The DFID white paper and the World Bank: Missing the point?

Published on IFIwatchnet, by Bretton Woods Project, August 13, 2009.

The latest DFID white paper strengthens the UK’s target setting for the World Bank, but fails to adequately tackle the crucial questions of governance, conditionality, human rights accountability, and climate finance. A recent Tory Party policy paper leaves it unclear whether they would do any better.

The white paper begins by lauding the achievements of the G20 including the supposed $1.1 trillion package of global financial support (see Update 65), of which a large proportion has yet to be delivered (see G24 briefing).   

It heavily promotes the role of the IMF and World Bank in resolving the crisis, but does admit “The old Washington Consensus – with its advocacy of structural adjustment and a one size fits all approach to policy making – failed because it was imposed from the outside and was not tailored to country circumstances.” And it promises to “monitor carefully how the IMF works with developing countries, to ensure it does not use a one-size-fits-all approach to adjustment.”

Bringing focus to Bank goals: …

… Conditionality review at DFID:

  • In May, DFID issued a new guidance note to staff on implementing its conditionality policy (see Update 47, 43) which appears to be backtracking on their 2005 commitment not to use economic policy conditionality. The note is not supposed to change the 2005 policy which stated that DFID “will not make our aid conditional on specific policy decisions by partner governments”. The new note, however, lists a number of circumstances when it would be possible for DFID to use policy conditions. This internal rethink may be partially behind the UK’s seeming climb-down on demands to end economic policy conditionality at the Bank.
  • The new note also gives emphasis to the need to define ‘ownership’ of conditions as going beyond just government ownership, indicating a step towards civil society calls for using the concept of ‘democratic ownership’.

Tories and the Bank: telling the future?

  • In July the UK opposition party, the Conservatives or ‘Tories’ issued their international development policy platform, from which even seasoned rune-readers would find it difficult to divine in which ways their approach to Bank and Fund reform would differ from the present Labour government’s.  One world conservatism: a conservative agenda for international development contains only vague proposals for reform of the Bretton Woods institutions. They repeat the criticism of the government’s system of allocating money to multilateral institutions like the World Bank raised by a 2008 parliamentary report (see Update 60), saying that when it “gives money to multilateral organisations like the World Bank, DFID admits that it does not know which are the most effective in reducing poverty.”
  • However, like the government, they back an increased role of the Bank and Fund and believe that “the World Bank is one of the most effective development actors.” Specific ideas for the IFIs are notably absent. Their plan for Bank and Fund reform, however, seems to consist merely of greater decentralisation and “giving developing countries a greater say in decision making” and making “the organisations more effective and efficient.”
  • The most controversial elements of the so-called green paper related to the use of vouchers for aid, including for education. This proposal for the use of bilateral assistance drew scepticism from the major UK NGOs. Christian Aid responded: “Vouchers would break the link between citizens and the state and effectively remove governments’ responsibility to provide services for their citizens.” It remains unknown whether the Conservatives will try to push these domestic policy changes into international institutions such as the Bank if they win the next election. (full text).

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