Description

Conditionalities are factors which make further interventions contingent upon specific results; incentives are interventions designed to encourage compliance; sanctions are negative incentives which are addressed in detail in the following tool profile in this section.

Conditionalities and incentives take various forms, encompassing economic, technological, diplomatic, financial, and security interventions, and can be applied in various ways. Some examples include debt forgiveness, reducing trade protection, diplomatic recognition, admission to international organizations, or economic and/or security assistance.

Objectives

Expected outcome or impact

Relationship to conflict prevention or mitigation

Implementation

Organizers

Participants

Activities

Economic and Security Assistance Conditionality

Probably the most common condition foreign donors impose is to tie economic or security assistance to institutional and policy reforms such as improving social services, creating jobs and redistributing income — promoting microenterprise development, redistributing land, providing credit, extending technical assistance to small farmers, and reforms to promote investment. Political conditionalities are typically designed to increase democratization or respect of human rights. Security assistance is often conditioned to certain actions or policies by the military, including civilian control and human rights observance.

As of the 1990s, the country-specific consultative groups of aid donors the World Bank convenes in Paris have become more assertive in considering political issues of governance, democratization, and human rights and in conditioning aid on democratic progress. This is not yet being done for progress in a conflict situation. However, because of limitations in the World Bank charter and the political sensitivity of conflict issues, a bilateral donor may be more appropriate to take leadership responsibility to encourage conditionality for conflict prevention and mitigation through direct and indirect actions. These responsibilities include preparing and facilitating meetings, monitoring compliance, and possibly convening preparatory meetings within the target country to include representatives of civil society, opposition politicians, policy analysts and the press.Aid conditionality for democratic changes and/or human rights observance may be imposed ad hoc on certain countries at pivotal moments of political stress and change, or may be institutionalized in universal standing conditions that apply to all potential members or aid recipients. For example, the US has laws that automatically restrict bilateral aid when there are military coups. In applying conditionality to achieve political reform, however, the US has traditionally required the electoral trappings of democracy to lift conditions, failing to apply them to the regime’s actual behavior once the political transition has occurred. The EU has been more effective in using explicit, standing conditionality both to encourage countries to become more democratic—especially in eastern Europe—and to discourage member states from abandoning democracy. "Increasingly, would-be autocrats have to ponder the heavy price their country would pay in loss of aid, capital, trade, investment, and symbolic status if they were to roll back democracy."

Conditionality of Humanitarian Assistance

While aid conditionalities for development and security assistance are well-established tools of foreign policy, humanitarian assistance has been largely exempt from overt conditions. Humanitarian assistance is most frequently the largest input from external donors to a government or rebel group engaged in conflict and as such can exert tremendous leverage on conflict management.

Humanitarian assistance can be conditioned to progress in areas such as human rights, sincerity at the negotiating table, security of aid personnel, curtailment of aid diversion, or other actions which both improve the environment for and effectiveness of humanitarian aid, as well as contribute to conflict prevention or mitigation. Foreign donors or international agencies commonly impose conditionalities on a government. Conditions can also be applied locally, for example, on a warring faction, and humanitarian assistance agencies have been experimenting with conditionalities on their assistance in the field.

Some familiar with such actions recommend that any cut-off or suspension be tied to previously stated conditions, and the same principles should be applied equally to aid to the various factions and regions involved in the conflict. An aid official insists, "Aid should only be suspended within the framework of an agreement with authorities."

Decisions about withdrawal should be coordinated among agencies. To the maximum extent possible, before making a decision whether and how to invoke conditions, agencies should canvass the target population on whether the agencies should go public about certain abuses and withdraw or get kicked out, or continue with their limited inputs in silence. Noting that extended, expensive relief could prolong conflict by enabling warring parties to evade their responsibility to civilians, one humanitarian NGO involved in Sudan urged agencies to consider withholding aid if peace efforts failed. Its director has declared the time has come to "question the effectiveness of paying endless millions for humanitarian aid which may only be exacerbating and prolonging the conflict."

Opportunities to tie conditions to improvement in a conflict situation increase once an acute emergency phase of a conflict or other crisis is over. "The emergency mandate is to save the drowning person," says one donor official. "When the person is out of the water, we need to get tougher politically. We shouldn’t go beyond the basics until there is peace."

Conditioning aid on progress in peace-building is a tricky process. One side in a conflict may be especially motivated to see humanitarian aid curtailed to both parties if they believe their opponent would be hurt by the cut more disproportionately.

An alternative is to use positive conditionality. As an example, the Somalia Aid Coordination Body has made security for aid providers a condition for rehabilitation assistance. The challenge in positive conditionality is to determine when the pattern of incentives will be perceived as great enough to increase an authority’s interest in and value of the benefits from peace and thereby cause the desired change in the targeted authority’s behavior.

Cost considerations

Set-up time

Timeframe to see results

Conflict context

Stages of conflict

Type of conflict

Causes of conflict

Prerequisites

Conditionality for political liberalization can only be effective if it reinforces existing domestic groups opposing an authoritarian regime or buttresses forces for reform a government. Reinforcement through conditionality might not be effective if regime opponents have sharp internal divisions,.

The agency imposing conditions or offering incentives must have real leverage to be successful; the target can always determine that the political cost of the conditions to be too great.

The power of international donors to shape behavior through aid conditionality is often directly proportional to the aid recipient’s dependence upon them and to the donor community’s unity in imposing conditions on individual regimes. Aid conditionality can only work if the major donors coordinate and sustain their conditions.

Threats to withdraw assistance must be credible and consistent with other major foreign policy objectives; for example, threats by the US to Turkey to improve its human rights record are not effective because of US dependence on Turkey as a strategic counterweight to the radical Islamic states, a conduit for assistance and outreach to the Central Asian republics of the former Soviet Union, and vis-a-vis Iraq and the no-fly zones.

Past practice

Within the Greater Horn

The policy of constructive engagement included positive conditionality—the European Unions term—involving sectoral aid programs designed to encourage pluralism and respect for human rights. Programs were sponsored to strengthen the Ministry of Justice and a number of local human rights organizations, as well as a free press.

Major donors finally began suspending aid programs in early 1994 in response to marked deterioration in the quality of governance. Ultimately, compliance with human rights conditions was shown to be nothing more than rhetoric. Aid was suspended largely on grounds of economic inefficiency and difficulty of project implementation. Failure to address even the most egregious public manifestations of extremism and authoritarianism—such as Radio Mille Collines’ venomous broadcasts—demonstrated to Rwandan authorities that most donors lacked the political will necessary to confront human rights concerns directly.

In the few months before April 1994 when the genocide began, some donors began to condition development assistance on implementing the Arusha Accords and more specifically on the composition of the transitional government as called for in the agreement. Nevertheless, the response was too little, too late and largely symbolic in the absence of meaningful actions to deal with the extremists.

Kenya. In November 1991, Kenya’s international aid donors "established explicit political conditions for assistance, making Kenya a precedent for the rest of Africa." New aid was suspended for six months, pending "the early implementation of political reform." Kenya’s foreign aid had reached $1 billion per year. In direct response to this overt pressure, the regime repealed its ban on opposition parties and agreed to hold multi-party elections a year later. A pattern has developed since then: government abuses subside in the period before each annual donor consultative meeting and accelerate after aid pledges are completed and disbursements begin. "In response to international and domestic criticism, the government periodically suspends its harassment of critics or adopts different methods," charges Human Rights Watch. In 1994, some donors changed tactics and began publicly noting progress on the government’s human rights record and its handling of ethnic tensions, despite significant contrary evidence. The government was clearly emboldened by this vote of confidence and rights abuses increased.

In response to the deterioration in the rights environment and the government’s complicity in the Rift Valley clashes, the German government cut its aid package to Kenya by two-thirds in April 1995. The Nordic countries in particular have consistently used their economic assistance as a lever for political accountability.

In many states with uneven records in economic policy and human rights, donors often gradually restructure aid programs to circumvent governments and utilize NGOs and consulting firms to implement projects. In Kenya, NGO utilization has gradually increased so that only a small portion of the overall aid package currently goes directly to the state: aid suspensions now impact the governing elite less than previously.

Nevertheless, there still are critical government projects reliant on donor aid such as the power plant in Central Province and two major road projects worth at least $200 million as well as the usual balance of payments transfers from the IMF. In the showdown with donors over the political parties bill, the registration of the new party Safina and the government’s desire to undermine the opposition in advance of the 1997 elections, the government may risk a reduction in aid in order to achieve its political objectives.

Sudan. Several international and local NGOs working in Eastern Equatoria (southern Sudan) teamed up to require safety on the roads and unfettered, secure access for their mission as a condition for continuing aid in response to repeated looting of agency vehicles. Unified actions on conditionality brought good results. In this case, the responsible faction (SPLA) was concerned enough about the affected people (Bor Dinka) that they ensured that raiding of agency vehicles stopped. A consortium of NGOs operating in southern Sudan is considering organizing to condition assistance such as animal health services to curtailment of cattle raiding, an activity which often provokes wider conflict in some regions.

Outside the Greater Horn

Council of Europe. The Council of Europe has set a number of specific criteria that the emerging democracies in eastern Europe must meet if they want to qualify for membership in the organization: every member of the Council "must accept principles of the rule of the law and the enjoyment of all persons within its jurisdiction of human rights and fundamental freedoms." Most of these freedoms and rights are listed in international human rights covenants such as the European Convention on Human Rights and its Additional Protocols. In general, no country can become a Council member until it adopts constitutional guarantees of human rights and establishes democratic mechanisms. Some have met the criteria; more are trying. Some, such as the Czech Republic, Poland, Hungary, sometimes suffer from lack of true respect for rule of law. Although their constitutions include the required language, their citizens and politicians still often misunderstand or bypass such principles.

Germany. Germany conditioned the provision of economic benefits in bilateral agreements to special rights for ethnic Germans in neighboring countries.

Evaluation

Strengths

Incentives may be "...a more humane and effective alternative to sanctions or the use of miliary force. It may be better to pay an economic or diplomatic price...than to incur the costs and risks of more coercive measures or war."

Weaknesses

Humanitarian aid is all too commonly siphoned off to underwrite a government’s or faction’s war efforts. Through humanitarian aid — even if carefully distributed only to civilians — the international community is assuming or subsidizing the government’s public welfare responsibilities, thereby freeing resources for the war. Common abuses include aid flights being diverted to supplying combatants rather than civilians in need, funds for aid projects providing the government with a source of hard currency used to prosecute the war, and donated food stocks freeing grain production for export. Aid conditionality may provoke further repression by the target regime if it resents the violation of its sovereignty and feels strong enough to resist the pressure.

Many defend continuing aid even in situations of such abuses, insisting there is a role for aid in keeping the lid on an explosive situation; however, sometimes this becomes the objective itself instead of addressing the roots of the conflict.

The decision to stop assistance often means loss of access to the affected area, of information on the humanitarian and conflict situations, and of the witness provided by the presence of international aid workers (believed by many to influence a reduction in atrocities). An aid cut-off can also have unintended side effects, especially on those who are not responsible for the violations and are the most needy of assistance. However, agencies unwilling to withdraw aid face the dilemma of their assistance and its abuse contributing to, provoking, or sustaining a conflict. Despite problems with humanitarian aid and its negative impact on the conflict situation, many agencies will continue to view their assistance as a humanitarian imperative. It is rare that other principles besides the security of agency staff are invoked for a cessation of humanitarian assistance.

It is difficult to evaluate how effective threats and actions to withhold aid have been because have such efforts been rarely unanimous among donors. Some agencies continue their funding and support, defending their efforts on the basis of "humanitarian imperative," thereby undercutting the efforts of the agencies imposing the conditions if they are not in coordination.

Aid conditionality can only be "a useful complement to other approaches encouraging political reforms — not a strategy in its own right."

"Critics point to the moral hazard of rewarding bad behavior or paying leaders to follow civilized standards of behavior. Within recipient countries incentives are sometimes attacked as ‘bribery’ and external manipulation."

The host country or other recipient to whom conditions are applied may publicly accede to the imposed conditions, but in reality fail to fulfill the conditions or engage in partial compliance. Partial compliance with conditions pose additional dilemmas. Conditionality may work only superficially, inducing ruling elites to make tactical concessions they will later "hollow out".

The donor may have conflicting interests, i.e., between promoting democracy and preventing violent conflict in another country versus other "harder" national interests.

At times the intended aid recipient may lack the ability to comply with the stated conditions, due to political or other reasons. It can be difficult at times for the donor to determine whether the recipient’s failure to act on the conditions is due to inability or unwillingness.

It can be difficult to follow through with a decision to stop assistance. Agents may concede or compromise on conditions because they fear a loss of influence if the recipient cancels project arrangements, because they are unwilling to disrupt an entire program or major investment, because they fear that confrontation or withdrawal would create worse consequences or make future development efforts more risky or expensive or because they fear backlash against non-dominant groups, and possibly against donors themselves.

Unanimity among donors in conditioning aid is important because otherwise the recipient government can appeal to alternative donors who either do not engage in conditionality or impose different political conditions.

Some policy changes tied to conditions may aggravate conflict instead of preventing or mitigating it.

Lessons learned

Governments with little access to alternative sources of revenues are more likely to concede to conditionalities (if, of course, they have the resources and ability to do so) especially if failure to comply would result in damaging domestic, political or economic costs, and/or threaten adverse relations with other actual or potential sources of revenue.

Conditionalities should be country-specific and should ideally involve extensive negotiations and consultations with the target government and various segments of its civil society.

Aid conditionality can only be "a useful complement to other approaches encouraging political reforms, not a strategy in its own right."

To increase its chances of being effective and for the effect to be discernible, conditionality must focus on specific, monitorable goals.

Donors should coordinate to improve the efficiency and political leverage of their efforts.

The consequences of conditionality should be incremental, instead of an all-or-nothing option, generally less credible and more difficult to implement.

References and resources