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Ireland and Aid Conditonality

Ireland and Aid Conditonality

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Published by Robert Kevlihan
A review of Ireland's attitude towards structural adjustment in developing states up to 1998
A review of Ireland's attitude towards structural adjustment in developing states up to 1998

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Published by: Robert Kevlihan on Nov 27, 2010
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11/27/2010

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Ireland and Aid Conditionality 1972 - 1998Working PaperBy Rob Kevlihan
 
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 Introduction
The maintenance of an independent foreign policy by small states has always been a difficult objective.Dominated economically, militarily and politically by larger, more powerful states, smaller statesfrequently have to tred carefully in order to maintain an appropriate balance between the necessity of maintaining cordial relationships with great powers, protecting their own interests and advancing theirown foreign policy aims. While the great game of diplomacy is perhaps now played in a more civilisedmanner in western Europe than in the past, power relationships in this respect have remained essentiallyunchanged.Ireland, as a small western European state with a colonial history similar to so many developingcountries, has traditionally considered itself to have a particular empathy for the plight of suchcountries. The initiation of a development assistance programme by Ireland in the early 1970s wasundoubtedly driven to a large degree by its new found membership to the European Community.Nonetheless, development assistance was quickly perceived to be a key part of Ireland's foreign policy,
and in the words of the foreign minister of the time, was “necessary to give Ireland moral credibilityinternationally” (Sutton, 1977,9).
 This paper examines changes in the application of conditionality to Irish development policy withparticular reference to Irish aid policy towards Sudan. It will demonstrate a clear trend towardsconformity with what one commentator has described as the international 'aid regime' (Gibbon,1993,36). The implications of such a trend are profound. It implies a significant reduction in the scopefor independent action in the provision of development assistance by Ireland and, more importantlyperhaps, it implies the loss of a small but critical voice on behalf of developing countries amongwestern states. The paper concludes that the Irish Government should closely re-examine this trend inits policy towards conformity with current international aid norms. Such a re-examination must of necessity involve a critical appraisal of the validity of these norms, the effectiveness of mechanismscurrently in place to implement them (in particular aid conditionality) and the appropriate balancebetween pressure for reform and the needs of vulnerable populations. Finally, it concludes that the
 
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decision by the Irish government to close it‟s bilateral aid programme in Sudan was flawed and should
be reviewed.
 First Generation - Economic Conditionality
Stokke (1995) describes two generations of conditionality to the provision of development assistance bywestern governments to less developed countries. First generation conditionality refers to the economicreform agenda imposed by western governments and Bretton Woods institutions, particularly theInternational Monetary Fund (IMF) and the World Bank on developing countries from the early 1980s.In the early 1980s, developing countries suddenly found themselves in the midst of a debt crisis as aresult of sharp interest rate increases. Western governments turned to the IMF and World Bank to act aslead agencies with developing countries in dealing with this issue. These institutions providedcontinued funding to highly indebted countries in return for adherence to strict reform packages. Suchreform packages were typically enforced using Structural Adjustment Programmes (SAPs), wherecontinued lending and assistance was conditioned on adherence by the recipient government to detailedfiscal, monetary and economic policies. This first generation conditionality is referred to by othercommentators as economic conditionality (Moore, 1993, 1). Economic conditionality is based on IMFand World Bank analyses of the failure of developing countries to develop. The prescriptions, known asthe Washington consensus, are predicated on the assumption that the debt crisis of individualdeveloping countries is fundamentally caused by excessive government spending. They include fiscaldiscipline, prioritisation of health, education and infrastructure over defence and administration,broadening of the tax base and cutting marginal tax rates, allowing market determined interest andexchange rates, liberalising trade, abolishing barriers to direct foreign investment, privatising stateenterprises, deregulating industries to allow greater competition and securing property rights (Kirby,1997,73).These prescriptions reflect a neo-liberal economic perspective and, at least in the mid 1980s, werehighly political. Criticism of economic conditionality was expressed in the period 1983-85 by UNagencies with poverty related
mandates (UNICEF, International Labour Organisation) and certain „like

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