Asians seen bound to swallow bitter pill of "good governance"

Asians seen bound to swallow bitter pill of "good governance"

By Jan Kristiansen

NICE, France (AFP): Western donor countries strongly hinted here this week that Asia's poorer nations face the prospect of aid flows drying up unless they commit themselves to "good governance."

The idea was firmly put on record during the annual meeting of the Asian Development Bank (ADB), which ended here Thursday, despite firm opposition from China and widespread concern among other poorer ADB members.

Led by the United States, the donor community, working through the Paris-based Development Assistance Committee (DAC), adopted this notion as a basic condition for bilateral aid early in the 1990s.

They have also put it on the agenda of other multilateral financial institutions, including the World Bank and, less explicitly, the International Monetary Fund (IMF).

The European Bank for Reconstruction and Development (EBRD), set up in 1991 to help formerly communist eastern Europe in the transition to a market-based economy, even had the political requirements of pluralistic democracy and respect for human rights written into its constitution.

Good governance figured among an 11-point list of conditions set by the United States for going along with a 100 percent increase in the capital of the Asian Development Bank (ADB), Western officials said.

The U.S.-led attempt to establish a formal link with the capital increase, to US$48 billion, which will be officially announced in two weeks, triggered a row between the donors and developing ADB members.

The most vocal opposition came from China and India, and western officials privately said they felt these and other ADB members might have a variety of political reasons for rejecting any linkage as an infringement on national sovereignty.

China, for one, has been engaged in a lengthy dispute with the U.S. administration over trade and human rights.

Western officials nevertheless said they were confident the issue would be sorted out, sooner or later, because most ADB borrowers badly need whatever funds they can obtain through the bank or its soft-loan wing, the Asian Development Fund (AFD).

From the donors' point of view, deepening budget deficits linked with the recession in the West have made it harder to "sell" development aid appropriations to their parliaments and taxpayers.

Ole Loensmann Poulsen, Danish state secretary for foreign affairs, said as the ADB's general debate wound up Thursday that the policy guidelines for using aid money were "not irrelevant" for Denmark, but were "fundamental" to its decision-making process.

In its broader definition, spelt out in the general debate by the Nordic countries while the U.S. omitted any reference to the issue, good governance includes such sensitive elements as respect for human rights and democratic rule.

It also includes such notions as fair, efficient and transparent public management, accountability towards the population, controlling corruption and cutting "excessive" military spending.

But the Danish official and other western speakers made it clear that good governance, in the ADB context and elsewhere, should form part of "policy dialogue" with aid recipients aimed at achieving sustainable development.

It was not meant to be a doctrine "imposed" on countries badly in need of external aid. "We have repeatedly told them so," one western official said.

U.S. Deputy Treasury Secretary Roger Altman, omitting any reference to good governance, told the meeting Wednesday it could be no coincidence that "most ... rich nations are democratic while most of the poor are not."

Sri Lanka answered back on Thursday, arguing that democratically elected governments in developing nations engaged in a difficult economic restructuring process faced the threat of being toppled by impatient voters unless their efforts receive adequate support and "encouragement."

A flexible and pragmatic approach was therefore required, Sri Lanka's chief delegate Harold Herat argued.