[DEBATE] : UK withholds £50 million from World Bank over conditionalities
MFleshman at aol.com
MFleshman at aol.com
Thu Sep 14 15:25:52 BST 2006
14 September 2006
UK withholds World Bank donation
The UK is withholding £50m it had pledged to the World Bank in protest at
conditions it attaches to aid.
International Development Secretary Hilary Benn voiced concerns that the Bank
is telling poorer nations how to run their affairs.
He is concerned that the Bank has been demanding too strict conditions before
giving aid to developing countries.
Mr Benn said the Bank had a duty to help those in poverty despite the actions
of their governments.
The Bank has for a long time insisted that the countries it lends to meet
economic targets and has encouraged trade liberalisation.
In addition, since taking over as head of the Bank last year, World Bank
chief Paul Wolfowitz has made it his mission to tackle corruption in poorer
His campaign has led to hundreds of thousands of dollars of loans and
contracts to countries like Chad, Congo, Ethiopia and Bangladesh being suspended.
However, it has also drawn significant criticism from charities and pressure
Mr Benn has also told Mr Wolfowitz that the UK is unhappy with the lack of
progress at removing strict conditions on financial assistance.
Last year, the UK provided £1.3bn to the Bank to help poorer countries and
promised to donate a further £50m in 2007, provided it eased the strings
attached to aid.
"On other issues, particularly economic policy, developing countries ought
to take their own decisions"
Hilary Benn, international development secretary
However, Mr Benn has said he will now delay handing over the cash until he is
satisfied the World Bank has eased its position.
The UK had taken the stance as it opposed World Bank efforts to impose
damaging policies that force poorer countries to liberalise their markets.
"Most people would agree that if you're invading your neighbour, if you're
oppressing your population or if you're taking aid money and spending it on
other things, then we shouldn't stand for that and we won't," Mr Benn told the
"Britain doesn't and nor does the World Bank and we should attach conditions
in those circumstances.
"But on other issues, particularly economic policy, developing countries
ought to take their own decisions and I do believe that this is one of the ways
that we can increase the voice of the poorest countries of the world," he
Campaigners such as Christian Aid and Oxfam have attacked the World Bank's
demands, saying they often leave people in developing countries worse off than
"Imagine what life would be like if you had to run every decision you made by
your bank manager and if he or she didn't like it, you would have to change
it," Christian Aid policy manager Anna Thomas said.
"That is the reality for many poor countries and they can't just switch
Christian Aid points to the example of Ghana where the World Bank's demand
for a ban on tariffs and subsidies for the poultry market has led to an influx
of cheap European imports and seen many thousands of Ghanaians lose their
jobs and livelihoods.
Story from BBC NEWS:
Oxfam Statement on UK decision to withhold £50 million to the World Bank
September 14, 2006 ­ Singapore ­ Oxfam welcomes the UK government¹s
decision today to withhold £50 million of its funding to the World Bank on
the grounds that the Bank has made unsatisfactory progress to stop tying
controversial economic policy reforms to its aid to poor countries.
Oxfam has been campaigning for many years for the World Bank and IMF to
stop its disastrous practice of attaching conditions like trade
liberalization and privatization to much-needed aid and debt relief on the
grounds that it often harms poor people.
Research commissioned by Oxfam revealed that 15 out of 20 developing
countries assessed in 2006, had privatization-related conditions attached
to their current World Bank lending contracts. Contrary to official World
Bank findings, the research also revealed that privatization-related
conditions attached to World Bank lending have risen in number, not fallen
Not only does this fly in the face of developing countries¹ sovereign right
to determine their own economic policy, but it can increase poverty rather
than reduce it. For example, the privatization of essential services such
as water in developing countries can price those services beyond the reach
of the poor. Oxfam¹s new report ŒIn the Public Interest¹ shows that the
private sector is not necessarily a more efficient provider of services,
let alone equitable. Furthermore, countries often have their aid delayed
as they implement these unworkable economic reforms, denying poor people
access to much-needed finance.
Oxfam is calling on other rich country donors to follow the lead of the UK
and press harder for the World Bank and IMF to restrict their policy
conditions only to the minimum necessary for ensuring financial
accountability and poverty reduction.
1. The UK provided the Bank with £1.3bn last year to help poor
countries, with the promise of an extra £50m next spring, provided it
softened its hard line approach on economic conditions. However, despite
the World Bank implementing new operational guidelines on conditionality,
the UK government believes progress has been far too slow.
2. Oxfam commission the European Network on Debt and Development to
undertake research on World Bank and IMF conditionality in February 2006.
The report, ŒWorld Bank and IMF conditionality: a development injustice¹ is
available at www.eurodad.org
3. Oxfam¹s new report Œ In the Public Interest: Health, Education, and
Water and Sanitation for All is available at
MDGs Media Officer
taylor.thompson at oxfaminternational.org
Oxfam International Advocacy Office
1100 15th Street, NW
Washington, D.C. 20005
Visit the web site at http://www.oxfam.org
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