Developing world confused by UK aid guidelines

·Officials complain of new policy's lack of clarity
·Free-market rules still imposed in some countries

David Pallister
Saturday September 24, 2005
The Guardian

Britain's controversial new guidelines for providing aid to developing countries are causing widespread confusion around the world, with the government's own officials saying they have "fundamental concerns" about the way the policy is operating. Campaigners have also criticised the new rules, saying the government's pledge to drop unpopular conditions for providing cash and loans is in danger of becoming a sham.
In March the development secretary, Hilary Benn, pledged that the UK would no longer provide aid on the condition that the country in question adopts free-market ideas, such as the privatisation of public services. Mr Benn acknowledged the old policy was unpopular in recipient countries and had not always benefited the poor. Mr Benn and the chancellor, Gordon Brown, will today press the World Bank and the IMF in Washington to consider changing their policies of insisting on stringent conditions for loans and debt relief.


Mr Benn has insisted that aid "which attempts to "buy reform from an unwilling partner has rarely worked", and that the only conditions imposed should be transparency in tackling corruption, respect for human rights and helping the poor.
Country-ownership has become the new buzzword among aid officials, with the assumption that a country's poverty reduction strategy is agreed between donors and the recipient government. Campaigners argue that poor countries often have no choice but to accept the west's economic medicine. Christian Aid said that if put into practice, the UK's move "would mean an end to more than 20 years of rich countries using their power as donors and creditors to enforce a dogmatic, and often disastrous, liberalisation agenda on poor countries".
However, a wide-ranging Guardian inquiry suggests the policy is foundering.
A review of the guidelines reveals that the UK's development officials, based in countries from Nicaragua to Nepal, have expressed "fundamental concerns" about them. The complexity of conditions that pre-date the new policy, and a lack of guidance about when to give aid, and when to withhold it, have led, in effect, to paralysis in some areas.
Produced last month by Mokoro, regular consultants for the Department for International Development (Dfid), the review looked at all the department's agreements and received reports from officials in 16 countries, six of them in Africa. It found that some developing countries had to achieve between 40 and 50 "milestones" before aid could be given.
And in at least two countries, the old rules still seemed to apply. Aid to Gambia is being withheld until it is back on track with the IMF, and in Guyana privatisation of water remains a condition of aid. The report highlighted a lack of clarity about the milestones and the triggers for disbursement."Nor is it clear what consequences, if any, there will be for governments who fail to achieve benchmarks, particuularly where there is a consistent failure that may indicate a lack of commitment." it continued.
Of particular concern was the question of human rights. "Conditions related to governance are particularly sensitive ... several country officials wanted guidance on how to initiate dialogue on human rights, given these sensibilities, and how to avoid imposing a narrowly Eurocentric understanding of democracy and rights."
Speaking on condition of anonymity, officials at the department admitted there was confusion, but said new guidelines would be drawn up by the end of the year.
The Mokoro review also highlights an apparent contradiction in Dfid's new policy. In March, the department said it still intended to "use analysis from the IMF and the World Bank" when assessing a country's progress towards poverty reduction. Officials said the department "could not justify continuing to give aid to a country which showed no concern about macroeconomic management".
Vicky Cann, of the World Development Movement, says the new policy does not put an end to the imposition of policies on poor countries by international donors." She cites water privatisation in Sierra Leone as a prime example.
"The IMF and the World Bank have been imposing a privatisation programme on Sierra Leone for years and DfID is effectively endorsing these conditions by funding the resulting water privatisation programme.
"If DfID was serious about promoting genuine choice for poor countries, it would refuse to use any aid money to back policies - including water privatisation - that are forced by international donors."
Sierra Leone
Even before Sierra Leone's 11-year civil war ended in February 2002, the aid advisers from Washington and London had arrived in the capital of Freetown with their prescriptions for development and tackling poverty.
Their solution to the problems of the second poorest country in the world was to privatise virtually the entire country, including, most controversially, the national water utility.
The World Bank and the IMF came up with a complex aid package with lots of strings. In the long term, privatisation, including water and sanitation, was a core requirement. In November 2002 Britain signed a 10-year agreement with Ahmad Tejan Kabbah's government. The UK is Sierra Leone's largest bilateral development partner, with £104.5m in aid in three years. The UK is supporting the National Commission for Privatisation, which intends to privatise 24 public enterprises including shipping, roads, the airline, telecommunications, housing, the postal service, the national power authority and water.
Department for International Development officials said that UK aid was conditional on 37 benchmarks this year. Privatisation of water, through various forms of management contracts, is probably one of the most sensitive and disputed areas of development, dividing those who believe it is an economic good, and others who regard water provision as a human right.

http://www.guardian.co.uk/guardianpolitics/story/0,,1577269,00.html

@ns

I am so frustrated with DFID and I wonder what really is going on behind the scenes as looks like UK is still playing the same game its always done from the days of colonialism and post colonialism



I know what international trade has never truly been liberalized, not even by its strongest proponents- the developed world and especially not with regards to product markets that are of significant importance to developing countries. The recently reformed European Common Agricultural Policy (CAP) guarantees European farmers steady subsidies until sometimes in2013. Such subsidies immunize European farmers from world commodity price fluctuations and, through lower production cost, allow them to export cheaply and suppress international prices for agricultural products and Farmers in developing countries, on the other hand, do not enjoy similar subsidies and, already disadvantaged through inferior technology, must compete on the international market. Similarly, subsidies per head of cattle in the EU amounted to an estimated roughly at £350 and those in the US to£150 in 1998, which ironically implies that, unlike 1.3 billion people, the majority of all European cattle live above the World Bank’s £1 a day poverty line ! aint that some shit?

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[align=justify]What often gets out of sight when looking at development as a phenomenon of numbers and applying rational economic textbook policies, is the fate of individuals in developing countries such as Tanzania,Burkina Faso ,Mali,Ghana etc..If some of you took notice ofRecently, newspapers have been swamped by articles of high suicide rates among farmers in Malawi.These Farmers are driven into desperation because of their inability to repay government loans and to feed their families after years of draught, soil exhaustion and falling international prices for grain and malawian example does not stand alone in these situations, implementation of the principle of sharing by the international community would require not only to support these farmers in the short run but also to recognize that unfair competition cannot be the basis for sustainable development in the world's poorest regions.[/align]
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[align=justify]I think for developing countries to catch up, reach economic sustainability and become equal beneficiaries of the potential gains from globalization, they must industrialize as history shows agricultural products are unlikely to provide the basis for sustained growth as demand for their products is inelastic. Already in the 19th century, afterall for a country to gain from international trade it must first reach a similar level of industrialization as its trading partner though all successful late developers have experienced their individual path to industrialization and no sweeping generalizations can be made, there are some patterns of similarity and common success factors in South Korea, Taiwan or Malaysia were trial and error investments into mid- technology industries, knowledge acquisition from abroad, large plant sizes that allowed for economics of scale and some diversification in their investment portfolios to spread financial risk. [/align]
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[align=justify]All in all no country be it the UK, the US, or more recently South Korea, Taiwan or Malaysia, has successfully industrialized without some form of infant industry protection and such initial protection allowed for the development of economic competitiveness through economics of scale before the opening of borders to international trade. Of course such protection, when carried too far can also be harmful and the right balance must be found and tthe financing of such industry investments, which necessarily involves failure rates, remains a challenge for developing countries that have already fallen far behind. Internal savings are low, debt service levels are high and surplus creation through primary goods export and agricultural production are limited agricultural trade on fair terms could at least provide for the right basis.[/align]
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[align=justify]and its not that Hillary Benn doesnt know this but he pretends not to know whats going on but I think Tony Blair has a hand in it and who knows maybe we should waut for Gordon Brown maybe he might positively influence more policies directed towards Intl Development
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http://africa.oneworld.net/external/...ierraleone.htm

ONE SIZE FOR ALL: A study of IMF and World Bank poverty reduction stratergies.

@Tahliba


Thanks for the link, it didn't quite work, so I've relinked it below hope everyone will have a look.

http://www.wdm.org.uk/


@COLTRANE


"All in all no country be it the UK, the US, or more recently South Korea, Taiwan or Malaysia, has successfully industrialized without some form of infant industry protection and such initial protection allowed for the development of economic competitiveness through economics of scale before the opening of borders to international trade"


I couldn't agree more, in developing nations some of protection of infant industries provided a conection between the citizens and the nation, people had jobs, cooperative farmers had buyers, there was an entery point to the market. Like you have said taking this too far could also prove harmful, but taking this all away as demanded by the IMF and donars has also been extremly harmful economically and psychologocially.