Should Reject Aid Conditionality

1. No justification either unnecessary or bad

Ajay

Chhibber, World Bank, 2006, Reform & Growth, eds. A. Chhibber, R. Peters, & B. Yale, p. xxiii

Conditionality as we know it does not work. If

policymakers are persuaded, conditionality is not needed, and if they are not
persuaded, conditionality does not work; therefore, it is important to try to shift more to
outcome-based support rather than to old style ex ante conditionality. There are
Third, persuade rather than prescribe.

instances where even within a reforming government a full consensus may not exist on all aspects of
reform, its timing, or sequencing. In such cases, the more reform-minded parts of the government may
find conditionality an expedient mechanism to carry their colleagues in government alongthere are
several instances where this has worked but it must be used carefully.

2. Multiple problems render conditionality harmful and ineffective

Eric Neumayer, London School of Economics, 2003, The Pattern of Aid Giving: the
impact of good governance on development assistance, p. 13

The conditionality strategy is problematic for a range of reasons, however. First, it

interferes substantially with the sovereignty of the recipient country and is, therefore,
bound to be met with the same kind of hostility as conditionality of the International
Monetary Fund (IMF) for its structural adjustment programs. The intrusiveness of stringent
conditionality has not only been criticized from left-wing analysts and activists, but also from conservative

Those who want to resist conditionality find

it easy to gather support behind them against the external imposition of conditions
even though the very same conditions might be in the (long term) interest of the
people. As Dijkstra (2002:310) argues, it is an inherent contradiction of comprehensive conditionality
economists such as Martin Feldstein (Singh 2002).

that it necessarily clashes with democratic decision-making within the country, whilst moving toward
democratization ironically is sometimes one of the conditions imposed .

It also clashes with the

concept of local ownership of the reform process as the process does not originate
from a domestic desire to reform, but is externally imposed via conditions (Collier 1997).
Second, recipient countries will do their best to merely create the image of
compliance with the conditions imposed and revert to their old policies as soon as the
donors turn away their attention. Ironically, this sometimes has the perverse
consequence that the same reform is sold several times to donors eager to allocate
aid on the condition of reform, but unwilling or unable to withhold the funds if the
reform is not implemented (Collier 1997). In principle, promised or at least future funds could be
revoked once the cheating becomes detected, but, as Allen and Weinhold (2000: 861) observe for the case
of IMF and World Bank lending, it is very difficult to withhold funds ex post if recipient countries do not
comply (fully) with the ex ante agreed upon conditionality. If non-compliance is only partial, there is

donors
are constrained in their decision-making by other interests, which stand against
withholding funds. This leads to erratic and inconsistent treatment of those who
violate or ignore conditions imposed, which undermines the credibility of the donors
themselves (Tomasevski 1997; Killick 1998; Crawford 2000; Kanbur 2000). Furthermore, the executing
always the incentive to ignore it so as not to endanger the whole program (Collier 1997). Also,

aid agencies might have incentives to maximize the amount of aid disbursed and might, therefore, shy
away from withholding funds (Leandro et al. 1999; Svensson 2003).

Third, reforms toward improving governance are hard work and often linked with
short term costs and painful adjustments to influential lobby groups. Paradoxically, aid,
even conditional aid, can reduce the very incentives for reform as it takes away some
of the pressure from policy makers to improve governance in order to enhance the
long-term welfare of their country (Dikjstra 2002). Fourth, it is doubtful at least whether

GG

[good governance] can be externally imposed via conditions. Bad governance is usually
deeply entrenched in a countrys political system with those in power benefiting systematically from bad
governance. It can only be overcome slowly and with the full support of the governing elites. In her
assessment of aid conditionality in eight developing countries, Dijkstra (2002:331) comes to the conclusion

whilst donors
may have some influence in the fight against corruption, this happens only if
corruption is also seen as a domestic issue. Fifth, for the reasons just mentioned
conditionality often does not and cannot tackle the root causes of bad governance
and is usually instead targeted at easily observable aspects of governance such as
macroeconomic stabilization policies that do not require further structural or
institutional changes in the governance system (Leando et al, 1999).
that demands with respect to the political system were not honored in any country, and

3. Alternatives more effective in promoting reforms/policy change

Olav

Stokke, Norwegian Institute of International Affairs, 1995, Aid and Political

Conditionality, ed. Olav Stokke, p. 82

The alternatives referred to previously so-called positive conditionality and aid targeted directly
on processes, groups and institutions which are promoting the objectives pursued
seem to stand a better chance of working than aid conditionality in its various
forms. The country studies show that most donors orient their bilateral aid in this direction.
Foreign aid with this direction supports processes and forces in the society which
work toward good government. The mechanisms at hand cover a broad spectrum,
from policy dialogue with the government (which receives financial support) to technical
assistance within strategic sectors and alternative channels for aid, including NGOs. The
strategy is based on recognition of the fact that reforms have to emerge from within.

Negative impacts of conditionality

1. Political conditions decrease quality of aid
Shah, Anup. (2012) Foreign Aid for Development Assistance. Global Issues
Recent increases [in foreign aid] do not tell the whole truth about rich countries generosity, or the lack of it. Measured

as a
proportion of gross national income (GNI), aid lags far behind the 0.7 percent target the
United Nations set 35 years ago. Moreover, development assistance is often of dubious quality. In many
cases, aid is primarily designed to serve the strategic and economic interests of the donor
countries; Or [aid is primarily designed] to benefit powerful domestic interest groups; Aid systems
based on the interests of donors instead of the needs of recipients make development assistance
inefficient; Too little aid reaches countries that most desperately need it; and, All too often, aid is
wasted on overpriced goods and services from donor countries.
2. Political conditions encourage aid relations with corrupt leaders and states
Bueno de Mesquita, Bruce. Smith, Alastair. (2009) A Political Economy of Aid New York University. International Organization:
Cambridge Journals.
The second question focuses attention on the corrupt uses to which aid money is often put. The theory suggests that these corrupt uses by smallcoalition, autocratic leaders, are an essential, if not necessarily conscious, part of the decision by donors to give aid, as well as being in the more

donors depend on effective policy

implementation for their political survival. They find it easier to purchase policy
concessions from small-coalition leaders who rely on cronyism and corruption as those
obvious interest of corrupt leaders in receiving aid. Large-coalition

leaders can best afford to sacrifice their own society's public-goods-oriented policies to stay
in power.
3. Amount of need does not affect amount of aid
Bueno de Mesquita, Bruce. Smith, Alastair. (2009) A Political Economy of Aid New York University. International Organization:
Cambridge Journals.

Humanitarian need, as indicated by life expectancy, does not seem to motivate the decision to
give aid by either the United States or other OECD members. Neither does it substantially affect the amount of
aid given. Donors give aid to large, geographically proximate states, especially those with whom
they maintain trade relations or whose security alignments may be up for grabs. The
neediest do not receive the most; rather, those whose policy compliance can be purchased at an
affordable price apparently are offered aid and agree to take it.

Political conditions are ineffective

1. Ineffective when placed by NGOs
Chong, Daniel (2002) UNTAC in Cambodia: A New Model for Humanitarian Aid in Failed States? Development and Change, Vol 33 Iss
5, p. 957-978.
A distinction should be made between the conditions put on aid from large donor institutions, such as the World Bank and IMF, and the prospect
of NGOs attaching conditions to their aid. International financial institutions invariably attach strings to their loans, ranging from timely
repayment, to market reforms, to democratization. These actors are relatively well coordinated compared to NGOs, and can exercise a large
amount of leverage over recipient governments. To the extent that these large donors can be persuaded to attach peace conditions to their
assistance rather than (or at least in addition to) structural adjustment conditions, it should improve the impact of aid on conflict. Unfortunately,
even these donors

face self-imposed ideological, political, and practical constraints that prevent

them from exercising effective conditionality (see Boyce, this volume). On the other hand, NGOs generally
have less leverage, are insufficiently coordinated, and take more responsibility for
protecting the most vulnerable populations in a conflict. Therefore, attaching conditions to their
aid is more problematic. Various approaches have been employed (for details, see Boyce, this volume). In all cases, conditionality
would have the dual goals of attempting to pressure warring factions to end the conflict, and allowing food and medical supplies to reach
vulnerable populations without obstruction (Barber, 1997; Lund, 1997; Prendergast, 1996). Of course, the problem with this approach is that

threatening to use the stick (the withdrawal of aid) often means risking the lives of
thousands of non-stop combatants caught in the middle of the war zone. For many humanitarian
organizations mandated to save as many lives as possible, this option is simply not acceptable;
it is trading short-term disaster for long-term potential (Boyce, this volume). Moreover, when an aid
organization uses threats or strict conditions in its negotiations with warring parties, it may cause the
belligerents to distrust the impartiality of the organizations motives, and may sour
relations between the organization and the parties (Anderson, 1999). Even if aid organizations try to
make humanitarian aid conditional on a peace agreement or a Code of Conduct, they may still h ave difficulties with proper
implementation. One party to a conflict may actually want aid to be pulled out, eliminating
the leverage that aid organizations think they have (Lund, 1997). Or some of the warring parties
may be unable to comply with the conditions set by aid organizations (for example, when
basic state institutions are not functioning), rendering conditionality problematic .
2. Empirics show that political conditions do not increase effectiveness
Crawford, Gordon (1997) Foreign Aid and Political Conditionality: Issues of Effectiveness and Consistency Democratization, Vol 4 Iss
3 p. 69-108

The main finding, however, from this evaluation of the impact of donor restrictive measures is
their failure to contribute to political change in 18 out of 29 country cases (62 per cent). How is this
lack of effectiveness to be [is] accounted for? Reasons can be explored along two dimensions. One proposition is the
relatively partial and weak nature of the measures imposed by the donors. [and] The other is the
relative strength of the recipient country government to resist the privations involved . Of
course, many country cases will be explained by a combination of the two dimensions.

3. Conditional aid does not focus on advancing societal well-being

Bueno de Mesquita, Bruce. Smith, Alastair. (2009) A Political Economy of Aid New York University. International Organization:
Cambridge Journals.
We develop and test implications of a new model derived from Bueno de Mesquita and colleagues' selectorate theory of political competition.
Bueno de Mesquita and colleagues speculated about the equilibrium conditions associated with foreign aid but offered no formal model of the
process and only limited tests of their conjectures. Bueno de Mesquita and Smith modeled the political incentives for donor leaders to offer aid
and for recipient leaders to accept it, but they did not include the prospect of bargaining over the size of concessions. They tested their model's
predictions using U.S. bilateral aid data. The model here generalizes Bueno de Mesquita and Smith's earlier model by allowing nations to bargain
over the size of policy concessions. This new, more general model leads to new implications that are tested here using bilateral aid flows from all
OECD donors. As we shall summarize below, the literature suggests that the United States is motivated to give aid for different reasons than other
states. Looking across the OECD, our analysis finds no such difference. We find that in

all nations, aid transfers occur

according to the political survival interests of donor and recipient government leaders, as
identified by the theory. Recipient and donor leaders seek substantive policies and resource allocations that protect their hold on power. To the
extent that such policies and allocations are compatible with good economic or social
performance, they will make social-welfare enhancing, "good" decisions. Yet, such
instances are coincidental. If faced with a contradiction between actions that enhance their
own political welfare and actions that advance societal well-being, donor and recipient
leaders will select those policies that benefit themselves.
4. Amount of aid with political conditions given based on political survival
Bueno de Mesquita, Bruce. Smith, Alastair. (2009) A Political Economy of Aid New York University. International Organization:
Cambridge Journals.
The results indicate that the

amount of aid given and to whom it is given are both consistent with the
decisions expected from political leaders who are motivated to enhance their political
survival. As such, at least part of aid giving appears to be driven by institutionally induced
considerations in recipient and donor nations. Thus, the answer to the first question posed above is that the right
amount of aid is given for the purposes that motivate donors and recipients, even if this is
suboptimal from the perspective of alleviating poverty.
5. Conditionality excessively complex
Joan M. Nelson & Stephanie J. Eglinton, Overseas Development Council, 1993, Global Goals, Contentious Means: issues of multiple aid
conditionality, p. 77-8

Effective aid in general, and conditions in particular, must be based on

thorough analysis and understanding of the recipient countrys situation and prospects.
Those agencies that have used extensive economic conditionality are often criticized for
failure to grasp adequately the complexities and nuances of individual country circumstances. Multiple
objectives and above all, multiple conditionality demand similarly thorough knowledge on a tremendously broadened range of issue .
Donor Capacities.

Multiple conditionality is likely to increase greatly the complexity at all stages of aid,
design, negotiation, implementation, monitoring and evaluation.