has raised questions within the aid community: That Canadian aid should be ”in line with Canadian values and priorities.”

So what exactly are Canadian values and priorities?

In his guest op-ed for Devex, Fantino stressed that CIDA will continue providing humanitarian assistance and advance “freedom, democracy, human rights and the rule of law” around the world. Another priority is the promotion of trade and investment, not just to lift people abroad out of poverty, but also to support Canada’s extractive industry.

“CIDA can help develop the capacity to negotiate with other countries, implement international commercial agreements with Canada and other trading partners, and help firms benefit from these agreements,” Fantino said at an economic club meeting last November.

When donors tie aid to the promotion of trade and commerce, though, middle-income countries tend to benefit the most. The danger is that aid to less developed countries could be edged out, potentially turning these nations into “aid orphans.”

Indeed, half of the focus countries on CIDA’s 2009 list contained vast natural resources, and fewer nations were considered low-income compared to the previous list from 2005. Focus countries were meant to receive 80 percent of Canadian official development assistance.

The Canadian Association of International Development Professionals wrote to lawmakers in November: “If the recent projects involving the extractive industries are an indication of future trends, they are starting with the commercial objectives of domestic firms and trying to find a developmental rationale for doing something in the field.”

“In the minds of many people, the government rightly or wrongly is subsidizing the corporate social responsibility of extractive industries as part of their profit-making overseas,” CAIDP’s Keith Ogilvie told Devex.

Ten years ago, roughly two percent of the total value of Canada’s mining imports came from CIDA’s focus countries, but last year, the figure had grown to ten percent.

In March 2009, DFAIT released a corporate social responsibility strategy for the Canadian extractive sector that called on the government to strengthen the capacities of developing countries to manage their natural resources — in large part through the work of CIDA.

CIDA’s approach on this became more apparent in 2011, when then aid minister Bev Oda announced the agency would finance three NGOs to run aid projects alongside Canadian mining companies in Burkina Faso, Peru and Ghana to provide local residents in those communities the skills required by the labor market.

Another case study is Peru, where since 2010, Canada has funded seven projects in support of the extractive industry, with a focus on mining and energy.

Peru is one of Canada’s fastest-growing trading partners, providing seven percent of imports compared to less than one percent ten years ago. In 2003, Peruvian imports were valued at $187 million, and nine years later, they totaled $3.6 billion, about 90 percent of which came from the mining, oil and gas industry.

Not surprisingly, Canadian lawmakers have broadly supported this focus on extractive industries.

Last year, the House of Commons’ Standing Committee on Foreign Affairs and International Development suggested Canada should help build capacity in resource-rich countries through “strengthening governance and consultative processes at the local level to improve development outcomes.” The Harper government agreed.

“Strengthening a partner country’s governance and institutional capacity, from the local to national level, has been a focus of CIDA’s extractive work, particularly in Latin America,” the government argued in its response.

Canada of course is not the first nor the last donor country that has taken steps to streamline development, diplomacy and trade policies. From Washington to London and beyond, the idea that development cooperation can — and in many cases, should — serve domestic purposes has been widely adopted.

Also, as social entrepreneur Scott Gilmore noted: “There’s a big difference between promoting Canada’s trade and commercial interests and using aid dollars to help Canadian companies.”

It may be years before amalgamation is complete, should it indeed become law as expected. In the meantime, the debate will continue over Canadian values and the role of trade and investment in determining the country’s aid priorities.

Read Julian Fantino’s exclusive opinion for Devex here and stay tuned for Friday’s feature about the lessons CIDA can learn from other aid agencies that have merged with government departments.

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About the author

  • Alliage profile

    John Alliage Morales

    As a staff writer, John Alliage Morales covers the Americas, focusing on the world's top donor hub, Washington, and its aid community - from Capitol Hill to Dupont Circle, Foggy Bottom to the downtown headquarters of USAID, the World Bank and Millennium Challenge Corp. Prior to joining Devex, Alliage worked for a variety of news outlets including GMA, the Philippine TV network, where he conducted interviews, analyzed data and produced in-depth stories on development and other topics.