Political Conditionality Effective: Egypt

Political Conditionality Effective: Egypt

Michelle Dunne & Amr Hamzawy, Carnegie Endowment, 2008, Beyond the Façade: political reform in the Arab world, eds. M. Ottaway & J. Choucair-Vizoso, p. 39

Michelle Dunne & Amr Hamzawy, Carnegie Endowment, 2008, Beyond the Façade: political reform in the Arab world, eds. M. Ottaway & J. Choucair-Vizoso, p. 40

Michelle Dunne & Amr Hamzawy, Carnegie Endowment, 2008, Beyond the Façade: political reform in the Arab world, eds. M. Ottaway & J. Choucair-Vizoso, p. 40

Economic assistance to Egypt is likely to continue to decline over the coming years and thus will no longer be a potential tool for conditionality; soon all that will be left are democracy, education, and economic reform programs that the United States does not want to sacrifice. The larger target for potential conditionality is military assistance, and the U.S. Congress started down this avenue in June 2007 by withholding $200 million of a total $1.3 billion in military assistance until it could be certified that Egypt had made specified improvements in human rights and Gaza security. This move reflects understandable frustration in Congress about how to get a message through to the Egyptian government, but it remains to be seen whether Egyptians interpret it as a wake-up call or merely a signal that the military partnership with the United States is drawing to a close. There are also more constructive ways to leverage the close military relationship to help build support in the Egyptian military and civilian bureaucracy for political reform. Programs such as International Military Education and Training, currently funded at only $1.2 million annually, could be expanded to help expose senior and mid-level military officers to critical concepts such as civilian control of the military in democratic systems.

Pro Forma Conditionality Legitimate

Tony Killick et al, Overseas Development Institute, 1998, Aid and the Political Economy of Policy Change, p. 188

In the scheme of things advocated in this chapter, does there remain a role for conditionality? We should here revert to the distinction introduced in Chapter 1 between “pro forma” and “hard core” conditionality (while recognizing that in practice these tend to shade into each other). Pro forma conditionality was described as policy commitments written into aid agreements for the convenience of both parties. These are consensual, included in order to set out systematically and clearly a mutually-agreed package of measures, codifying what should be done and in what sequence; serving as a kind of institutionalized memory against the possibility of changes among key ministers, officials, perhaps even the government itself; providing a vehicle through which the agencies can undertake their program lending, adequacy of the policy program. Hard core conditionality, by contrast, was seen as coercive: actions, or promises of actions, made only at the insistence of the lender or giver, measures that would not otherwise be undertaken, promised involuntarily by governments in urgent need of money.,

The thrust of our arguments, then, is the desirability of a major shift (at least in the IFIs, which make the most use of conditionality) from the hard core to the pro forma variety. The question may well be asked: why, in that case, bother with the modalities of conditionality at all? The answer is that, for reasons jus suggested, these may make life easier for both parties, may smooth the path for policy reform, make it more orderly, more assured.

Christopher L. Gilbert & David Vines, Finance Professor Vrije University & Fellow at Balliol College, Oxford, 2000, The World Bank: Structure and Policies, eds. C. Gilbert & D. Vines, p. 25

Economic theory suggests that a benevolent government should adopt the best policies without external coercion. If a potentially beneficial reform is too costly, the government will rationally choose not to implement it. Haggard and Kaufman (1992:18) state: “The central political dilemma of reform is that though significant benefits may accrue to society as a whole, policy adjustment involves significant startup costs and the reduction of rents to particular groups.”

If governments are required to adopt policies or reforms which they would not choose unilaterally, this requires that one of the following conditions holds:

1. 
   the multilateral agency can reduce the costs of adjustment, for example, by lowering interest costs (a standard capital market “imperfection” view deriving from sovereign risk considerations
   
2. 
   The agency can reduce the costs or increase the benefits of reform through its superior knowledge and experience (the “Knowledge Bank” view)
   
3. 
   Aid conditionality can allow government to pre-commit and thereby avoid time-consistency problems; they can also, to a more limited extent, commit their successors
   
4. 
   The agency can oblige a government to adopt reforms which are in the best interests of its population, but run against the narrow interests of the government or its clients.