Review: Ethiopia, aid and conditionality

The author, Axel Borchgrevink, is a senior researcher at the Norwegian Institute of International Affairs. He holds a doctoral degree in social anthropology from the University of Oslo. In addition to the Horn of Africa, his work has been involved with Central America and the Philippines. Issues of aid, development, conflict, civil society and indigenous peoples are among his thematic interests.

This study examines the relations between Ethiopia and its donors since 1990, with a focus on how donors have attempted to influence Ethiopian policies. The study tries to answer why none of the very different policies donors have applied towards Ethiopia failed to have much impact in terms of influencing Ethiopian policies.

The study is structured in three main sections. The first section is a brief review of the literature on aid conditionality. The second section describes the relationship between Ethiopia and its donors in the past 20 years with a focus on attempts by donors at influencing Ethiopian policies and Ethiopian responses to these attempts. This section delimits four different periods: the early EPRDF years (1990-1998); the war years (1998-2000); the post-war years (2000-2005); and after the 2005 elections (2005- 2007). The final section focuses on the factors that have limited donor influence and lessons learned about power relations between donor and recipient.

Conditionality can be generally defined as “the promise or increase of aid in the case of compliance by a recipient with conditions set by a donor, or its withdrawal or reduction in the case of non-compliance” (Frerks, 2006). Stokke classifies conditionality into economic conditionality – typified by the structural adjustment conditions imposed by the IMF and the World Bank since the early 1980s) and political conditionality – promotion of the institutions of liberal democracy.

Further classifications mentioned are “peace conditionality” – with aims of implementation of peace accords, “peace enforcement conditionality” – where aid is subservient to the security interests of the donor country. And “post-conditionality”, refers to situations where donors are able to impose their will not through explicit and visible conditionality, but rather through the exercise of ideological hegemony over key institutions in aid- dependent recipient countries (When recipient country elites and bureaucrats – for instance in the Ministries of Finance and of Public Administration – are ideologically aligned with international donors).

According to Borchgrevink, the literature is fairly unanimous in assessing the effectiveness of conditionality: in general, it does not work very well. The author provides us with multiple references that claim conditionality to bring negative impacts and/or backlash. The author however claims “This does not mean that conditionality has no impact at all” and gives us an example:

“Obviously, the structural adjustment programmes imposed by donors on a number of recipient countries did have effects, sometimes quite far-reaching ones, for instance in terms of reducing the number of state employees, liberalizing the economy, and dismantling capacity for delivering basic services.”

One may wonder why the author chose an example that shows the negative impact of conditionality since it doesn’t help his case. Then however, the author tries to qualify it as “according to the studies – the outcomes in terms of economic development and poverty reduction have mostly not been the intended ones, at least in part because reform programs were carried out halfheartedly, partially, or only temporarily.” This is a long discredited argument in defense of the multilaterals’ (IMF & WB) and their damaging neo-liberal policy impositions. Prof. J. Stiglitz, who was part of the IMF leadership at the time, emphasizes the source of the negative impacts rests solely on the policy prescriptions of the multilaterals. The choice of these studies than the revealing insider account of Stiglitz, which the author used as a reference, may tell the neo-liberal ideological orientation of the author.

The four periods delimited by the study show different types of aid conditionality at work. the initial years (1992-1997) witnessed the coordinated application of economic conditionality by multilaterals (IMF and WB); the war years (1998-2000) saw uncoordinated application of peace conditionality; the post-war years (2000-2005) were a period of higher aid levels and can be considered as a ‘peace enforcement’ conditionality; and unified threats of the use of political conditionality marked the fourth period (after the 2005 elections – 2007). The current (post 2007) ‘engagement policy’ is an attempt at establishing a relation of post-conditionality, which is likely to fail if they not already. The common denominator in this story, says the author, donors have been relatively powerless to influence Ethiopian policies.
In his assessment of the factors that have limited donor influence Borchgrevink concludes “The Ethiopian regime is independent-minded, proud, and unwilling to bow to the whims and wishes of donors and the international community in general…The EPRDF has learnt self-reliance during a long guerrilla struggle, has a strong commitment to its own development model with a basis in Marxism-Leninism, and a perhaps healthy distrust of the reliability of donors”. He provides the reader with plenty of “strategies” the government effective applies to minimize donor influence. When these strategies have not been sufficient, Borchgrevink tells us, the Ethiopian government has been willing to take a tough stance and tell donors that they’d rather forego aid than accept interference.

The conclusion “donors have had limited influence over Ethiopia not simply because of the obstinate character of the EPRDF regime, but primarily because donors have been incapable of applying consistent and coherent policies” is a U-turn from both the literature and empirical results found from the study. He earlier stated:

“Whether conditionality has been applied – as when aid levels were halved between 1992 and 1997 – or not applied – for lack of donor coordination during the war or for strategic reasons after the 2005 election – the outcome has consistently been that the Ethiopian regime has been able to stick to its own policies, without making significant concessions.

After 1992 aid dropped off every year until 1997, by which time it had been cut in half. The World Bank was not alone in pressing for privatization and liberalization of the financial sector reforms. Even greater pressure was applied by the IMF, which cut off its lending to Ethiopia in this period still; Ethiopia did not bow to the economic conditionality of its multilateral donors. The regime that had been a model reformer in its first years – when reforms corresponded to its own programme – preferred very significant aid cuts to implementing reforms considered to go against that programme. And Ethiopia has maintained its position.”

It is only fair to assume this contradiction stems from lack of alternative recommendation (ruling out military intervention) or the author’s ideological predisposition towards the imposition of policies in donor recipient countries. The study is comprehensive in light of such complicated undertaking with multitude variables that are difficult to measure.
What makes this study important is that it shows the inability aid conditionality to impose certain “reforms” to a nation in general and in the case of Ethiopia in particular. The failure of donor influence to bring about “reforms”, even though applied using different techniques for two decades, can only prove the independent-mindedness of Ethiopians and their government hence, the reforms needed can only be brought by the people of Ethiopia. The only way to success for the opposition lies in admitting this hard truth, abandoning their hope in donor influence and trying to convince Ethiopians on reform agendas.

You can download the study here

Fetsum Berhane is an Ethiopian resident, economist researcher and a blogger on HornAffairs.

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