Middle Power Clout: Sweden And The Development Banks

by Jan Rudengren with Peter Gisle and Karin Brann

Sweden has often been of two minds about joining and supporting the multilateral development banks (MDBs). The desire to support development has been countered by a hesitation to contribute to governments seen to conduct policies at variance with Swedish ideals or objectives.

In the final analysis, Sweden did decide to join the MDBs and was a founding member of the Asian Development Bank (AsDB) in 1966, although it subscribed the minimum of capital. It did not join the Inter-American Development Bank (IDB) until 1976. Its greatest interest has been in the African Development Bank (ADB), joining its Fund in 1972. This was natural since Swedish bilateral aid has been concentrated on Africa, and the Bank was seen as a "home-grown" African institution. At December 1992, its subscribed capital to the multilateral development banks amounted to US$2.2 billion (more than 80 percent to the World Bank) and $161 million had been paid in, including $45 million to the African Bank.

The clout Sweden wields by itself in the regional banks is not large. In the African Bank, it holds a seat as an Executive Director (with the other Nordic countries and Switzerland) for three years in 15, while in the Asian Bank it is Alternate Executive Director for two years in every 12. Canada holds the AsDB Executive Director post in Sweden's constituency or voting group, which includes Canada and the Netherlands in addition to the Nordic countries. Rudengren writes that this constituency "has often been at the forefront on issues that are central to Swedish development policy, such as poverty alleviation, the environment, and women in development." However, he thinks Sweden has not fully used its potential influence in the Banks, mostly because it does not have staff in strategic posts.

Sweden seeks alliances to increase its clout, and preliminary meetings among the Nordic countries produce joint policies. Lack of documentation of such meetings makes it difficult to identify separate Swedish influence, however.

One of Sweden's main motives in joining the regional banks has been to gain access to the procurement opportunities of their development projects. It has done well in supplying goods in IDB and AsDB projects, and in procuring consulting contracts with the IDB.

In general, Rudengren approves of the regional banks, worrying a little about overlap with the World Bank. The issue, he states, is not really whether Sweden should continue to be a member of the Banks, but rather at what level of engagement. He argues that the answer is political. And if Sweden wants to remain an active member, how can it best influence the Banks' operations and policies? The key, he feels, is in strengthening Swedish representation at the Banks' Boards of Directors. This, however, would imply a considerable increase in Sweden's shareholding, which is not realistic for either Sweden or the Banks.

About The Book And Author

Published in 1995, this study is part of a larger project on the multilateral banks, launched by the North- South Institute in 1991 and supported by the Canadian International Development Agency, the Ford Foundation, the Swedish Ministry for Foreign Affairs, the Norwegian Ministry for Foreign Affairs, the Netherlands Ministry for Development Cooperation, the Inter-American Development Bank, the Caribbean Development Bank, the African Development Bank, and the Asian Development Bank. This volume was undertaken at the initiative of the Swedish Ministry for Foreign Affairs.

Jan Rudengen is a member of the Scandinavian Project Managers of Stockholm.

Available at a cost of $12 from: Renouf Publishing Co.