Perspectives driving the new multi-stakeholder economic diplomacy of the Topsector Water program : the case of National Capital Integrated Coastal Defence

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Perspectives driving the new multi-stakeholder

economic diplomacy of the Topsector Water program

The case of National Capital Integrated Coastal Defence

Iris Heeremans

Supervisor: dr. Luc Fransen

Second reader: dr. Farid Boussaid

June 2016

University of Amsterdam

Master thesis Political Science

International Relations

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1. Introduction

In recent years the concept of economic diplomacy has made a prominent return in policies of several states’ Ministries of Foreign Affairs and so too in the Netherlands (Rood, 2011: 221-222). For the Netherlands this started with the focus letter on development assistance for the year 2011, reshaping Official Development Assistance priorities and refocusing on cooperation with private sector partners to increase effectiveness (Rijksoverheid, 2010). Although there is some understanding as to the why economic diplomacy has returned, the ongoing globalisation, far less is known about how it actually works (Rood, 2011: 221-222). A new development in economic diplomacy is that is appears to be less state-centred and develops towards Multi-Stakeholder Diplomacy (Hocking, 2006: 17). Here non-state actors such as businesses and civil society organisations also participate in diplomacy. This results in an altered role for the state and a more fluid relationship between the state and the non-state actors in a diplomacy effort (idem: 19).

One prominent example of Multi-Stakeholder presence in economic diplomacy can be seen in the structure of the Topsector Water program, where the government works together with businesses, NGOs and knowledge institutes (NWP, n.d.). The Topsector Water is part of an initiative announced in February 2011 by Dutch minister Verhagen to create nine sectors that are to be the ‘Topsectors’ of the Netherlands (ibid). These sectors are areas of expertise in which the Netherlands is already excelling, but on which the government wants to place further emphasis and as a part of that increase its international efforts. One of the Topsectors is the water sector, which is not surprising as the Dutch knowledge and experience in this field is considered to be one of the best in the world (ibid). Even after cuts were made in government spending, water remained one of the top priorities (Rijksoverheid, 2013: 6). Not only because water is considered a Dutch strength, but also because of a higher sense of urgency in relation to climate change (idem: 12).

The Topsector Water effort can be seen as part of the economic diplomacy effort of the Ministry of Foreign Affairs of the Netherlands. Within economic diplomacy, advancing Dutch businesses abroad is a more commercial part of economic diplomacy. Helping other states deal with water related challenges by offering Dutch knowledge, is however more closely related to the inducements (including Official Development Assistance) part of economic diplomacy.

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The research that has so far been done into economic diplomacy only looked at econometric effects of the existence of economic diplomacy while hardly any research has been done into the workings of economic diplomacy, let alone in a multi-stakeholder context (Rose, 2007; Okano-Heijmans and Ruël, 2011: 465). The aim of this thesis is to fill this gap and give a first detailed description of how economic diplomacy is taking place and how it is shaped during its process. This could be a relevant reflection on impact of the chosen course of action in the Dutch Foreign Affairs policy and the return to economic diplomacy.

Therefore, the following research question is asked; What is the main perspective driving the new multi-stakeholder economic diplomacy of the ‘Topsector Water’ program?’. Here a specific case of economic diplomacy is analysed to unravel the extent of the influence of both commercial diplomacy and ODA in economic diplomacy and the workings of Multi-Stakeholder Diplomacy. The case that is analysed is the National Capital Integrated Coastal Development (NCICD) project, taking place in Indonesia and part of the Topsector Water program. The Netherlands has both an aid and a trade relationship with Indonesia, bringing commercial diplomacy and ODA together. Through this case study, this thesis provides detailed insights in the workings of economic diplomacy; both regarding the influence of commercial and ODA perspectives and regarding the Multi-Stakeholder Diplomacy component. The thesis specifically deals with the NCICD project and the Netherlands and therefore its representativeness is limited, but it does provide a first insight in how economic diplomacy works. The aim however, is not to test a theory, but rather to build on it, given that the theory on [Multi-Stakeholder] economic diplomacy is not yet fully developed. Even a single case study gives valuable detailed insights in its workings and leads to new areas of research.

To answer the aforementioned research question, in the second chapter the concept of economic diplomacy is set out. This is followed by a description of the evolvement of economic diplomacy and the Multi-Stakeholder Diplomacy theory and a description of the research question and sub questions. The third chapter deals with methodology and discusses the case selection, methods used and corresponding reliability and validity concerns. Chapter four provides additional information on the Topsector Water program, the NCICD case and the government intent on economic diplomacy. This again is followed by chapter five, which describes the empirical information found during this thesis. All the findings are summarised in chapter six, where the conclusion will be drawn. At the end of this thesis background information such as references and an appendix can be found.

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2. Theoretical framework

This chapter describes the theoretical framework of this thesis and gives insights into where the thesis fits in the broader scope of international relations literature, what gaps it hopes to fill and how it contributes to the current state of academic literature on economic diplomacy. To achieve this, first the concept of economic diplomacy is introduced, followed by the evolvement of economic diplomacy throughout history. Then the recent combining of ODA in Dutch economic diplomacy is elaborated on. Fourthly the theory of Multi-Stakeholder Diplomacy is set out, which forms the main context of the thesis. All this leads to the research question and sub questions. The last part of the theoretical framework features the theoretical reflection on the empirical results.

2.1 Concept

In this thesis, economic diplomacy is the main concept, as it forms the setting in which the Topsector Water operates and in which the case study is placed. Therefore, it is important to understand what economic diplomacy entails. When reading literature on economic diplomacy it becomes immediately apparent that different operationalisations are used. For larger econometric studies, economic diplomacy is considered through the existence of embassies and consulates and the rise of import and export between countries (Rose, 2007). However, the broader definition of Bayne and Woolcock (2011: 3-4) describes that economic diplomacy consists of [economic] relations amongst states and between states and other actors. Policy topics that could be included in these relations are related to; production, movement or exchange of goods, services investments (including ODA), money, information and their regulation. To this description can be added that economic diplomacy is not limited to purely economics or diplomacy. Cultural, historical and organisational aspects also have their impact on the success of economic diplomacy (Melissen et al., 2011: 4). Also there is the Dutch Ministry of Foreign Affairs’ definition that describes economic diplomacy as increasing opportunities for Dutch entrepreneurs on foreign markets and to strengthen the market position of the top sectors (Rijksoverheid: n.d.).

Although there are these different insights regarding the concept of economic diplomacy, Okano-Heijmans (2011) thought out a structured conceptualisation of economic diplomacy. She describes five strands of economic diplomacy, varying from more business

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oriented to more politically focussed (idem: 17). In that order they are; commercial diplomacy, trade diplomacy, financial diplomacy, inducements and sanctions; each with their own tools (idem: 20). Commercial diplomacy and inducements (including ODA) are on opposite sides of the spectrum. Commercial diplomacy has an economic goal with a political tool, whilst inducements have a political goal with an economic tool (idem: 18). The former has tools such as; trade- and investment promotion, business advocacy and socially responsible investment, while the latter can make use of tools such as bilateral aid, granting access to technology and humanitarian aid (idem: 20). These two strands are the main strands involved, given the research question, and are therefore the focus of this thesis. However, during the research process there remains the opportunity of including any of the other forms of economic diplomacy when required.

2.2 Evolvement of economic diplomacy

After the previous section gave a clear notion of what economic diplomacy entails, this section discusses the evolvement of economic diplomacy throughout history. Economic diplomacy is not a new feature of Dutch foreign policy and the phenomenon is as old as diplomacy itself, originating in around 2500 B.C. (Coolsaet and Kesteleyn, 2010: 94). Its presence in foreign policy has however fluctuated over time. In the beginning it was mostly seen as a matter of bilateral trade relations (ibid). However, during the World Economic conference of the League of Nations in 1927 it was introduced into multilateral relations. Here states started to cooperate and reduce trade barriers, all for international trade to grow. This multilateral aspect was of short nature, as during the Depression, states were less open to multilateral trade relations and mostly used economic diplomacy in bilateral relations. This situation continued until shortly after World War II, when states started to open up again to the idea of multilateral trade relations. The period after World War II was recognised by increasing globalisation, which is exemplified by the creation of international organisations like the World Bank, the IMF and the WTO (ibid). With the reintroduction of multilateral trade relations, so too became economic diplomacy a multilateral topic again.

Since then however, the trend of globalisation had also its reversed effects, which resulted in the return of bilateral economic diplomacy. Smaller states like the Netherlands found themselves to be of less importance in the international organisations and returned to bilateral economic and commercial diplomacy (Rood, 2011: 221-222). In relation to this, Lee

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and Hocking (2010: 1225) describe that globalisation means that ‘there is much more economic activity occurring in national, regional and international markets due to ever increasing flows of capital, trade, services, people, ideas and information between states, firms and individuals’. According to them, these changes increased ‘the need for and significance of integrated diplomacy to help facilitate as well as manage and govern economic development and market integration’ (ibid). Furthermore, they say that if globalisation is to be understood to include higher levels of integration of progressively more competitive markets (a result of this increased liberalisation of international trade and finance). This means that globalisation is seen as ‘to increase economic vulnerability and/or opening up new opportunities for trade and investment growth in the world market’ (idem: 1226-1227).

Lee and Hocking (2010: 1227) suggest that diplomacy could be the tool at hand to manage these risks and opportunities. Regarding this, they describe an impact from globalisation on diplomacy that is twofold (ibid). First, there is an institutional impact which is characterised by the increased commercial diplomatic activities of governments during the last two decades. This is realised by increasing funding for export and investment support in the Ministry of Foreign Affairs and other agencies, as well as by creating new or supporting existing institutional frameworks (ibid). The increased focus on economic diplomacy of the Dutch government and the creation of the Topsector Water can be seen as an example of this. The second impact is the drawing in of private actors from businesses (Lee and Hocking, 2010: 1227). Lee and Hocking (ibid) describe that by responding to competitive pressures and the need to find and exploit new markets for domestic goods and services, commercial diplomacy primarily involves export and investment support and advocacy for domestic business. Commercial diplomacy then focuses on building networks of diplomats and business groups based in overseas missions to promote trade and investment as well as business advocacy (ibid). Lee and Hocking (2010: 1227) mention that commercial diplomacy is made up of complex organisational networks that involve, in addition to the foreign ministry, the ministries of commerce, trade and finance. Business groups are also key players in these networks. In this conceptualisation of commercial diplomacy, ‘business actors are merged with the state rather than autonomous and as such both public and private interests are included in diplomatic representation’ (ibid). According to Lee and Hocking (ibid), these two developments thus influence economic diplomacy in its current state to involve more stakeholders and to include a significant element of commercial diplomacy.

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Whilst the previous section elaborated on the evolvement of economic diplomacy over time, this section describes an evolvement in the content of economic diplomacy. Despite the earlier definition of economic diplomacy of the Ministry of Foreign affairs, economic diplomacy in the Netherlands does not solely benefit commercial interests by creating more opportunities for Dutch entrepreneurs. The Netherlands has seen a modernisation of its official development assistance to something that is combined with economic diplomacy (Okano-Heijmans and Ruël, 2011: 463). Especially in those areas of public interest where there are also business opportunities; being climate change, energy and water scarcity (Okano-Heijmans and Ruël, 2011: 463). That this is no longer a taboo might be related to the economic downturn of 2008. The Netherlands and other states had to cut back on government spending also including ODA (ibid).

Efforts from China and India have shown that stimulating economic reform processes can create economic growth and have positive effects like poverty alleviation (Okano-Heijmans and Ruël, 2011: 464). For the Netherlands this would mean a reintroduction of the age old maxim ‘merchant versus clergyman’, through which a combination of political reform processes and sustainability can be promoted whilst conducting business. Western entrepreneurs are frontrunners as far as corporate social responsibility is concerned, including in nondemocratic states. By including businesses in ODA they could play a positive role in the promotion of green growth in areas of climate change, scarcity problems and stability (ibid). Although business does not automatically lead to poverty alleviation, combining business and ODA is a way to gain the attention of foreign leaders in order to improve the quality of its institutions and inspire policy changes that will do so (van Bergeijk, 2013: 136). According to van Bergeijk (ibid) for businesses too, the combination is beneficial. Economic diplomacy is most profitable when there are large cultural and institutional differences between the countries involved. This results in the notion that the effects of state visits and trade missions is most beneficial to developing and or transition states.

In relation to this, de Haan (2011: 214-215) describes a shift in ODA from being untied to Dutch private interests in the nineties, to more recently being linked to areas in which the Netherlands has the most competitive advantage. One of these areas is the water sector. He describes this linkage as an attempt to cut down on aid spending and enhance aid

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effectiveness by the inclusion of private interests in the public interests based ODA. Moreover, de Haan (idem: 215) also confirms that actively supporting Dutch private interests through the cover of ODA is somewhat of a protectionist act. This is caused by a globalising world in which the Netherlands has become less important (ibid). So has the Netherlands not been a part of the recent G20 summits where policies to promote financial stability are discussed. Here the Netherlands is represented through the European Union, where as in 2008 it was invited on its own merit (ibid). The concerns about the developments in linking ODA and economic diplomacy are twofold. Firstly, as certain public goods remain underprovided with too strong a focus on the market, this will result in a gap in ODA (idem: 214). Secondly, by making this policy shift, the Netherlands could lose its progressive aid image worldwide, with unknown long term effects (idem: 216).

2.4 Multi-Stakeholder Diplomacy

Now that the concept of economic diplomacy, its evolvement over time and its combining with ODA have been discussed, this section features the theory on Multi-Stakeholder Diplomacy. This theory functions as the main context in which the Topsector Water, and thereby this thesis, is set.

Especially the developments of globalisation and the combining of economic diplomacy, even specifically commercial diplomacy, and ODA indicate that diplomacy is no longer ‘confined to inter-state relations in an international system, but also involves the social, economic, cultural and political relations among networks of political actors’ (Lee and Hocking, 2010: 1217). Economic diplomacy itself is only a study of diplomacy since the 1980s. The first theoretical issues were the extent to which economic diplomacy is tied to the state and public interests and whether it covers a broader range of social actors and interests (idem: 1220-1221). The newer approaches however, recognize that diplomacy cannot be compartmentalised into separate economic and political activities and acknowledge that economic diplomacy is a key strand in diplomatic strategy. Therefore, it is necessary for states to develop an integrated or coordinated diplomacy effort (idem, 1221). According to Hocking (2004) this coordinated diplomacy would involve a multiplicity of actors and individuals from several government ministries, including the Ministry of Foreign Affairs, as well as the private and civil sector actors. This leads to the concept of a national diplomatic system (NDS)

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developed by Hocking (2007). It describes that whilst economic diplomacy may be driven by the Foreign Ministry, it involves those economic responsibilities and interests of both inside and outside the government and at all levels of governance (Lee and Hocking, 2010: 1224). In the NDS concept of diplomatic structures and processes, the Ministry of Foreign Affairs becomes the integrator or coordinator of diplomacy, working with ‘partners’ such as other government departments, as well as business and civil society groups to deliver diplomatic goals (ibid).

A theory that captures the involvement of several actors is the Multi-Stakeholder Diplomacy theory of Hocking (2006). He concludes that, given globalisation, there has been an erosion of the exclusive functions and prerogatives of the state and the professions that served it and that there are now multiple spheres of authority (idem: 16). In this Hocking (idem: 17) sees a greater exercised right of non-state actors to engage in diplomatic processes, something that in the state-centred diplomacy was a prerogative of the state. In Multi-Stakeholder theory there is room for this influence of non-state actors (ibid). Nonetheless, the theory does not automatically lead to a diminished role for diplomats, rather a different one (idem: 19). The diplomat will be more of a mediator or broker between all the different actors involved. The boundaries between the government, businesses and NGOs are more fluid rather than irrelevant and these boundaries will become sites of increased activity. Moreover, the state-centred diplomacy and Multi-Stakeholder Diplomacy are not considered to be mutually exclusive, but more as a pattern of evolvement in diplomacy (idem: 26-27). How Multi-Stakeholder Diplomacy holds up against state-centred diplomacy for specific categories can be seen in table 1: State-centred diplomacy and Multi-Stakeholder Diplomacy, below.

Table 1: State-centred diplomacy and Multi-Stakeholder Diplomacy (Hocking, 2006: 18-19)

Characteristic State-centred diplomacy Multi-Stakeholder Diplomacy

Context State as unchallenged terminal authority.

Multiple spheres of authority.

Forms Government-led using bilateral and multilateral channels.

Diffuse: may be led by governments or other stakeholders.

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Developing and fluid forms. Participants Professional diplomatic guild. Multiple participation based on

varying models. Diplomats whose credentials are

based on principles sovereignty.

Frequently based on trisectoral model incorporating governments, NGOs, and business.

Non-state actors as consumers of diplomacy.

“Stakeholders” whose credentials are based on interests and expertise. Non-state actors as producers of diplomacy.

Roles Diplomat as gatekeeper. Diplomat as boundary spanner: facilitator and entrepreneur. Stakeholders performing multiple roles: stakegivers vs. staketakers. Communication

patterns

Government focused. Networks.

Relations with stakeholders defined as “outreach.”

Open and inclusive.

Hierarchical information flows focused on governments.

Can be fluid and unstable.

Exclusive but with recognition of need for outreach.

Multidirectional flows of information.

Functions Managing relations between sovereign entities.

Compensate for deficiencies in diplomatic processes by exchanging resources through policy networks.

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Defining and promoting national interests.

Information exchange.

Defining and promoting global interests.

Monitoring processes.

Location Outside domestic arenas. Crosses domestic-international arenas.

Diplomatic sites: intergovernmental.

Multiple diplomatic sites.

Representation patterns

State-focused. Multilateral and mission oriented. Mixed bilateral and multilateral

with growing emphasis on mission diplomacy.

Variable permanent representation.

Rules Clear normative expectations of behaviour.

Underdeveloped rules.

Derived from sovereignty related rules.

Clash of sovereignty and non-sovereignty based rules. Centrality of protocol. Openness, accountability and

transparency.

Immunity of diplomatic agents. Institutional tensions.

Confidentiality. Clash of expectations between stakeholders.

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The comparison above shows that Multi-Stakeholder Diplomacy challenges the traditional state-centred diplomacy and pleads for a more interactive relationship between the parties involved. It resembles much of the structure of the Topsector Water, which is also initiated and structured by the Ministry of Foreign Affairs, but includes other actors as well. Therefore, the theory forms the context of the thesis into economic diplomacy in the Topsector Water. That the theory can only function as context and does not generate hypotheses has to do with the lack of specificity of the categories. Although the category ‘participants’ describes non-state actors as producers of diplomacy in Multi-Stakeholder Diplomacy, it does not mention how this would take place. This thesis is therefore guided by and helps build the Multi-Stakeholder Diplomacy theory.

2.5 Research questions

So far this thesis has incorporated several insights in academic literature to present a clear picture on what economic diplomacy entails, how it evolved throughout time, was influenced by globalisation, combined with ODA and has developed a Multi-Stakeholder Diplomacy character. Nevertheless, there is still a lack of research into economic diplomacy (Okano-Heijmans and Ruël, 2011: 465). Some research regarding the effects of economic diplomacy points towards an overall positive relationship between export growth and the number of diplomatic representations in a state, especially for economic diplomacy with developing countries (Yakop and van Bergeijk, 2011: 263). Second to that, Okano-Heijmans and Ruël (2011: 465) also mention there is less information at hand on systematic analysis of diplomatic instruments in specific cases or states. The Ministry of Foreign Affairs itself has only a broad description on what could be improved on economic diplomacy, involving both trade promotion and ODA (Rijksoverheid, 2013: 15). It recognizes that trade does not automatically lead to poverty alleviation and that the developing states with own structural developments are the type of states that stand to benefit most from this combination (ibid). However, it has few specific suggestions. Thirdly, the theory of Multi-Stakeholder Diplomacy gives a clear overview of how it differentiates from traditional state-centred diplomacy and why this is currently the case. Nonetheless, it only describes the type of actors involved and the type of impact this would have, and offers no specific information on how economic diplomacy works in such a setting and which actor has the prevailing influence.

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As the Netherlands has put economic diplomacy more at the forefront of its Foreign Affairs policy it is worthwhile to investigate what perspectives drive this development. Hence the following research question; ‘What is the main perspective driving the new multi-stakeholder economic diplomacy of the ‘Topsector Water’ program?’. In answering the research question, the case of the National Capital Integrated Coastal Development (NCICD), is used. Further details on this case can be found under ‘case selection’. To fully answer the research question, three sub-research questions have been established. They are; 1. ‘How does the perspective of commercial diplomacy influence the workings of economic diplomacy in the case of NCICD?’; 2. ‘How does the perspective of Official Development Assistance, as a part of inducements, influence the workings of economic diplomacy in the case of NCICD?’ and 3. ‘Which were the prevailing moments in the process of obtaining the NCICD project for the Netherlands?’. These questions thus describe how the two perspectives work within the Dutch economic diplomacy and what perspective prevailed when.

To know more about the perspective driving economic diplomacy is significant as the perspective that has the upper hand determines the direction of the projects in the Topsector Water program. Especially in regards to whether it has more commercial aspects or ODA aspects. Adding to this is the new Multi-Stakeholder Diplomacy context, as in this situation the Ministry of Foreign Affairs is no longer the sole determinant of the economic diplomacy effort. Therefore, this thesis adds to the theory of Multi-Stakeholder Diplomacy by describing how a process of multi-stakeholder economic diplomacy took place in the case of the NCICD project and how the involvement of several actors influenced the outcome of the Topsector Water program, which was initiated by the Dutch government. It also contributes to economic diplomacy theory at large, by giving a detailed description of the workings of economic diplomacy in a specific case, thereby adding to the mainstream econometric research which only incorporates the effects economic diplomacy.

2.6 Theoretical reflection on empirical research

As described in section 2.5 research questions, the theory on economic diplomacy and Multi-Stakeholder Diplomacy is present but under researched. Therefore, this thesis has an inductive approach and empiric results are combined with insights from theory. As a result, this section is written at the end of the research period. It is however placed at the beginning of the thesis to offer the possibility to take in all theoretical aspects at once and to test the

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theoretical reflection whilst examining the empirical results in chapter 5 ‘Empirics’. The empirics show that Multi-Stakeholder Diplomacy theory plays out differently in practice than what the theory suggests. As elaborated on in the following sections, current economic diplomacy presents characteristics that can be described as either fully or partially Multi-Stakeholder Diplomacy. In that same order, the characteristics will be elaborated on below. Lastly, these findings offer new insights in the theory Multi-Stakeholder Diplomacy and that form the basis for future research. Moreover, the findings have policy implications for the use of economic diplomacy in combining the commercial diplomacy perspective and ODA perspective.

2.6.1 Multi-Stakeholder Diplomacy

The areas where economic diplomacy definitely shows characteristics of Multi-Stakeholder Diplomacy are the context of authority, the inclusion of participants, the location where diplomacy takes place and the type of representation patterns used. For the context of authority, Multi-Stakeholder Diplomacy acknowledges multiple spheres of authority where non-sovereign actors exercised the right to engage in diplomatic processes (Hocking, 2006: 16-17). The private sector has contact with the government of the emerging economy without involvement from national government, even though the overarching relationship was a government to government one. This authority of the private sector in the diplomatic process was given to them by the government based on a second characteristic of Multi-Stakeholder Diplomacy; the inclusion of participants. Here a trisectoral model is expected, where inclusion of stakeholders is based on interests and expertise and where non-state actors can produce and not just consume diplomacy (Hocking, 2006: 17-18). In practise, all stakeholders are present in a Multi-Stakeholder partnership and in an economic diplomacy effort based on their expertise and/or long term presence in the emerging economy. Private sector actors have authority in diplomatic processes, based on this type of inclusion of participants. Moreover, private actors not only use their authority to advise on the content. They also influence the structure of diplomacy by arranging meetings and visits from government officials to speed up decision-making.

A third characteristic of Multi-Stakeholder Diplomacy theory that is present in current economic diplomacy is the location where the economic diplomacy effort takes place. Whereas in state-centred diplomacy there are separate domestic and international diplomatic

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sites, Multi-Stakeholder Diplomacy takes place on several diplomatic sites with varying levels of government involvement (Hocking, 2006: 20-21). The empirics show that both private sector actors and government officials will have multilateral meetings with their counterparts of the emerging economy. The Multi-Stakeholder aspect comes forward in flexibility to hold bilateral meetings between any of the parties at any moment needed to address specific issues, both at domestic and international level.

The fourth and final characteristic of the Multi-Stakeholder Diplomacy theory is clearly represented in current economic diplomacy is the type of representation patterns used; diplomacy by multilateral and mission oriented with variable permanent representation (Hocking, 2006: 19). This allows for diplomacy with whomever and whenever necessary and relates to the previous characteristic of the location (idem: 24-25). Not only is there a mixture of international and domestic meetings with all actors, the private sector also participates in government-led missions. The representation was Multi-Stakeholder as public and private sectors need each other to offset deadlock in the decision-making process. Moreover, by the occurrence of intensified cooperation, the government makes use of a variable permanent representation to strengthen the diplomacy effort.

2.6.2 Partial Multi-Stakeholder Diplomacy

As opposed to the previous section, there are some areas where current economic diplomacy only partially represents characteristics of Multi-Stakeholder Diplomacy theory. They are the role of the state, its functions in the diplomacy effort, the forms of diplomacy that are present, the communication patterns used and the rules that shaped the economic diplomacy effort. All are discussed in the same order.

Contrary to the state-centred diplomacy where the government and diplomats have a role as gatekeeper, Multi-Stakeholder Diplomacy sees the government more as a facilitator and boundary spanner between all stakeholders involved (Hocking, 2006: 17, 18). In practice it appears that the government has both the role of facilitator and as gatekeeper. Especially this characteristic influences the presence of the ODA perspective and the commercial diplomacy perspective in economic diplomacy. In the role of facilitator, the government has attention for both perspectives, first by recruiting actors based on their expertise to reach their ODA aim in economic diplomacy. In the role of facilitator, the government also has attention for the commercial perspective by creating increased cooperation between the

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actors to promote the national commercial interests. However, in the role of gatekeeper, the government remains the owner of the economic diplomacy effort and has the final say on the content where it gives preference to the ODA perspective. The private sector agrees upon this leading role based on the public good nature of the economic diplomacy effort.

The same duality goes for the functions of the government in current economic diplomacy. Here the government has a function that embodies Multi-Stakeholder Diplomacy as it compensates own deficiencies to include private sector involvement (Hocking, 2006: 20-22). One note here is that to increase its legitimacy deriving from the inclusion of several actors, NGOs should have been included (ibid). In line with Multi-Stakeholder Diplomacy theory the government focuses on a knowledge deficit by cooperating with businesses and the knowledge institute and to monitor the process. Secondly the economic diplomacy is seen in the contexts of global interests. However, state-centred diplomacy characteristics are also present as the initiation of economic diplomacy is set in a government bilateral relationship with the emerging economy, with the inclusion of national interests.

Given the role and functions of the government in current economic diplomacy, the forms of diplomacy can also be placed in both state-centred and Multi-Stakeholder Diplomacy. The government leads in initiating and shaping the economic diplomacy effort, but all actors participated and took the lead based on their expertise, as can be expected according to Multi-Stakeholder Diplomacy theory.

Communication patterns is the fourth characteristic of Multi-Stakeholder Diplomacy theory that is only partly present in current economic diplomacy. Given the government role of gatekeeper, communication on final decisions regarding the content was hierarchical and focused on the government (Hocking, 2006: 18, 20). However, the communication between the three actors is also fluid and multidirectional, as actors are involved based on their expertise (idem: 20).

Lastly there is the issue of rules in current economic diplomacy. There are clear expectations regarding a primary ODA focus and the private sector is expected to deliver on that in the content. Added to that is a centrality of protocol during the visits of high government officials where the government was in charge of protocol (Hocking, 2006: 19). However, there is also openness in shaping the content of the current economic diplomacy, just as described for communication patterns. These parallel rules create a clash of expectations as is foreseen in Multi-Stakeholder Diplomacy theory. By combining the

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financing of economic diplomacy, which is still structured in a state-centred form, with cooperation, that is expected to be more Multi-Stakeholder, difficulties arise. Moreover, as cooperation takes place on an ad-hoc basis without clear guidelines, this creates friction and differences in expectations.

2.6.3 Conclusion

When considering the current economic diplomacy, it becomes clear that it exemplifies the notion of Hocking (2006: 26) that the state-centred model and Multi-Stakeholder Diplomacy are not mutually exclusive and a pattern of evolvement can be recognised. However, there are also some new insights gained, given the difference between theory and practice. It has appeared that a dominant factor in the presence of Multi-Stakeholder Diplomacy in economic diplomacy is the role of the government. Although the government functions as a facilitator in bringing together actors to obtain knowledge and promote national interests, as long as the government also has the role of gatekeeper to have a final say, economic diplomacy will not have a full Multi-Stakeholder Diplomacy character. This as the role of the government appears to correlate with other characteristics such as the functions of the government and the communication patterns. How these characteristics influence each other is an opportunity for further research. What is evident is that if the government has the role of gatekeeper and in that aspect holds on to the state-centred view, it is its primary ODA perspective on economic diplomacy that will have the most dominant presence in the economic diplomacy effort. However, private sector actors do have some influence on the economic diplomacy effort by their authority in diplomatic processes and their inclusion in representation and thereby the commercial diplomacy perspective is nonetheless also present in current economic diplomacy. Lastly, the government policy of partly choosing for Multi-Stakeholder Diplomacy without clear guidelines creates some friction and differences in expectations. If not dealt with, these frictions can lead to a future decrease of willingness of actors to participate and therefore different end results.

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3. Methodology

This chapter on methodology first gives insights in the case selection process and offers some background information on the case. Moreover, it describes the methods that are used to gather the empirical data in this thesis. Lastly this chapter covers the reliability and validity concerns that come with the chosen research methods.

3.1 Case selection

To answer the aforementioned research question, qualitative research is done in the form of a case study. This allows for a more detailed examination of what went on during the obtainment of one of the projects of the Topsector Water program. This thesis specifically focusses on the Dutch delta technology sector as part of the Topsector Water. Besides delta technology, the Topsector Water consists of the maritime technology sector and the water technology sector. In comparison to maritime technology, delta technology is more closely related to sustainability and ODA, as it deals with the direct consequences of the rising sea level (Topsector Water, 2011: 20-21). Compared to water technology, delta technology is again more suitable for this research as the water technology sector largely consist of small and medium-sized enterprises rather than internationally operating businesses in delta technology. The latter will be more involved in the international Topsector Water effort.

The unit of analysis is the entire group of nine international delta technology projects that are underway since the establishment of the Topsector Water (Dutch Delta Approach, 2014: 7-9).They are the following; the Bangladesh Delta, the Greater Jakarta metropolitan area in Indonesia, the Nile Delta in Egypt, the north east region of the USA, the Ayeyarwady Delta in Myanmar, Beira in Mozambique, the Vistula and Oder Delta in Poland, the Mekong Delta in Vietnam and the upper valley of the Cauca River in Colombia. From these, Indonesia, Bangladesh and Mozambique are recognised by the ministry of Foreign Affairs as transition states with whom the Netherlands has both and ODA and a trade relationship (Rijksoverheid, 2013: 5). These states are then both target states for the sector and for a combination of economic diplomacy and ODA.

From these three projects, the first takes place in the Greater Jakarta metropolitan area in Indonesia and is called ‘National Capital Integrated Coastal Development’ (NCICD). Its initiation was in 2013, right after the start of the Topsector Water program and this project is

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as a result the most advanced in its development (Masterplan NCICD, 2014: 14). The Masterplan was completed in 2014, after which Phase A is currently underway (idem: 18). The downside is that the Netherlands has mostly an advisory role in the construction of the plan and little to no role in the civil engineering part of the project, which is done by Indonesian companies (Dutch Watersector, 2014a). The second project is the Bangladesh Delta Plan 2100, in which Dutch civil engineering companies have formed a consortium with Bangladeshi companies and do the construction together (Dutch Delta Approach, 2014: 13). The downside here is that the planning phase of the project is set to be finished in 2016 and can therefore not be analysed (BDP2100, n.d.). The third contender, the Beira project in Mozambique, also finished its plan in 2014 and Dutch civil engineering companies are involved in the engineering. However, finances need to be arranged through the World Bank and several other investors and because of this the project has not made as much progress as the NCICD poject in Indonesia (Dutch Delta Approach, 2014: 18; Dutch Watersector, 2014b).

From these three projects, the NCICD project has the most advantages and is therefore the case studied in this thesis. It has the longest time span out of the three and therefor offers more to analyse. Not only the creation of the final plan, but also the start of the building phase. Doing a comparative case study would be beneficial for the strength of the thesis, however this is not possible given the timeframe of the thesis.

3.1.1 Only case (currently) available

The motivation for selection of the NCICD project to answer the research question is that it is the only case currently available. This motivation is chosen, rather than representativeness, as there are only three cases currently underway in transition states. From these three projects, the NCICD project has the longest time span and can therefore be seen as a prototypical case. This is a case not chosen for its representativeness, but because it is expected to become so (Hague and Harrop, 1998: 363). The point in studying this case is ‘comprehending a phenomenon that is growing in significance elsewhere’ (ibid). The NCICD was initiated just after the creation of Topsector Water. Since then several other projects have been initiated in transition states and the NCICD project is used evaluated and looked at to shape and improve these later projects (van Bork et al., 2015: 89). In order to understand the phenomenon of economic diplomacy in the Topsector Water, it is thus important to

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understand the economic diplomacy effort in the NCICD project as it influences and shapes the projects that will follow.

A second element of uniqueness of this case is that it has the longest time span compared to the projects in Bangladesh and Mozambique and as a result will most likely have the most available data to analyse. Thirdly, a special element of this case is the post-colonial bond between the Netherlands and Indonesia. How the combination of commercial diplomacy and ODA is shaped in the NCICD project can shape other economic diplomacy efforts in the Topsector Water with states with whom the Netherlands has a similar post-colonial relationship. A final element of the case selection is that this is a diachronic research, as the perspective driving economic diplomacy is considered from both the process of obtaining the project as well as during the project up until now (idem: 222).

3.2 Methods

The program used to promote Dutch water technology abroad is the ‘Topsector Water‘. In this setup, the Dutch government works together with Dutch businesses and knowledge institutes and NGOs to achieve this. To find out the different economic diplomacy perspectives at play and which of these had the overhand in shaping the NCICD project in Indonesia, the method of process tracing is used. The process tracing method attempts to identify the causal process between the independent and dependent variable (George and Bennett, 2005). In this single case study, process tracing is used to help build theory on economic diplomacy and Multi-Stakeholder Diplomacy as they are not yet fully developed and under researched. Here process tracing does offer the possibility to consider several dependent variables and causal relations (George and Bennett, 2005). The variety of process that is used is the one of analytical explanation, where it is based in a specific theoretical form and focusses only on important parts of the process (ibid). In this thesis that theory is Multi-Stakeholder Diplomacy in combination with the two strands of economic diplomacy; commercial diplomacy and inducements. Although these two strands partly shape the process tracing, the existence of the three strands is not forgotten. This fits with the method of process tracing which allows for such openness and the inclusion of more theory when considered relevant. The process in this case is a sequence of events that can include path dependency. (George and Bennett, 2005). This indicates that past events can steer the development of future events into a certain

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direction. Path dependency is dealt with in this thesis by identifying key decision points and comparing them.

The research is thus inductive and process tracing allows for going back in time to find out who and with which objectives was involved when. To achieve this two data source types will be used, namely interviews and document analysis. The interviews were held with individuals from all actors involved in the Masterplan. There are five private partners involved; Witteveen+Bos, Grontmij, KuiperCompagnons, Deltares and Ecorys. From these partners the actors’ representative in the negotiations (except of KuiperCompagnons) were interviewed, as they are representing their actors’ objectives in the process. Other actors involved with whom interviews were arranged are first the Topsector Water, as the organizing body of the cooperation between the three actors. Secondly, an interview was arranged with the Netherlands Water Partnership, as they are co-structuring the economic diplomacy effort in this specific case and partly represent the objectives of the Ministry of Foreign Affairs. Moreover, they oversee the collaboration between the parties and could shed light on the interaction. Thirdly, interviews were arranged with several government officials; the special envoy for International Water Affairs for the Netherlands, who works on the international economic diplomacy effort for the Dutch Water sector, the Delta coordinator from the Ministry of Infrastructure and the Environment and the Delegated Representative on Water in Indonesia. The primary document analysed was the NCICD Masterplan, containing the vision of the flood protection plan for Jakarta with attention for appearance, aims and strategies and financing. Secondly, several documents have been used to come to an understanding of the economic diplomacy effort.

3.3 Reliability and validity concerns

In this thesis the method of process tracing is used to go back in time and find out who and with which objectives was involved when in the economic diplomacy effort of the NCICD project. This method can establish which perspectives prevailed in the end result of the project (both in obtaining the project and the set-up of the project plan) and the currently ongoing implementation of the plan. As described in section 3.2 ‘Methods, for this two data source types are used, namely document analysis and interviews.

To increase the reliability the functions of the interviewees are kept most similar and date and location of the interview are reported on, just as a list of interview question. The

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interviews are open and semi-structured to both address reliability and validity. This allows for more transparency whilst leaving room for the respondents to answer in their own words. As the interviewees might have been tempted to paint a different picture than describe what really occurred or give socially desirable answers, the questions are focused on the process. Furthermore, the answers are compared with the outcomes of the document analysis to see if they can be confirmed. This should improve the validity of the research. The objectives and processes discovered in the interviews are held alongside the final Masterplan and related documents, to find out what was the main perspective driving the economic diplomacy effort. In the selection of the documents to be analysed, a criterion is the amount of actors involved in the creation. If several actors were involved, they have had to agree on the content and therefore are less biased in favour of one specific actor. Also, to increase reliability, a list of topics is created on the basis of which the analysis takes place. The chosen topics are quite similar as the ones used in the interviews and focusses on the presence of different elements of economic diplomacy.

The robustness of this thesis is thus increased by the usage of both two data source types and having multiple data sources (the different actors involved), thereby creating triangulation. However, since economic diplomacy is a broad concept with a great variety of indicators and hardly any case studies, the indicators used need might be susceptible to validity issues so they need to be well researched. Here the method of process tracing is also useful.

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4. Background information on economic diplomacy and NCICD

The previous chapters described the relevance of this thesis given the return of economic diplomacy in the policy of the Dutch government and Ministry of Foreign Affairs. They also elaborated on the Multi-Stakeholder Diplomacy setting which can be recognised in the initiation of the Topsectors, including the Topsector Water. Thirdly, regarding the case selection for this thesis, the NCICD project was introduced. However, to fully comprehend the results of the empiric research, this chapter provides background information on these three topics respectively.

4.1 Economic diplomacy with commercial and ODA elements

With the start of the cabinet of prime minister Rutte in 2010, two policy changes were initiated that led to the return of economic diplomacy in Dutch foreign policy and the emergence of the Topsector Water. These two policy changes created the circumstances for the multi-stakeholder economic diplomacy theory in the Netherlands as it is examined in this thesis. Firstly, in November 2010 the combining of commercial diplomacy and ODA was introduced as part of economic diplomacy. This was based on the advice of the Wetenschappelijk Raad voor het Regeringsbeleid (Scientific Council for government policy) which recognised the added value of government cooperation with businesses and knowledge institutes (WRR, 2010: 255). This was seen in the reaction of the House of Representatives, stating it acknowledged the inclusion of business in ODA was inevitable (Rijksoverheid, 2011a: 1). The advice was translated into the ‘basisbrief ontwikkelingssamenwerking’ (letter on ODA), which announced all factors that can be seen in the current interpretation of economic diplomacy (Rijksoverheid, 2010). The inclusion of commercial elements is explained by the need to increase public support for ODA and to increase effectiveness. This is reached by choosing specific donor states and to limit the topics on which aid is offered to those where the Netherlands can make a significant difference. This to offer the best possible ODA, but also to further commercial interests. For this, the use of public private partnerships is suggested. In relation to the twofold aim, reciprocity is expected in the relationship with the donor states (ibid). The ODA offered is in accordance with the needs of the donor state, however, thematic choices are based on Millennium Development Goals and Dutch strategic (both social and commercial) interests, leading to a focus on food security and water. In the bilateral

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relationship it is hoped that ODA will eventually translate the relationship into a profitable trade relationship (ibid).

4.1.1 Start of the Topsectors approach

In the same want for public private cooperation and combining Dutch (commercial) interests and expertise in economic diplomacy, the Topsectors were established in 2011. They cover a broad scope of the Dutch economy with the Topsectors being; High Tech Systems and Materials, Energy, Creative Industry, Logistiscs, Agro&Food, Horticulture and Starting Materials, Life Sciences & Health, Water and Chemistry (Rijksoverheid, 2011b: 7). Here the emphasis lies on protecting and supporting the Dutch economic growth, partly by increasing international efforts (idem: 3, 5). The reason behind the international focus is that the Netherlands is internationally ranked top five in most competitive states and wants to remain there. To achieve this the Dutch government works together with businesses and knowledge institutes. The role of the government is to bring together the parties involved, to finance research to achieve innovation, to reduce barriers and to co-invest (Topsectoren, 2016: 7). The role for the private sector is in line with the demand driven the Topsector approach. The private sector needs to indicate where the challenges and opportunities lie and where there is need for innovations (Rijksoverheid, 2011b: 6; Topsectoren, 2016: 9).

As part of the internationalisation strategy a reinforcement of economic diplomacy and a more effective promotion and usage of Dutch strengths in ODA are amongst others main areas of interest (Rijksoverheid, 2011b: 28). Here the new policy is that the government will arrange targeted economic missions that suit the needs of the private sector with the aim of promoting an unambiguous Dutch position abroad. With regards to ODA, it is expected that the use of Dutch economic developments can help in fostering self-reliant durable economic developments in developing states (idem: 30).

One of the Topsectors is the Topsector Water and here again the government enables innovation by financing new research and supporting business cases. One of the business cases is ‘Enabling Deltalife’ (the Dutch Delta Approach) of which NCICD is a subsection (Rijksoverheid, 2011b: 51). Within the context of Topsector Water there is emphasis on sustainable development in water and ecosystems. This is a key part of the ODA priorities food security and water. Moreover, the focus on sustainability also increases the competitiveness of the Dutch water sector (idem, 52).

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27 4.2 Background of National Capital Integrated Coastal Development (NCICD)

After the background information on economic diplomacy and Topsector Water in the previous section, this section offers additional information on the NCICD case to improve understanding of the empirics. Although NCICD started in 2013, it had two predecessors that ultimately resulted in NCICD. The first project, Jakarta Flood Management (JFM) started in 2007 as Jakarta suffered from what was thought to be river flooding. During this projects it was found out that some of the flooding was also caused by high sea levels in combination with low sea dikes (Deltares, 2009: 49; State Ministry of National Development Planning of Indonesia, 2009: 2). This discovery led in 2009 to a follow up project, being Jakarta Coastal Defence Strategy (JCDS), which focused on investigating alternatives for the sea defence of Jakarta (ibid). JCDS offered possible alternatives and an offshore solution was decided upon (NCICD, n.d.a). This led to a new phase and the initiation of National Capital Integrated Coastal Development (NCICD), including a Masterplan on what this solution would entail (ibid). Besides the Masterplan there is a second advice project regarding the organisational structure of NCICD for the Indonesian partners, arranged and financed by Dutch actors, and several smaller Indonesian side line developments (NCICD, n.d.b).

The need for a solution against regular flooding is increased by several factors. First Indonesia is a rapidly developing state, resulting in a rapid urbanisation of the capital Jakarta (Dutch Delta Approach, 2014: 14). This rapid urbanisation is putting the infrastructure under pressure and is causing environmental problems such as pollution. Moreover, polluted riverbeds increase the risk of river flooding. Besides pollution and river flooding there is an overexploitation of groundwater resources present in Jakarta that leads to subsidence. Therefore, the city sinks slowly below sea level at a rate of 7.5 centimetres a year (ibid).

The current strategy of onshore sea defence will last 10 to 15 years (ibid). After this period, an offshore solution and a water storage system are required. The total cost of NCICD is around 24.7 billion US dollars (22 billion Euros) and this is financed by revenues from land reclamations and toll roads (ibid; NCICD, 2014). The land reclamations are shaped in the form of the Great Garuda, the national symbol of Indonesia (ibid; Rijksoverheid, 2014). Although the aim of NCICD is to create a solution for flooding and water pollution, the project has sparked protests against the land reclamations. Feared is that fisherman will face difficulties to get to their livelihoods and that the less wealthy inhabitants will have trouble finding suitable housing (Heriyanto, 2016).

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5. Empirics

After providing an overview on the initiation of economic diplomacy by the Dutch government, the start of the Topsector Water and background information on the NCICD project, this thesis continues with the analysis of the results of the data gathering process. The analysis is based on the theory of Multi-Stakeholder Diplomacy and the concept of economic diplomacy. The theory of Multi-Stakeholder Diplomacy by Hocking (2006) showed that there are several actors involved in a diplomacy effort with a greater excised right for non-state actors. This leads to a different role for diplomats where they are more of a mediator or broker between all the different actors involved. The boundaries between the government and the private sector are more fluid rather than irrelevant and these boundaries will become sites of increased activity (ibid). This combined with a concept of economic diplomacy that entails a myriad of topics, the most prominent for this case being commercial diplomacy and inducements (including ODA), led to the following research question ‘What is the main perspective driving the new multi-stakeholder economic diplomacy of the ‘Topsector Water’ program?’. This question is answered in the following sections. The first section describes the government participation in the economic diplomacy effort of NCICD. The second section deals with the participation of businesses in the economic diplomacy effort and the third section deals with the participation of the knowledge institute during the NCICD economic diplomacy effort. Each section also compares the respective perspectives on economic diplomacy with its visibility in the NCICD Masterplan to see what influence has been reached through the cooperation between government, business and knowledge institute. Lastly, the cooperation and participation of the Topsector Water as an entity is discussed. Together this leads to answers on all the three sub-questions.

5.1 Government participation in economic diplomacy

In order to trace what role commercial diplomacy and ODA perspectives played in the economic diplomacy effort of the NCICD case, it is first relevant to understand the participation of all the actors in the economic diplomacy effort. This is important to identify as the new roles of the actors within Multi-Stakeholder Diplomacy can influence the end result of the diplomacy effort. This section describes the participation of the government in the NCICD economic diplomacy effort and partly answers each of the sub-questions.

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29 5.1.1 Government perspectives on economic diplomacy

The official definition of the Dutch government is, as mentioned previously, increasing opportunities for Dutch entrepreneurs on foreign markets and to strengthen the market position of the top sectors (Rijksoverheid: n.d.). However, amongst government officials there are different notions of what economic diplomacy entails. The broadest and most generally understood definition captures both commercial and ODA aspects, but on the latter the most emphasis is placed. Economic diplomacy is seen as a concept that arose when distance was taken from the traditional aid relationship. This transition has emerged for two reason, first for creating a more equal connection between the Netherlands and the emerging economy in question and for giving the emerging economies the opportunity to initiate their own changes.

Economic diplomacy is considered a bilateral relationship on political and high official level that forms a framework in which interventions such as ODA and commercial diplomacy are placed. It can therefore be considered both an aid relationship and a trade relationship. To achieve the interventions, the Dutch government has several instruments; organizing missions, financing specific projects (either by subsidy or lone) and especially by creating political support for certain activities. Within economic diplomacy it has become important for the government to cooperate with the private sector where there are joint interests. As mr. Warmerdam (2016) describes it; “(…) economic diplomacy is in general less direct money

for projects, more an investment you do as a government to create a framework where beautiful things can happen”. In order to make those ‘beautiful things’ happen the

Netherlands needs to open up doors by building long-term relationships and networks. This includes creating opportunities to talk and to bring along financing. As mr. Wieriks (Ovink and Wieriks, 2016) puts it “(…) you cannot just walk through the door and say, we are here to make

money, is does not work like that”.

The previous paragraph described the basic dynamic of economic diplomacy. However, there are overarching themes as to when economic diplomacy, in the meaning of combining commercial and ODA aspects, is used. Those are the international agreements on the future of the world, such as the Sustainable Development Goals and the Paris agreement (COP21). Here the Netherlands not only has a responsibility to change its own ways, but also to help other states to change. This responsibility comes from the position the Netherlands has in the world as part of the more affluent states and as it has also had a greater part in causing problems of inequality. Given that water is a topic in which the Netherlands is particularly

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progressive and has an advanced knowledge as a result of the nations’ history with water, mr. Ovink (Ovink and Wieriks, 2016) describes it as a “almost an obligation to help, a noblesse

oblige”. By using economic diplomacy as an instrument to help, there lies an opportunity to

create a continuous cycle of development. By using economic instruments to improve the world, this contributes to the Dutch economy, and creates a learning and innovation effect that can later be reused to help the Netherlands with its own water challenges. This innovation can then again be used to achieve the international goals to change and improve the world. As mr. Ovink (Ovink and Wieriks, 2016) describes it; “(…) without that the aim to improve the

world, it cannot be called economic diplomacy, then it is mere trade. (…) Trade itself is fine, but it cannot interfere with the core value [improving the world]”.

5.1.2 Government participation in NCICD

As in the previous section the perspective of economic diplomacy on which the government operates was clarified, in this section the role the government played in the NCICD project can be analysed. The empirics show that the Dutch government had most influence in setting up a trusting relationship with the Indonesian government, which created the opportunity for an NCICD project with Dutch participation, in financing the initial technical research and creation of plans for NCICD (and predecessors) and keeping momentum in the process of NCICD decision making.

Even though the relationship between the Netherlands and Indonesia regarding water goes back further, one significant moment early on was the creation of the Memorandum of Understanding (MOU) Water in 2001 (van der Kerk et al., 2013: 6). Here both governments pledged to exchange knowledge and cooperate on infrastructure and flood prevention in urban deltas. This was followed by a second MOU in 2006 which focussed more specifically on water management (ibid). Thus when in 2007 Jakarta suffered unexpected flooding, there was already a relationship between the two governments. As Indonesia had trouble understanding and combatting the floods, that same year it reached out to the Dutch embassy in Indonesia asking for help to do so. The Dutch government decided to finance research projects to help understand the flooding and create solutions. The motivation behind this was to make a real difference in protecting the four million people behind the sea wall, to develop the city, to provide better housing and to fight poverty (Ovink and Wieriks, 2016). The financing led from the Jakarta Flood Management (JFM) plan via the Jakarta Coastal Defence Strategy (JCDS) to

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the National Capital Integrated Coastal Defence project (NCICD). Important here was that the Dutch government was asked to do this by the Indonesian government, as it shows that the emerging economy was given the room it needed to initiate own action on their own terms. That the Netherlands was asked is also proof of the trusted relationship (Ovink and Wieriks, 2016). Moreover, it is an example of government intervention to involve ‘the Dutch’ in this specific water problem. The trusted relationship has been established by the longevity and quality of the support by the Dutch government.

“If you have been in Jakarta, you see many skeletons of previous projects, al offered by

Japanese or Chines as ‘this is the solution of your country’. And after two years it was stopped as it did not appear to function. In the meantime, the Indonesians have reached a point where they do not want that anymore” (Ovink and Wieriks, 2016).

For the technical quality of the plans, the government refers to the Dutch private partners.

“We are the advisors, we open the doors. But we really do not have anyone that can still build a dike. (…) that knowledge is mostly with our businesses” (ibid). The quality of advice and the

build-up trust in the relationship between the Netherlands and Indonesia led to a third official request in 2011, this time the develop the concept of NCICD and to develop a plan on how to realise the project.

Besides creating a trusted relationship with Indonesia regarding water management and financing research projects that developed into NCICD, a third element where the Dutch government played a big role was keeping momentum in the NCICD project. In the same week in 2011 that the government decided to focus on economic diplomacy, state secretary Knapen visited Jakarta (Brinkman, 2016). He was brought by the embassy and Partners for Water to the wall where all three major problems in Jakarta, flooding from sea, subsidence and the slums, were clearly visible. There he decided that this was a great example of the aid and trade combination and he made five million euros available to fund Dutch NCICD research. Here momentum for NCICD was initiated. A significant moment in keeping momentum were the visits of prime minister Rutte where he presented the Dutch vision on NCICD and a visit from the minister of Infrastructure and Environment Schultz van Haegen, where the Indonesian government formally declared to embrace the NCICD Masterplan (van der Linden, 2016; Warmerdam, 2016). Also the visit of the President of Indonesia to the Netherlands in April

Perspectives driving the new multi-stakeholder economic diplomacy of the Topsector Water program : the case of National Capital Integrated Coastal Defence