Development and Cooperation

In 1997, the World Bank backed away from pure free market dogmatism by devoting its World Development Report to the “role of the state”. The multilateral institution emphasised that, besides economic liberalism, other things matter – such as competent authorities, good governance, transparency of public activities and so on. Ideologically speaking, this ended the dominance of the Washington Consensus doctrine, which had previously controlled multilateral development policy. This doctrine demanded that poor states integrate into the world market as fast as possible, and provide the necessary foundations by deregulating the economy, privatising public services and fighting inflation.

The World Development Report, of course, did not end the debate on multilateral development policy. The next important step followed in 1999 when the G8 summit launched the Cologne Initiative to relieve the debt burden of poor countries that had been overwhelmed by grinding levels of interest payments for too long. Debt relief was linked to the demand that the target countries themselves draft strategies to alleviate poverty. These were to be the result of coordinated efforts by governments, parliaments and civil society. Such documents were to supplant the earlier, stereotyped structural adjustment measures.

Since then, everything has been just fine – in theory. A new jargon has evolved with buzzwords as good governance, institution building, ownership and participation stressed by most major actors. However, these terms need interpretation. World Bank chief economist, François Bourguignon, lists good reasons for speaking of local ownership and participation in the case of the People’s Republic of China (interview, p. 18). As Beijing’s dictatorial regime can certainly not be applauded for good governance, it becomes obvious that the individual elements of recent development jargon do not automatically add up to one coherent concept.

Moreover, we should not forget that the present World Bank course is not unopposed. In a recent book on James Wolfensohn, the journalist Sebastian Mallaby reminds us that the right wing in US politics has different priorities than the President of the development bank (review, p. 20). The Federal Government of Germany supports Wolfensohn. Development Minister Heidemarie Wieczorek-Zeul appeals for old doctrines to be abandoned, and to refine the concepts followed since Wolfensohn took office (p. 12).

Recent evaluations of the World Bank and the International Monetary Fund have confirmed the need for change. Both documents point out that poverty reduction strategies drafted by developing countries tend to be inadequate. The principle of ownership – it is stated by Bank and Fund – rings hollow. Indeed, there is a certain paradox inherent in the principle. As the saying goes, he who pays the piper calls the tune. Of course, the governments of the donor countries are used to pursuing their interests and are keenly aware of their power. It is unrealistic to expect them to simply stop calling the tune.

Nonetheless, the rhetoric of ownership is not meaningless. It reflects a welcome acknowledgement of many governments that there is no remote control for foreign societies. Technocrats in wealthy capitals do not have a blueprint for the welfare of other world regions. The keyword “ownership” should be correctly understood as an offer of cooperation based on partnership and mutual responsibility.

The intentions are good. But goodwill cannot make up for the imbalance of one party supplying the funds and the other, of its own volition, behaving sensibly (in the terms of the financiers). One possible solution could be development partnerships between parties, with each party’s responsibilities being clearly set out. This would be similar to the European Union’s approach to regional aid and expansion negotiations, which have set international standards for keeping the peace and speeding up modernisation (Louka Katseli, p. 16).

In the meantime, the old Washington Consensus is not entirely gone and forgotten. Dogmatic notions of macroeconomics have survived – augmented by clearer ideas about the role of the state. It remains debatable, however, whether this is enough. Rich country governments often fail to adhere to the principles of stability they use to assess the performance of finance ministers and reserve bank governors in poor countries. With respect to budgetary discipline, the world’s three largest economies (USA, Japan and Germany) certainly did not excel in recent years. More attractive strategies are conceivable for poorer countries too (Jan Priewe, p. 22).