Part I Introduction - Reality of · PDF fileIntroduction The Reality of Aid 2004 3 ... since...

Part IIntroduction

IntroductionThe Reality of Aid 2004

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Reports from NGOs in this Reality of Aid present a very diverse picture of governance andhuman rights in international cooperation. At one end of the scale we see donors anddeveloping country governments focusing on the very practical questions of how aid can bebetter managed and coordinated. At the other end, we see how selective interpretation of‘good governance’ may be used, consciously or unconsciously, to reinforce long-standingpatterns of economic and political domination, and the new hegemony of wealth and powerconcentrated in the hands of a very privileged élite in a uni-polar world.

But despite this diverse picture — a few clear messages come through loud and very clear.

• the risk that aid is being diverted from the overriding necessity of eliminating poverty forthe many to the narrow, and very probably illusory end, of promoting security for the few;

• the continued domination and maladministration of global political and economicmechanisms by OECD countries, especially G8 donors and very particularly, the UnitedStates;

• the Alice in Wonderland interpretation of governance and human rights by OECD donors –so that these terms mean whatever OECD countries want them to mean.

Less than five years after they were endorsed by world leaders, the MillenniumDevelopment Goals are off track. The goal of halving the proportion of people living inabsolute poverty, who still number 1.3 billion people today, is being put at risk, by donorcountries who again are failing to live up to their commitments on aid and policies needed toachieve a more equitable world order.

The judgement of history on those who, despite having wealth and power at their disposal,opt for narrow national interest rather than poverty elimination and the promotion of humanrights of ordinary people, will be harsh.

Antonio Tujan Jr, IBONChair, Reality of Aid

The Reality of Aid 2004

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‘Donors are playing a dangerousgame. You come with inadequateamounts that are highlyconditioned and fundamentallyunreliable, then you insist onnegotiating as though you are avaluable partner, then you aresurprised that these governmentsdon’t trust you. Put some realmoney on the table. Then you canstart negotiating’.

This comment, from a senior aid official in ameeting on development cooperation in AddisAbaba in February 2004, captures the tone ofmuch of the analysis in this latest edition ofthe Reality of Aid.

In Sept 2000, World Leaders at the UNGeneral Assembly endorsed a vision of globaljustice for the 21st Century in the MillenniumDeclaration. Central to this, was acommitment to the Millennium DevelopmentGoals, which aim to halve the proportion ofpeople living in poverty by the year 2015(see page 164). Subsequently, donors havemade much of a stronger focus on povertyand increased efforts to improve aideffectiveness and strengthen North/Southpartnerships in pursuit of the MDGs.

Governance: reclaiming the conceptfrom a human rights perspective

Reality of Aid Networks

But just three years later, in October2003, the Development Assistance Committee(DAC) of the OECD released a controversialpolicy statement, endorsed at the highestlevel by OECD aid ministers, on developmentcooperation and the prevention of terrorism.1

This policy asserts that ‘developmentcooperation ... [has] an important role toplay in helping to deprive terrorists ofpopular support and addressing the conditionsthat terrorist leaders feed on and exploit’.(OECD, DAC, 11) These conditions include thepoverty, marginalisation and disaffection ofpeople whose ‘frustrations and educatedenergy can make them useful foot soldiersand supporters for terrorism’. States with‘weak, ineffectual or non-existentgovernance systems’ are considered ‘morelikely to provide the environment in whichterrorists are recruited and supported’(OECD, DAC, 13, 16). In the face of profoundcrises of poverty, growing inequality andconflict in Asia, Latin America, the MiddleEast and Africa, the lens through whichdonors now wish to assess their prioritiesappears to be their own security interestsand the ‘war on terrorism’.

Only two years ago, in its 2002 Report,the Reality of Aid drew attention to thecritical failure of the international community

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to meet its obligations and commit thenecessary resources and policies for deepglobal and national reform to reach evenmodest Millennium Development Goals(MDGs). To achieve these goals, globalleaders adopted the Monterrey Consensus atthe 2002 UN Conference on Financing forDevelopment (FfD). This promised ‘a newpartnership between developed anddeveloping countries’— albeit one thatcontinued largely with the foundation of nowclearly bankrupt donor-imposed policies ofintegration into a global economy (at anycost), privatisation of state capacities and asingle-minded focus on economic growth asessential ingredients to addressing poverty.

But by 2003 the United States and itsallies had instead unilaterally committedhundreds of billions of dollars to destructivewars and reconstruction efforts in Afghanistanand Iraq, expanding a global ‘anti-terrorism’state and military security apparatus acrossmany countries throughout the South. In thename of a ‘whole-of-government’ approachto global security, some donors are seeking to‘expand’ the criteria for official developmentassistance (ODA) as they merge military,political and humanitarian responses tocountries experiencing protracted crises, inthe name of the ‘war on terrorism’.

In Australia for instance, NGOs areconcerned about an overt shift to a newagenda that conflates the combating ofterrorism and combating of poverty, as ifthey were the same thing. Australian aid nowincludes several initiatives for counter-terrorism capacity building, including bilateralcounter-terrorism programmes with Indonesiaand the Philippines, a ‘Peace and SecurityFund’ for the Pacific Island Countries, and acontribution to an Asia-Pacific EconomicCooperation (APEC) fund for counter-terrorism capacity building. While it isnecessary and legitimate for governments tosupport an effective programme to combat

terrorism, Australian NGOs have argued thatthe resources for these activities should comefrom national security budgets, not from theoverstretched aid and development budget.

This trend towards the ‘securitisation’ ofaid brings into sharp relief the notions ofgovernance and the promotion of rights ininternational cooperation and aid, which isthe theme of the Reality of Aid 2004 report.

The current international rightsframework covers a spectrum of rightsembodied in various treaties, declarationsand programmes of action, developed underthe auspices of the United Nations, ILO andUNESCO. The two basic treaties that providea foundation for human rights are the UNInternational Covenant on Civil and PoliticalRights (ICCPR) and the UN InternationalCovenant on Economic, Social and CulturalRights (ICESCR). The ICCPR covers rights thatinclude the right to life, freedom fromtorture and slavery, and the right to freedomof conscience and religion. The ICESCR coversthe right to work, to join a trade union, toeducation, to enjoy the highest attainablestandard of health, the right to socialsecurity and to an adequate standard ofliving. The Rio Conventions and the KyotoProtocol cover rights that affect theownership of communities over resources,local people’s livelihoods and the role ofinternational cooperation in protecting theenvironment and promoting development.

The indivisibility of rights means that noright is more fundamental than another.Rights are supposed, except in times of direemergency, to be applicable to every personat all times.2

The obligation to respect, protect andfulfil human rights rests with the State. Butthe extent to which individual governmentsrecognise and discharge human rightsobligations varies widely. In principle,development cooperation could and shouldplay a key role in enabling the international


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community to work together to promote alegally binding international human rightsframework. Article 2 Paragraph 1 of theICESCR urges States to take steps ‘individuallyand through international assistance andcooperation, especially economic andtechnical, to the maximum of availableresources, with a view to achievingprogressively the full realization of rights’.

The UN has also developed a conceptualframework and content for the right todevelopment, also known as the collectiverights of peoples, communities and nations,mainly through the adoption of theDeclaration on the Right to Development in1986. However, efforts to make thisdocument a binding legal instrument havenot been successful due to the lack ofsupport and cooperation from the developedcountries and international financialinstitutions.

The selective way that donors interpretideas of governance and human rights is notconsistent with a genuine rights approach todevelopment and poverty. Japan for exampleis said to have applied its human rightscriteria more harshly on small countries thanon larger and more resource-rich countriessuch as China and Myanmar.

The United Nations human rights bodieshave criticised the International FinancialInstitutions for not paying sufficient attentionto the adverse effects that StructuralAdjustment Programmes (SAPs) and othereconomic and trade policies can have on therealisation of economic and social rights. Insome cases, developing country governmentshave had to balance competing obligations:to pursue the realisation of social andeconomic rights by undertaking necessarymeasures for poverty eradication or tocomply with narrow economic conditionalities.There may be conflicts between internationalobligations to comply with UN treatyobligations and IFIs conditions or WTO

agreements. In such a situation, governmentsmay be left with no choice but simply toignore the human rights treaty obligations, asthe pressure from largely donor-imposedconditionality is stronger. Countries may bepunished for violating IFIs and WTOconditions, but not those of the UN.

Achieving the Millennium DevelopmentGoals within a human rights frameworkAt the UN General Assembly in September2000, the international community brought adifferent, a more hopeful, universal vision tothe challenges of the 21st century. In theMillennium Declaration, they articulated aglobal consensus focusing on global justice,and in particular committed to theachievement of the Millennium DevelopmentGoals by 2015. For all donors, these Goals,combined with strategies to improve aideffectiveness and renewed North/Southpartnership, were to become the definingparadigm of international cooperation for thenext 15 years. Adopted by both developedand developing countries, the MDGs, withoutquestion, respond to clear humanitarian andethical imperatives to end global poverty andplace an unequivocal responsibility on alldevelopment actors — official donors,multilateral institutions, civil societyorganisations (CSOs) and the private sector —to contribute to their realisation.

The imperatives to act, and the costs ofinaction, are morally shocking, withcatastrophic human consequences forhundreds of millions of people around theworld. One third of all human deaths — some18 million people a year or 50,000 daily —are due to poverty-related causes (such asstarvation, diarrhoea, pneumonia,tuberculosis, measles, malaria, perinatal andmaternal conditions), which could beprevented or cured easily, and increasinglyHIV/AIDS, which is still largely untreatedamong people in poverty. This death toll


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since the end of the Cold War in 1990 isabout 270 million people, a majority womenand children, roughly the population of theUnited States.3 How many more will die, asthe world turns away from even modesttargets in order to finance its ‘war onterrorism’? The UNDP’s 2003 HumanDevelopment Report has demonstrated thatthe era of globalisation has accompaniedsuch levels of poverty with a wideninginequality gap, where the richest 5% of theworld’s people receive 114 times the incomeof the poorest 5%.4 Nearly half the world’spopulation lives on less than US$2 a day andcommand a mere 1.25% of the world’s globalsocial product, while a third as many peoplein rich countries command 64 times theincome and 81% of the global social product.5

The MDGs are clear and committedbenchmarks for donor and developing countrygovernments, as they assess their priorities ininternational cooperation and socialdevelopment policy. Yet they are alsoexceptionally modest in their reach. Forexample, the first goal to reduce theproportion of people living on less than US$1a day by 2015, if it is achieved, will stillleave an estimated 900 million people livingin absolute poverty in 2015, a merereduction of about 230 million or less than20% in the numbers of people living inpoverty between 2000 and 2015.6

While now adopted by the UN GeneralAssembly, the Goals had a less thandemocratic birth; they were proposed andagreed in 1996 by developed country aidministers operating within their exclusive‘donor club’ at the OECD DAC,unencumbered by developing country‘partners’. Many civil society commentatorsat the time, including the Reality of Aidnetwork, were highly critical of donorministers who thereby avoided commitmentsto, and drew attention away from, thecritical structural issues for global economic

justice. Among these were debt cancellation,fair trade and equitable participation inglobal institutions, which had been raisedrepeatedly in the 1990s global UNconferences by both developing countrygovernments and many participating CSOs.

Despite their rhetorical expressions ofsupport, several years later the Goals at bestinform the discourse of multilateralorganisations, government ministries anddevelopment specialists. Despite coordinatedcampaigns by the UNDP and some CSOs,ordinary citizens have little sense ofownership of the MDGs, or of their role inholding their governments accountable fornational strategies to tackle social dimensionsof poverty based on the MDGs.7 Indeed, theGoals are silent on basic issues of citizens’rights, empowerment and improved equality,and thus ignore the politics inherent inworking for their achievement in manycountries. Even the World Bank recognises, atleast intellectually that empowerment andequality are essential social conditions forovercoming poverty.8

Ending poverty is inherently a politicalprocess, specific to local economic, social,cultural, ecological and gender equalitycircumstances in each country. As the work ofAmartya Sen demonstrates, people-centreddevelopment for poverty eradication isultimately about recognising the rights of thevulnerable and transforming the powerrelations, and cultural and social interests,that sustain inequality. Development istherefore a political process that engagespeople, particularly people who are poor andpowerless, in negotiating with each other,with their governments, and with the worldcommunity for policies and rights thatadvance their livelihood and secure theirfuture in their world. But as the Reality ofAid commentary on the Middle East pointsout, the focus of discussions on governancein the Arab world has been on procedures


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and has ignored political and economicforces, both internal and external.

People in poverty are not subjects to beacted upon by ‘development’ but rathercentral actors in sometimes conflictualpolitics seeking pro-poor developmentstrategies. Consequently, finding avenues toaddress unequal power, capacity, and accessto resources for those whose rights arebeyond reach — due to poverty andmarginalisation — is a fundamental challengeto development actors wanting to linkpoverty reduction to democratic governanceand participation. The UN system, theCharter, and its various Declarations andCovenants on Human Rights, provides anormative framework within which theseissues can be addressed.

While based on international legal codesand covenants developed over the pastcentury, the rights framework is a dynamicone that continues to evolve through intensenational and multilateral political processes.It has been the result of many decades ofstruggles by peoples’ organisations —women’s movement, indigenous nations, gayand lesbian networks, workers and labourorganisations, fishers’ and farmers’organisations, human rights defenders.Human rights are essentially active andshould not merely be ‘promoted’ or‘protected’, but are to be practiced andexperienced. They have implications for theactions of all donors, governments, and non-state actors in development. In the words ofJohn Foster, ‘participation is central to ahuman rights approach to development as aright, an entitlement guaranteed byinternational law, rather than an optionalextra or tool for the delivery of aid’.Nevertheless the challenge for developmentpractitioners, civil society and official aidagencies alike, is to make the language andanalysis of rights accessible to citizens andorganisations working to overcome the

conditions of poverty, from community tonational levels.9

In this context, the MDGs are oneexpression of economic, social and culturalrights, to which all governments are boundand must be accountable. Achieving thesegoals would be a positive though insufficientstep towards the eradication of poverty. TheMDGs are minimal but very useful targets,which can serve as a political framework forleveraging political commitment to poverty-focused development. This must notundermine existing broader obligations on thepart of governments to international humanrights law. Some members of the Reality ofAid network, particularly in the North, focuson the MDGs in their advocacy foraccountability with their governments andmultilateral institutions, with strong supportfrom the UNDP leading a global campaign.Others, understanding the importance of aholistic approach to poverty, point to theirlimitations noted above. But irrespective ofthe emphasis on the Goals, all members ofthe Reality of Aid network stress that theMDGs can only be achieved within a rightsframework whereby citizens and governmentsare engaged in restructuring global andnational power relations in order totransform the root causes of poverty. Hencedemocratic governance and citizens’ rights,at all levels, with full local ownership ofdevelopment initiatives, are fundamental.

The Reality of Aid 2004 calls for allactors in the global aid regime (includingmultilateral organisations, theinternational financial institutions,bilateral donors and civil societyorganisations) to entrench the discourse ofhuman rights, not only the in theirpolicies, but also in their practices forinternational cooperation to achieve theMillennium Development Goals and theeradication of poverty. Respect for human


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rights is the foundation for effectivegovernance to achieve these goals.

Competing Notions of Governance andCitizenship in the Aid RegimeThe question of democratic governance is atthe heart of effective strategies to endglobal poverty. Concern for governance has along pedigree for both donors and civilsociety. In 1989 the World Bank explicitlyidentified ‘a crisis of governance’ behind the‘litany of Africa’s development problems’: itdefined governance as the ‘exercise ofpolitical power to manage a nation’saffairs’.10 Since then the policies andinterventions to promote ‘good governance’have become a central preoccupation in theofficial donor community. But reports fromNGOs in The Reality of Aid 2004, represent aserious critique of the way that donors arecurrently approaching governance. The firstcharge, is that donors often have strong pre-conceived notions of what constitutes ‘good’governance. This often results in localtraditions and accountabilities beingundervalued and undermined. INFID’sdetailed description of Consultative Groupprocesses in Indonesia illustrates a widerpoint on how de facto alliances between verypowerful international institutions and localélites can leave very little room foralternative perspectives, let alone policies,despite stated commitment to participatoryapproaches and ‘good’ governance.

Linked to this criticism is the fact thatdonors take an ‘Alice in Wonderland’approach to governance, so that the termmeans whatever a donor wants it to mean.11

NGO reports from France highlight how abewildering variety of interventions areexplained away on the basis that they willimprove governance.

But perhaps more serious is the way thatsome donors seem to be using goodgovernance like a can-opener, to prise open

markets and dismantle national regulatoryframeworks. When the result of changes topromote ‘good’ governance is poor peoplehaving to pay for privatised water,international companies extracting new profitstreams from fragile southern economies andthe most vulnerable people having to bearthe risks of unemployment in a capriciousglobal market, the relationship betweengovernance policies and poverty reductionhas to be questioned. The AGILE project inthe Philippines and the Melamchi Riverdiversion project in Nepal, both show howexternal donors’ pressure and corporateinterest can combine to negate genuineparticipation and jeopardise the long-terminterests of poor countries and poor people.

According to Bank President, JamesWolfensohn, a comprehensive ‘bargain’ wasspelled out at Monterrey in 2002 whereby the‘developing countries promised to strengthengovernance, create a positive investmentclimate, build transparent legal and financialsystems, and fight corruption’. The‘developed countries agreed to support theseefforts by enhancing capacity building,increase aid, and open their markets fortrade’.12 While Wolfensohn takes thedeveloped countries to task for failing to liveup to their end of this bargain, particularlyevident in the breakdown in WTO tradenegotiations at Cancun, what is remarkable iswhat is missing from Wolfensohn’s discourse.

A few months earlier, Kumi Naidoo,addressing the President and officials of theWorld Bank, suggested that the ‘old notion ofgovernance is breaking down in an era ofglobalisation with the emergence of adevastating ’democratic deficit” in severallocal and national contexts, and certainly atthe global level’. He went on to challengethe Bank ‘to be willing to bring its owndecision-making processes into line withthose it is encouraging its [government]clients [in participatory PRSPs] to use’.13 For


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more than a decade the developed countries,which clearly control the operations of theBank and the Fund, and in practice the WTO,have ignored repeated demands andproposals for reform.

The UN Financing for Development (FfD)conference brought reinvigorated attentionto governance/democratic deficits in theinternational economic, financial and tradingsystem.14 The Monterrey Consensus callsexplicitly for ‘broadening and strengtheningof participation of developing countries witheconomies in transition in internationaleconomic decision-making and norm-setting’,and in particular invites the World Bank andthe IMF to respond to these concerns (para56 and 57). These institutions have been atthe forefront of major systemic crises indeveloping countries (for example, Argentina,Indonesia, Ghana among many others) withdevastating social and economicconsequences for citizens in these countries,particularly people who are poor andvulnerable. After 30 years, they have largelyfailed to deliver promised opportunities forpoverty reduction from structural adjustmentpolicy and loan conditionalities based on theprimacy of deregulated market-led growth.Instead, as we shall demonstrate below,globalisation has undermined the policyalternatives and the capacity for effectivegovernance for many of the poorestcountries. This situation is reinforced bydonor priorities such as the German goodgovernance conditionalities, which requireadherence to market friendly economicorthodoxy and preclude freedom to explorealternatives.

The fostering of a different model ofglobal governance is of critical importance,because the current model, designed for thepost-war 1945 world, is no longer relevant orsustainable for the 21st century. Astrengthened coordinating and agenda-settingrole for the United Nations is at the very

core of a democratic vision for themanagement of urgent global social,environmental and economic issues. But somemajor developed countries, with theircontrolling shares in decision making at theBank and the IMF, are reluctant to see moredemocratic processes determining theseissues. In assessing the results to date of thecomprehensive ‘bargain’ of Monterrey,Roberto Bissio, founding Coordinator of SocialWatch, representing NGOs at the October2003 UN High Level Financing forDevelopment Dialogue, put it to thedelegates: ‘The spirit of Monterrey that weall praise, needs to find a body to live in.Otherwise it will remain a ghost.’15

Issues of governance permeate thediscourse of the official donors and the Bank,the IMF and official donors, but focus almostentirely on the need for reform in the South.There is little doubt that issues ofgovernance in developing countries areimportant conditions for empowering citizensand people living in poverty. But how doofficial donors understand developingcountries’ Monterrey promise to strengthengovernance? In general, ‘good governance’for donors has some if not all of thefollowing effective dimensions:

• public accountability and transparency;• the rule of law;• anti-corruption measures;• decentralisation and local government

reform;• democratic performance;• juridical reform;• social safety nets;• a regulatory but lean state apparatus for

efficient private markets;• civil society participation in

development; and• overall respect for human rights.


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In practice, however, donors havefocused on governance largely through amuch more restricted lens of ‘goodgovernance’ in the technical management ofgovernment resources and effectiveimplementation of (often donor-directed)macroeconomic and anti-poverty sectorpolicies.16

Many in the South, including authors forThe Reality of Aid 2004, are asking whetherdonor concerns for ‘good governance’, nowreferred to as the ‘Post-WashingtonConsensus’ are no more than repackagedstructural adjustment programmes that werehighly contested in many countries in whichthey were imposed in the 1980s and 1990s,now with a supposed human face fordemonstrable ‘country ownership’?

Civil society networks in the Reality ofAid, by contrast, focus their policy andadvocacy attention on issues in democraticgovernance. As such, governance is not anend in itself, to be engineered throughtechnical assistance and policy interventionsby donors. Rather it is fundamentally aboutpolitics, power and the exercise of rights insociety, and is therefore an evolving andparticular process that may take decades. Inthe words of Kavaljit Singh:

‘A good governance system is theone under which all public policyaffairs are managed through broadconsensus in a transparent,accountable, participatory andequitable manner. However, suchan ideal system of good governanceremains a far cry in the developedworld, leave alone the poor andthe developing world. Hence,governance cannot be an end initself. It is an evolving process andhas the potential to become apotent instrument for radicaltransformation provided it is

applied in all spheres of social life.Like democracy, good governancecannot be implanted or imposed bythe donor community, it has to beimbibed, nurtured and cherishedfrom within. That is why recentefforts to impose universalblueprints have not yieldedpositive results.’17

The Reality of Aid network shares withthe UNDP the identity of ‘effectivegovernance’ with democratic governance. Inits 2002 Human Development Report, theUNDP defines governance as a culturally andcountry-specific democratic means, bothprocess and institutions, for the exercise ofpeoples’ rights, which ensure equity, promotesocial solidarity and sustainable livelihoods.Unlike the technocratic approach of theWorld Bank and many donors, focusing onadministrative efficiency, processes ofgovernance within a rights framework takesaccount of unequal power relations withinsociety and globally, including genderrelations. For the UNDP advancing democraticgovernance has several implications:

• The links between democracy and equityare essential for human development,which is not automatic when a smallelite dominates economic and politicaldecisions;

• Democracy that empowers people mustbe built — it cannot be imported — andwill take many forms in a given context;

• Establishing democratic control oversecurity forces is an essential priority —otherwise, far from ensuring personalsecurity and peace, security forces mayactively undermine them; and

• Global interdependence also calls formore participation and accountability inglobal decision-making.18


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These normative issues surroundinggovernance are strongly contested in nationaland global political realms betweengovernment, socio-economic élites and CSOsrepresenting the interests of people living inpoverty. Internationally, CSOs arecontributing to critical policy discussions andpromoting democratic process in the Bank,the IMF, the WTO and within the UnitedNations, as well as regional bodies such asthe Africa Union. Nationally, civil societyoften acts to promote citizens’ rights asrepresentative organisations that articulatedifferent ideas and values, and serve tonegotiate and peacefully accommodatevarious social forces. Civil society can be aspace to constitute processes that encouragethe conditions for democratic governance —tolerance in the context of pluralism,diversity and mediation of social andeconomic conflict.

Drawing on the contributions of Realityof Aid global partners, this report offers

some analysis and lessons with regard togovernance and rights in the context of theurgent need to bring deep-seated democraticreform to the multilateral system. In thislight, we also ask how might official donors(including northern CSOs) construct realdemocratic partnerships in internationalcooperation, in their practices for effectiveaid and collaboration to realize a shared goalof poverty eradication?

Governance and rights in the aidregime: reforming multilateralinstitutionsIn this uncertain and volatile period in worldhistory, with new threats to peace and theirimpact especially on poor and vulnerablepeople, the international community mustrespond, not through threats of violence andwar, but by reinventing democracy for the21st century (See Box 1, below). But thisoption is not apparently the one beingpursued by powerful countries.

Box 1: A Challenge to the Global CommunitySecretary General Kofi Annan, Addressing the General Assembly, 23 September 2003

‘Three years ago, when you came here for the Millennium Summit, we shared a vision, avision of global solidarity and collective security, expressed in the Millennium Declaration.

But recent events have called that consensus in question.All of us know there are new threats that must be faced – or, perhaps, old threats in

new and dangerous combinations: new forms of terrorism, and the proliferation ofweapons of mass destruction.

But, while some consider these threats as self-evidently the main challenge to worldpeace and security, others feel more immediately menaced by small arms employed incivil conflict, or by so-called ‘soft threats’ such as the persistence of extreme poverty, thedisparity of income between and within societies, and the spread of infectious diseases, orclimate change and environmental degradation.

In truth, we do not have to choose. The United Nations must confront all thesethreats and challenges — new and old, ‘hard’ and ‘soft’. It must be fully engaged in thestruggle for development and poverty eradication, starting with the achievement of theMillennium Development Goals; in the common struggle to protect our commonenvironment; and in the struggle for human rights, democracy and good governance....


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The consolidation by the United States ofa unipolar world order, dangerously based oneconomic and military might, with fewchecks and balances, has instead weakenedmultilateral institutions and values. NGOs inSwitzerland, for instance, report growingconcern that the role of the US and its alliesin the fight against terrorism is increasinglyinfluencing the World Bank’s donorcoordination role in PRSPs. These multilateralinstitutions, with a potential for buildingglobal democratic consensus on priorityglobal public goods issues, such as fair tradeor combating curable diseases, are beingsidelined by the United States and severalother developed countries, when they do notserve the US administration’s immediate andexpressed strategic interests.

At the same time, key internationalfinancial institutions (IFIs), including theWTO, while a part of the multilateral system,are largely controlled by these samepowerful countries. IFIs have a long history ofstructuring policy choices for developingcountries. In doing so, as we have seenabove, these institutions have been widelychallenged for their lack of democracy andtheir rigid defence and promotion of theinterests of industrial countries in themanagement of global crises and theexpansion of global economic opportunities,

often in the interests of unaccountable globalcorporations.

Recently, Kofi Annan warned that theUnited Nations, which is at the centre ofmultilateralism, was at a ‘fork in the road’and called for ‘radical reform’ of theorganisation that must consider ‘theadequacy and effectiveness, of the rules andinstruments at our disposal’. He urgesmember countries to reinvigorate the UN by‘demonstrating its ability to deal effectivelywith the most difficult issues, and bybecoming more broadly representative of theinternational community as a whole, as wellas the geopolitical realities of today’19 Astrengthened United Nations, andparticularly its Security Council and Economicand Social Council (ECOSOC), built on thefoundation of a system of norms andstandards arising from its Charter andUniversal Declaration of Human Rights, couldbe a critical counter-weight to the competingnormative framework of corporate andprivate property rights in a market economy,long promoted aggressively by the IFIs andtheir allies among the corporate andgovernment élites. What are the challengesand opportunities for reform of theseinternational financial institutions within aframework of democratic governance andhuman rights?

Excellencies, we have come to a fork in the road. This may be a moment no lessdecisive than 1945 itself, when the United Nations was founded.

At that time, a group of far-sighted leaders, led and inspired by President Franklin D.Roosevelt, were determined to make the second half of the twentieth century differentfrom the first half. They saw that the human race had only one world to live in, and thatunless it managed its affairs prudently, all human beings may perish.

So they drew up rules to govern international behaviour, and founded a network ofinstitutions, with the United Nations at its centre, in which the peoples of the worldcould work together for the common good.

Now we must decide whether it is possible to continue on the basis agreed then, orwhether radical changes are needed...’


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There is little doubt that the IFIs, theBasel Committee (of the ten most powerfulCentral Bankers) and the WTO, along withregional development banks, are the centralpillars in global economic governance. TheIFIs are also the apex institutions in theinternational aid regime, with an almostunquestioned role to define for all donors thelegitimate terms of policy discourse withdeveloping countries and effective strategiesfor the delivery of aid in relation to povertyreduction. The pervasive influence of theWorld Bank’s Assessing Aid: What Works,What Doesn’t and Why20, adopted now byalmost all donor agencies for improving theiraid effectiveness, is but one example. WorldBank assumptions about aid effectiveness inthis and subsequent reports set out theintellectual foundations and the ‘right’policies in developing countries forcoordinated donor initiatives in budgetsupport and harmonised sector programmingfor ‘effective’ poverty reduction strategies(PRSPs). As a result many donors, notably theEuropean Commission among others, nowfocus their aid with a high degree of countryselectivity based on country ‘owned’ butBank/IMF endorsed PRSPs and on Bank/IMF‘certification’ of compliance with Bank/Fundpolicies for economic reform and ‘goodgovernance’. Governance reform makes upincreasing levels of multilateral and bilateralaid packages; and some countries have beensuspended based on donor perceptions ofgovernance issues.

What reforms in the multilateral system,and particularly with the InternationalFinancial Institutions, would enhancedemocratic governance within a human rightsframework?

1. The International Financial Institutionsmust no longer be the exclusiveintellectual and authoritative ‘gatekeeper’for policy advice on governance reform

and resource transfers in the aid regime.These institutions must take on board thesubstantial critique of their past andcurrent practices, which exposes thefallacies and undermines their credibilityas source for definitive developmentdiscourse and practice for the donorcommunity.Northern donors have become both the judgeand the jury of ‘good’ governance in highaid-dependent poor countries, with all donorsclosely integrating into their own aid policiesa Bank-defined ‘Post-Washington Consensus’.As noted earlier, this Consensus links Bank-inspired macroeconomic policies for growthwith institutional reform to assure political‘ownership’ and governance capacity in thepoorest countries to implement thesepolicies. The donors have adopted this Post-Washington Consensus with the explicitworking assumption, rooted intellectually inthe Bank, that, on the whole, thedevelopment agenda is indisputably knownand only the details need attention.21 Bygaining a near monopoly on official donordevelopment analysis and the extension of itsassumptions to the donor community as awhole, the Bank is able to validate itsideology and essentially discount theemergence of alternatives outside itsparadigm.22

In assuming this mandate on behalf of alldonors, the IFIs in effect serve to protectnational donors from the political risksassociated with what would be seen to beinappropriate and intrusive policyinterventions in the sovereignty of recipientcountries, that is, with respect to their rightto choose democratically the policy optionsthat best meet the needs of their citizens.Governments of the poorest countries, in theface of the overwhelming capacities of theBank, the Fund and major donors acting inconcert, in practice, have few options tochallenge this policy advice (although even in


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the most aid-dependent countries’ governingélites have often been effective in protectingtheir own interests and avoiding the worstimpacts). The Reality of Aid networks suggestthat the governance agenda for donors hasmore to do with the exercise of their poweras aid donors to achieve a given policyagenda in the poorest countries than it hasto do with their concerns for the democraticrights of citizens affected by the exercise ofthis power. Few donors publicly question thesometimes serious limitations of governancein China, India or Mexico, for example.

The World Bank and IMF adopted theirfocus on governance in the 1990s in thecontext of a widely recognised failure oftheir neoliberal economic policies to addressgrowing poverty and inequality. In exercisingtheir power as donors, rather than questionthe integrity of the policies or their ownresponsibility for inappropriate neo-liberal‘advice’ (the earlier ‘Washington Consensus’),the Bank and the Fund were quick to blamepoor implementation and poor institutions inborrowing countries for this policy failure.So, for example, the Bank argued thatinefficient financial systems, excessivepolitical interference and widespreadcorruption required more attention as theinstitutional preconditions for marketeconomies and successful reform efforts.23

The IFIs have shown little restraint in usingtheir designated role on behalf of all donorsas a ‘gatekeeper’ that may choose whetherto open the door to substantial resourcetransfers from all donors, in order tocontinue to push these same policies ofeconomic liberalisation or privatisation ofessential social services. Bank hegemony hasalso been reinforced by actions of otherdonors. New research by the UK NGOnetwork BOND, suggests that EC CountryStrategy Papers in Bolivia, India, Kenya andSenegal have replicated and enhanced theWorld Bank and IMF country analysis and

remit for development assistance.24 This hasresulted in World Bank macroeconomic policyprescriptions being imposed without properconsultation.

Recent focus on developing country‘ownership’ of strategies to tackle poverty inPoverty Reduction Strategy Papers (PRSPs)further consolidates the power of the Bankand the Fund over development options. Withintense pressures to cancel debt for thepoorest countries, the Bank and the Fundwere able to condition debt cancellation onthe presentation of effective strategies forusing these resources for poverty reductionthrough the PRSP. Needing ultimate approvaland considerable support from the Bank andthe Fund to develop PRSPs, the IFIs havebeen able to position themselves as thearbiter of the content of such strategies,thus sidelining the UNDP, which had morethan a decade of experience working withdeveloping countries on country planningframeworks.25

In contrast to governance of the IFIs, theEU Cotonou Agreement opens up a formalpolitical space for Southern governments andactivists in its institutional architecture. NGOcommentators argue that this moves thedonor-recipient relationship towards a modelof rights and obligation, rather thanbeneficence and paternalism. And whilenegotiations on trade under Cotonou havebeen flawed, some incrementalimprovements, such as the ‘Everything ButArms’ agreement, have been achieved.26

Civil society join with donors anddeveloping country governments who insistthat aid must focus on the core elements ofeffective strategies to address poverty.However, as Reality of Aid 2002 pointed out,authentic ownership of such national povertystrategies, to guide donor collaboration,depends on the quality of national efforts toconsult those most affected, often with verylimited capacities to participate, and to


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reach often difficult social consensus onappropriate poverty reduction goals andsocio-economic policy.

While some in civil society have beenable to take advantage of the often-limited‘consultations’ afforded by the IFI-mandatedPRSPs, it is clear that PRSPs to date have notbeen able to provide the independentpolitical space in which authentic nationalefforts can evolve. As the Norwegian reportasks, will donor promotion of PRSP processesthat strengthen the role of the executive butmarginalise elected representatives,strengthen or weaken a system of governancethat is accountable to the people. The latter,as demonstrated by Uganda’s experiencedeveloping their own poverty strategies,occurs over several years and with differentdegrees of government coordination of civilprocesses with invited support from outsidedonors. Humility is a critical ingredient onthe part of donors, civil society andgovernments, in the face of the immensechallenges of poverty eradication — fromstructural reform to assuring gender equality.Well-targeted and effective country-designedpoverty reduction strategies will require adiversity of approaches and policy mixes thatmay often challenge the policy prescriptionsemanating from the Bank and the Fund thatcurrently seem to define the overarchingcontent of PRSPs.

There is also emerging evidence thatPRSPs may serve to depoliticise the politicsof poverty eradication. As one field-basedstudy concluded, ‘the social and ideologicalfoundations of the [Tanzania] PovertyReduction Strategy are narrow, representingthe views of a small, homogeneous ‘irontriangle’ of transnational professionals basedin key government ministries and donoragencies in Dar es Salaam. The content andprocess of the PRSP thus reflects adepoliticized mode of technocraticgovernance’. Indeed the authors point to

‘signs of domestic [civil society] advocacygroups being ‘crowded out’ of policy debatesdue to the superior resources and readinessof transnational [private] agencies, which arebecoming surrogate representatives ofTanzanian civil society in the state-donorpartnership.27

These reflections on the Tanzania processreinforce a more general observation on theimpact of aid’s technocratic and bureaucraticapproaches to governance, in which ‘in theguise of a neutral, technical mission to whichno one can object, it depoliticizes bothpoverty and the state.’ The process is oneof ‘re-engineering’ government to insulate,in effect, government power from populardemands and to shift power away fromparliaments into an elite public service.28

The Post-Washington Consensus is anoverwhelming agenda for institutional reformthat is premised on optimism about therelevance of northern models of governanceand pessimism about local southerngovernance capacities and structures.29 It isa model that many would argue is ill-suitedto the real conditions of governance facingthe poorest countries to which it is directed.These countries are being overwhelmed notonly by deep institutional reforms imposedby the IFIs, but also by a host of rules andregulations arising from their compliancewith the Uruguay Round GATT tradeagreements. The expectations for thebreadth of public sector reform within veryclose time horizons to make progress wouldtax the most committed government in theNorth, with far greater institutionalcapacities to respond.

Not unexpected, the evidence to dateis of very limited success. By the Bank’s ownreckoning, in the late 1990s fewer than 40%of projects with institutional developmentgoals showed ‘substantial impact’. Less thana third of civil service reform projectsachieved satisfactory results and many of


17

these proved unsustainable. Another studysuggested that juridical reform has paidexclusive attention to putting in place theinstitutional context for the rule of law(to strengthen a formal market economy) andhas often undermined informal mechanismsto resolve disputes on which people inpoverty depend. This study concluded thatthe IFIs have approached governance issueswith ‘a combination of impatience and areadiness to use borrowers as guinea pigs’.30

Despite a significant critique of thegovernance agenda promoted by the Bankand the Fund, which is largely substantiatedin independent research and participantobservation by southern CSOs, the monopolyweight of this Bank agenda can have profoundconsequences for the eligibility of borrowingcountries for all donors. Significantly, theBank has recently determined each borrowingcountry’s aid allocation against a ‘CountryPolicy and Institutional Assessment’ (CPIA)tool, for which there is evidence that theBank allocated five times more resources tocountries that received an ‘A’ rating thanthose that received an ‘F’. An analysis ofthis system concluded that ‘developingcountry governments are not given the sameflexibility that industrial countries claim forthemselves when determining whether orwhen to liberalize, privatize or exercisegreater budgetary discipline. By modulatinga government’s access to credits, the Bankrewards or punishes governments dependingon their performance relative to CPIAstandards....A government will not gainaccess to its full allocation of credits...unless it accomplishes specific policy actions,or ‘trigger’ derived from the CPIA.’31

Currently the Bank is adjusting the CPIAto align it more closely with the views of theUS government and its allies with respectto ‘good policies’, which is also an approachthat the United States has taken todetermine eligibility for its Millennium

Challenge Account, announced with greatfanfare at the Monterrey Conference.

Sogge concludes that the problem withthe IFIs is ‘not know-it-all arrogance, but anunchecked power to define truth andfalsehood. The net effect is to intimidate,cut off debate and close off alternatives.’He suggests that people living in povertyare better served by ‘breaking up the aidindustry monopoly practices and, above all,the closing of gaps between citizens atthe receiving end and those who take aiddecisions on their behalf’.32

2. In establishing new and equitablepartnerships with developing countries,the International Financial Institutionsmust abandon the practice of externallyimposed policy conditionalities and policyundertakings, enforced through their rolesin negotiation of multilateral aid loansand in their facilitation of donorcoordination in the international aidregime. World Bank-led dialogue withdeveloping countries should adopt arights-based approach.The Reality of Aid 2002, with its focus onconditionality and ownership, suggested thatdonors and developing country partnersneeded to negotiate resource transfer withina framework of reciprocal obligations basedon shared values and a commitment to directthese resources to benefit those who aresocially and economically excluded. In thewords of Opa Kapijimpanga from AFRODAD, aReality of Aid member network, ‘Donors muststop dictating what they think Africancountries must do. Conditionalities muststop.’33 Donors must instead give support andpriority to national political processes fordetermining appropriate strategies in relationto local economic, social, cultural, ecologicaland gender equality circumstances forpoverty reduction.

Our 2002 Report asserts that‘fundamental to determining a fair and


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equitable process for such negotiations is whodecides, shifting the highly unequal powerrelations in current aid decision making.’34

Governance reform now makes up asignificant and growing proportion ofmultilateral and bilateral aid agreements forstructural adjustment loans, as well asbudget support and sector programs inhealth or education, particularly for the aiddependent poorest countries or countriesfacing insurmountable economic crises. In areview of conditionalities found in IMFagreements, Kapur and Webb counted anaverage of 82 governance-related conditionsout of a total of 114 conditions peragreement for Sub-Saharan Africa (or 72% ofall conditions).In Asia and Latin America suchconditions made up 58% and 53% of totalconditions respectively. Moreover they pointout that for aid dependent countries, someof the most important conditions do notmake it into the formal agreements, but aresubject to ‘side letters’ and ‘pre-programme’conditions.35 These do not include anycomparable conditions and undertakingsattached to World Bank loans to the samecountries, which are also likely to besubstantial, given a process of streamliningIFI conditions that was initiated in 2000.

The World Bank itself is quite categoricalabout the perverse effects of conditionality.Paul Collier, Director of Research in theWorld Bank, has written:

‘The extension of the practice ofconditionality from occasionalcircumstances of crisis managementto the continuous process ofgeneral economic policy-making hasimplied a transfer of sovereigntywhich is not only unprecedentedbut is often dysfunctional’.

Joseph Stiglitz, former Chief Economistat the Bank, has argued:

‘There is increasing evidence that[conditionality] was not [effective]— good policy cannot be bought, atleast in a sustainable way. Equallycritically, there is a concern thatthe way changes were effectedundermined democratic process.’36

Quoted in Ibid., 7-8.

Nevertheless the practice ofconditionality in the loan programmes of theBank and the Fund persists. Southern civilsociety commentators in the pages of TheReality of Aid 2004, and in response to theimpact of structural adjustment programmingin their own countries, confirm the significantdistortions imposed by these programmes onboth democratic process and on the liveli-hoods for a growing number of poor people.37

A great deal of research hasdemonstrated that governance is in fact aproduct of complex and inevitable politicalprocesses in which different groups in societycompete and benefit differently fromalternative governance agendas. Therefore,‘sorting out priorities [for governance reform]from the perspective of different interests isa political process, and one that cannot beshort-circuited by technical analysis or donor[conditionality] fiat.’ Grindle goes on toassert that ‘an important incentive fororganizations and officials alike is thecapacity of citizens and groups to demandfair treatment, to have information abouttheir rights vis-à-vis government and be ableto hold officials and government accountablefor their actions.’38

Externally-imposed conditionality, byfocusing broad-based policy dialogue in oftensecret negotiations between selectgovernment officials and those from the Bankand the Fund, clearly undermines democraticaccountability by removing significant policyoptions from public processes for citizen andparliamentary oversight. A rights approach


19

puts people, particularly those living inpoverty, the vulnerable and the marginalized,at the centre of local and national politicalprocesses. In rejecting conditionality, TheReality of Aid proposes that the World Bankprovide policy space for a rights-basedapproach as an alternative to policyconditionalities. In this approach, donorswould work to assist developing countries tomove towards the realisation of their UNtreaty obligations and international humanrights law. The framework for such dialoguewith donors is the mutual obligations andrequirements, arising from these treaties andCovenants, for all countries to progressivelyrealise economic, social and cultural rights oftheir citizens.39

3. The decision making processes at theWorld Bank, the International MonetaryFund and the WTO must be reformed anddemocratised and brought within a newframework led by the United Nations, withlimited mandates subject to the UnitedNations legally binding internationalhuman rights framework and the socialvalues embodied in the MillenniumDevelopment Goals.As noted earlier the renewed partnership andspirit of the Monterrey Consensus included acommitment to ‘broadening andstrengthening of participation of developingcountries with economies in transition ininternational economic decision-making andnorm-setting’ (para 56). Civil society has longchallenged the legitimacy of the IFIs in termsof their impact on governance anddemocratic accountability in the poorestdeveloping countries. Two decades of secretnegotiations for structural reforms haveremoved the political locus for nationaldecision making away from domestic politicalchecks and balances where citizens have apotential influence on public policy. In the1990s as the IFIs became more deeply

involved in issues of national governance, thefocus on the governance of these institutionsthemselves has intensified.

Like Christian Aid and many other CSOsaround the world, the Reality of Aid believesthat better representation of the poorestcountries at the IMF and the World Bank, andimproved transparency and accountability inthese institutions, would lead to moreappropriate, and better informed, decisionmaking and country-led ownership ofstrategies to combat poverty.40 But Reality ofAid NGOs also assert that democratic reformof governance within the institutions mustalso go in tandem with a strengthened rolefor the United Nations in the social andeconomic areas.41 The IFIs have assumed acommanding role in the international aidregime that goes into areas far beyond theiroriginal mandate, in areas that wereoriginally deemed the prerogative of the UNand its agencies or never before addressedon a global level.42

With respect to the IFIs, changes in theirsystems of governance must include changesin voting structures and quotas to moreeffectively reflect the principle of onecountry one vote, with possible use of doublemajorities (weighted by financial contributionand by constituencies, similar to the currentpractices of the Global Environment Fund).They must include changes in theconstituencies of Executive Directors.Currently two Directors for Africa have thedaunting task of representing 44 Sub-SaharanAfrican countries and their interests on theBoard. An improved balance is needed in thecomposition of the Executive Board betweenindustrialised, middle income and low incomecountries. Greater Board transparency andaccountability to all member countries is alsoimportant.

At the October 2003 UN General Assemblyspecial high level follow-up to the financialfor development conference, CSOs sought a


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new relationship between the IMF, WorldBank and the jurisdiction of the UnitedNations. CSOs supported proposals from theSecretary General to upgrade and reform thepositioning of the ECOSOC as a forum fordynamic interactive dialogue on crucial issuesrelating to global economic governance. It isalso proposed that an Executive or SteeringCommittee, representative of country groupswithin its membership, would provide greaterdirection for its work promoting policycoherence and follow-up to the MonterreyConference, including preparations for moresubstantive high-level dialogue with theBretton Woods Institutions and the WTO.43

CSOs, monitoring the impact of the WTOon development options for povertyreduction in developing countries, also seekto bring current rounds of global trade andinvestment negotiations at the WTO and inregional forums within the overarchingnormative framework of the UN system.The collapse of WTO negotiations at TheMinisterial Meeting in Cancun Mexico inSeptember 2003 was seen by some as asetback to the continued extension of aNorthern-driven trade and investmentliberalization agenda. For others, theemergence of effective coalitions amongdeveloping countries was seen as an importantaccomplishment upon which to build. Thesecountries were able for the first time inmany decades to collectively raise substantialissues affecting the development agenda asa counter-weight to the authoritarianpractices of the Quad44 in the WTO.

The WTO processes have beencharacterised as secretive and opaque inwhich developing countries, particularly thepoorest, have little opportunity to influenceoutcomes. In recent years, leading membersof the WTO have organised highlyundemocratic Mini-Ministerials, by invitationonly, to ‘advance’ the negotiating agenda. Inthe words of a global coalition of CSOs

involved in WTO issues, ‘the lack of internaltransparency, participation and democracy isappalling in such an important organizationwhose decisions and actions have such farreaching effects on the lives of billions ofpeople...in an organization that prides itselffor being a ‘rules-based organization’ andfor championing the ‘principles oftransparency, non-discrimination andprocedural fairness’.45

Governance and rights in the aidregime: reforming bilateral donorpracticesThe Reality of Aid networks have noted andcritically welcomed over the past severalyears an improved focus of bilateral aiddonors on poverty and social sectors thatmost affect those living in poverty, improvedattention to issues of donor coordination andcommitment to harmonisation, greaterattention to programmatic mechanisms(budget support and sector wideprogrammes) that intend to support recipientcountry priorities and reduce recipienttransaction costs, greater untying of aidcommitments by some donors, andcommitments to increase aid resources bysome donors.46 A few donors, such as DFID inthe UK, have set out ‘a rights-basedapproach’ to development and theachievement of the MDGs, which includes‘incorporating the empowerment of poorpeople into our approach to tackling poverty’and ‘making sure that citizens can holdgovernments to account for their humanrights obligations’.47 But what are therealities of these new donor commitmentsand practices? What are the implications ofthese practices for more effective aiddelivery for improved governance andcitizens’ rights in the recipient countries?

1. Effective strategies for official bilateralaid that focus exclusively on ending global


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poverty, and achieving the targets con-tained in the MDGs, must be grounded in arights framework, with an expanding andequitable contribution of untied financialresources to enable effective internationalcooperation to realise these goals.The Reality of Aid 2002 highlighted thecentrality of ‘local ownership’ in theconceptual framework, first set out by aidministers in the DAC’s 1996 policy statementShaping the 21st Century, for donor efforts toimprove the effectiveness of their aidrelationships. ‘Ownership’ is not an absolutecondition, but rather a definition ofrelationship and the power and influence ofdifferent stakeholders to negotiate thecontent of this relationship. Local ownership,for example, cannot be understood withoutunderstanding gender equality—do womenhave equal access to society’s resources andpower? Are women’s experiences andcapabilities an integral part of developmentstrategies, or are they excluded? Donorcommitments to ownership in the context ofNorth/South aid relationships is not justabout strengthening the state to take up itsresponsibilities, but it is also fundamentallyabout citizenship and building capacity forthe exercise of people’s rights in the contextof exclusion, marginalisation and poverty.

Our 2002 Report called on donors tomove beyond a rhetorical respect for localownership with real change, evidenced ininstitutional practice and donor commitmentsto expanding the resource base forinternational cooperation. The Reality of Aid2004 suggests that these changes can bringpositive capacity for a strengthened rightsapproach in several key areas:

Donors must strengthen ownership andlocal accountability by reducing theirreliance on donor country technicalassistance. Despite the rhetoric onownership, reliance on technical assis-

tance to increase the capacity of sectoralministries in developing countries tomanage donor project relationships hasnot diminished. In 2002, US$15 billion or38% of bilateral ODA, worth US$39 billion,was in the form of technical cooperation.From a rights perspective, technicalassistance might make a positivecontribution, if it were to be provided onrequest to build the capacities ofgovernments and other constituencies ofthe poor to achieve rights commitmentsand engage in policy dialogue on rightsobligations. The experience in Tanzaniaexplained in this report shows that withcommitment from developing countrygovernment and external donors, theprinciples embodied in the DAC TaskForce on Donor Practices can be trans-lated into ‘real benefits for the poor interms of increased aid effectiveness’.The unconditional untying of aid, includ-ing food aid and technical assistance, isan acknowledged pre-condition for thecontribution of aid to strengthening localproductive capacities and livelihoods ofpoor people through small and mediumscale enterprises. The Reality of Aid notesthe donor commitment made at the LCDIII Conference to ‘enhance the value oftheir development assistance by increas-ing the proportion of goods and servicessourced in the recipient LDC or fromother LDCs or developing countries tohelp boost poor-poor economic growth.’48

The unconditional cancellation of alldebts of the world’s poorest countries isan acid test of donors’ commitment tothe right of all people to economicjustice and the elimination of poverty.Despite a promising beginning in 2000,the HIPC II programme is bogged down indelays and inadequacy and is unlikely todeliver a ‘permanent exit’ from debtrescheduling. Since 2000 only eight


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countries have received debt stockreductions, with 19 others waiting theircompletion point when debt stock isfinally cancelled. Countries are beingdelayed in the HIPC initiative by condi-tionalities unrelated to the rationale fordebt relief, including overly stringentfiscal criteria and a range of governanceconditionalities that require privatisationof important sectors of their economies,resulting in 9 of 19 countries significantlyoff-track in reaching their completionpoint. HIPC countries have been highlyvulnerable to external shocks fromdeclining global commodity prices andthe internal impact of HIV/AIDS.As a group, 27 countries that have

already entered into a HIPC II programmecannot afford to meet the MDGs and provideother basic services even with currentlypromised increases in aid. Achieving existingdonor commitments to even the minimalMDGs by 2015 will require full debtcancellation for the poorest countries andconsideration of international mechanisms forfair arbitration of unsustainable debts ownedby middle income highly indebted countries.49

All donors must establish and be account-able to a realistic timetable to achievetheir long-standing commitment to reach0.7% of their GNI for Official DevelopmentAssistance.

As noted in the Trends in Aid chapter ofthis report, global aid increased by 7.2% inreal terms between 2001 and 2002 —marginally up to reach 0.23% of donor GNI.

But whilst this may be a reversal in thedecline of global aid, the increases fall farshort of the additional US$50 billionestimated by the World Bank as requiredeach year to reach the MillenniumDevelopment Goals. These are appallingstatistics when seen in the context of morethan US$565 billion requested from Congress

by the American Administration for Defenseand other spending in its so-called ‘pre-emptive’ wars on terrorism.50 The WHOCommission on Macroeconomics and Healthestimate that a donor investment of US$27billion a year, on TB, HIV/AIDS, malaria, andother infectious diseases and nutritionaldeficiencies, could save up to eight millionlives a year. The UNDP estimates that theadditional cost of providing basic educationfor all is only US$6 billion a year.51

Alternative proposals for financing theMDGs have been put forward by both NGOsand the UK government. UK ChancellorGordon Brown is proposing an InternationalFinance Facility that would use aid increasespledged at Monterrey to back the issue ofbonds, the revenue from which would allowaid spending to be frontloaded. If all of theUS$16 billion in increased aid is devoted tothe IFF, this would generate the additionalUS$50 billion needed now to meet the 2015MDGs.52 While clearly a creative idea whichmerits further study, the proposal depends ondonors achieving their committed 0.7% of GNIby 2015, at which time money owed to thebond holders will come due. Otherwise, theinterests of the more than 900 million peoplestill living in absolute poverty in 2015, not tomention many more living with highlyvulnerable livelihoods, will be potentiallycompromised by dramatically reduced aidallocations in the post-2015 years. CSOscontinue to demonstrate the feasibility of aTobin Tax on foreign exchange transactions,or a Carbon Tax as significant sources ofrevenue for the multilateral system, whileclearly contributing to a more stableinternational financial system and the KyotoProtocol. Goran Hyden proposes the creationof ‘autonomous development funds’,managed jointly by government, civil societyand donors, based on global reallocationmechanisms along the lines of the EuropeanUnion equalisation funds.53


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While aid allocations may be increasing,we note below deepening concerns for theintegrity of aid allocations., with itsoverarching goal ending poverty in tensionwith foreign policy interests of donorcountries. Equally concerning is the trendamong donors to select countries forconcentration of aid efforts based on Bank-sanctioned notions of ‘good policies’ notedabove. Pakistan has moved from being 14th onthe list of aid recipient countries in 1999/2000 to being top of the in 2001 and 2002.Donors frequently talk about the need toconcentrate their aid in order to make itmore effective in tackling poverty; but thedanger is that in practice, considerationssuch as security, migration and governancecrowds aid into countries who are for thetime being ‘popular’, whilst strategically lessimportant, but just as poor countries areoften overlooked.

As 11.11.11 point out in their report onBelgium, ‘With each new government, thelist of partner countries changes, and thecriteria used are not very clear’. NGOs inBelgium favour more concentration, butstress the need for continuity, andespecially the need to avoid aid beingdiverted to priorities such as deterringasylum seekers.

The Reality of Aid strongly urges donorsto avoid triage of poor people by developinginclusive, coordinated, approaches in theirinternational assistance programmes, whichsupport the rights of people living in povertyno matter where they may live. Such anapproach requires that donors fulfilcommitments to aid increases made atMonterrey, make specific commitments toreach the 0.7% target within a reasonabletimeframe, and provide predictable levels offunding adequate for governments andsocieties to make medium term plans forsustainable progress on economic and socialrights.

2. Donors are to be commended forbringing new support for strengtheninggovernment as an effective developmentactor and for coordinating their focus onkey social sectors and poverty reductionplans through Sector Wide Approaches(SWAps) and Programme Budget Supportinitiatives in the poorest developingcountries. These positive approaches,however, must be complemented by donoraction to eliminate Bank/Fundconditionalities associated with theseprogrammes and by efforts to strengthendomestic participation and effectiveaccountable to CSOs and people living inpoverty for their results.Donor pooled resources and policy dialogue insupport of Sector Wide Approaches for basiceducation or primary health programming,including a focus on HIV/AIDS, implicitlyrecognises the primary responsibility andobligations of government, within theCovenant on Economic, Social and CulturalRights, to deliver universally accessible socialprogrammes. However, as noted earlier, theWorld Bank often coordinates theseprogrammes, usually directed to the poorest,most aid dependent countries in Sub-SaharanAfrica. They include large numbers ofgovernance conditionalities and a range oflargely donor-imposed undertakings onrecipient ministries and governments inexchange for the regular release of pooledfinancing.

While the product of donor dialogue withgovernment officials, sector programmes andpoverty reduction strategies often reflectwhat Sogge terms ‘the politics of the mirror’— addressing potential aid donors ‘in thelanguage that is most congenial, andcrucially, most easily reinforces the beliefthat they (outsiders) understand what [therecipient] needs.’54 The terms of theseconditions undermine not only nationalaccountability for effectively tackling


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poverty, they also promote approaches, suchas privatisation or public/privatepartnerships, for the delivery of services thathave had serious impact on the rights of thepoor to access essential services.55

SWAps and Budget Support areaccompanied almost universally byconditionalities that insist upon a decentra-lised local government model for the deliveryof poverty-reducing programming andessential social services. Governance at thegrass-roots level is often a critical foundationfor effective strategies to reduce povertythat can be inclusive of people living inpoverty. However, there are a number ofcritical factors that determine the localpolitics of development for poverty reduction— the resources available to localgovernment, the parallel roles of traditional/ local economic power structures incommunities, the influence of local CSOs andcommunity associations, open avenues forparticipation by those living in poverty andthe vulnerable in decisions that affect theirlives, and the impact of gender relations onthe distribution of local benefits fromdevelopment. Unfortunately many donorsconflate these issues within simplistic notionsof decentralisation and deal exclusively withadministrative capacity, budgetary andcorruption issues associated with programmedelivery, while strongly encouraging private/local government partnerships to overcomecapacity problems. They seldom manage toengage local communities, who requiresubstantial roles (and support) in theplanning and delivery processes.56

In both Africa and Latin America,pressures by donors for decentralisation areaccompanied by profound citizen distrust atall levels as government ministries use theseresources to re-establish local clientistrelationships often based on corruption.Goran Hyden argues that in much of Africa along legacy of authoritarian politics and

abuse of public positions for personal gain bypoliticians leave citizens deeply cynical aboutgovernment and its role as guardian of thepublic good. He concludes pessimistically that

‘Efforts by the internationalcommunity to preach and imposeprinciples of what they perceive asgood governance have left few, ifany traces in everydaypolitics...The idea that some oneelected to office should treat it asa public trust does not register inthese societies. Instead, holdingoffice is viewed as giving theincumbent the right to use itdiscretionally for his own interestor those of his clients/supporters...[P]ublic accountabilityas understood in the context ofcurrent conceptions of goodgovernance will be very hard, ifnot impossible to achieve.’.57

While recognising the limits of manyCSOs in terms of their professed roles ofrepresentation and accountability to peopleliving in poverty, political mobilisation ofpoor constituencies particularly in rural andlocal community is essential to hold officialsaccountable. Often the poor organisethemselves to seek influence on specific localconcerns, while CSOs — NGOs, labour unions,autonomous research centres, independentmedia — represent by proxy differinginterests of the poor in society. Despite thesepotential limitations, Grindle suggests thatless attention on government on the part ofdonors and more on ‘the mobilization of thepoor into political parties, interest groups,unions and NGOs may be a condition underwhich judicial reform, civil service reform,decentralization and other kinds of changeare most likely to have a significant impacton poverty and on the poor.’58


25

The sole focus of new programmeapproaches by donors on the mechanisms ofgovernment in SWAps and Budget Support,and their reliance on national and localgovernment to partner with civil society, isseemingly having a deleterious impact on thecapacities of local civil society to play theseroles. For some donors, such as DFID andCIDA, new approaches have beenaccompanied by a marked decline in thesupport of local civil society as developmentactors, whether directly or throughinternational NGOs.

Based on local interviews in Uganda,Lister and Nyamugasira demonstrate theimpact of the reduction in such projectfunding on a narrowing of ‘political space’for local and national NGOs to holdgovernments at all levels accountable, and todirect resources to communities theyrepresent. As DFID, along with other donors,has moved significant funding for local civilsociety projects to government BudgetSupport and SWAps, these community-basedorganisations are obliged to seek funding ascontracting agents from local governmentand thereby become tied into local clientistpolitics and corruption. The study concludesthat such organisations, often vital to localservice delivery and grass-rootsaccountability, are in a quandary: ‘They areunsure whether to abandon long-standingactivities in which they have expertise andthrough which they provide vital service, orbecome sub-contracting agents of authoritiesthey do not trust, and thus risk loosing thefreedom to speak out’. They go on to findthat donors, where they do support nationalNGO participation in development ormonitoring of Uganda’s poverty strategy doso on a highly selective basis, one which seesparticipation as an ‘instrumental’ value-added requirement for governmentmanagement of services, rather than basedon principled notions of citizens’

empowerment and the right to participate,which seemingly defines DFID’s rights-basedapproach noted above.59

Bilateral donor support for programmeapproaches through SWAps and BudgetSupport would be greatly strengthened ifthey were to pay equal attention to assuringthe continued engagement of local civilsociety accountability structures, whichshould also include continued piloting ofinnovation in service delivery at thecommunity level. Processes ofdecentralisation in the context of extremeconditions of poverty are highly complex forwhich there is no easy ‘one-size-fits-all’approach. Donors, government ministries andCSOs must approach comprehensivestrategies for poverty reduction with bothhumility and the dedication of resources tostrengthen the advocates for povertyeradication at all levels.

Reducing direct support for CSOs bydonors may also prove a significant barrierfor making progress on donor pre-occupationswith high levels of corruption within ill-functioning governments and politicalprocesses. Corruption (including notably highlevels of private sector corruption in severaldeveloped countries) concerns everyone whoseeks socio-economic justice . Donors mustalso accept their own responsibility forcorruption that has resulted from donor-imposed demands and policy advice for rapidprivatisation and downsizing of civil services.By many accounts, CSOs can be effective inputting in place ‘social accountabilitymechanisms’ to monitor government actionas well as in leading significant anti-corruption campaigns. A few examples –

• Many grassroots organisations, supportedby national NGOs, have developedcapacities to monitor officialdevelopment budgets, have developedalternative budgets based on people’s


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priorities for poverty reduction, andanalysed budgets from a genderperspective or a government’s respectfor human rights commitments toindigenous and vulnerable populations.60

• The development of community-based,convenient, internet centres to accessbasic government services, such asdocument retrieval and certifications,may be effective in cutting out pettycorruption that affect poor people mostdramatically in their dealings withgovernment.

• Local organisations work with localcommunities to expose corruptionthrough informal vigilance committeesto monitor expected delivery of servicesor to assess the quality of publiclyfunded infrastructure.

• CSOs work to strengthen the capacitiesand roles of parliamentarians, as well asofficial auditors, as a key oversightinstitution, with recent examples ofparliamentary action in Kenya and SouthAfrica’s Legislatures’ Office for PublicParticipation’ as outreach to those withgrievances who are unable to accessparliaments directly.

• CSOs mobilise grassroots groups broadlyagainst corruption through district levelmonitoring committees and dialogues,acting on specific complaints and raisingpublic awareness through plays, songsand poetry about the impoverishmenteffects of corruption.61

Civil society is a critical resource totackle corruption, but it is often weak,disorganised, and lacking in the capacityand financial resources to expand theseand other interventions. Donors can helpcreate a favourable environment not only bydemonstrating transparency andaccountability in their own relationships withgovernments concerned, but also by

supporting country-level capacities to analysehuman rights claims and obligations, and thecapacity of autonomous civil society to holdstakeholders accountable to these obligationsin the day-to-day working of governments.

As donors assess the complex issues inmoving from donor project financing tocoordinated support for sector programmingthat strengthen the roles of government inkey areas of poverty eradication, they needto urgently review the roles of civil societyorganisations as development actors withinthe context of politics at all levels topromote effective approaches to povertyreduction.62

3. Bilateral donors must maintain theintegrity of official developmentassistance (ODA) with an exclusive focuson poverty reduction. An effectivecontribution to improved governancethrough a rights-based approach will besignificantly undermined by the seemingconvergence of the global security agendawith priorities for internationalcooperation.The promotion of the post-September 11th

anti-terrorist global security agenda, whoseterms and courses of action are defined bythe United States government and its allies,but actively pursued by all governments,challenge the universal legal framework ofhuman rights and the multilateral institutionsestablished to guarantee these rights. Thesecurity agenda has profound implications forthe promotion of effective structures ofgovernance at all levels, not least being theunilateral declaration of war on countriesthat by-pass the authority of the(democratically-challenged) UN SecurityCouncil. Reality of Aid members have pointedto important examples of unilateral foreignmilitarised interventions, often lead by theUnited States, in countries beyond Iraq andAfghanistan, in Colombia, in military


27

repression of people in Aceh (Indonesia) andthe denial of the human rights of the peopleof West Papua, in the Democratic Republic ofthe Congo (DRC), in Mindanao (Philippines)and in Palestine.63

Development aid and global securityagendas are converging. Most clearly, theUnited States adopted the September 2002National Security Strategy, giving thegovernment the right of pre-emptive militaryaction ‘against ... terrorists, to prevent themfrom doing harm against our people and ourcountry; and denying further sponsorship,support, and sanctuary to terrorists byconvincing or compelling states to accepttheir sovereign responsibilities’. This Strategywas subsequently supported with a foreignaid policy statement, Foreign Aid in the

National Interest, which substantially linkednational security and foreign assistance.64

This strategic posture has also affectedthe independence of American NGOs workingin zones of conflict. In June 2003, AndrewNatsios, Administrator of USAID, provocativelychallenged US NGOs working internationallyto demonstrate and link their humanitarianassistance in Afghanistan and Iraq to USforeign policy and made it clear that theyare considered an ‘arm of the USgovernment’65. InterAction, Reality of Aid’sUS partner, points to the increasing role ofthe Pentagon and private contractors incarrying out humanitarian and reconstructionmissions for which they may be ill-suited,undercutting efforts to lay the foundation forlong-term development.66

There is growing evidence that donorsare to a greater extent shaping theirdevelopment cooperation priorities throughthe lens of the ‘war on terrorism’.

Terrorism, as random deadly violenceagainst unprotected civilians for the purposeof creating fear and insecurity among

surrounding populations, clearly constitutesillegal criminal action. Such acts areunambiguously and morally reprehensible anddevoid of any political rationale. ButSeptember 11th notwithstanding, terrorism isnot a pervasive tactic undertaken bysignificant numbers of groups and individuals

Box 2: Reality of Aid Statement in support of the independence of US NGOs

Reality of Aid affirms that NGOs are a key part of the independent voice of civilsociety. Their role in a democratic society is to ensure that the views of all of thepeople, including minority and other ethnic groups and those who are marginalised fordiscriminatory reasons, are heard by the decision makers.

Non-government organisations are, by definition, not an arm of any government.If they receive Government funding, it should be given on the merits of the applicationand in recognition of the NGO’s ability to work in partnership with the grassrootspeople in developing countries, to promote basic human rights and assist towardspoverty eradication. Through funding NGOs, governments contribute to meeting theircommitments to reach the Millennium Development Goals as a first step in this process.

A society where there is no freedom of speech for civil society and no right to usethe media as an outlet for its concerns cannot be called democratic and free. Theseare the very issues on which the US and their allies said that they went to war in Iraqand Afghanistan. The US Government should practice at home that which it preachesabroad.


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seeking change. Far more people andsocieties continue to be affected bypersistent internal conflict and violence,which impact on large civilian populationsand have had incalculable human andmaterial costs over the past decade.

There can be little if any synergybetween donor strategies to promote peace,prevent conflict and encourage social andpolitical cohesion, and strategies andpractices to prevent/combat terrorism.

The former emphasise the creation ofviable and broadly responsive state and civilinstitutions, the promotion of social cohesionbased on justice, and tackling the backdropof socio-economic conditions that underlieendemic poverty and exclusion. In contrast,current actions by governments (North andSouth) to prevent and counter terrorism areoriented to the restriction of people’s rights,deepening repression of communities inconflict with their government (whetherpeaceful or otherwise), strengthening withingovernment the military /the police /agencies for covert action and the creationof a climate of fear among its citizens. Theseproactive anti-terrorism measures do little tonourish climates for peace and developmentin the interests of people living in poverty.There is a great deal of evidence that donorshave compromised their attention to humanrights in their ‘war on terrorism’ in countriessuch as Pakistan, seen to be on the front linewith the Taliban and Al Qaeda in Afghanistan.The DAC policy insofar as it emphasisessupport for ‘improved’ security legislationand military/police capacities may furtherundermine an already weak focus by donorson a comprehensive approach to humanrights in development cooperation

Donors acting through the OECD DACpropose to review the ODA eligibility criteriain the context of its policy statement oninternational cooperation and the preventionof terrorism. Opening ODA criteria will only

dilute the purpose of aid for povertyeradication, further reduce public support,and effectively divert scarce ODA resourcesaway from its core goal. Reality of Aidmembers also argue that many currentactions (police, security and militarystrengthening) to prevent terrorism, linkedby some governments to a ‘war onterrorism’, clearly fall outside the boundariesof effective strategies for conflictprevention.

The integrity of the notion of ODA isalready deeply compromised by the inclusionof financial support for refugees, as well astied aid and the inclusion of economic andforeign policy considerations in its allocation.The DAC rules are already subject to abuse.Australia was able to count as ODA supportfor refugees in Australia and the costs ofrecent Pacific Island internment of boatpeople seeking refuge in Australia! The use ofODA for domestically inspired priorities, suchas those noted in the Danish chapter ofdeterring or repatriating refugees and asylumseekers and offsetting obligations under theKyoto Protocol, is not consistent with theDAC line that poverty reduction must be theoverriding priority for aid.

A Call for Fundamental Reform:

‘The poor should be considered asfull citizens and not simplyvictims, as full citizens and notsimply recipients, as full citizensand not merely beneficiaries orcharity cases....Unless we putpeople, and particularly those thathave been historically excluded, atthe centre of public life, ourdevelopment goals will continue toevade us.’

Kumi Naidoo, Secretary General, Civicus


29

As the UN Secretary General, Kofi Annanhas recently highlighted, we live at a criticaljuncture in world history. It is one thaturgently calls for both a return to processesof multilateralism and the international legalframework of human rights, and their reformto meet the challenges of peace andinternational cooperation. Aid alone plays aminor role in restructuring such an effectivemultilateral system for the 21st century;nevertheless aid is also a critical resourcethrough which donors have structured arelationship with developing countries formore than four decades. But will the globalcommunity, both nations and citizens’organisations, find the creativity and buildingblocks for dialogue on the democratisation ofgovernance and the promotion of rightsthrough the aid regime?

The Reality of Aid network has set outsome proposals for such reforms, in both themultilateral and national realms, and iscommitted to pursue them vigorously. Theyare:

1. Donor countries must carry out theirdevelopment cooperation programmes so thatgovernance reflects their binding obligationsunder human rights law and the rights basedapproach in line with internationally agreedhuman rights instruments, including the rightto development.

Governance has been given a wide rangeof interpretations, but what it must mean isa framework based on democraticgovernance and human rights, which leads toa national political process that is democraticand based on the principles of law andhuman rights.

In practice, the ill-defined governancesector provides for the most part a space forpursuing a range of donor interests with aidmoney.

The principles of good governance applyto the management of international

cooperation and aid institutions as muchas to developing countries.

2. Imposed conditions are incompatiblewith democratic governance. Any terms mustbe fairly and transparently negotiated withparticipation of and accountability to peopleliving in poverty and in line with theprinciples of international human rights and arights based approach.

Good governance should not be a vehiclefor imposing market based approaches.

Conditionality cannot even be justifiedon the basis of effectiveness.

PRSPs that simply embody InternationalFinancial Institution prescriptions, leave littleroom for authentic local and national debate.Where accountability is essentially to theIFIs, rather than local stakeholders, theseplans are not consistent with the principlesof democratic governance and human rights,which are essential preconditions foreffective strategies to eradicate poverty.

3. The MDGs are an expression ofcommitment to economic social and culturalrights and define a set of steps to enablethose rights to be realised. If MDGs are tocontribute to international goal of povertyeradication, efforts to achieve them must befounded on strategies that empower andrecognise the rights of all people, includingall the poor no matter where they live.

Donors must comply with their obligationcontained in Goal 8 specifically increasingODA to the UN target of 0.7% of GNI,improving the quality of their aid for povertyreduction and achieving debt cancellationfor the poorest countries.The emphasis on a global partnership inMillennium Goal 8 is welcome. But inpromoting ‘an open, rule-based trading andfinancial system’, envisaging cooperationwith the private sector and encouragingcompetition in the global economy, there


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are real dangers that the poverty imperativewill in practice be overwhelmed by corporateand donor national interests and that therules adopted will be no different to currentrules which reinforce unequal powerrelations.

4. The International Financial Institutionsthat are mandated to support the fightagainst poverty embody entrenchedinequalities or power and wealth in theirsystems of governance. The IFIs must notremain the monopoly providers of policyadvice on governance reform or thegatekeepers on resource transfers.Aid should support governments,representative institutions and legislatures, informulating national poverty reductionstrategies. Aid should not determine theprocess.

5. Aid should be treated as money held intrust for people in poverty. Current attemptsto divert resources for poverty reduction topay for donors’ security interests are themost serious expression of the endemicproblem of aid resources being hijacked tofund rich country priorities.

6. The imperatives of poverty eradicationand democratic governance underline theobligations to reinvigorate multilateralism, inthe current context of the adverse globalimpact of unilateralism, especially thepractices of the US government and its allies.

The subsequent chapters take up thisshared commitment to reform and its uniqueapplication in the particular contexts ofAfrica, the Middle East Asia, the Americasand the OECD donor countries. In pursuinggovernance and rights, clearly politics

matters. While we may fear that counter-terrorism measures may have subsumed thespirit of Monterrey and dashed hopes forinternational cooperation on financing fordevelopment67, we must never lose thedream that continues to inspire millions ofmarginalised and poor people to struggle tosecure their rights in their daily lives and inthe politics of their particular locale. Indeedit is our obligation as citizens andgovernments to accompany and sustainpeople in their efforts to eradicate poverty.

The selective way that donors interpretideas of governance and human rights is notconsistent with a genuine rights approach todevelopment and poverty.

There may be conflicts betweeninternational obligations to comply with UNtreaty obligations and IFIs conditions or WTOagreements. In such a situation, governmentsmay be left with no choice but simply toignore the human rights treaty obligations, asthe pressure from largely donor-imposedconditionality is stronger. Countries may bepunished for violating IFIs and WTOconditions, but not those of the UN.

Civil society networks in the Reality ofAid… focus their policy and advocacyattention on issues in democratic governance.As such, governance is not an end in itself,to be engineered through technical assistanceand policy interventions by donors. Rather itis fundamentally about politics, power andthe exercise of rights in society, and istherefore an evolving and particular processthat may take decades.

Two decades of secret negotiations forstructural reforms have removed the politicallocus for national decision making away fromdomestic political checks and balances wherecitizens have a potential influence on publicpolicy.


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Notes1 OECD, Development Assistance Committee (DAC),

A Development Cooperation Lens on TerrorismPrevention: Key Entry Points of Action is available onthe OECD DAC website at http://www.oecd.org/dataoecd/17/4/16085708.pdf. A joint statement ofconcern about the implications of this policy, signedby many members of the Reality of Aid network, isavailable on the web site of BOND, ww.bond.org.uk.An analysis of the DAC policy statement can be foundon the web site of the Canadian Council forInternational Cooperation, www.ccic.ca.

2 States can take measures that derogate from theirobligations under the Covenant on Civil and PoliticalRights, only in times of ‘public emergency thatthreatens the life of the nation’.

3 Thomas Pogge, ‘The First Millennium DevelopmentGoal’, first Oslo Lecture in Moral Philosophy at theUniversity of Oslo, September 11, 2003, ww.etikk.no/globaljustice/, 9

4 UNDP, Human Development Report 2003, New York:Oxford University Press, 2003, 38-39. The 25 millionrichest Americans have as much income as almost 2billion of the world’s poorest people.

5 World Bank, World Development Report, New York:Oxford University Press, 2003, 235 (quoted in Pogge,2003, 11)6 Pogge, 2003, p. 3

7 See for example, Kumi Naidoo, ‘Civil Society,Governance and Globalization’, World BankPresidential Fellows Lecture, Washington DC,February 2003, pp. 7-8, accessed from the World Bankweb site, www.worldbank.org.

8 Simon Maxwell, Heaven or Hubris: Reflections on the‘New Poverty Agenda’, Development Policy Review,2003, 21 (1), p. 13-14.

9 John Foster (North South Institute, Canada),‘Crisistime: Repossessing Democratic Space, Governanceand the Promotion of Rights in InternationalCooperation and Aid, A Discussion Paper for TheReality of Aid’, April 2003, accessed from the Realityof Aid website, www.realityofaid.org., p. 8.

10 World Bank, Sub-Saharan Africa: From Crisis toSustainable Growth, Oxford: Oxford University Press,1989, 60.

11 Lewis Carroll’s children’s novel Alice in Wonderland,has the following exchange: ‘When I use a word,’Humpty Dumpty said in rather a scornful tone, ‘itmeans just what I choose it to mean — neither more

or less.’ ‘The question is,’ said Alice, ‘whether youcan make words mean different things.’ ‘The questionis,’ said Humpty Dumpty, which is to be master—that’s all.’‘ A thorough discussion of the governancediscourse can be found in a background paperprepared for the Reality of Aid International AdvisoryCouncil by Kavaljit Singh (Public Interest ResearchGroup (India), ‘Aid and Good Governance: A DiscussionPaper for Reality of Aid’, January 2003, accessible atwww.realityofaid.org.

12 James Wolfensohn, ‘A New Global Balance: TheChallenge of Leadership’, Address to the Board ofGovernors of the World Bank Group, Dubai,September 23, 2003, 6.

13 Kumi Naidoo, 2003, 7, 10.

14 For a review of the FfD process in relation to globalgovernance, see Aduba, G., Caliari, A., Foster, J.,Hanfstaengl, E., Schroeder, F., ‘A Political Agenda forthe Reform of Global Governance’, October 2003,prepared as a background paper for the UN Financingfor Development High Level Dialogue, October 29-30,2003, by members of the civil society InternationalFacilitating Group, accessed on the UN Financial forDevelopment web site at http://www.un.org/esa/ffd/14April03-NGO-Statement-Plenary.pdf.

15 Quoted in Martin Khor, ‘Report on UN Financing forDevelopment Interactive Dialogue’, TWN Info Service,November 5, 2003, page 2, accessed at http://www.twnside.org.sg/title/twninfo89.htm.

16 See background paper prepared for the Reality of AidInternational Advisory Council by Kavaljit Singh(Public Interest Research Group (India), ‘Aid and GoodGovernance: A Discussion Paper for Reality of Aid’,January 2003, accessible at www.realityofaid.org.

17 Ibid., 7

18 UNDP, Human Development Report 2002, Deepeningdemocracy in a fragmented world, New York: OxfordUniversity Press, 2002, ‘Overview’, 1 – 9.

19 Secretary General Kofi Annan, ‘Address to theGeneral Assembly’, September 23, 2003.

20 David Dollar et al, Assessing Aid, What Works, WhatDoesn’t and Why, New York: Oxford University Press,1998.

21 Alex Wilks, Fabien Lefrancois, ‘Blinding with Scienceor Encouraging Debate? How World Bank AnalysisDetermined PRSP Policies’, Bretton Woods Project,World Vision, 2002, available onwww.brettonwoodsproject.org.


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22 Concern (Ireland) [no author], ‘Is the PRSPConsolidating the World Bank’s Dominant Position inthe Development Process?’ [no date] (approximately2002), 2.

23 Collingwood, V. (editor), ‘Good Governance and theWorld Bank’, University of Oxford, mimeo, 2002, 7.

24 BOND research paper ‘Civil society participation inEuropean Community Country Strategy Paperprocesses’, to be published in March 2004

25 Concern (Ireland), 1.

26 For analysis of Cotonou trade negotiations:www.actsa.org

27 Jeremy Gould and Julia Ojanen, ‘Merging the Circle,the Politics of Tanzania’s Poverty Reduction Strategy’,Institute of Development Studies, University ofHelsinki, Policy Paper 2/2003. See also AFRODAD,‘Comparative Analysis of Five African Countries withCompleted PRSPs’, 2002, accessed from www.afrodad.org and Warren Nyamugasira and Rick Rowden, ‘NewStrategies, Old Loan Conditions, Do the New IMF andWorld Bank Loans Support Countries’ PovertyReduction Strategies, The Case of Uganda, April 2002.

28 Sogge, D., Give and Take: What’s the Matter withForeign Aid? Reading, UK: Z Books, 2002. 122 - 131.

29 Ibid., 150-1.

30 Kapur and Webb, 7-11.

31 Nancy Alexander, ‘World Bank Judges Performance ofLow-Income Countries’, Citizens Network for EssentialServices, 2003, accessed at www.servicesforall.org.Countries are rated overall for economicmanagement, structural policies, social inclusion,public sector performance and loan portfolioperformance.

32 Sogge, 2002. 153, 107.

33 Quoted in CAFOD, ‘Summary of CAFOD’sE-Consultation on NEPAD’, June 2002, accessedfrom www.cafod.org.uk/policy/africa_nepad_consultation.shtml.

34 Randel, J., German, T., (editors). The Reality of Aid2002, an independent review of poverty reduction anddevelopment assistance. Manila: IBON, 2002,available electronically at www.realityofaid.org.

35 Kapur, D., and Webb, R., ‘Governance-relatedConditionalities of the International FinancialInstitutions’, G-24 Discussion Paper Series, No. 6,UNTAD, August 2000, 3-7.

36 Quoted in Ibid., 7-8.

37 See for example, the Structural AdjustmentParticipatory Review Network (SAPRIN) at http://www.saprin.org/.

38 M. S. Grindle.‘Good Enough Governance: PovertyReduction and Reform in Developing Countries’,Boston, Harvard University, Kennedy School ofGovernment, prepared for the Poverty ReductionGroup of the World Bank, November 2002, 18 and 23.

39 See Ken Currah, Haidy Ear-Dupuy, Ruth Kahurananga,Melanie Gow, Alan Waites, ‘Doing the Right Thing?The World Bank and the Human Rights of PeopleLiving in Poverty’, World Vision International, 2003,accessible at www.wvi.org.

40 Christian Aid, ‘Options for democratizing the WorldBank and IMF’, February 2003, accessed fromwww.christianaid.org.uk. See also ‘Open statementon steps to democratize the World Bank and IMF’supported by civil society organisations prior to theApril 2003 meetings of the Governors of the Bank andthe Fund, accessible atwww.brettonwoodsproject.org/topic/reform.

41 See the recommendations in ‘The Summary of theInformal Hearings of Civil Society (New York, 28October 2003)’, UN General Assembly Follow-up tothe International Conference on Financing forDevelopment, accessible at http://www.un.org/esa/ffd/.

42 Sabrina Varma, ‘Improved Global EconomicGovernance’, Trade-Related Agenda, Development andEquity, Occasional Papers, #8, South Centre, August2002, 18.

43 Adaba, G., et. al, ‘A Political Agenda for the Reformof Global Governance’, op. cit., for more details.The policy statement also supports initiatives tocreate Expert Working Groups that would support thisExecutive or Steering Committee, as proposed by theSecretary General, to allow for a wide range ofstakeholders — governments, civil society, business,academics and multilateral institutions — to addressthe implementation of agreements coming out of theFfD Conference and follow-up. The annual ECOSOCmeeting with the Bretton Woods Institutions and theWTO would become a major forum ensuring thecoherence of monetary, financial and trading systemsin support of development and the overarching goalof poverty eradication. In the medium term, membercountries should pursue proposals to establish a morepermanent global Economic and Social Security


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Council within the structure of the UN, as originallyproposed by Carlsson and Ramphal’s 1995 Commissionon Global Governance in its report, Our GlobalNeighbourhood.

44 The European Union, Canada, Japan and the UnitedStates.

45 Third World Network, OXFAM International, Focus onthe Global South et. al., ‘Memorandum on the Needto Improve Internal Transparency and Participation inthe WTO’, July 2003, accessible at http://www.twnside.org.sg/title/memo2.doc. TheMemorandum sets out a range of specific proposalsfor reforming these undemocratic practices in thepreparation and conduct of Ministerial Conferences.

46 See DAC, International Cooperation 2002 Report, DACJournal, Volume 4, No. 1, 2003 for a donorperspective on these achievements to date and aprojection of increased aid resources up to 2006.Reality of Aid analysis notes that the commitment toincreased aid resources by the United States forexample may not be fully realized [and any otherqualifications that we put on these increases in ourtrends chapter] See the Trends chapter, pages X to Y..

47 DFID, ‘Realizing human rights for poor people:Strategies for achieving the internationaldevelopment targets’, October 2000, accessed atwww.dfid.gov.uk. 7

48 LDC III final recommendation, para 84 (e) quoted inActionaid, ‘ODA and Aid Effectiveness in FfD’,July 2001.

49 For details see Jubilee Research at the NewEconomics Foundation, Real Progress Report on HIPC,in cooperation with CAFOD, Christian Aid, EURODADand Oxfam, September 2003 atwww.jubilee2000uk.org/analysis/reports/realprogressHIPC.pdf.

50 Bridget Moix, ‘Counting the Cost of War – A View fromCapital Hill’, Legislative Secretary on Iraq Issues,Friends Committee on National Legislation, Conflict inIraq Bulletin, No 25, November 2003.

51 Russell Mokhiber and Robert Weissman, ‘Other ThingsYou Might Do with $87 billion’, Focus on theCorporation, September 10, 2003, http://lists.essential.org/pipermail/corp-focus/2003/000160.html.

52 The International Finance Facility Briefing Note,Development Initiatives, UK September 2003.

53 Goran Hyden, ‘How Can Civil Society be Rebuild inAfrica?’, University of Florida, paper prepared for the

‘Langano Encounter’, organized by Oxfam Canada,March 2002, 16.

54 Sogge, 2002, 48. He goes on to say that ‘suchbehaviour renders the aid encounter closed,manipulated and unaccountable’.

55 For an analysis of the recent World Bank WorldDevelopment Report 2004 on the delivery of essentialservices see Tom Kessler, ‘Review of the 2004 WorldDevelopment Report (WDR), Making Services Work forPoor People’, Citizens’ Network on Essential Services,September 2003.

56 Gould and Ojanen in ‘Merging the Circle’ (2003) foundthat social relations of governance at the local levelin Tanzania precluded effective implementation ofthe Poverty Reduction Strategy. Policyimplementation was often based on clientist relationsand procedures and was abused by local politico-administrative elites who distribute resources amongthemselves via weakly regulated mechanisms of directexpenditure and sub-contracting. See also similarconcerns in Uganda in Oxford Policy Management andODI, ‘General Budget Support Evaluability Study PhaseI, Final Synthesis Report’, prepared for DFID,December 2002.

57 Goran Hyden, 2002, 13.

58 Grindle (2002), 14.

59 Lister, S. and Nyamugasira, W., ‘Design Contradictionsin the New Architecture of Aid’? Reflections fromUganda on the Roles of Civil Society Organizations’,Development Policy Review, 2003, 21 (1) 104.

60 See for example, John Samuel (editor),Understanding the Budget: As if people mattered,Pune: National Centre for Advocacy Studies, 1998.‘Gender and Budgets’, Bridge Bulletin, #12, March2003 (www.ids.ac.uk/bridge/) provides a number ofexamples from Tanzania and Recife Brazil.

61 Catholic Relief Services, ‘Social AccountabilityMechanisms: Citizen Engagement for Pro-Poor Policiesand Reduced Corruption’, January 2003 accessible athttp://www.catholicrelief.org/publications/social_accountability.pdf

62 An example of such an initiative is Stein-Erik Kruse,‘SWAps and Civil Society: The Role of Civil SocietyOrganization in Sector Programmes’, A reportprepared for the Norwegian Development Cooperation(NORAD) by the Centre for Health and SocialDevelopment, Oslo, December 2002. See also DANIDA(Danish Int’l Development Agency). ‘Strategy for


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Danish support to civil society in developing countries— including co-operation with the Danish NGOs.’Copenhagen: Draft analysis & strategy document,June/2000 and DANIDA, Partnership 2000, accessibleat www.um.dk/danida/partnership2000/.

63 See the political statement ‘Stop Military Aid toRepressive Regimes’ and ‘Stop all aid to Burma’adopted by the International Advisory Council ofmembers of the Reality of Aid network, meeting inthe Philippines, June 24 – 28, 2003, accessible atwww.realityofaid.org. See also IBON Foundation andBOND, ‘Development and the ‘War on Terror’’,November 2003 (www.bond.org.uk/advocacy/globalsecurity.htm) for examples from Indonesia andthe Philippines.

64 President of the United States, The National SecurityStrategy of the United States of America, September2002 and USAID, Foreign Aid in the National Interest,Promoting Freedom, Security and Opportunity, 2002,www.usaid.gov/fani/.

65 Tracy Hukill, ‘AID Chief Outlines Change in Strategysince 2001 Terrorist Attacks’, UN Wire, June 2, 2003.

66 InterAction, ‘Foreign Aid in Focus: Emerging Trends’,an Interaction Policy Paper, November 2003,www.interaction.org.

67 Saradha Iyer of the Malaysia-based Third WorldNetwork, as told to IPS at the UN High Level Sessionon Follow-up to Financing for Development, October27, 2003.

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