Thursday, September 14, 2006

Hillary Benn and the World Bank

I knew it! Hillary Benn, our International Development Secretary, makes himself out to be the good, reformed, Blairite. He knows that being identified as another Bennite dinosaur would mean spending his time in Marxism 2006 conferences opining on how great Scargill was to an audience of smelly old men and Islamists. That's a depressing prospect for an ambitious Benn so he jumped on the centrist bandwagon. Now he appears to be jumping off.

His true colours are coming to the fore: Apparently he finds the idea of us imposing our economic creed on developing countries undemocratic. Of course, this isn't a principle as he's quite happy with IMF conditionality in matters of corruption and good governance but when it comes to privatisation he's threatening to stop a contribution to the World Bank in protest.

There is no principle here. Respecting sovereignty means allowing nations to do what they want with their own citizens and their own money. It doesn't mean we have to throw our own money down a hole because we need to wear democratic blinders to avoid telling the difference between a loan which is going to end up spent on subsidies for the Chad auto industry and one which will get used constructively.

There is a sensible debate to be had over whether or not conditionality needs adjusting to, for example, move more slowly in privatising key industries, my inclination from reading respectable analyses such as the Economist's a year or so ago is that the World Bank does a decent job these days. The Bank has learnt lessons from decades seeing the money it is responsible to us for distributing pissed away on countries without the political will to reform. As far as international development organisations go this is a good one. Reforms which may still be necessary are clearly under discussion and don't need posturing to shunt them along.

What I really hope Hillary Benn will remember, but expect he won't, is the economic history of the Marshall Plan and its role in the European postwar Golden Age. The amount provided by the plan was large but not nearly sufficient to have created growth like was seen in post war Europe. Instead, its role was in encouraging, through conditionality like policy requirements, policy reform and providing the funds to make the process of reform more comfortable in the short term. This is a model the World Bank should and does follow.

World Bank conditionality is an easy target for lazy snipes about democracy from socialists who haven't absorbed the historical experience of what privatisation, Britons should know, and trade liberalisation, all Europeans should remember, can do to improve a country's economic performance.

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