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Ethiopia-World Bank: Good governance and human rights

Do they really matter for the World Bank[1]

By Fita Chala*

Basic Facts about the World Bank Group

June 1, 2006 — Created in 1945 to serve as a lender of last resort to countries which could not borrow money from the world market to build modern infrastructures and enter into international trade, the World Bank has been used as another instrument to reward political allies and protégé governments. The World Bank Group is composed of four main organizations: the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA). This paper tries to focus only on IDA and IBRD because these branches of are the ones which grant loan to poor countries like Ethiopia and it is in the context of their activities that ?governance” issues have arisen. According to its charter (Article of Agreement), all of the Bank’s power is vested in the Board of Governors. Each member country is represented by a single board member. Even though the Board makes important decisions, the day- to- day operation and business decisions are made by the executive directors and the president. Five of the executive directors are appointed by the U.S., Japan, Germany, France and the United Kingdom, the owners of the largest number of shares, while the rest is elected by the governors representing the other member countries[2]. Currently, the president of the Bank is the former Deputy Defense Secretary and the chief architect of the post -September 11- U.S policy, Dr. Paul Wolfovitz. Therefore, we need to ask ourselves “who is your daddy?” when we write open or personal letters, organize demonstration before the World Bank or attend the so-called consultations or other mostly fruitless meetings with the executives of the World Bank.

IDA’s loans carry no interest but service charges; the payment time is 35 to 40 years. Therefore, the money a government borrows today should be paid back years after they are gone, whether they were elected by the people or they came into power by force or through rigged election. If we look at Africa, we all know that except for a handful of countries like the Republic of South Africa, Botswana and Senegal, other states in the continent are under the rule of a military dictator, a one party rule or an absolute monarch. Nevertheless, the Bank has approved hundreds of billions of loans and aids to the governments of Mobutu, Daniel Arap Moi, Mussevini and former Apartheid government of South Africa.

We shall bear in mind that the founders of this institution never thought that Africa had any independent African country, except for two countries, Liberia and Ethiopia. We do not need to second guess what the intentions of the founding fathers of this institution were when they set it up few months after the end of World War II. Nevertheless, to its credit, this institution has put billions of dollars in many projects in Africa even though its charter requires that it lends only for productive purposes. Unelected governments, dictators and their supporters have plundered the money borrowed in the name of the stakeholders. Bear also in mind that this institution was not created to be an antipoverty agency, but its supporters argued that by helping developing countries become modern industrial economies, the bank would also be fostering a rise in their standard of living. Some analysts argue that during the sixty-one years the World Bank was lending money and was giving advice it succeeded mainly in plunging many countries into insupportable debt. [3]

Ethiopia started receiving a huge amount of support from this institution after the fall of the Dergue Regime. As an American and Western ally, it has received tens of billions of dollars since 1991. However, despite such a huge support, our country remained economically the poorest in the world, but in the top five in jailing journalists and other political opponents. It has also remained a country where one person and his party have been ruling for the last 15 years. One of the major criteria in lending money for a country is good governance.

What is good Governance?

The more the World Bank lends to a country, the more it can insist on being involved in domestic issues of the loan applicant country.[4]According to Joan M. Nelson, good governance requires efficient and honest institutions staffed with well-trained people, enforcing the rule of law impartially and effectively.[5] Good governance requires the presence of a free press, an independent judiciary, a functioning court system, opposition parties, free and fair elections, an active legislature, laws that promote transparency in governmental decision-making, and an active and involved civil society.

The current policy of the World Bank that is to take into consideration the quality of governance in a particular country before approving a loan originated from a study that it had sponsored in 1989. [6] Following this study, the Bank’s Vice-President and General Counsel, Ibrahim Shihata issued a memorandum by 1990 to “clarify the appropriate legal limits for the Bank in addressing this issue” [7] According to the Memorandum, political rights might reach such proportions as to become a Bank concern “due to significant direct economic effects…”[8] The Memorandum concluded “the Bank should not allow political factors… to influence its decisions, unless … it is established that they have direct and obvious economic effects relevant to its work.” [9]

Another study by the World Bank concluded that the “root causes of the inefficiencies and poor performance of the civil service in Africa are more institutional (governance) than technical. ” [10]The central hypothesis of this new approach was that bureaucracies are ?by and large ?patrimonialized’ by ruling élites, which use them as control tools to ensure their own permanence in power at the expense of serving the public interest.”[11].

We have seen the requirements for good governance. The question is whether TPLF/EPRDF-Ethiopia passed the World Bank’s test to qualify for billions of loans and aid in the form of direct budgetary supply or the new name “Protection of Basic Services”. The facts speak for themselves. Ethiopia could be found on the top list of countries who jailed journalists; there is no independent judiciary, the legislature is the tool of TPLF/EPRDF; non-EPRDF parliamentary parties, except for few-minute- floor- speeches and occasional walk-outs they are ineligible to present an agenda, a bill or a substantive proposal; last but not least there is clear and convincing evidence that the TPLF/EPRDF rigged the 2005 election, as it did with the previous two.

The Bank faced the same criticism 16 years ago when it disbursed billions of dollars to an important U.S ally and our good neighbor, Kenya. Let us investigate briefly what happened in Kenya at that time. Governance concerns were raised publicly, by senior Bank staff in 1990, however it received more than one billion dollars in 1991. At that time World Bank loan was the country’s main source of foreign assistance. [12] President Daniel Arap Moi failed to take reforms, including improving its human rights records and moving toward multiparty democracy. As Ethiopians did in 2005 and 2006, Kenyan opposition figures called on Western donors in many forms including open letter[13] to get tough on Arap Moi during a November 1991 meeting. In response, the Bank withheld some promised loan to Kenya. [14] After this meeting, in December 1991, President Moi announced the end of the one party system, called for new election, released political prisoners and granted limited liberation of freedom of speech, press and assembly. However, until he left power in 2002, he continued to control the executive and the legislating bodies; his government arrested, detained and harassed opposition figures and those critical of government policies.[15] This is a lesson what we have to learn from the experience of our good neighbor. It seems that we are in a stage where Kenya found itself 15 years ago.

In his response to criticism, the World Bank’s country director, Ishac Diwan’s, “direct budget support” to Ethiopia has been suspended and the Bank has discovered alternative means, the so-called Protection of Basic Services. Accordingly, the Bank will provide $215 million out of the 1.05 billion it allocated in Ethiopia to hundreds of local governments. In defense of this policy, Mr. Diwan stated that the TPLF/EPRDF “government has made progress on several key “human development fronts …” Mr. Diwan, acting like a wingman of Ato Zenawi, chose a unique, I assume, coded-word, the “Human Development Front”, but in that definition he avoided mentioning human rights. As a country director and a resident of Addis Ababa, he might have heard the shots, seen the graphic pictures of atrocities, or might have heard the human rights reports[16] about the flagrant violation of human rights by TPLF/EPRDF government.
[17].

Let us briefly look at what do these independent reports contained.

Human Rights Watch World Report 2004

“…The Ethiopian government continues to deny its citizens’ basic human rights and to repress the unarmed opposition.” [18]
“Provincial authorities, including local leaders of political parties allied with the ruling coalition EPRDF, are often implicated in physical assaults on supporters of registered opposition parties. ” [19]ibid
“Security forces frequently arrest civilians, claiming that they are members of … the Oromo Liberation Front …” [20].

2003 U.S Country Report

“The government human rights record remained poor: although there were improvements in few areas, serious problems remained. Security forces committed a number of unlawful killings and at times beat, tortured, and mistreated detainees.” P.1.

2004 Country Report

“The government human rights record remained poor; although there were improvements in few areas, serious problems remained. Security forces committed a number of unlawful killings and at times beat, tortured, and mistreated detainees.” [21]p.1.

2005 Country Report

“…Security forces committed many unlawful killings, including some alleged political killings, during the year. There were numerous reports of unlawful killings during the year. ”[22]

“… There continued to be reports of unlawful killings by security forces particularly in the Oromia and Somali Regions” [23]. “…AAUP supporters reported attacks by government militia against them escalated during the year. Local officials often turned a blind eye to these attacks or complicit in them.” [24]

These reports indicate that local government as accessory before and after the fact during the government’s crackdown on opponents. The prevailing country conditions show that there is no local government under opposition control. It is well-known that local governments are another branch of the central government, they are not democratically elected by the people for the people, the legal system in Ethiopia allows Ato Meles Zenawi to ignore election results and, most importantly, to appoint whomever he wants to lead a local government. It is also known that they are incapable of performing small tasks and lack transparency. Despite the above prevailing conditions, the Bank has stuck with its 16-year- old- policy and has approved a loan in the name of Protection of Basic Services even though it suspended aid last year. Given its history, this action of the Bank is not surprising. The Bank has found the connection between economic development and civil and political rights less direct.[25] Had the U.N Security Council found Ethiopia guilty of violating human rights, that would have make some differences in the policy of the Bank. [26] But it has not. So, life goes on as usual.

We have to bear in mind, though, that the World Bank is not a Human Rights Court and it did not sign a convention to protect human rights. Governments, but not the World Bank, are responsible to protect human rights proclaimed by declarations and conventions and also by their own constitutions.

Conclusion

It is well-known that there are a number of countries receiving World Bank loans and credits in which the governments consistently and systematically violate basic human rights. Ours is not the only one. And the World Bank has been and is another instrument of the U.S. and its allies. Before the war on terror started the World Bank was fighting for its life because the bank’s biggest donors, including the United States were tired of failed projects. But now the chief architect and the chief surgeon has brought it to life. When taking the office Dr. Paul Wolfowitz stated, “I hope I can push the Bank staff to look at the mistakes of the past so that we don’t repeat them.” We don’t know what happened with that promise.

There is no doubt that the new money would strengthen EPRDF and jeopardize the struggle of Ethiopians for freedom. Basic services, human rights and governance are important hot-button-issues. Neither is inferior to the other. The Bank should have considered them equal and should have found another alternative way to assist Ethiopian people. Unless some other institutions emerge, which provide loans in a more favorable condition, there will be continuing need in the 21st century for the World Bank. With that in mind, and having learned a lesson form other countries that passed through the same route, we need to find innovative ways to continue the dialogue with the Bank. As the English say “Wise men change their minds, fools never.”

References

1. Jacob A. Frenkel, Micheal P. Dooley and Peter Wickham (edited by), Analytical issues in Debt, 1992

2. Peter Gray and Sandra C. Richard (edited by), International Finance in the New World Order, 1995

3. http://www.worldbank.org/html/extdr/toc.html.

4. http://www.worldbank.org/wb/images/wbg_psd.gif. http://www.worldbank.org/edi/edirp.html.

[email protected].

6. http://www.worldbank.org/html/extdr/toc.html , visited June 17, 1999

7. http://www.globalideasbank.org.

8. Lawyers Committee on Human Rights, The World Bank: Governance and Human Rights 1995:, 1993, 1995.

9. F. Stewart, The Many Faces of Adjustment in: World Development, vol. 19 (12), 1991

10. J.W. Smith, The Political Struggle of the Twenty-First Century, release date July 1999. [email protected]

11. Newsweek September 14 1998,
September 28 1998,
October 5 1998,
October 12 1998,
December 21 1998,
November 9 1998,
January181998,

12. Plunder With A Human Face by Asad Ismi in: http://www.infoasis.com/people/stevetwt/index.html.

13. Jessica Vivian, Social Safety Nets and Adjustment in Developing Countries,’ Copyright 1995, InterPress Third World News Agency (IPS).

14. Patricia Adams, Odious Debts: Loose Lending, Corruption, and the Third World’s Environmental Legacy (London and Toronto: Earthscan, 1991)

15. Bruce Rich, Mortgaging the Earth: Environmental Impoverishment and the Crisis of Development (Boston: Beacon, 1994);

16. Bradford Morse and Thomas Berger, Sardar Sarovar: Report of the Independent Review (Ottawa: Resource Futures International, 1992);

17. Indian Express, April 27, 1991,

18. Berne Declaration, Switzerland, 1993.

19. World Bank Operations Evaluation Department, 1994 Evaluation Results (Washington: World Bank, 1996)

20. Auditor General of Canada, Report of the Auditor General of Canada to the House of Commons ,1992 (Ottawa: Minister of Supply and Services Canada, 1992)

21. IBRD, Press conference, April 23, 1995

22. Mark Malloch Brown, ‘Communications Strategy Update,’ World Bank office memorandum, May 3, 1995,

23. Mark Malloch Brown, ‘The World Bank and its Critics,’ Washington Times, July 7, 1995.

24. House of Representatives, Committee on Appropriations, Foreign Operations: Export Financing, and Related Programs Appropriations Bill, 1997,’ Report 104-600, 104th Cong., 2d sess., May 29, 1996, p. 50.

25. Peter T. Bauer, Equality, the Third World, and Economic Delusion (Cambridge, Mass.: Harvard University Press, 1981), p. 122.

26. Greg Mastel, China and the World Could Bank, THE WASHINGTON POST December 29, 1997 by

27. The New Work Times, August 17, 1999

28. Catherine Caufield. Masters of Illusion: the World Bank and the Poverty of Nations, 1997.

29. How to Tackle a Mammot: A guide for successful campaigning against the International Monetary Fund and the World Bank, AFSA at [email protected].

30. Tyler Marshall, IMF, World Bank: Dispensing Loans at a Price, The Los Angeles Times, August 9, 1998


[1] This piece is extracted from a graduation paper presented in 1999. However, it is updated and modified to fit its readers.

[2] Lawyers Committee on Human Rights, The World Bank: Governance and Human Rights 1995:, 1993, 1995, p 8.

[3] Id.

[4] Id…

[5] Joan M.Nelson, “ Comment on Governance and Development”, by Boeninger, in “Proceedings of the World Bank Annual Conference on Development Economics” 1991, at 292-293(World Bank, 1992).

[6] Sub-Saharan Africa – From Crisis to Sustainable Growth, a study prepard in 1989 by staff members from the Africa Department.

[7] General Council’s Memorandum, The World Bank Annual Report 1992, p. 2-3.

[8] The World Bank: Governance and Human Rights 1995, p. 36

[9] Id. P. 38, 55.

[10] Mamadou Dia, A Governance Approcha to Civil Service Reform in Sub-Saharan Africa, Technichal Paper No. 225 at 26 (World Bank, 1993)

[11] The World Bank: Governance and Human Rights 1995, p. 68.

[12] In 1987, donor aid and loans was reported to finance five percent of government expenditues; in 1989, this rose to 14% and morethan doubled in 1990. “ Western Donors to Meet” The Weekley Review, June 5, 1992, p. 30

[13] “Will Kenya’s Bad Habits Jeopardize Its Aid?,”, Newyork Times, Nov. 17, 1991, P-4; “ On the Eve of Taiks with Aid Donors, Kenya is Under Pressure to Democratize,” New York Times, Nov.25, 1991, p. 5.

[14] “ Global Lender Withholds Kenya’s $63 million” New York Times, page 11; “ Kenya, in Protest of IMF Demands, Reserves Economic Reforms,” Washington Post, March 24, 1993, p. A27.

[15]See U.S country Report from 1991-2002.

[16] See U.S reports on human rights, Amnesty international and Human Rights Watch Reports.

[17] See U.S reports on human rights, Amnesty international and Human Rights Watch Reports.

[18] Human Rights Watch World Report 2004 p. 1.

[19] Ibid.

[20] Human Rights Watch World Report 2004 p. 2.

[21] 2004 Country Report p. 1.

[22] 2005 Country Report p.2

[23] Ibid.

[24] Ibid. p.4

[25] The World Bank: Governance and Human Rights 1995. at 34

[26] Ibrahim F.I. Shihata, “ Human Rights, Development and International Financial Instituions” (paper prepared for Conference on Human Rights, Public Finance, and the Development Process, Jan 24, 1992 Washington DC)[hereinafter Shihata, Human Rights].

* The author is an Ethiopian born; he is a practicing attorney and lives outside of Ethiopia. He can be reached at [email protected].

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