Scholarly assessmentsof transnational actors are largely optimistic, suggesting they herald an emerg-ing global civil society comprising local civic groups, international organiza-tions (IOs), and international nongovernmental organizations (INGOs). Thisnew civil society, moreover, is widely assumed to rest upon shared liberalnorms and values that motivate INGO action and explain their supposedly be-nign inºuence on international relations.1The NGO Scramble

The NGO Scramble Alexander Cooley andJames Ron

Organizational Insecurity and thePolitical Economy of Transnational Action

International Security, Vol. 27, No. 1 (Summer 2002), pp. 5–39© 2002 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

5

Alexander Cooley is Assistant Professor of Political Science at Barnard College, Columbia University. JamesRon is Canada Research Chair in Conºict and Human Rights, Department of Sociology, McGill University.

A version of this article was presented at the annual meeting of the International Studies Associa-tion, New Orleans, Louisiana, March 24–27, 2002. The authors are grateful for comments by PeterAndreas, Mark Blyth, Mlada Bukovansky, Elisabeth Jay Friedman, Kevin Hartigan, Patrick Jack-son, Paula Duarte Lopes, Larry Minear, Dominique Morel, Emma Naughton, Hendrik Spruyt,Jacques Stroun, Kellee Tsai, Peter Uvin, members of the nongovernmental organization commu-nity who have chosen to remain anonymous, and three anonymous reviewers for InternationalSecurity.

1. For recent works, see John Boli and George M. Thomas, eds., Constructing World Culture: Interna-tional Nongovernmental Organizations since 1875 (Stanford, Calif.: Stanford University Press, 1999);Ann Marie Clark, Diplomacy of Conscience: Amnesty International and Changing Human Rights Norms(Princeton, N.J.: Princeton University Press, 2001); Martha Finnemore, National Interests in Interna-tional Society (Ithaca, N.Y.: Cornell University Press, 1996); Margaret E. Keck and Kathryn Sikkink,Activists beyond Borders: Advocacy Networks in International Politics (Ithaca, N.Y.: Cornell UniversityPress, 1998); Audie Klotz, Norms in International Relations: The Struggle against Apartheid (Ithaca,N.Y.: Cornell University Press, 1996); David Holloran Lumsdaine,Moral Vision in International Poli-tics: The Foreign Aid Regime, 1949–1989 (Princeton, N.J.: Princeton University Press, 1993); ThomasRisse, Stephen C. Ropp, and Kathryn Sikkink, The Power of Human Rights: International Norms andDomestic Change (New York: Cambridge University Press, 1999); Paul Kevin Wapner, EnvironmentalActivism and World Civic Politics (Buffalo: State University of New York Press, 1995); and PaulKevin Wapner, “The Normative Promise of Nonstate Actors: A Theoretical Account of Global CivilSociety,” in Wapner, Lester Edwin Ruiz, and Richard A. Falk, eds., Principled World Politics: TheChallenge of Normative International Relations (Lanham, Md.: Rowman and Littleªeld, 2000).Other scholars do not dispute the normative motivations of IOs and INGOs, but provide critical

analysis of their emergence, strategies, and effectiveness. See, for example, Ann Marie Clark, Elisa-beth J. Friedman, and Kathryn Hochstetler, “The Sovereign Limits of Global Civil Society: A Com-parison of NGO Participation in UN World Conferences on the Environment, Human Rights, andWomen,” World Politics, Vol. 51, No. 1 (October 1998), pp. 1–35; Michael Edwards and DavidHulme, eds., Beyond the Magic Bullet: NGO Performance and Accountability in the Post–Cold War World(West Hartford, Conn.: Kumarian, 1996); Chaim D. Kaufmann and Robert A. Pape, “ExplainingCostly International Moral Action: Britain’s Sixty-Year Campaign against the Atlantic SlaveTrade,” International Organization, Vol. 53, No. 4 (Autumn 1999), pp. 631–668; James Ron, “VaryingMethods of State Violence,” International Organization, Vol. 51, No. 2 (Spring 1997), pp. 275–300;

Although not entirely misplaced, this view does not adequately address theorganizational insecurity, competitive pressures, and ªscal uncertainty thatcharacterize the transnational sector. Powerful institutional imperatives cansubvert IO and INGO efforts, prolong inappropriate aid projects, or promotedestructive competition among well-meaning transnational actors. Attemptsby IOs and INGOs to reconcile material pressures with normative motivationsoften produce outcomes dramatically at odds with liberal expectations.This article develops a political economy approach to the study of contem-

porary transnational networks. We argue that many aspects of IO and INGObehavior can be explained by materialist analysis and an examination of the in-centives and constraints produced by the transnational sector’s institutionalenvironment. We advance two theoretical propositions. First, the growingnumber of IOs and INGOs within a given transnational sector increases uncer-tainty, competition, and insecurity for all organizations in that sector. Thisproposition disputes the liberal view that INGO proliferation is, in and of it-self, evidence of a robust global civil society. Second, we suggest that themarketization of many IO and INGO activities—particularly the use of com-petitive tenders and renewable contracting—generates incentives that producedysfunctional outcomes. This claim disputes the popular assumption that mar-ket-based institutions in the transnational sector increase INGO efªciency andeffectiveness.In advancing these arguments, we do not criticize the normative agendas,

moral character, or nominal goals of individual transnational groups. Ratherwe suggest that dysfunctional organizational behavior is likely to be a rationalresponse to systematic and predictable institutional pressures. In many cases,uncooperative local actors will take advantage of the transnational sector’sperverse incentives to further their own opportunistic agendas.In making our argument, we draw on the New Economics of Organization

(NEO), a body of theory that focuses on the incentives and institutional out-comes generated by contractual relations, incomplete information, transactioncosts, and property rights.2 By applying these concepts to the environment in

International Security 27:1 6

and Jack Snyder and Karen Ballentine, “Nationalism and the Marketplace of Ideas,” InternationalSecurity, Vol. 21, No. 2 (Fall 1996), pp. 5–40.2. Thráinn Eggertsson, Economic Behavior and Institutions (New York: Cambridge University Press,1990); Geoffrey M. Hodgson, Economics and Institutions: A Manifesto for a Modern Institutional Eco-nomics (Philadelphia: University of Pennsylvania Press, 1988); Douglass O. North, Institutions, In-stitutional Change, and Economic Performance (New York: Cambridge University Press, 1990); andOliver Williamson, The Economic Institutions of Capitalism: Firms, Markets, and Relational Contracting(New York: Free Press, 1985). A rich literature applies the NEO to international institutions and or-

which contemporary transnational actors operate, we identify sources of orga-nizational insecurity and explain patterns of behavior that liberal theories oftransnationalism either fail to acknowledge or cannot address conceptually.INGOs compete to raise money and secure contracts. These contracts, more-over, are often performance based, renewable, and short term, creating coun-terproductive incentives and acute principal-agent problems. Opportunismand dysfunctional outcomes are particularly rife when groups seek controlover the same project, a phenomenon known as the “multiple-principals prob-lem.” Indeed we ªnd that nonproªt INGOs respond to contractual incentivesand organizational pressures much like ªrms do in markets.To test our model, we examine three cases of transnational assistance. Al-

though our theory is broadly rationalist, our method is necessarily qualitativeand case based. Because we seek to go beyond the images, public documents,and prepared statements of IOs and INGOs, our three studies draw on in-depth interviews that seek to uncover hidden behavioral imperatives. The ªrstcase is based on more than thirty discussions with for-proªt corporations oper-ating in Kyrgyzstan under contracts from Western governments, internationalªnancial institutions, and the United Nations (UN). The case shows how reli-ance on one-year renewable contracts by Western donors created incentives forcontracting INGOs to downplay government subversion of economic reforms,withhold information about ineffective projects, and tolerate bureaucratic op-portunism. Our second case shows how inter-INGO competition in Goma,Democratic Republic of Congo (former Zaire), undercut the collective actionnecessary to protest misuse of refugee aid. This case draws on thirty-ªve dis-

The NGO Scramble 7

ganizations. Here we extend those insights to explain relations among international aid donors,INGO contractors, and aid recipients.For NEO applications to international relations, see Alexander Cooley, “Imperial Wreckage:

Property Rights, Sovereignty, and Security in the Post-Soviet Space,” International Security, Vol. 25,No. 3 (Winter 2000/01), pp. 100–127; Jeffry Frieden, “International Investment and Colonial Con-trol: A New Interpretation,” International Organization, Vol. 48, No. 4 (Autumn 1994), pp. 559–593;David A. Lake, Entangling Relations: American Foreign Policy in Its Century (Princeton, N.J.: Prince-ton University Press, 1999); Lisa L. Martin, Democratic Commitments: Legislatures and InternationalCooperation (Princeton, N.J.: Princeton University Press, 2000); Helen V. Milner, Interests, Institu-tions, and Information: Domestic Politics and International Relations (Princeton, N.J.: Princeton Univer-sity Press, 1997); Hendrik Spruyt, The Sovereign State and Its Competitors (Princeton, N.J.: PrincetonUniversity Press, 1994); Roland Vaubel, “A Public Choice View of International Organizations,” inVaubel and Thomas Willett, eds., The Political Economy of International Organizations (Boulder, Colo.:Westview, 1991); Celeste A. Wallander, “Institutional Assets and Adaptability: NATO after theCold War,” International Organization, Vol. 54, No. 4 (Autumn 2000), pp. 705–735; and Beth V.Yarbrough and Robert M. Yarbrough, Cooperation and Governance in International Trade: A StrategicOrganizational Approach (Princeton, N.J.: Princeton University Press, 1992).

cussions with staffers from “Refugee Help,” a respected nonproªt organizationwith a budget in the tens of millions of dollars.3 The ªnal case draws on eventsin wartime Bosnia, showing how inter-IO and INGO competition empoweredlocal military commanders seeking to resist international efforts to protect pris-oners of war (POWs). Here we make use of some 100 interviews with membersof the International Committee of the Red Cross (ICRC), the UN, INGOs, andBosnian military ofªcers.4

Although three qualitative cases cannot provide a deªnitive test of ourclaims, they fulªll important criteria of social inquiry and suggest a globaltrend. First, our cases include both for-proªt and nonproªt transnational ac-tors, providing a “most likely” and “least likely” test of our claims. Second,each case is drawn from a different geographic region, allowing us to controlfor local cultural factors, identity-based action, and other potential regional id-iosyncrasies. Finally, each case involves a different sector of the transnationalworld: economic technical assistance, humanitarian aid/refugee relief, andPOWmonitoring. Controlling for for-proªt status, geographical setting, and is-sue area, we observe dynamics consistent with a political economy approach.Some INGOs may resist material pressures, either because of idiosyncratic

funding patterns, unique organizational cultures, or remarkable leaders or co-alitions. Others may even deªne themselves in opposition to the mainstream,condemning their rivals’ marketized or “corporate” mentalities. For sure, nor-mative aspirations may sometimes overcome material constraints. As a generalrule, however, the transnational environment is pushing INGOs and IOs to-ward greater competition, regardless of their normative starting points or ori-entations. By identifying these institutional pressures and imperatives, wehope to encourage scholars and policymakers to think theoretically and sys-tematically about the transnational world’s political economy. This is particu-larly important given the enormous relief and reconstruction efforts currentlyunder way in Afghanistan, as well as the mass inºux of IOs and INGOs intoCentral Asia. It is vital that the international community devise workable solu-tions to the “NGO scramble.”The next section examines the conventional wisdom espoused by analysts of

transnationalism and global civil society. We then build on insights from NEOtheory to examine how the tender process, renewable contracts, and the pres-

International Security 27:1 8

3. James Ron, Human Rights vs. Humanitarian Relief in the Goma Refugee Camps (Refugee Help,1999). Permission to use the material was conditioned on using “Refugee Help” as a pseudonym.4. James Ron, Compete or Collaborate? The ICRC and Other Protection-Related Agencies in the FormerYugoslavia (Geneva: ICRC, 1996). Permission to use the interviews was conditioned on informants’anonymity.

ence of multiple contractors create self-interested and competitive incentivesantithetical to liberal expectations. After presenting our three empirical cases,we conclude with a theoretical summary and discussion of policy implications.

A “Civil” Global Society? Organizational Density and Marketization

Liberal scholars and Western aid donors view two key trends in transnationalactivity—increasing organizational density and growing marketization—asimportant contributions to a global civil society. Because they assume thattransnational behavior is shaped chieºy by liberal norms, they believe that themore IOs and INGOs exist, the better. Moreover, marketization of aid funding,through the creation of competitive project tenders, is supposed to boostefªciency. Competition cuts waste, curbs corruption, and allows new INGOs tobecome transnational players. We question the optimism embedded in bothpropositions, suggesting that more is not always better and that marketizationcan produce dysfunctional incentives and results.The notion that growth in the transnational sector heralds a more benign

global civil society is fast achieving doctrinal status. An inºuential article byJessica Mathews, for example, charts the rise of a liberal world polity based ontransnational NGOs and argues that this trend deepens global democracy by“disrupt[ing] hierarchies” and spreading “power among more people andgroups,” thereby promoting an unprecedented “power shift” from states to lib-eral private organizations. NGOs “breed new ideas, advocate, protest, and mo-bilize public support,” Mathews says, and “shape, implement, monitor, andenforce national and international commitments.”5 P.J. Simmons is similarlyupbeat, noting that “unprecedented levels” of INGO activity have producedstartling liberal triumphs, including agreement on the international ban onland mines and greater World Bank accountability.6 And in a widely acclaimedstudy of transnational activism, Margaret Keck and Kathryn Sikkink arguethat world politics have been fundamentally transformed by liberal transna-tional networks that “multiply the channels of access to the international sys-tem,” most notably in the environmental and human rights ªelds.7

The NGO Scramble 9

5. Jessica T. Mathews, “Power Shift,” Foreign Affairs, Vol. 76, No. 1 (January/February 1997),pp. 52–53.6. P.J. Simmons, “Learning to Live with NGOs,” Foreign Policy, No. 112 (Fall 1998), pp. 82–96. Onthe land-mine issue, see also Richard Price, “Reversing the Gun Sights: Transnational Civil SocietyTargets Land Mines,” International Organization, Vol. 52, No. 3 (Summer 1998), pp. 613–644.7. Keck and Sikkink, Activists beyond Borders, p. 1.

There is little doubt that the transnational world is increasingly dense. Be-tween 1960 and 1996, the number of INGOs grew from 1,000 to 5,500.8 Thisgrowth has been particularly dramatic in the transnational aid sector, as pri-vate aid agencies expanded their operations by 150 percent from 1985 to 1995,affecting the lives of 250 million people worldwide.9 In 1992 the total amountof assistance to the developing world channeled through INGOs was $8 bil-lion, representing 13 percent of all development assistance.10 War-related reliefin particular is growing rapidly. In 1989 the U.S. Agency for International De-velopment (USAID) spent $297 million on humanitarian relief, a ªgure thatrose to $1.2 billion four years later, in large part due to the relief effort inBosnia.11 Increasing organizational density is also evident from the number ofINGOs operating near or within zones of armed conºict. In 1980, for example,there were 37 foreign relief agencies in a major Cambodian refugee camp alongthe Thai border. By 1995, more than 200 INGOs were present in Goma; and in1996, 240 INGOs were active in Bosnia,12 requiring some thirty coordinationmeetings per week.13 In our interviews, most professional aid ofªcials ex-pressed concern with this trend, viewing it as indication of the relief market’slow barriers to entry.The explosion in INGO numbers stems in part from shifts in donor strate-

gies, which increasingly rely on private transnational groups as contractorsand intermediaries.14 USAID, for example, disburses 25–30 percent of its bud-get through private groups, as do the governments of Sweden, Switzerland,Norway, and the European Union (EU).15 In 2000 the UN High Commissionfor Refugees’ (UNHCR) budget was $1 billion, most of which was disbursedthrough competitive INGO contracts.16 “Willy nilly,” Simmons notes, “the UN

International Security 27:1 10

8. Taken from the Yearbook of International Organizations, 1996, as cited in Simmons, “Learning toLive with NGOs,” p. 89.9. This United Nations Development Programme (UNDP) estimate is cited in Roger Charlton andRoy May, “NGOs, Politics, Projects, and Probity: A Policy Implementation Perspective,” ThirdWorld Quarterly, Vol. 16, No. 2 (June 1995), p. 240.10. Simmons, “Learning to Live with NGOs,” p. 87.11. Andrew S. Natsios, “NGOs and the UN System in Complex Humanitarian Emergencies:Conºict or Cooperation?” Third World Quarterly, Vol. 16, No. 3 (September 1995), p. 406.12. Ian Smillie, Relief and Development: The Search for Synergy (Providence: War and Humanitarian-ism Project, Brown University, 1998), p. 42; and interviews with Refugee Help ofªcials, August–November 1998.13. Interview with ICRC head of ofªce, Sarajevo, April 12, 1996.14. For background and analysis, see Ruben Berrios, Contracting for Development: The Role of For-Proªt Contractors in U.S. Foreign Development Assistance (Westport, Conn.: Praeger, 2000).15. Ian Smillie, “NGOs and Development Assistance: A Change in Mind-Set?” Third World Quar-terly, Vol. 18, No. 3 (September 1997), p. 564.16. Philippe Rekacewicz, “How the Burden of the World’s Refugees Fall on the South,” Le MondeDiplomatique [English version], (April 2001), p. 19.

and nation-states are depending more on NGOs to get things done.”17 This in-creased reliance on competitive contract tenders has stimulated further INGOgrowth, because as the number of tenders increase, so do contractors’ ranks.18

The growing reliance on INGOs and the marketization of transnationalism ispropelled by searing critiques of project failures, demands for accountabilityby domestic politicians, and broad neoliberal agendas.19 Western, Japanese,and other aid donors are increasingly issuing short-term, renewable contractsfor discrete aid projects, requiring aid contractors to bid competitively anddemonstrate concrete results.20 As one study of Bosnian assistance noted, forexample, “virtually all donor grant mechanisms had a time frame of one yearor less. Some were for six months or even three.”21 Donors, moreover, seek tofund projects, not administrative overhead, hoping that this will push INGOcontractors to rationalize procedures, demonstrate effectiveness, and slash

The NGO Scramble 11

17. Simmons, “Learning to Live with NGOs,” p. 87. On the growing inºuence of NGOs on UN ac-tivities, see also Kathryn Hochstetler, Ann Marie Clark, and Elisabeth J. Friedman, “Sovereignty inthe Balance: Claims and Bargains at the UN Conferences on the Environment, Human Rights, andWomen,” International Studies Quarterly, Vol. 44, No. 4 (December 2000), pp. 591–614; Natsios,“NGOs and the UN System in Complex Humanitarian Emergencies”; Peter Willets, “From ‘Con-sultative Arrangements’ to ‘Partnership’: The Changing Status of NGOs in Diplomacy at the UN,”Global Governance, Vol. 6, No. 2 (April–June 2000), pp. 191–212; and Thomas George Weiss andLeon Gordenker, eds., NGOs, the United Nations, and Global Governance (Boulder, Colo.: LynneRienner, 1996).18. Although some transnational sectors have assumed oligopolistic qualities, the increase in ten-ders has boosted overall INGO numbers for several reasons. First, there are often low barriers toentry in the humanitarian market, which has no binding set of regulatory agencies or rules. More-over, because many donors are governments, they tend to give preference to INGOs from theirown countries, spurring greater growth. Thus, for example, major aid groups such as Save theChildren are often divided into multiple and independent national branches. Speciªc countriesalso have greater connections to conºicts for historical reasons. For instance, Portuguese aidgroups are particularly active in Angola, a former colony. Finally, the individual country ofªces ofINGOs continue to press for ªnancial self-sufªciency. Thus each country branch of the same NGObehaves as an autonomous entity, and these subunits may actually vie for the same contracts.19. Recent critiques of humanitarian, relief, and human rights groups include Ben Barber, “Feed-ing Refugees, or War? The Dilemma of Humanitarian Aid,” Foreign Affairs, Vol. 76, No. 4 (July/August 1997), pp. 8–14; Edward N. Luttwak, “Give War a Chance,” Foreign Affairs, Vol. 78, No. 4(July/August 1999), pp. 36–44; Snyder and Ballentine, “Nationalism and the Marketplace ofIdeas”; and Alex de Waal, Famine Crimes: Politics and the Disaster Relief Industry in Africa(Bloomington: James Currey and Indiana University Press, 1997). For a critique of the develop-ment sector, see Peter Uvin, Aiding Violence: The Development Enterprise in Rwanda (West Hartford,Conn.: Kumarian, 1998). For two sensationalist critiques, see Graham Hancock, The Lords of Pov-erty: The Power, Prestige, and Corruption of the International Aid Business (New York: Atlantic MonthlyPress, 1989); and Michael Maren, The Road to Hell: The Ravaging Effects of Foreign Aid and Interna-tional Charity (New York: Free Press, 1997).20. On the marketization of humanitarian relief, see Smillie, Relief and Development, pp. 35–51; andIan Smillie, The Alms Bazaar (London: IT Publications, 1995).21. Ian Smillie and Goran Todorovic, “Reconstructing Bosnia, Constructing Civil Society,” inSmillie, ed., Patronage or Partnership: Local Capacity Building in Humanitarian Crises (Bloomªeld,Conn.: Kumarian, 2001), p. 31.

overhead. They view marketization as a way to curb waste, improve profes-sionalism, and enhance project implementation.22 Marketization can also gen-erate support within donor countries by reassuring skeptical legislators thatforeign assistance is being spent responsibly and efªciently.The proliferation of IOs and INGOs operating in the same sector, along with

the marketization of their activities, is radically transforming certain sectors ofthe humanitarian relief world. The UN system itself has become increasinglycomplex, with four major agencies—the United Nations DevelopmentProgramme, the United Nations Children’s Fund, the World Food Programme,and UNHCR—operating independently with separate budgets and staffs.These are joined by at least 40 large aid and relief INGOs and two separate RedCross groupings, the ICRC and the International Federation of Red Cross andRed Crescent Societies.23 In addition, hundreds of smaller INGOs are seekingentry to the aid and relief market, hoping to raise funds for future work byraising their ºag in media-saturated humanitarian “hot spots.” Although theglobal INGO relief market is dominated by eight agencies, each of their coun-try ofªces is forced to compete heavily for individual contracts in particularconºict settings.24

Western technical assistance programs in Eastern Europe and the formersocialist states contribute to also an increasingly lucrative, crowded, andmarketized transnational sector. Cumulative technical assistance from the EUto the former Soviet states totaled $2.804 billion from 1991 to 1996; U.S. assis-tance from 1992 to 1997 totaled $10.967 billion.25 Most of these disbursementsfunded projects implemented by well-known for-proªt multinationals. In 1995alone, contracts worth $476 million were awarded to just four corporations—Arthur Andersen, Booz Allen and Hamilton, Chemonics, and KPMG/PeatMarwick—for economic restructuring efforts.26 Indeed, the annual value of

International Security 27:1 12

22. Charlton and May, “NGOs, Politics, Projects, and Probity,” p. 244. See also Berrios, Contractingfor Development, pp. 23–34.23. Natsios, “NGOs and the UN System in Complex Humanitarian Emergencies,” p. 416.24. The eight large relief INGOs are APDOVE (Association of Protestant Development Organiza-tions in Europe), CARE, CIDSE (Coopération internationale pour le développement et la soli-darité), Eurostep, Médecins sans Frontières, Oxfam, Save the Children, and World Vision. Eachcontrols a budget of more than $500 million. Together they account for more than half of theworld’s relief market. Simmons, “Learning to Live with NGOs,” p. 92.25. Janine Wedel, Collision and Collusion: The Strange Case of Western Aid to Eastern Europe (NewYork: St. Martin’s, 1998), pp. 203–204.26. Nancy Lubin, “U.S. Assistance to the Newly Independent States: When Good Things Come inSmaller Packages,” in Bruce Parrott and Karen Dawisha, eds., The International Dimension of Post-Communist Transitions in Russia and the New States of Eurasia (Armonk, N.Y.: M.E. Sharpe, 1997),p. 351.

technical assistance and INGO projects to many post-Soviet states exceeds thatof ªnancial assistance from established multilateral lenders such as the Inter-national Monetary Fund (IMF).27

INGO and IO insiders are increasingly concerned by this growth of actorsand marketization. According to a recent UN-commissioned study, for exam-ple, coordination efforts among war-relief IOs and INGOs are being systemati-cally undermined by the growing number of humanitarian groups vying forcontracts.28 “Competitiveness,” the report states, is “built into the system” ofwar-related aid, while competition within the UN relief system, according toone senior UN ofªcial, is even ªercer than in the private sector. The resultshave been deeply corrosive.29

Our research on transnational aid of all kinds reveals dysfunctions beyondcoordination failure, however, including disincentives to protest aid diversionand empowerment of uncooperative aid recipients. Density and marketizationhave created new relationships and incentives between transnational and localactors, but analysts have largely relegated these endogenous sources of dys-functional IO and INGO behavior to industry-speciªc literatures.30

Organizational Environments, Contracting, and NGO Incentives

When an organization’s survival depends on making strategic choices in amarket environment characterized by uncertainty, its interests will be shaped,often unintentionally, by material incentives. We assume that IOs and INGOsbehave similarly to other organizations, internalizing the values, goals, andmethods of their institutional environment through imitation and isomorph-ism.31 The more that nonproªt groups attempt to secure and maintaincontracts under market-generated pressures, the more they will copy the struc-

The NGO Scramble 13

27. For comparative data, see Alexander Cooley, “International Aid to the Former Soviet States:Agent of Reform or Guardian of the Status Quo?” Problems of Post-Communism, Vol. 47, No. 4(July/August 2000), p. 38. It is becoming increasingly difªcult to disentangle the value of mone-tary and nonmonetary disbursements, given that many developmental and restructuring creditsgranted by ªnancial institutions such as the World Bank and the Asian Development Bank are nowaccompanied by mandatory technical assistance projects.28. Nicola Reindorp and Peter Wiles, Humanitarian Coordination: Lessons from Recent Field Experi-ence (London: Overseas Development Institute, 2001). The study was commissioned by the UN’sOfªce for the Coordination of Humanitarian Affairs.29. Ibid., p. 9.30. For a rare exception, see Michael N. Barnett and Martha Finnemore, “The Politics, Power, andPathologies of International Organizations,” International Organization, Vol. 53, No. 4 (Autumn1999), pp. 699–732.31. James G. March and Johan P. Olsen, Rediscovering Institutions: The Organizational Basis of Politics(New York: Free Press, 1989); Walter W. Powell and Paul J. DiMaggio, eds., The New Institutionalism

tures, interests, and procedures of their for-proªt counterparts.32 The inºuenceof material incentives is further bolstered by the organizational structures ofaid INGOs emulating private-sector models. Most large nonproªt groups havedeveloped elaborate structures for handling public relations, fund-raising, in-ternal audits and accounting, human resources, and the like. Thus, as a theorycreated to study organizational behavior under market conditions, the NEO isparticularly suited to today’s transnational setting. Because IOs and INGOs en-gage in competitive and contractual relations, we analyze their behavior withtools speciªcally developed for that purpose.Transnational organizations are embedded in market-based institutions cre-

ated by contracts between donors and INGO contractors, or between contrac-tors and recipients. Donors typically seek the effective implementation of theirprojects; contractors are tacitly preoccupied with organizational survival.33 Inunstable or competitive markets, aid contractors cannot take their survival as agiven.34 INGOs are in the business of implementing programs. Securing newcontracts—or renewing existing ones—is the best way to remain solvent.35 Inthis respect, the dependence of major U.S. relief groups on short-term, renew-able government contracts is notable. In 1995, for instance, U.S. governmentcontracts constituted 62 percent of CARE-USA’s total revenue and 54 percentfor Save the Children–USA.36 In turn, principal-agent problems, competitivecontract tenders, and the presence of multiple principals exacerbate INGO in-security and create organizational imperatives that promote self-interested ac-tion, inter-INGO competition, and poor project implementation.

International Security 27:1 14

in Organizational Analysis (Chicago: University of Chicago Press, 1991); and Richard W. Scott, Orga-nizations: Rational, Natural, and Open Systems (New York: Prentice Hall, 1997).32. For institutional isomorphism, see Powell and DiMaggio, The New Institutionalism. For applica-tions to U.S. corporations, see Neil Fligstein, The Transformation of Corporate Control (Cambridge,Mass.: Harvard University Press, 1990); for Chinese ªrms, see Doug Guthrie, Dragon in a Three-Piece Suit (Princeton, N.J.: Princeton University Press, 1999); and for political organizations, seeHendrik Spruyt, The Sovereign State and Its Competitors.33. We recognize that implementing projects may not always rank highest on the list of donor’spreferences. Other factors are clearly at work, including international proªle, organizational pres-tige, and even ªscal survival, depending on the donor’s funding sources. We believe, however,that the project implementation motive is a reasonable simplifying assumption for generating hy-potheses about behavior.34. The contractors’ predicament differs from that of most donors, which tend to be permanent in-ternational organizations or part of a donor state’s bureaucracy.35. David C. Korten, Getting to the Twenty-First Century (West Hartford, Conn.: Kumarian, 1996),p. 102.36. Data are from USAID, cited in Smillie, Relief and Development, p. 43.

principal-agent problems

Short-term contracting can lead to acute agency problems. Relations betweendonors, contractors, and recipients can be modeled as a double set of “princi-pal-agent” problems wherein the donor is a “principal” and contractors are“agents.” At the lower half of the hierarchy, the contractor functions as theprincipal and the aid recipient is the agent.37 As in all relations of authority, anagent’s fulªllment of a principal’s directives cannot be taken for granted,38 anddonor-principals face the problems of hidden action and information.39 Be-cause contractor-agents often have de facto control over a project’s resources,they will try and guide the project so that it promotes their own goals, whichmay or may not be identical to those of the donor.40 If the project is not goingaccording to the donor’s plan, contractors or recipients—or possibly both—may conceal, withhold, or distort information harmful to their interests.41

More important, most projects are renewed after an initial evaluation, givingcontractor-agents little incentive to report failing or inappropriate projects. Ifcontractor-agents were to be entirely truthful about implementation problems,they might hurt their chances of contract renewal and threaten their own orga-nizational survival.Relations between contractors and project recipients are also characterized

by agency problems. It is more difªcult, however, to impute a priori a projectrecipient’s preferences than it is those of a contractor. Recipients may genu-inely welcome all project support and use aid resources for the purposes for

The NGO Scramble 15

37. Terry M. Moe, “The New Economics of Organization,” American Journal of Political Science, Vol.28, No. 4 (November 1984), p. 756. On the dynamics of more complex, multilevel hierarchies, seeSteven Solnick, Stealing the State: Control and Collapse in Soviet Institutions (Cambridge, Mass.: Har-vard University Press, 1998).38. For overviews of agency theory, see Kathleen M. Eisenardt, “Agency Theory: An Assessmentand Review,” Academy of Management Review, Vol. 14, No. 1 (January 1989), pp. 57–74; Gary Miller,Managerial Dilemmas: The Political Economy of Hierarchy (New York: Cambridge University Press,1992); and John W. Pratt and Richard J. Zeckhauser, Principals and Agents: The Structure of Business(Boston: Harvard Business School Press, 1985). Many of the monitoring mechanisms employed bydonors endogenize agency problems. For instance, all USAID contractors must compile detailedmonthly reports that list their activities and, at the end of year, present a list of “objectives accom-plished.” In both cases, USAID must rely extensively on information exclusively provided bycontractors.39. Miller, Managerial Dilemmas, especially pp. 138–178.40. David Sappington, “Incentives in Principal-Agent Relationships,” Journal of Economic Perspec-tives, Vol. 5, No. 2 (Spring 1991), pp. 45–66.41. This is especially true in remote locations, where contractors acquire specialized informationtypically unavailable to the donor. North, Institutions, Institutional Change, and Economic Perfor-mance, pp. 54–60; and Hendrik Spruyt, “Oversight, Control, and Resistance in Translocal Organiza-tions,” paper presented at the annual meeting of the International Studies Association, San Diego,California, April 16–20, 1996.

which they were intended. On the other hand, without adequate monitoring,recipients may appropriate the contractor’s resources for opportunistic gain.One of our key hypotheses is that when faced with pressure to renew existingcontracts, aid contractors will be reluctant to report recipients’ opportunisticbehavior unless donors can credibly guarantee that they will not terminate orreduce funding for the project.42 Two other institutional features can exacer-bate these agency problems: competitive bidding and multiple principals.

competitive bidding

The competitive nature of short-term contracts acts as a powerful institutionalconstraint on IO and INGO contractors. Donors initiate projects with asemipublic tender, which contractors then bid on.43 In war-related relief, three-to six-month contracts are the norm, with contractors constantly facing threatsof layoffs, cutbacks, and capacity reductions. Contractors incur signiªcantstart-up costs to service a new contract—hiring staff, renting ofªces, and leas-ing new equipment—and can recoup their expenses only by securing addi-tional contracts. Because alternative contractors threaten to appropriateprojects, INGOs are under constant pressure to renew, extend, or win new con-tracts, regardless of the project’s overall utility. Some INGO headquarters or-der their country ofªces to become ªnancially self-sufªcient, exacerbating thecompetitive dynamic. Securing new funding is an ever-expanding part of theINGO’s function, pushing other concerns—such as ethics, project efªcacy, orself-criticism—to the margins.44

the multiple-principals problem

A ªnal institutional constraint arises when multiple donors or contractorscompete for the same project. If IOs and INGO were members of a purely

International Security 27:1 16

42. This is a variant of the “ratchet problem.” See Solnick, Stealing the State, pp. 27–29.43. The process is not entirely open or fully competitive, of course. Large aid contractors withstrong reputations and connections have a better chance of securing contracts than small or little-known rivals. See Berrios, Contracting for Development, pp. 35–51.44. Contracts, moreover, generate economies of scale, creating incentives for acquiring and main-taining large projects. Staff, materials, and logistics are expensive but ªxed costs, whereas over-head, or “administrative recovery,” is calculated as a ªxed percentage of the contract’s value. Asnon-earmarked funds, administrative recovery is a signiªcant source of revenue. As the contract’svalue increases, ªxed costs decline while the administrative recovery percentage remains constant.Overhead fees, in other words, are rents of increasing return generated by project size and continu-ity. On rents and rent seeking, see James M. Buchanan, Robert D. Tollison, and Gordon Tullock,eds., Toward a Theory of the Rent-Seeking Society (College Station: Texas A&M University Press,1980).

normatively driven and robust global civil society, we might expect them tocooperate, pool resources, and share information. There are good theo-retical reasons, however, to believe that the opposite may occur due to themultiple-principals problem. The more contractors there are, the more eachorganization’s position within the market seems insecure.45 As a result, someorganizations may seek to undermine competitors, conceal information, andact unilaterally. Rather than burden and cost sharing, this generates projectduplication, waste, incompatible goals, and collective inefªciencies.46 In addi-tion, competing multiple contractors often dilute the coherence of their collec-tive project goals, advice, and strategies.The presence of multiple contractors also increases recipients’ ability to play

contractors and donors off against each other. Recipients can use cross-cuttingadvice and strategies offered by multiple principals to pick and choose amongthe project elements they most like, disregarding projects that are more disrup-tive. This is especially likely when recipients seek concessions or payoffs fromone or more principals and can threaten to withdraw their cooperation as abargaining tactic.Calls for IO and INGO coordination are ubiquitous in the humanitarian aid

literature, prompting periodic creation of new UN coordination studies andagencies.47 Recurring coordination problems, however, are not caused solelyby poor communication, lack of professionalism, or a dearth of coordinatingbodies. They are also—and perhaps chieºy—produced by a crowded andhighly competitive aid market in which multiple organizations compete forcontracts from the same donors. Interorganizational discord is a predictableoutcome of existing material incentives.

The NGO Scramble 17

45. For the multiple-principals problems in matrix organizations, see Stanley Davis and Paul Law-rence,Matrix (Reading, Mass.: Addison-Wesley, 1979). On multiple principals and bureaucratic ap-pointments, see Pablo Spiller and Santiago Urbiztondo, “Political Appointees vs. Career CivilServants: A Multiple Principals Theory of Political Bureaucracies,” European Journal of PoliticalEconomy, Vol. 10, No. 3 (October 1994), pp. 465–497. For an application of the concept to defenseappropriations, see Deborah D. Avant, Political Institutions and Military Change: Lessons from Periph-eral Wars (Ithaca, N.Y.: Cornell University Press, 1994).46. Philippe Aghion and Jean Tirole, “Formal and Real Authority in Organizations,” Journal of Po-litical Economy, Vol. 105, No. 1 (February 1997), pp. 20–22. See also Jean Tirole, “The Internal Orga-nization of Government,” Oxford Economic Papers, Vol. 46, No. 1 (January 1994), pp. 1–29.47. See, for example, Natsios, “NGOs and the UN System in Complex Humanitarian Emer-gencies”; Reindorp and Wiles, Humanitarian Coordination; Cyril Ritchie, “Coordinate? Cooperate?Harmonize? NGO Policy and Operational Coalitions,” Third World Quarterly, Vol. 16, No. 3 (Sep-tember 1995), pp. 513–524; and Marc Sommers, The Dynamics of Coordination (Providence: War andHumanitarianism Institute, Brown University, 2000).

In sum, our analysis draws on the NEO to identify the political economy ofrelations among transnational actors. Agency problems, competitive contracts,and multiple principals generate incentives promoting self-interested behav-ior, intense competition, and poor project implementation. Our cases illustratethese claims in practice.

Case Study #1: Technical Assistance in Kyrgyzstan

In Kyrgyzstan both the multiple-principals problem and competitive biddingconstrained aid INGOs, empowering recipient bureaucracies to evade reformspromoted by donors and preventing contractors from publicly protesting theseevasions. This case might be considered a relatively easy test of our assump-tions, because the INGOs involved were Western for-proªt corporations, notnonproªt groups.

technical assistance

Since the collapse of the Soviet Union, international donors have assisted for-mer Soviet-bloc countries with their economic, political, and social transitions.Although much of this effort has been monetary, the last decade also saw anexplosion in funding INGOs via the establishment of technical assistance pro-grams (TAPs). Broadly speaking, most TAPs target state agencies and seek tointroduce parliamentary legislation that will strengthen institutional capacity,increase bureaucratic transparency, formalize accountability procedures, androutinize decisionmaking procedures. Prominent donors in this sector includeUSAID, the EU, UNDP, the World Bank, and the Asian Development Bank(ADB).TAPs have been at the heart of external efforts to assist building market-

based economies. Contracted technical assistance providers are typically estab-lished for-proªt corporations with expertise in the legalities and logistics ofcapitalist institutions. Projects include designing privatization programs andconstructing capital markets, standardizing trade and exchange-rate regimes,enacting banking reforms, formulating property laws, introducing interna-tional accounting standards and commercial laws, reforming tax codes, and re-designing entitlements programs. As a result, donors expect that stateinstitutions will be better equipped to manage and govern the nascent marketeconomy.

International Security 27:1 18

projects in kyrgyzstan

Kyrgyzstan portrays itself as one of the most liberalizing of the former Sovietrepublics and is often touted by multilateral organizations as a model of suc-cessful reform.48 Since 1994 the small Central Asian state has received $80–120million annually (5–10 percent of annual gross domestic product) in technicalassistance, along with substantial ªnancial assistance from multilateral lend-ers. Per capita, Kyrgyzstan has received the second-most USAID technical as-sistance of all the post-Soviet states, with disbursements totaling $42 million in1997, $36.5 million in 1998, and $30 million in the years since.49 Other majordonors include the EU through the Technical Assistance to the Commonwealthof Independent States (TACIS) program (providing ECU 28 million up to 1996and 40 million ECU in 1997 alone),50 and UNDP ($15 million between 1994 and1997).51

At ªrst glance, this plethora of assistance seems to have had an unprece-dented impact on Kyrgyz legislation. Fifty-ªve percent of bills under consider-ation in the spring of 1998 were either formulated or drafted by IOs andINGOs acting as technical assistance providers. In the area of economic policy,foreign specialists sponsored 65 percent of all bills relating to tax reform, thebudget, privatization, ªnance, business, banking, and trade.52

The NGO Scramble 19

48. For examples of these generally optimistic assessments made by the international community,see International Monetary Fund, Kyrgyz Republic: Recent Economic Developments, IMF Staff Coun-try Report No. 98/8 (Washington, D.C.: IMF, 1998); and World Bank, From Plan to Market: World De-velopment Report, 1996 (New York: Oxford University Press 1996). More recent assessments are lessupbeat.49. Of the $36.5 million allocated for technical assistance in 1998, $1.5 million was earmarked forªscal reform; $14.5 million for private enterprise and corporate governance institution building;$4 million for citizens’ initiatives and democracy and civil society promotion; $3 million forªnancial reform; $2 million for local government; $3 million for the social sector; and another $8.5million for “cross-cutting initiatives.” Full details of USAID project disbursements can be found athttp://www.usaid.gov/regions/europe_eurasia/car/kgpage.html.50. European Commission, Evropeiskaya Kommissiya: Programma TACIS Godovoi Otchet za 1996 god[European Commission: TACIS Program annual report for 1996] (Brussels: European Community,1997), p. 24.51. UNDP internal memo provided by central ofªce in Bishkek, Kyrgyzstan.52. Among the donors involved were the USAID contractors Barents Group, Booz Allen andHamilton, CARANACorporation, International Business and Technical Consultants, InternationalCity/County Management Association, KPMG/Peat Marwick, and Pragma Corporation. In addi-tion, contractors from the German Technical Agency, the World Bank, ADB, and TACIS also formu-lated the original versions of some bills. Parliament of the Kyrgyz Republic (Jogorku Kanesh),“Bills under Consideration” (Bishkek: Jogorku Kanesh, 1998). A comprehensive list of the donorsresponsible for each article of legislation can be found in Alexander Cooley, “Depending Fortunes:Aid, Oil, and the Formation of the Post-Soviet States,” Ph.D. dissertation, Columbia University,1999, pp. 174–177.

actual results: incomplete institutional reform

Yet while the volume of legislation seems impressive, the bills’ ªnal text di-verges signiªcantly from the original donor-drafted versions. Kyrgyz parlia-mentary committees, the assembly, the president’s ofªce, or some combinationthereof have all amended the reform laws to protect their interests. The sub-stance and wording of ªnal bills dealing with land reform, budgetary laws,new tax codes, and other issues bear little resemblance to the original, INGO-formulated drafts.The “modernizing” tax code of 1996, for example, produced by Barents

Group (the USAID-contracted INGO), the World Bank, and the EU, is litteredwith exemptions inserted to safeguard the interests of regional administrators,prominent social factions, and organized crime. Indeed the code ªnallyadopted in 1996 was substantially altered after eighteen months of circulationin government circles from the Barents Group–proposed version. One majorchange was the addition of several new rates of personal taxation. Whereas theoriginal draft proposed a two-tiered taxation rate, the ªnal legislation delin-eates six different brackets of taxation rates, scaled progressively according toincome level, but with a host of new deductions.53 Other changes include per-mission for parliament to exempt politically loyal regions from taxation andambiguous additions to the foreign investment laws.54 As a result of these andother loopholes, tax revenues actually decreased after the code’s adoption.55

Despite the tax initiative’s failure, however, ªscal reform projects are an ongo-ing part of Western donor efforts in the country. In 2001 USAID renewed theBarents Group project on ªscal reform for the eighth consecutive year.As with the issue of taxes, the extent of donor involvement in promoting

change may seem high because of the volume of donor-sponsored legislation.The actual legislation, however, diverges frequently from donor intent, and

International Security 27:1 20

53. The Tax Law of the Kyrgyz Republic, Bishkek, April 14, 1997 (amended version); and interviewswith relevant TAP ofªcials, March–April 1998, Bishkek, Kyrgyzstan.54. Scott Horton and Temirbek Kenenbaev, “Kyrgyzstan Struggles to Modernize Its Tax Law,”Central Asia Monitor, Vol. 5, No. 2 (1997), pp. 26–30.55. As the IMF noted, “An increasing number of discretionary tax exemptions to value added tax(VAT), customs, and excise duties has eroded the tax base following the introduction of the newtax code on July 1, 1996.” IMF, Kyrgyz Republic: Recent Economic Developments, p. 14. VAT areas thatwere granted subsequent exemptions included organized gambling, ªnancial services, and se-lected agricultural producers. The more politically motivated amendments for exemptions fromthe income tax include income derived from the extraction of precious metals, inheritances, and in-terest income as well as “income from the sale of apartments, houses, cars, jewelry and artwork.”Ibid., pp. 83, 87. Contrast these IMF observations with the optimism with which USAID describesthe project and its selective use of performance indicators. See USAID website, http://www.usaid.gov/country/ee/kg/116–012.html.

many of the laws passed have not produced the intended institutionalchanges.56 Contrary to public proclamations by the Kyrgyz government, do-nors, and INGOs, institutional change has not been rapidly forthcoming. In-stead entrenched state and social interests have drained most substance fromthese reform initiatives.

contractor incentives for tolerating opportunism

While uncooperative Kyrgyz bureaucracies and political factions are responsi-ble for the watering down of TAPs, their continuation is explained by the insti-tutional environment in which INGO contractors and recipients operate. Thecontracting system forces INGOs to tolerate legislative backsliding. Becausedonors often ask recipients whether the contractor’s project should be re-newed, contractors are likely to permit and even conceal recipient obstructionsso as to curry favor with recipients.57 Among the dozens of projects initiatedthrough 1999, we uncovered only one project voluntarily terminated by con-tractors for recipient noncompliance.58 The short-term contract renewal re-quirement, coupled with the contractor’s desire to survive, trumps most otherconcerns, including effective project implementation and frank discussion ofproject problems.Contractors also provide recipients with perks to maintain good relations.

TAPs do not offer cash payments, but they do provide scarce assets to re-source-strapped bureaucracies. Ofªce computers, vehicles, and telecommuni-cations are included in most TAP budgets, but the equipment is frequentlyembezzled by recipients or resold on the black market. Many TAPs also offertheir recipients foreign trips, justifying these expenditures as “institutional in-struction.” In 1997, for example, Kyrgyz judges were ºown to Paris and Riga,parliamentarians to Washington, privatization ofªcials to New York, health-care administrators to Denmark, and oblast administrators to Switzerland. Thecost of such trips can exceed $100,000 each, while some seminars can top$30,000.59 One contractor acknowledged that these were de facto bribes, say-

The NGO Scramble 21

56. On the similar weakening of USAID legislative initiatives in the case of post-Soviet Georgia,see Charles King, “Potemkin Democracy: Four Myths about Post-Soviet Georgia,” National Interest,No. 64 (Spring 2001), pp. 98–100.57. For an insider’s account of how contractors collude with bureaucracies to renew ineffectiveprojects in Kazakhstan, see Mathew Bivens, “Aboard the Gravy Train: In Kazakhstan, the FarceThat Is USAID,” Harper’s, August 1997, pp. 69–76.58. The project was the TACIS project on Civil Service Reform, subcontracted to the legal ªrmEurostar.59. Interviews with TAP contractors, Bishkek, Kyrgyzstan, March and April 1998.

ing, “the trips are a very good bargain for us . . . allowing us to continue [theproject] with the cooperation of important ministry members.”60 Contractorsalso budget money for “local operating costs” or “local consulting services”—work that is often given to groups with strong ties to ofªcials involved in theproject, some of whom then collect a hefty premium for their recommen-dations.61 Both recipients and INGO contractors, however, conceal theseand other project problems from donors to help ensure renewal of theircontracts.62

multiple principals: institutional reform stalled

The presence of several donors in the same sector also precipitated multiple-principals problems. Project implementation has often been delayed or haltedas a result of interdonor and INGO competition. This lack of coordination isnot a product of ill will or poor organizational culture. Rather, it is generatedby an increasingly marketized aid environment in which IOs and INGOs feelrequired to demonstrate their ability to spend monies and win inºuence, re-gardless of broader project outcomes.For instance, during discussions over how to restructure the state-owned en-

ergy company, KyrgyzEnergo, IOs and INGOs submitted contradictory pro-posals. Whereas USAID preferred to completely dismantle the state monopolyand privatize by function, TACIS and the European Bank for Reconstructionand Development wanted to keep the company intact and ªnd a foreign part-ner to help it initiate gradual reforms.63 Unsure of its position, the World Bankshifted support from USAID to the European donors. Although the ªrst pro-posals for KyrgyzEnergo reform were drafted in 1995, legislation on the matterwas not ªnalized until 2000, in part because Kyrgyz ofªcials stalled as donorsvied for inºuence.64 Similar confusion is evident in agriculture, where effortsto reform farmer cooperatives stalled as contractors for Swiss Aid, TACIS, the

International Security 27:1 22

60. Interview with a director of a capital-market-formation TAP, Bishkek, Kyrgyzstan, March 17,1998.61. See also Bivens, “Aboard the Gravy Train,” pp. 72–75.62. In fact, most INGOs are explicitly instructed by management at home to submit all project-related memos and evaluations to their home ofªce for clearance before forwarding them to theirrelevant USAID or EU country directors.63. Interviews with foreign staff members of TAPs, March and April 1998; and various TAP re-ports on energy reform. See the reform options discussed in Haglar Bailey, International Experienceswith Privatization and Restructuring in the Energy Sector and Alternatives for the Kyrgyz Republic(Bishkek: USAID, 1996).64. Although even as of early 2002, the planned denationalization and restructuring had yet to becompleted.

World Bank, and the German Technical Agency each independently tried toimplement a strikingly different program.65 In land reform, a World Bank planto lease property to peasants was halted by a disagreement with TACIS overbasic monitoring and statistical gathering procedures.66

In other cases, donors simply refused to meet with each other, duplicatingwork and wasting valuable time, resources, and opportunities for cooperation.For example, in the area of pension reform, the contractors for USAID, theWorld Bank, and ADB all drafted separate proposals. These IOs and INGOswere operating on renewable, one-year contracts; and as one TAP ofªcial ac-knowledged, it would have been better to have pooled resources and coordi-nated efforts rather than to have each spent six months gathering data anddrawing up individual action plans.67 The same dysfunctions characterized thebudget reform process.68

Aid specialists often discuss coordination failures, but many of these studiesdo not acknowledge the systematic bias toward interorganizational competi-tion. Although aid donors and contractors are rhetorically committed to coop-eration and broadly shared goals, they are pushed into competition by theirinstitutional environment, which pits actors within similar sectors against oneanother in a struggle for survival and contract renewal.

institutional incentives and ingo operations in kyrgyzstan

Kyrgyzstan’s technical assistance projects have largely been ineffective. Al-though the roots of project failure may lie within the Kyrgyz state and its unco-operative or “predatory” tendencies, the issue of why projects continue toreceive international funding is best explained by the political economy of thedonor-contractor-recipient relationship.69 With their organizational survivaldepending on contract renewal, TAP contractors have little incentive to protest

The NGO Scramble 23

65. World Bank, Kyrgyz Republic: Agricultural Support Services Project, Report No. 17312-KG (Wash-ington, D.C.: World Bank, 1998), pp. 9–10; and Gennady Zhalkubayev, “Agricultural Reform: Not aStep without the World Bank,” Central Asian Post, April 20, 1998, p. 3. For details, see Cooley, “De-pending Fortunes,” p. 194.66. TACIS, Policy and Agro-Business Support Projects: Addendum Report on Land Reform and Agricul-tural Legislation (Bishkek: TACIS Ofªce Kyrgyzstan, 1996), p. 5.67. Interview with foreign staff member of a TAP working on a ªscal reform TAP in the ministryof ªnance, Bishkek, Kyrgystan, April 16, 1998.68. Cooley, “Depending Fortunes,” pp. 199–204.69. On predatory states and corrupt bureaucracies, see Peter Evans, “The State As Problem and AsSolution: Predation, Embedded Autonomy, and Structural Change,” in Stephen Haggard and Rob-ert Kaufman, eds., The Politics of Economic Adjustment (Princeton, N.J.: Princeton University Press,1992).

abuse of donor resources, to discontinue ineffective projects, or to cooperatewith one another. Indeed the more they conceal abuses and failures, the morelikely they are to receive renewed contracts.Contrary to the expectations of global civil society scholars, the evidence

from Kyrgyzstan does not suggest that transnational NGOs have successfullypromoted liberalization and reform in Central Asia.70 Despite the enormousamount of ongoing IO and INGO activity, the Kyrgyz Republic is widely seento have moved backward on promoting economic and political liberalization.71

These ªndings are consistent with observations made by other scholarsstudying the transnational sector’s shortcomings in multiple postsocialiststates.72

The Kyrgyz case provides a relatively easy test of our assumptions, becausethe INGO contractors involved are for-proªt corporations. We might expectfor-proªt groups to seek to promote their own interests, even at the expense ofa donor’s overall goals. What is surprising, however, is the tendency ofnonproªt groups to behave similarly, despite their different normative orienta-tion. In many situations, INGOs will act like their for-proªt counterparts aslong as their ªnancial survival is at stake. The following two cases of humani-tarian relief and POW monitoring provide evidence for this claim.

International Security 27:1 24

70. On this point, see also Fiona Adamson, “International Democracy Assistance in Uzbekistanand Kyrgyzstan: Building Civil Society from the Outside?” in Sarah E. Mendelson and John K.Glenn, eds., The Power and Limits of NGOs: A Critical Look at Building Democracy in Eastern Europeand Eurasia (New York: Columbia University Press, 2002); and Michael Dobbs, “Investment inFreedom Is Flush with Peril: From Kazakhstan, a Cautionary Tale,” Washington Post, January 25,2001, p. A1. On the problems of environmental NGOs in Central Asia, see Pauline Jones Luongand Erika Weinthal, “The NGO Paradox: Democratic Goals and Non-Democratic Outcomes inKazakhstan,” Europe-Asia Studies, Vol. 51, No. 7 (November 1999), pp. 1267–1284.71. For instance, the Freedom House indicator for economic and political freedom in Kyrgyzstanhas dropped to its lowest level since independence. See Freedom House Country Ratings, avail-able at http://www. freedomhouse.org/ratings.72. See Lubin, “U.S. Assistance to the Newly Independent States”; and Nancy Lubin and MonicaWare, Aid to the Former Soviet Union: When Less Is More (New York: JNAAssociates, 1996). For a crit-ical, but highly provocative, view of Western INGO involvement in the economic reform processin Russia and Ukraine, see Wedel, Collision and Collusion. Even scholars who are generally support-ive of INGO efforts have pointed to mixed results. For instance, for candid assessments of the stateof democracy promotion in post-socialist countries, see Thomas Carothers, Aiding DemocracyAbroad: The Learning Curve (Washington, D.C.: Carnegie Endowment for International Peace, 1999);Thomas Carothers, Assessing Democracy Assistance: The Case of Romania (Washington, D.C.: Carne-gie Endowment for International Peace, 1996); Mendelson and Glenn, The Power and Limits ofNGOs; Sarah E. Mendelson, “Democracy Assistance and Political Transition in Russia: BetweenSuccess and Failure,” International Security, Vol. 25, No. 4 (Summer 2001), pp. 68–106; and JackSnyder, From Voting to Violence: Democratization and Nationalist Conºict (New York: W.W. Norton,2001), pp. 189–264. See also Gideon Rose, “Democracy Promotion and American Foreign Policy: AReview Essay,” International Security, Vol. 25, No. 3 (Winter 2000/01), pp. 186–203.

Case Study #2: Competitive Bidding and Refugee Relief in Goma

Competition and an overabundance of organizations helped to cause a myriadof problems during refugee relief operations around Goma, a town in theDemocratic Republic of Congo, formerly known as Zaire. From 1994 to 1996,representatives frommore than 200 relief organizations traveled to Goma to se-cure UN contracts seeking to aid desperate Rwandan refugees. Contrary to the“more is better” hypothesis, however, the presence of multiple internationalaid groups did not produce optimal outcomes. In particular, competitive con-tract bidding created powerful disincentives for Refugee Help, a respected pri-vate Western relief organization, to strongly protest aid diversion by Hutumilitants and suspected war criminals. Refugee Help’s reluctance in this re-spect is particularly striking, given its stated commitment to a deeply ethicalview of global affairs.

humanitarian aid in goma

In the summer of 1994, 1.5 million Rwandans of ethnic Hutu origin ºed to Tan-zania and eastern Zaire.73 In April of that year, extremist Hutu groups hadlaunched a deadly campaign of genocide against ethnic Tutsis, but a reversal ofmilitary fortunes pushed Hutu soldiers and civilians alike into exile. NGOs, in-cluding Refugee Help, moved quickly to provide refugee relief in four majorZairean and Tanzanian camp complexes, often working on relief contracts pro-vided by the United Nations High Commission for Refugees.74 UNHCR repre-sentatives extended dozens of tenders for short-term contracts dealing withfood distribution, camp administration, airport off-loading, transportation,warehousing, and medical and sanitation services.Conditions were particularly atrocious in and around Goma, where camps

housed 800,000 ill and malnourished refugees, making it one of the largest-ever concentrations of human misery.75 As a result of the genocide and mass

The NGO Scramble 25

73. Gérard Prunier, The Rwandan Crisis: History of a Genocide (New York: Columbia UniversityPress, 1997). For broader discussions of war and refugees, see Alan Dowty and Gil Loescher, “Ref-ugee Flows as Grounds for International Action,” International Security, Vol. 21, No. 1 (Summer1996), pp. 43–71; Barry R. Posen, “Military Responses to Refugee Disasters,” ibid., pp. 72–111; andMyron Weiner, “Bad Neighbors, Bad Neighborhoods: An Inquiry into the Causes of RefugeeFlows,” ibid., pp. 5–42.74. David Millwood, ed., The International Response to Conºict and Genocide: Lessons from the RwandaExperience (Copenhagen: Steering Committee of the Joint Evaluation of Emergency Assistance toRwanda, 1996), especially Vol. 3.75. The intense suffering of refugees in Goma was captured in multiple media reports, includingSteve Fainaru, “When Death Becomes Casual: Defying Solutions, Rwandan Tragedy Overwhelmsthe Senses,” Boston Globe, July 31, 1994, p. 1.

civilian ºight, Goma attracted unprecedented press and Western and interna-tional donor interest.76 Two hundred NGOs made their way to Goma in 1994and 1995, competing for more than $1 billion in relief-related contracts, makingthe Goma relief operation one of the highest proªle and best-funded relief op-erations in history.77 Established NGOs specializing in general camp adminis-tration and food distribution were joined by dozens of intermediate andsmaller groups specializing in niche activities such as public-health education,sanitation, ªrewood provision, community development, psychological coun-seling, and unaccompanied child protection.

goma’s hypercompetitive relief market

The combination of vast sums of donor money, short-term contracts, and anoverabundance of NGOs created an unstable and competitive environment forRefugee Help and others. NGOs constantly renegotiated old contracts whosedue dates were fast approaching, while competitors kept lobbying theUNHCR for new contracts. “It’s perhaps embarrassing to admit,” one midlevelRefugee Help manager recalled, “but much of the discussion between head-quarters and the ªeld focused on contracts: securing them, maintaining them,and increasing them. The pressure was on: ‘Get more contracts!’”78 Whenheadquarters staff visited the ªeld, another manager recalled, “They mostlyasked about contracts. How many did we have? When were they up? Whatwere the chances that they would be renewed? Were there any competitors?”79

“Contract fever” was in the air, and most of the international relief groupsfound themselves slipping into a deeply competitive frame of mind.Refugee Help was by no means the only Goma-based NGO to react this way.

As one journalist noted after a 1995 visit, Goma had become a “three-ring cir-cus of ªnancial self-interest, political abuse and incompetence” where aid hadbecome “big, big money,” and any NGO “worth its salt . . . recognized that ithad to be in Rwanda.”80 As a result, he said, aid INGOs “parachuted” by the

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76. Contrary to the initial impression given by some Western media reports, the Goma refugeeswere not victims of the Rwandan genocide, which had chieºy targeted persons of Tutsi ethnicity.Rather the refugees were largely of Hutu origin, who had ºed when the Hutu-led Rwandan gov-ernment and militia allies were defeated by the predominantly Tutsi Rwandan Patriotic Front.77. International donors spent $1.4 billion on relief contracts for Goma from April to December1994 alone. Millwood, The International Response to Conºict and Genocide, Vol. 3, pp. 24–45.78. Interview in North America with former senior Refugee Help staffer, October 1, 1998. Preciseinterview locations and NGO informant names have been withheld to protect anonymity.79. Telephone interview with former Refugee Help camp manager, October 8, 1998.80. John Vidal, “Blood Money,” Guardian, April 5, 1995, p. T2.

hundreds into Goma, creating “chaos and madness.”81 Another Western re-porter described Goma as an “aid agency supermarket” in which aid groups“blare[d] out their names and logos like soft drink manufacturers,” plasteringeverything from water pumps to T-shirts with advertisements.82 Competitionwas ªerce, he wrote, and aid groups were desperate to be involved in theGoma relief effort so that they could bolster their fund-raising capacities backhome.83

There is no doubt that Refugee Help and other like-minded groups sincerelywanted to provide relief to the refugees. The human needs were tremendous,and the NGOs were able to do much good. Normative considerations aside,however, Refugee Help’s material stakes were also high; at the peak of the cri-sis, some 13 percent of Refugee Help’s headquarters costs were funded byGoma-related administrative recovery. No major organization concernedabout self-preservation could risk losing such an important source of funding,and Refugee Help was no different. In addition, a major presence in Goma cre-ated a foothold for future work in the country and allowed for the possible ex-pansion of Refugee Help’s global capacities. This latter consideration wasparticularly important; if Refugee Help could secure more contracts in Goma,it could then deepen its reservoir of trained staff, purchase relief hardware(such as trucks and radios), and expand its stocks of emergency material, al-lowing Refugee Help to respond quickly to emergencies elsewhere. Typically,major relief contracts were secured only after an NGO ªrst demonstrated asigniªcant ªeld presence. Refugee Help’s long-term prospects, therefore, de-pended on its ability to use current contracts to boost capacity for future opera-tions. Goma, in other words, was important both for the enormity of thesuffering that Refugee Help could alleviate and for its boost to Refugee Help’scompetitiveness in the global relief market.

aid diversion and ethical dilemmas

Although relief groups were saving lives in Goma, their efforts soon drewharsh criticism fromWestern human rights groups and the new Rwandan gov-

The NGO Scramble 27

81. Ibid.82. Richard Dowden, “Battle of Logos and T-Shirts Rages in Refugee Camps: Aid Agencies Scram-ble for Cash,” Independent, September 4, 1994, p. 11. See also Chris McGreal, “Aid with BiblicalStrings Attached,” Guardian, December 17, 1994, p. 11; and Colin Smith, “Aid Agencies Feud asRwandans Die,” Sunday Times, August 7, 1994.83. Dowden, “Battle of Logos and T-Shirts Rages in Refugee Camps”; and Luttwak, “Give War aChance,” p. 43.

ernment.84 Hutu armed forces responsible for the genocide had regroupednear Goma, recruiting among the refugees, importing weapons, and organiz-ing military training. Soon the number of armed Hutu militants swelled tomore than 50,000.85 Over time, the refugee camps became de facto safe havensfor Hutu ªghters, some of whom were suspected war criminals. They alsocame to serve as rear bases for cross-border guerrilla operations against Tutsicivilians and the Tutsi-led Rwandan government. The ªghters sold some reliefitems on the open market and used the camp population as a source of politi-cal legitimacy. Critics increasingly accused the UNHCR and its aid contractorsof indirectly fueling the conºict and unwittingly aiding Hutu war criminals.86

As a relatively important component of Goma’s international relief machinery,Refugee Help found itself implicated in an acute ethical dilemma.

weak protest and collective action

Given the competitive nature of Goma’s INGO environment, ofªcials in Refu-gee Help’s headquarters were reluctant to encourage self-critical analysis or topublicly protest aid diversions. Refugee Help managers who fended off com-petitors, renewed UNHCR contracts, and ensured smooth delivery systemswere valued for their work. Those interested in exploring the potentially un-ethical by- products of Refugee Help’s relief activities, however, received littleencouragement. “Nobody told me to stop looking into that kind of thing,” oneformer Refugee Help emergency manager said, “but I was never asked towork on it either.”87 Competition created incentives for contract renewal andgrowth, not self-reºection or protest.In the camps, NGO staffers were frustrated with both the UNHCR and the

Zairean government’s refusal to crack down on Hutu militants. Although therewas little the UNHCR could do without Zairean cooperation or a UN-suppliedmilitary force, its representatives might have launched a stronger and morepublic advocacy effort. Speciªcally, UNHCR representatives might have

International Security 27:1 28

84. Barber, “Feeding Refugees, or War?”; Philip Gourevitch, We Wish to Inform You That TomorrowWe Will Be Killed with Our Families: Stories from Rwanda (New York: Picador, 1999); Rakiya Omar,Death, Despair, and Deªance (London: African Rights, 1995); and Prunier, The Rwandan Crisis.85. Human Rights Watch/Arms Project, Rearming with Impunity: International Support for the Perpe-trators of the Rwandan Genocide (New York: Human Rights Watch, 1995).86. See Gourevitch, We Wish to Inform You That Tommorrow We Will Be Killed with Our Families;Prunier, The Rwandan Crisis; and newspaper reports, including Robert Block, “Wolves Lie Downwith the Lambs: Killers Are on the Loose among the Refugee Camps in Zaire,” Independent, July 24,1994, p. 14; Chris McGreal, “Hutu Extremist Holds UN and Refugees to Ransom,” Guardian, De-cember 5, 1994, p. 11; and Paul Jelinek, “Foreign Aid Fattens Exiled Hutu Regime: Agencies Aghastas Rwandans Plot Return to Power,” Toronto Star, December 4, 1994, p. A18.87. Interview in North America with former senior Refugee Help staffer, October 1, 1998.

pressed the issue with greater public vigor in the media, the UN SecurityCouncil, and interested publics. The UNHCR, however, was eager to ensure asmooth, problem-free relief operation and was not keen to do anything thatmight jeopardize its contracts, or undermine broader international support forthe Goma aid effort. A vigorous and public UNHCR protest against Hutu mili-tants living in the refugee camps would have reduced international supportfor relief efforts. It might have also transformed Goma into an unmanageable,even dangerous, quagmire. The UNHCR thus quietly lobbied the UN SecurityCouncil, but dared not raise its voice too loudly. As a result, Hutu militantscontinued to use the camps for their own purposes.Although many Refugee Help staffers recognized the ethical dilemmas in-

volved in the Goma aid effort, the organization as a whole made few system-atic efforts to address the problem. Refugee Help never convened an internalconference or debate on the issue, and never wrote an internal position paperprobing the dilemma. When asked, Refugee Help ofªcials attributed this inpart to the frantic pace of work, including Goma’s prevailing “contract fever,”concern about losing aid contracts, and fear of inspiring a violent reaction byHutu extremists.Even if it had launched an introspective effort, Refugee Help might have still

chosen to continue in Goma, because it was helping thousands of refugees.Were it not for Goma’s highly competitive environment, however, RefugeeHelp might have taken steps to address the urgent ethical concerns. In addi-tion to conducting an internal analysis, the group might have tried to push theUNHCR or Western powers into a more publicly principled stand. Given themultitude of potential NGO competitors already in Goma, however, RefugeeHelp staffers felt that they had to exercise caution. After all, if Refugee Helpearned a reputation as a loud-mouthed troublemaker, the UNHCR might pushit aside and award lucrative relief contracts to less-vocal aid groups. This wasespecially true given the eagerness of other aid contractors in Goma to offersimilar relief services at a similar or lower cost.Competition among international relief groups also undercut the potential

for Refugee Help–led collective action. For example, Refugee Help might havetried to organize a protest coalition with other groups, threatening to tempo-rarily cease food distributions if the Zairean government or international agen-cies did not drive the militias out. Given inter-NGO competition, however,Refugee Help could not be sure that other relief groups would join in. Somemight have agreed to protest, but others might not have, preferring instead totake over Refugee Help’s contracts. In fact, during a security crisis in one of theGoma camps, another Western relief group did signal its willingness to imme-

The NGO Scramble 29

diately take over Refugee Help’s contract if the latter so much as temporarilyceased aid distribution.Finally, competition and the ready presence of rival NGOs made Refugee

Help feel powerless. Given that many other groups were willing and able toassume Refugee Help’s aid contracts, what difference would it make if thegroup withdrew in protest? Refugee Help was not irreplaceable, and ittherefore had little bargaining power. As one staffer opined, “No one wouldhave paid any attention if we left. They would have just carried on with-out us.”88 Given the presence of multiple competitors, withdrawal—the ulti-mate act of protest by a high-proªle relief organization—seemed an emptygesture.Comparing today’s multitude of relief NGOs to previous eras, one expert

notes a decline in NGOs’ ability to resist Goma-like problems of aid diversion:“Competition for turf and difªculties of coordination . . . make [today’s] hu-manitarian actors easy targets for political actors seeking access to the scarceresources they control.”89 When there were only a few aid providers in a warzone, NGOs could vigorously protest recipient opportunism. Today NGOs aremore cautious, fearing they might be pushed aside by rival groups.Organizational survival was a particularly pressing concern for NGOs situ-

ated in Goma’s competitive and uncertain environment. Individual RefugeeHelp ofªcials realized Goma’s ethical dilemmas, but the organization focusedªrmly on securing and renewing contracts. Had competitive pressures notbeen so heavy, Refugee Help might have publicly protested, vigorously lob-bied, openly organized, and even threatened to withdraw.Not all NGOs allowed themselves to be caught up in Goma’s “contract fe-

ver.” The Belgian chapter of Médecins sans Frontières (MSF), for example, re-solved to avoid competition and forgo Goma-related revenue, refusing to bidon new Goma contracts and replacing its relief operations with an advocacycampaign pushing for limits on the Hutu militant camp presence.90 Accordingto MSF’s secretary-general, “Food represents power, and camp leaders [inGoma] who control its distribution divert considerable quantities towards warpreparations,” as well as “skim off a percentage of the wages earned by the

International Security 27:1 30

88. Interview in North America with senior Refugee Help staffer, August 25, 1998.89. Neil MacFarlane, Politics and Humanitarian Action (Providence: War and Humanitarianism Pro-ject, Brown University, 2000), p. 45.90. Mark Frohardt, Diane Paul, and Larry Minear, Protecting Human Rights: The Challenge to Hu-manitarian Organizations (Providence: War and Humanitarianism Project, Brown University, 2000),pp. 72–73.

thousands of refugees employed by relief agencies.”91 The majority of aidgroups, however, chose to stay on. Indeed MSF’s experience is the exceptionthat proves the rule: It was able to protest aid abuse only by opting out of theGoma contract system altogether. As long as relief groups remained embeddedin Goma’s competitive humanitarian market, institutional pressures forcedthem to tone down their criticism. These dynamics were not unique to Goma,and are present in other war zones where donor interest attracts multiple reliefgroups.In Afghanistan, for example, a similarly competitive NGO environment

evolved in the town of Herat, when in 1996 Taliban forces banned girls from at-tending school. Development and relief NGOs were unable to develop a com-mon response, largely due to inter-NGO competition. Two leading aid groupssuspended their education programs in the area, but the Taliban were not de-terred, according to journalist Ahmed Rashid, because they realized that“other UN agencies were not prepared to take a stand against them on the gen-der issue,” and because IOs and INGOs in Herat could not mount a sustainednegotiating effort. “As each UN agency tried to cut its own deal with theTaliban,” Rashid writes, “the UN compromised its principles, while Taliban re-strictions on women only escalated.”92 As had been true in Goma, intra-NGOcompetition hindered collective protest and empowered local armed forces.More broadly, the Goma case, like that of Kyrgyzstan, highlights the role of

material struggles within the transnational world, rather than the harmoniousand liberalizing civil society of globalization theory. What is striking, however,is that as a result of institutional conditions, nonproªt humanitarian groupswere pushed to behave like their for-proªt counterparts in the technical assis-tance sector.

Case Study #3: Multiple Principals and Bosnia’s POWs

Competition also created uncertainty among IOs and INGOs in the former Yu-goslavia, and again empowered uncooperative local recipients.93 Instead of

The NGO Scramble 31

91. MSF Secretary-General Alain Destexhe, quoted in Patrick Bishop, “Aid Workers Pull Out ofRefugee Camps,” Daily Telegraph, February 14, 1995, p. 13.92. Ahmed Rashid, Taliban: Militant Islam, Oil, and Fundamentalism in Central Asia (New Haven,Conn.: Yale University Press, 2001), p. 113.93. For two very different perspectives on the causes of war in the former Yugoslavia, see V.P.Gagnon Jr., “Ethnic Nationalism and International Conºict: The Case of Serbia,” International Secu-rity, Vol. 19, No. 3 (Winter 1994/95), pp. 130–166; and Susan Woodward, Balkan Tragedy: Crisis andDissolution after the Cold War (Washington, D.C.: Brookings, 1995).

technical assistance or refugee care, however, this case involves the promotionof international humanitarian law, with speciªc reference to the protection ofPOWs.94

From 1992 to 1995, the ICRC saw its position as the lead international guar-antor of POW rights eroded by competition from UN forces and EuropeanCommunity monitors, both of which sought to protect Bosnian POWs. Thesemultiple principals unduly empowered Bosnian Serb, Croat, and Muslim mili-tary commanders, helping them to evade international prisoner monitoring byplaying the three international groups off against one another.95

pow monitoring in bosnia

The ICRC’s lead role in prisoner monitoring was established by the FourthGeneva Convention, which entrusts the Swiss group with responsibility forimplementation of international humanitarian law.96 The convention stipulatesthat warring parties must permit ICRC delegates to register and privately in-terview all war prisoners and to transmit messages from them to their families.Private, one-on-one prisoner interviews and prisoner tracking help to protectprisoners from abuse, disappearance, or murder.97 If ICRC delegates learn ofabusive conditions during their interviews, they are obligated to conªde theirªndings to prison commanders, local authorities, and senior state ofªcials.98

ICRC delegates collect information on prison commanders, evaluating theircompliance with the Fourth Geneva Convention. The ICRC’s relationship withwarring states is highly legalistic, including the signing of an agreement grant-ing the organization the right to visit prisons in accordance with conventionand internal ICRC guidelines. Because the ICRC cannot certify compliancewith the Geneva Convention without physically inspecting prisons, access isrequired.

International Security 27:1 32

94. For the laws of war, see Frits Kalshoven, Constraints on the Waging of War (Geneva: ICRC,1991); and Theodor Meron, Human Rights and Humanitarian Norms As Customary Law (New York:Oxford University Press, 1989).95. Strictly speaking, there was less of a monetized “market” in Bosnia than in Goma, where all re-lief operations were generated through competitive contract tenders. With the exception of theICRC, IOs did not receive funds explicitly for prisoner-of-war visitation, although their fundingoverall was tied to their usefulness and productivity. This, in turn, required that they demonstrateengagement with key humanitarian issues, including prisoner protection.96. David P. Forsythe, Humanitarian Politics: The International Committee of the Red Cross (Baltimore,Md.: Johns Hopkins University Press, 1977).97. See International Committee of the Red Cross, ICRC Action on Behalf of Prisoners (Geneva:ICRC, 1997).98. In extreme cases, the ICRC may break conªdentiality.

When ªghting began in Croatia during the summer of 1991, the ICRC wasrecognized by combatants, IOs, and Western powers as the sole agency respon-sible for safeguarding war prisoner rights. To ensure its leading role, the ICRCsigned an agreement with Croatian republican authorities, the Yugoslav fed-eral army, Bosnian republican authorities, and other combatants.99 Althoughthe ICRC did not gain access to all Bosnian prisons, it initially faced no rivalsin the monitoring business. Other IOs and NGOs engaged in humanitarian re-lief work, but none dealt with POWs.When the ªghting in Bosnia began in 1992, however, the UN Protection

Force (UNPROFOR) initially sent to protect aid convoys, gradually began toconduct its own inspections of POW camps.100 The UN soldiers were stationedthroughout the Bosnian Croat and Muslim enclaves and were aware of intenseinternational concern for Bosnian POWs, especially following reports ofBosnian Serb prison camp atrocities.101 UNPROFOR ofªcers were eager to en-sure that similar abuses did not occur in their zones of responsibility andhoped to show skeptical donors that they were effective protectors of POWs.After being heavily criticized for not blocking Bosnian ethnic cleansing earlyon, UN ofªcers were eager to show journalists, Western publics, donor govern-ments, and other signiªcant audiences that they could protect Bosnia’s warvictims.102 The agency’s normative agenda was thus joined by concern for itsimage and survival.A second international organization, the European Community Monitoring

Mission (ECMM), was also increasingly keen to protect POWs. The ECMMwas an observer mission funded by the European Community, with a vaguemission to monitor and reduce violence in the former Yugoslavia. Like its UNcounterpart, the ECMM was searching for high-visibility opportunities to pre-vent human rights abuses. The ICRC had a clear mandate under the GenevaConvention, and UNPROFOR was in Bosnia because of a UN Security Councilresolution. The ECMM, by contrast, had been sent there only on the EuropeanCommunity’s say so, and thus had less international legal backing. Originally

The NGO Scramble 33

99. For ICRC operations in the former Yugoslavia, including its signed agreements with Bosnianmilitary and militia ofªcers, see Michel Mercier, Crimes without Punishment: Humanitarian Action inFormer Yugoslavia (London: Pluto, 1995).100. The UN Peace Forces were sent to Croatia in 1991 and became known as UNPROFOR in 1992.In 1995 the contingent was split into UNCRO (UN Conªdence Restoration Operation) for Croatiaand UNPROFOR for Bosnia.101. Roy Gutman, Witness to Genocide (New York: Macmillan, 1993).102. David Rieff, Slaughterhouse: Bosnia and the Failure of the West (New York: Simon and Schuster,1995).

designed by European mediators seeking to monitor long-failed cease-ªres,the ECMM was verging on irrelevance. Continued ªghting in Bosnia and else-where made its work virtually irrelevant, while UNPROFOR’s overwhelmingpresence threatened to marginalize it. POW camp inspections, the ECMMhoped, might justify its existence, enhance its credibility with donors, and se-cure future funding.Theorists of global civil society would expect multiple international moni-

tors with similar principled beliefs to cooperate and enhance Bosnian prisonerwelfare. Our model, however, suggests the opposite: More organizationsshould create multiple-principals problems, empowering local militarycommanders to subvert external monitoring. This is ultimately whathappened.Before the UN and ECMM interventions, Bosnian military commanders had

relied exclusively on the ICRC for certiªcation of their Geneva Conventioncompliance. ICRC certiªcation, however, was often burdensome to POWprison commanders, because its inspection procedures required unimpededaccess to all prison areas and detainees as well as private, one-on-one inter-views with prisoners, allowing ICRC representatives to obtain accurate infor-mation from persons who might otherwise fear to speak out. ICRC delegateswere also trained to conduct thorough evaluations of prisoners’ mental andphysical condition. The art of ICRC prison inspection had been developed overdecades and was closely monitored by internal supervisors.The UN and ECMM inspectors, by contrast, were poorly trained, rendering

their efforts far less effective. Neither organization provided specialized prisoninspection training, and neither regarded prison visits as a core function. UNand ECMM staffers typically did not insist on full access and conªdential inter-views, and thus could not guarantee that the information they received was ac-curate or that prisoners would not suffer retaliation. More important, the UNand ECMM did not register the prisoners they interviewed, and thus couldnot track detainees as they were released or transferred. As a result, the UNand ECMM could not know if a prisoner was tortured or killed for speakingfreely. Prisoners meeting with the ICRC, conversely, were registered andtracked until their release, upon which they were reinterviewed about theirexperiences.The presence of multiple international monitors threatened the welfare of

POWs by empowering POW prison commanders to resist proper inspections.Prison authorities preferred the UN and ECMM visits to those of the ICRC, be-cause the latter were more intrusive. Openness to international monitoring

International Security 27:1 34

was a public relations gain, but UN or ECMM visits were quicker, simpler, andless likely to provoke difªcult questions about the fate of individual prisonersor the conditions in which POWs were held. With three organizations eager toact as principals for the international community, Bosnian commanders, asagents, could pick and choose.The three-way competition for prison inspections also helped Bosnian com-

manders to play one IO off against another. When ICRC representatives de-manded access to a POW camp, commanders often balked, saying that theyhad already been visited by the UN or ECMM. Indeed some prison command-ers made that argument even if the UN or ECMM had not visited the prison. Inthe chaos of war and with high turnover rates among international aid person-nel, the “prior visitation” argument was plausible.All three international groups identiªed themselves to Bosnian commanders

as international community representatives seeking to promote humanitarianlaw. Publicly, all three had normative and complementary agendas. Their orga-nizational environment and interests, however, made cooperation difªcult.Here, more organizations did not generate higher rates of prisoner welfare,and competitive pressures did not enhance the efªciency of POW monitoring.Instead of leading to greater POW protection, the multiplicity of concernedtransnational organizations empowered prison authorities seeking to evadethe requirements of international humanitarian law.The competitive aid market in Bosnia was not restricted to POWmonitoring,

however, and INGO competition in Bosnia created other dysfunctions follow-ing the signing of the 1995 Dayton peace accords.103 According to one source,local humanitarian NGOs were “quick to fall into competition with each other,vying for donor attention and funding,” chasing whatever new donor fundsand priorities emerged in a desperate “search for security and employment.”Although many Bosnian groups originally were concerned with helping warvictims overcome psychological trauma, they shifted their attention to recon-struction and public infrastructure following the reordering of internationaldonor priorities. “Because funding was drying up in one programming area,”observers argue, “NGOs, in order to survive, were being drawn to new areaswhere they had no special expertise and little interest.” Contrary to the expec-tations of liberal globalization theorists, the transnational market for aid in

The NGO Scramble 35

103. The following quotes are drawn from Smillie and Todarovic, “Reconstructing Bosnia,”pp. 28–31.

Bosnia led to opportunism and poor project implementation, despite the nor-mative inclinations of local NGO staffers.

Conclusion

Scholars need to rethink their approach to the emerging world of transnationalaction. To date, most theorists have seen transnational groups as harbingers ofa new, liberal, and robust civil society, but our theory and case studies demon-strate that this view may be overly optimistic. The evidence we have compiledsuggests that scholars should also analyze the transnational world with toolsdrawn from political economy. We should recognize the powerful, if often un-acknowledged, role of material incentives, competitive struggles, and tacit col-lusion with uncooperative government ofªcials or local militias. Given thestructure of today’s transnational world, organizations may ªnd ªnancial con-siderations more pressing than liberal norms.Relying on insights from New Economics of Organization, a body of theory

that examines the incentives generated by market institutions and contractualrelations, we uncovered a tacit system of material constraints that shapedINGO actions and, on occasion, subverted nominal agendas. Focusing on thediverse world of transnational aid, we found that across the board, competitiveenvironments create institutions that not only systematically shape the behav-ior of donors, INGO contractors, and recipients but also inhibit cooperation.There is no doubt that many of today’s INGOs are motivated by normative

agendas. Insecurity and competition, however, often pushes them to behave inrational and rent-seeking ways. As scholars of institutional isomorphism havelong suspected, organizational environments have powerfully homogenizingeffects on their constituent units.104 When placed in competitive, market-likesettings, nonproªt groups are likely to behave like their for-proªt counterparts.Consequently, there should be little disagreement over whether our approachis ontologically appropriate, given that the transnational actors in question areresponding to actual market incentives. Donors, INGO contractors, and recipi-ents behave in manners consistent with agency theory precisely because theyhave entered into contractual relations and thus have disparate preferences.The transnational sector has opened new channels for political access and

action, but its dynamics are often inconsistent with the views of scholars who

International Security 27:1 36

104. George Ritzer, The MacDonaldization of Society (Newbury Park, Calif.: Pine Forge Press, 2000).

argue that the growing number of INGOs will create a liberal and normativelydriven transnational civil society. In fact, organizational density and marketi-zation pose formidable challenges to the consolidation of such a transnationalcivil society. More is not always better, tenders do not always promoteefªciency, and competition does not solely reduce waste. As the volume andintensity of transnationalism grow, scholars should pay as much attention tothe tacit material relations among transnational actors as they do to their nomi-nal liberal agendas.More studies are needed across regions and sectors to test the general-

izability of our propositions. It is likely that different conºicts create differenttypes of humanitarian markets, and that different markets will lead to varia-tions in organizational behavior. In some cases, conºicts may take place near orwithin strong states capable of creating barriers to entry, limiting the penetra-tion of transnational actors and reducing interorganizational competition. Else-where, competition could be reduced by declining donor interest or tacit donoragreements to divide the aid market. In still other cases, a single donor or aidcontractor may dominate the aid market for historical or political reasons,crowding rivals out and creating a more stable transnational hierarchy. Al-though our analysis is likely to hold true at the most general level, there will beimportant regional and sectoral variations in transnational markets.Our analysis highlights structural contradictions within the transnational

world, rather than the dispositions or morality of speciªc transnational actors.Opportunism may be a rational response to institutional conªgurations of ma-terial interests, not an inherent characteristic of individual INGOs. This isan important ªnding for a ªeld marred by accusations of immorality andcorruption. Although we do not ignore individual organizational responsi-bility, we believe that many problems within the transnational sector, includ-ing aid diversion and poor project implementation, are institutionallyconditioned.Donors and contractors can address these problems in concrete ways.

INGOs, for example, can bolster their ability to resist competitive pressures bylocating alternative sources of funding beyond established Western govern-ments and IOs. Here, faith-based groups are of particular interest because oftheir access to less competitive funding. The relief and development groupCatholic Relief Services (CRS), for example, has rejected contracts offered byWestern governments or UN donors when it believes that the projects aremisguided. More often than not, CRS country ofªces can do so because theyhave access to alternative funds from Catholic dioceses in Europe and the

The NGO Scramble 37

United States.105 Lutheran World Services, World Vision, the Middle EastCouncil of Churches, and other faith-based groups are in a similarly enviableposition.Donors can reduce organizational uncertainty and create healthier incen-

tives by extending the length of contracts and encouraging INGOs to speakopenly about their problems. Because short-term, renewable contracts createpowerful agency problems, donors could provide longer-term, general-usefunds for reputable INGOs that would then be free to make better choices andconstructively confront failing projects.106 Once released from the pressures of“contract fever,” INGOs could focus on their work, adjusting their strategiesmidstream or protesting aid diversion where appropriate. Most important,new structural incentives would make it easier for INGOs on the ground to co-operate rather than to compete. If INGOs knew that their organizational sur-vival did not depend on their rival’s failure, they would have reason to shareinformation, pool resources, and generate broad coalitions.Reforming the institutions underlying the “NGO scramble” is all the more

pressing in light of ongoing efforts to provide humanitarian relief and recon-struction aid to Afghanistan. Our analysis suggests that a large amount of as-sistance does not guarantee project effectiveness, especially in uncertain andchaotic postconºict environments. If efforts to rebuild Afghanistan and aid theAfghani people are to succeed, Western donors and IOs must design humani-tarian market institutions with greater care, avoid creating a competitive aidfrenzy, and provide long-term contracts to respected groups with regional ex-perience. Similarly, donors seeking to rebuild Afghanistan’s infrastructure andpublic institutions—a process that will inevitably be long and arduous—should consider granting INGOs nonrevocable contracts so that they can pub-licly confront problems of aid abuse and political interference and change in-effective project strategies without fearing for their ªscal survival.107

Once established, transnationals are organizations like any other. To survivein a competitive world, they must justify their existence to donors, secure new

International Security 27:1 38

105. Interview in North America with a senior CRS staffer, September 17, 2001.106. For the importance of administrative overhead, see Raymond Bonner, “Post-Mortem forCharities: Compassion Wasn’t Enough in Rwanda,” New York Times, December 18, 1994, p. 3.107. Alexander Cooley and James Ron, “Coming to the Aid of Afghan People,” Toronto Star, Octo-ber 29, 2001, p. A19; Alexander Cooley and James Ron, “Afghan Relief Business Bears Watching,”Baltimore Sun, October 15, 2001, p. A11; and Barnett Rubin, “Putting an End to Warlord Govern-ment,” New York Times, January 15, 2002, p. A21.

contracts, and fend off competitors. Under speciªc institutional conditions,these imperatives will produce dysfunctional results. In the 1990s scholars es-tablished the importance of transnational networks and organizations forglobal politics; now we should turn our attention to the material incentivesshaping their actions.

The NGO Scramble 39

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