OneWorld.net (U.S.)

By Elísio Macamo, University of Bayreuth

The former President of Mozambique, Joaquim Chissano - a man admired for his diplomatic skills, composure and good manners - was angry.

Speaking at a conference on aid at Oxford University he complained about how donors were using aid to pitch their tents up inside the government machineries of recipient countries. Chissano was particularly critical of direct budget support and poverty reduction strategies, as the amount of coordination required between donors and recipient countries and the level of expertise needed by the latter to meet the goals of either programmes effectively committed donors to taking a leading role.

He did not say it, but it sounded like he was suggesting that such forms of aid are Trojan horses that undermine national sovereignty.

The angry diplomat knows what he is talking about. After all, he presided over Mozambique’s surrender to the well-meaning policy advice of the World Bank and the International Monetary Fund from 1986 to 2004, when he quit the presidency. During this period of time many good things happened to Mozambique’s economy. Government financial policy instruments were brought into shape. Government spending was restrained. Mozambique was made attractive to foreign investment. Economic growth rates have been consistently high ever since. Depending on how one interprets statistics, Mozambique has become a useful success story for donors. Accusations of corruption are not absent, but then again, why should they not be made? Are they not a convenient residual explanation to account for the failures of “development”?

There is an interesting side to Mr. Chissano’s anger, though. Throughout his mandate many Mozambicans – and foreigners – warned him against the insidious influence of certain well-meaning institutions. They repeatedly cautioned him and his government against the real danger of running the country on behalf of these institutions. They sought to remind him that in theory at least he derived his authority from his own people represented in parliament and organized civil society. He did not seem to be listening.

And then the World Bank illustrated the point. It advised his government to stop subsidising the cashew nut industry in the early nineties. The Government of Mozambique was reluctant. It was worried about the many women who would lose their jobs. It did not quite understand the rationality of the World Bank’s argument according to which it made more economic sense for Mozambique to sell raw cashews to India and let its own industry perish. But the World Bank wanted it that way and drew from the sanctity of neo-liberal economics to cast government reluctance in a bad light. And so Chissano’s government gave in.

Years later, a World Bank consultant found that the decision to stop subsidising the cashew industry had been economically unsound and disastrous and wondered how on earth the World Bank had managed to persuade the Government of Mozambique.

Alas, the powers of persuasion of those who have money to lend rest on much more than just rational argument. The Bank never forced Mozambique to accept its advice. In fact, it has never forced any country to accept anything which a country does not want to do. All that the Bank did was to point out to Mozambique that acceptance of advice would make it easier for the Bank to continue supporting the course of liberalization upon which the country had embarked. It was still up to Mozambique to say no.

In a way, it is not as if former President Chissano had not listened. He had. He listened to the wrong people, though. And he had to. He had to listen to the World Bank and being an adult like most other members of his cabinet and of many other governments receiving support from the Bank he must learn to take responsibility for his actions. Saying yes to the World Bank, even if the advice is misguided, means being prepared to let the Bank off the hook when things go wrong. The Government of Mozambique destroyed its own cashew industry. It was neither the Bank, nor its advice.

This is what is wrong with conditionalities. They confer power without responsibility. This is the source of Mr. Chissano’s anger. It is actually frustration. Now that he is out of office he feels free to tell the world that he was running Mozambique with much responsibility, but little power. If this sounds like a zero-sum game wherein if the Bank loses, Mozambique gains and if Mozambique loses, the Bank gains, that is perhaps because it is, indeed, a zero-sum game: the game of development assistance.

It is a massive attack on political development and if it is, as seems to be the case with international financial institutions, backed up by a superstitious belief in neo-liberal economic wisdom there is no telling where developing countries will end up.

Politics is not about choosing the best economic theory to ground policies. Rather, it is about the process of choosing itself. And the longer it takes the World Bank and the development industry at large to realise this simple principle of liberal democracy, the higher the likelihood will be that diplomats will lose their cool.

Ownership, harmonisation, customisation, criticality and transparency and predictability - the five Good Practice Principles to which the Bank committed itself way back in 2005 - are not a concession to popular criticism. They signal a return to common sense. And only God knows how much emerging polities need this common sense for the sake of their development.