Thursday, May 21, 2009

Should Aid be Unconditional?

The UN's Economic and Social Council held a special high-level meeting with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development, in New York last month (on 27 April 2009).

The President issued a Summary of the proceedings, which includes the following sentence: "The World Bank expects to triple its annual level of disbursement during the next three years at the same time that it is exerting extra effort to simplify
procedures, reduce the transactions costs of lending and eliminate outdated conditionalities".

I am of course pleased that the Bank will triple its disbursements (though where the money has come from, and with what consequences, is a different matter that I have discussed here earlier).

However, I have been concerned for some time about this matter of eliminating "outdated conditionalities". What exactly is it that has made the Bank's former conditionalities "outdated"?

Some of the "structural reforms" on which the Bank used to insist have been criticised for being too strong and too deep, with undesirable consequences.

But in the rush to get rid of such undesirable conditionalities, I wonder whether some DESIRABLE conditionalities are not also being eliminated.

If the international community is giving money to any country, then the international community has the duty to insist that the money is well and wisely used, and it is right for the international community to insist that the money is used to enable genuine political openness in recipient countries - in line with international norms.

Otherwise, the Bank's activities will amount to nothing more than handing money over to corrupt elites and endorsing their running away with the money.

It would be better to refuse to give the money to governments and to the financial systems controlled by them as that would simply entrench corrupt elites in power.

Much better to give the money to properly managed and audited NGOs which can better guarantee that the money reaches and poorest and most disadvantaged in such countries. Sphere: Related Content

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