Aid returns as a political weapon

By Jonathan Power

LONDON (JP): Using aid as a political weapon goes in phases and fashions, fits and starts, lulls and storms. The only consistent factor is that invariably it is the U.S. that sets the tone. Other Western and Middle Eastern aid givers follow in a straggle. Sometimes they do, more often they don't, as Japan has just made plain over Cambodia, much to Washington's chagrin.

With Jimmy Carter as president it was a sword to be wielded in every direction and certainly in Latin America, combined with a high decibel rhetoric on human rights, did help in the battle to vanquish tyranny and restore democracy. Since Carter's days there has been the occasional spate of activity but of a less spirited kind. But now the Carteresque fervor is back in vogue. Madeleine Albright's State Department is charging at every windmill.

Although it is far too early to say whether she will have any more success than Sancho Panza it comes as a breath of much needed air into what was in danger of becoming, under her predecessor, Warren Christopher, the politics of the doldrums. Cambodia is one target, Kenya another. Moreover, one remarkable aspect of this swordsmanship is that this time America is not alone. The stodgy, consensus-seeking International Monetary Fund (IMF) is also flexing its financial muscle, which means that the U.S., as always the IMF's most powerful governor, has won over for this new policy of toughness not just the West Europeans, Canadians and Japanese but most of the Third World's financial heavyweights.

On Aug. 1, the world's monetary institution of last resort suspended a loan program to Kenya of US$220 million. This was followed a few days later by the publishing of new guidelines that instruct IMF staff to become more political. No longer will only economic and financial criteria be the deciding issues in giving loans. From now on "governance" will be factored into decision making. In other words, corruption and mismanagement will be weighed and, if found wanting, governments will find their capacity to borrow curtailed. Kenya is the first test. The IMF finally decided to pull the plug after the government fired the independently minded -- and honest -- head of customs and excise.

These remarkable developments in policy come not very long after the IMF decided to examine, when analyzing a country's credit-worthiness, not just the civilian budget but the once off- limits military budget too. Some countries have been told they ought to rein in runaway arms purchases.

All this raises the sensitive and demanding question, if the White House has decided to become more rigorous on human rights and good governance where does it stop, or rather how far does it go? Is it only aimed at poverty-ridden, relatively dependent countries like Kenya and Cambodia or will the White House once again change tack with Beijing and link human rights to trade concessions? Is it also going to lead to a more aggressive use of military aid -- out of fashion since the end of the Cold War -- making the world better for the "good guys"? This seems to be the message from Rwanda where recent revelations of American military aid and training suggest Washington may have had a hand in the Tutsi armies' recent overthrow of Zaire's long-time dictator, Mobutu Sese Seko.

One of these questions can be answered quickly. No, policy is not going to change towards China. Washington knows that the Chinese economy is too big and too robust for it to be able to gain political leverage by punishing China for human rights abuses with trade sanctions. The Nixonian policy of embracing China will continue, interrupted as it was for only the briefest of moments by Tienanmen Square.

The Rwanda/Zaire affair is more convoluted and, let us say, after the Somalian imbroglio, unexpected. What on earth is America doing poking around in African civil wars? Were the old- time Marxist analysts right after all -- the capitalist countries will slit each other's throats in order to win favored access to African minerals? This policy was discredited by the killing fields of Angola where East and West competed for the prize of its post-colonial government and its diamond fields. The murderous consequences of Africa's worst war still linger on. Surely Washington doesn't believe it should compete with capitalist Paris as it did for so long with communist Moscow? (And vice versa).

But suspending aid to small, dependent countries is another matter. This must be a very good thing to do and the new tough America and IMF policies are well overdue. In too many countries aid and loans have been poured into the coffers of countries that have misspent and corrupted them away. In Africa, in particular, aid has not had a good track record in fostering economic growth and the alleviation of poverty. Although during the 1960s, 1970s and 1980s aid contributed to many important individual achievements, overall they were negated by the counterproductive policies of governments.

Belatedly, but rather wonderfully, a significant number of African countries have put their fiscal house in order. Take Ethiopia. After decades of protracted civil war and corrupt government it now has much improved governance and a growth rate last year at the unbelievable East Asian rate of 12.4 percent.

Aid Ethiopia. Cut-off Kenya. Embrace China and stay out of Africa's wars. Who said aid as a foreign policy tool was a simple weapon? More activity is all to the good but getting it right is even better.