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Donor Competition in Africa: Comparing China and the EU’s Aid in Ethiopia

Yingxue Wu and Anniek Sienot analyse the differing approaches of the EU and China regarding aid in Africa, focusing on the case study of donor competition in Ethiopia.



Introduction


Today’s geopolitical environment is increasingly characterized by growing donor competition between the West and East, imposing their global influence through democratic and authoritarian approaches. This rivalry appears across issue areas and continents, including Africa. China’s growing presence in Africa and what this means for traditional Western donors is a topic widely discussed, both in the media and among policymakers and politicians.


Two of the biggest players in foreign aid to Africa are Brussels and Beijing. For years, the EU has been and continues to be the largest foreign aid distributor in Africa (Armel, 2019). Consequently, EU foreign aid remains an essential funding source for many African countries. Yet, China is also increasingly active in providing aid and financial support on the continent.


This article examines how the EU’s and China’s approaches to aid in Africa differ by focusing on a case study, namely Ethiopia. Ethiopia has become one of the fastest-growing economies in Africa since 2000 but is also the country with the highest foreign aid dependence in Africa (OECD, 2022). Moreover, both traditional donors such as the EU, who follow the normative regimes of international aid, and emerging powers like China have a strong presence in Ethiopia, which makes it an interesting country to analyze the clashing ideas between the aid providers. In doing so, this article explores two diverse approaches that China and the EU implement in international aid, providing an analysis of the donor competition in Ethiopia. This article portrays the background for the future trilateral relationship between China, the EU, and Africa, and argues that the European and Chinese approaches differ significantly, leading to further economic and political competition.



Different Styles: The Why and How of Chinese and European Aid in Africa


Before contrasting how China and the EU provide aid to African countries, we need to understand the African continent’s geopolitical importance to China and the EU.


For the EU, geographical proximity plays an important role in how it evaluates its Africa strategy. It sees Africa as its backyard and desires stability of the continent, for potential spillover effects of political unrest could threaten Europe (Shopov, 2020). Furthermore, the EU advocates the spread of liberal values, such as democracy, human rights and rule of law (Bentzen, 2020). Through the promotion of these values, the EU hopes to increase its soft power.


China does not focus so much on disseminating its values: Instead, it promotes a “win-win cooperation” through trade and investment, arguing for a collaboration in which both the African country and China benefit (Van der Lugt, 2020). Clearly, Beijing does think it benefits from working with African countries, both economically and politically. Not only does the cooperation create more business opportunities for Chinese companies, but it also leads to more political support for China’s initiatives (Esteban & Olivié, 2022). After all, the African continent has the most United Nations members of any continent. Hence, close ties with African countries could translate to more influence in the UN.


Therefore, both the EU and China have interests in Africa that go beyond its development. How they go about providing aid is different: the EU tends to spend on humanitarian aid and the health and education sectors (Esteban & Olivié, 2022). Additionally, it tries to involve civil society actors as much as possible, aiming for an inclusive model of economic development (Esteban & Olivié, 2022). Yet, Brussels is often accused of not being African-centered enough in its aid (Bernstein, 2022). Instead, it uses aid as a political tool to advance its values and interests, attaching many strings to sums of money (Nowak, 2016). Many African countries as well as Chinese officials perceive this conditionality as pedantic (Esteban & Olivié, 2022).


In contrast, China opts for more infrastructure projects. These projects cover a different part of development that are no less important for state survival. China often implements infrastructure works through its infamous Belt and Road Initiative, a vital component of Chinese foreign policy (Githaiga, Burimaso, Wang & Ahmed, 2019). Different from the EU, China endorses a more horizontal relationship between the donor state and local African authorities (Esteban & Olivié, 2022). It promises not to interfere in domestic affairs and provide economic support through its projects. Although Beijing stresses economic cooperation and not so much political dependence, Hodzi (2022) has argued that the mere presence of China in African countries undermines democracy there by offering an alternative example of governance. This governance is characterized by rapid economic growth without democratic reforms. Additionally, some have pointed out that similar to the EU, China is not entirely offering money without conditions either: China invests and expects a return, which means that funding for projects does depend on how much money it will make Beijing. As a result, China is often portrayed as a pernicious lender who uses its loans to take advantage of weak countries by entangling them in a debt trap (Brautigam, 2019).


China and the EU Aid in Ethiopia: Competing Approaches


In Ethiopia, both the Chinese and European approaches can be found. Ethiopia’s agricultural exports as well as its capital’s diplomatic significance - Addis Ababa houses the headquarters of some major international organizations, including the African Union - make it an attractive aid recipient ​​(Rapanyane, 2020).


Ethiopia is a central hub for China’s Belt and Road Initiative (Yalew & Changgang, 2020). Over 400 Chinese manufacturing and construction projects worth over $4 billion are now underway in Ethiopia (Sany & Sheehy, 2022), which attracts attention to the BRI’s implications in Ethiopia. The EU is also actively involved in Ethiopia, accounting for 50 per cent of the country’s health budget (Esteban & Olivié, 2022). Moreover, it collaborates on various projects with other institutions, such as UNICEF and the World Bank (Esteban & Olivié, 2022). Especially since its civil war broke out in 2020, Ethiopia has received humanitarian aid.

To facilitate the economy in the region, China provides capacity-building programs and concessional loans to Ethiopia. It focuses on infrastructure development like roads, dams, and airports. These projects could be associated with a quest for geopolitical dominance as they are desperately needed to boost connectivity and consequently economic growth. Prime examples are the Addis Ababa–Djibouti railway and the port of Mombasa in the Indian Ocean (Yalew & Changgang, 2020).


China's aid provision is characterized by a “no-conditionality” rhetoric and a promise not to interfere with the recipient’s government. Nevertheless, China’s “authoritarian policies” seems to still have impacts on local politics. The pragmatic technical aids assert influences are indirectly reflected in how Chinese actors aim to maintain domestic stability to guarantee the effectiveness of implementation projects. Stability-oriented measures, like autocratic policies and non-lethal repression, encourage local authorities to accept authoritarian methods during aid projects. (Gehring et al., 2022).


Moreover, China’s “win-win” discourse does not necessarily mean that the benefits from cooperation are balanced. Indeed, the Ethiopia-China relationship is asymmetric. Despite China’s promise not to use economic sanctions (Joseph & Thomas, 2022), Ethiopia still risks being economically controlled. After all, development projects are much more important for Ethiopia than they are for China due to the sheer size and development level of the latter’s economy (Esteban & Olivié, 2022).


Even though China claims BRI is a typical reflection of China's aid principles that advocate cooperation rather than aid itself (Jin, 2010), traditional donors doubt the sustainability of growth. The EU criticizes China for focusing too much on infrastructure establishment, which is not enough to overcome a development trap in African countries (Zeitz, 2015).


The EU, on the other hand, concentrates on enhancing state capacity and promoting transparent governance. In doing so, it emphasizes ownership and inclusiveness by collaborating with various stakeholders (Gehring et al., 2022). This is in line with the EU’s adoption of the Aid Effectiveness Agenda (OECD, n.d.) and exhibits a strong liberal presence while putting democratic principles into practice. For example, the EU adopts inclusive development partnerships as one principle in its monitoring framework, highlighting the EU's priority on fostering public-private collaboration (Esteban & Olivié, 2022). This diverges from China’s aid model: as China favours a state-to-state approach, the Chinese Communist Party (CCP) relies on support from the local government. This does mean, however, that it establishes few significant relations with Ethiopian civil society actors like NGOs (Esteban & Olivié, 2022). The centralization of power empowers local officials but also results in corruption scandals, which raises public concerns about key issues like land expropriation, corruption, debt sustainability, and profitability (Carrai, 2021).



The Ethiopian response to Beijing’s and Brussels’ engagement


Chinese and European aid is received differently in Ethiopia. Some local officials welcome China as an alternative to traditional Western donors since it expands the number of options they have for funding. In turn, this gives them more leverage during negotiations with other aid donors (Zeitz, 2015). Furthermore, the political conditionality that is inherent to the EU’s aid policy remains a source of tension. According to Ethiopian stakeholders and African diplomats posted in Ethiopia, “the West treats us like infants” (Esteban & Olivié, 2022). This undermines the effectiveness of the EU’s aid strategy instead of strengthening European soft power in the country. In the face of the perceived condescending attitude of Brussels, Ethiopians are more likely to seek rapprochement with Beijing.


Seeing how differently the EU and China operate in Ethiopia, it is hard to imagine closer cooperation to harmonize initiatives and ultimately work toward Ethiopian independence from aid. Still, China’s activities have incentivized changes among traditional donors, resulting in fewer conditions and economic transparency requirements (Hatton, 2017). In this way, China asserts pressure on the EU to reform its aid and development policies. Yet, China’s aid strategy might not be sustainable either: if Beijing’s loans to Ethiopia are not repaid with interest in a decade or so, China may restructure its activities (Hatton, 2017). Already, Beijing increasingly chooses to lend via the Asian Infrastructure Investment Bank to decrease risks (Hatton, 2017).


Conclusion


China and the EU use different tools and emphasize other objectives in their aid provision not only to Ethiopia, but also more widely across the African continent. While Ethiopia is just one of 54 African countries, studying this particular case paints a picture of two diverging donors fighting to increase their influence. Both the EU and China are convinced of the effectiveness of their own strategies. However, this does not necessarily benefit the ultimate objective of foreign aid: the development of Ethiopia’s economy. More trilateral cooperation between Ethiopia, the EU, and China would contribute to achieving this. In playing their strategic games, Brussels and Beijing should not lose sight of what really matters.




This article represents the views of contributors to STEAR's online digital publications, and not those of STEAR, which takes no institutional positions.



 

References


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