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International supervision

by Hans Dembowski
This March, Cologne’s historic city archive collapsed into a tunnel dug for a new metro line. Two people died, and cultural heritage of many centuries was destroyed. For weeks, no one assumed political responsibility. The average German would expect such accidents to occur when major projects are implemented in Cairo or Delhi, but not at home.

In the USA, Illinois Governor Rob Blagojevich was impeached for corruption in January. Among other things, he apparently tried to auction off the Senate seat left vacant by President Barack Obama. US citizens imagine that politics is run that way in Nigeria or Mexico.

Governance troubles in the rich world are not limited to Cologne and Illinois. As the global financial crisis proves, Western officials did not fulfil their macroeconomic duties. “Good governance” is a global challenge.

That buzzword was coined by the World Bank in the 1990s. The Bank’s structural adjustment programmes, which mainly focused on opening markets and fighting inflation, had largely failed. As a result, its development theorists took a fresh look at the role of the state in the economy – including the provision of infrastructure, the enforcement of laws and contracts, education and combating corruption.

Ever since, development experts have regularly demanded good governance. However, progress in such essential tasks as administrative and judicial reform remains especially slow. As long as donors only work with state bodies, they will not achieve much. Instead, they must involve non-state actors. But the effective commitment of civil society and independent media cannot be provided by decree. The limits of sector programmes and individual projects are therefore quickly reached.

A relatively recent set of instruments – budget support plus systematic negotiations between a group of donors and the recipient government – looks more promising. This approach serves to take a look at the “whole of government”. In the multilateral aid-effectiveness debate, proponents of this approach initially emphasised that it forces donors to harmonise and align with the target country’s institutions and procedures. True. But another opportunity may be even more important: donors should pay attention to transparency and quality in the budget proceedings in target countries, involving the parliamentary opposition and actors outside the parliament.

They have that option; after all, donors do get insights into all budget matters. And historically, the budget has always been a core issue of democratic de­liberation. To promote openness here really is about promoting democracy. At the High-Level Forum on Aid Effectiveness in Accra last year, independent organisations from Asia, Africa and Latin America demanded that aid be linked to transparency requirements. While they normally oppose all donor conditionality, their idea of good governance (though not their rhetoric) largely overlaps with that of European donors.

Budget support will only work where crucial state institutions operate more or less reliably. If it is done right – a big if – budget support will improve accountability by public officials. And such an outcome would be a reason to put rich countries under stricter international and multilateral supervision too, and to not leave macroeconomic policymaking only to the biggest and most powerful nations.