In a Newsnight interview last night, Bono "threw a brick through a window" on the issue of conditionality. Its an issue that divides Europe from America and the NGOs from the summiteers - but everybody's been avoiding it. He said:
"Conditionality actually is a word that means different things to different people. When we talk about conditionality we are talking about clear transparent processes, seeing where the money is going. Some people - the IMF/World bank - although they've stopped this now, or are stopping it now under pressure, [want] conditionalities to open their markets, forcing these countries to open their markets to get loans from the Bank and the Fund. Of course, this is obscene because we protect our own agriculture here in Europe and that's what the Trade Justice Movement is all about."
Actually, the old style conditionality Bono objects to is still a live issue...
- While Gordon Brown thinks the IMF and World Bank should move away from the kind of active conditionality it practised under Structural Adjustment, and concentrate mainly on surveillance, that is not yet a universally accepted argument;
- The USA has an overt and coherent policy of conditionality, enshrined in the policies of USAID and the Millennium Challenge Account;
- Even the debt deal done on 7 June, and on the table at Gleneagles, provides relief only for countries that have completed HIPC - ie privatised and liberalised to the satisfaction of the World Bank.
- The system of global trade administered by the WTO is nothing but a set of conditions for market access, and here economic liberalisation will be a key issue in the horsetrading over the draft proposals for its December summit.
Up to now, there's been a reluctance to raise the issue of conditionality. For the NGOs in Make Poverty History it's where they clearly diverge from the Blair government - but their strategy up to now has been to be critical cheerleaders. For Bush, the philosophical disagreement with the Brits is entirely containable because - through USAID and the MCA - the USA can do what it wants: indeed as with the original Bush proposal on 100% debt relief, the USA would be happy to see the multilateral finance bodies deprived of new spending power.
But the indigenous people of Bolivia have now put conditionality on the agenda in a striking way. The mass revolt that brought down Carlos Mesa forced lawmakers to slap a 50% tax on the foreign owned gas companies who bought into the industry at privatisation; the demand of the protesters is renationalisation. A previous revolt in 1999 sent water privatisation into reverse. Yet Bolivia is in the list of the 18 HIPC countries to benefit from the debt-relief deal agreed in London.
There are two stages to the HIPC process: first structural reform - which in Bolivia's case included privatisation, reduction of trade tariffs and deregulation of its labour market; second, a comprehesive poverty reduction strategy alongside strengthening of political and civil institutions. Bolivia is in the second phase (here is its 1998 HIPC Completion Point Document), and had been progressing, although slowly. The question nobody has bothered to ask - in public at least - is what happens to its HIPC status if its oil and gas industry are renationalised? Add to that the possibility of Evo Morales being elected president - he's an indigenous coca growers' leader - and the question becomes more acute. Here is an excerpt from Morales' website:
"We, Aymaras and Quechuas, original nations of the Andes, have survived the onslaught of the white man until today thanks to our coca leaf...after impoverishing our people with their neoliberal policies, the United States government, foremost enemy of the Indians, has used its dollars to bribe the officials of Bolivia, corrupt its institutions and pit white Bolivians against us..."
Bolivia is a candidate country for the US Millennium Challenge Account, and actually receives $95m a year from USAID. Here is an excerpt from the most recent justification document:
"Despite an extraordianrily difficult political and economic environment, the Goverment of Bolivia continues to pursue painful yet needed economic and political reforms. The Government of Bolivia honours its international and bilateral commitments to combat narcotics production and trafficking at great domestic political cost."
If Morales wins the next elections it would be hard to sustain the technical case for continued US aid, or for debt relief on grounds of HIPC completion. Of course in the event of a Morales government, renationalisation etc the technicalities would go out of the window and the wider foreign policy objectives that lie behind US development aid would kick in.
Bolivia, of course is a special case but it does pose some wider questions for the debate over conditionality: and it's a debate that, until now, has been in danger of getting lost amid the atmosphere congratulation and emotion that is building as we approach G8/Live8.
