Donors to withhold $375m from Ethiopia
Dec 29, 2005 (NAIROBI) — Donors are to withhold direct budgetary support worth about $375m (?317m £218m) from Ethiopia following the government’s brutal crackdown on opposition supporters last month, western development officials said yesterday.
Until the situation improves, the donors – which include the World Bank, the European Union and the UK – will look to disburse the funds in other ways to continue tackling the country’s massive poverty challenges, Ishac Diwan, the World Bank’s country director, said.
The move is a further blow to the credibility of Meles Zenawi, Ethiopia’s prime minister, who was once regarded as a visionary African leader and was appointed to the UK’s Commission for Africa.
“Because of the situation, trust has broken down so we are trying to find other ways of doing it (funding),” another western development official said.
At least 46 people were killed and thousands detained during several days of politically motivated violence in the capital in November. Some 40 others were killed in similar clashes in June, which erupted after disputed elections in May.
More than 100 people, including opposition leaders and journalists were charged last week with treason, genocide and other offences, despite calls from donors that political detainees should be released.
Opposition groups made unprecedented gains at the elections, but later alleged the process was rigged and called for peaceful protests. The government blamed the opposition for the violence and used extreme force to put down rioters, deploying huge numbers of police, as well as soldiers armed with sniper rifles, on the capital’s streets.
The heavy-handed manner in which the supposedly-reformist government handled the crisis shocked many and raised serious concerns about Mr Meles’s democratic credentials.
The quandary for donors, who pump about $1bn in development aid into the country annually, is how to be seen to be taking a tough stance towards the government while at the same time continuing to work to alleviate poverty in the impoverished nation.
“We are very concerned and have taken principled positions, along with our development partners, on the recent disturbances,” Mr Diwan said. “It’s a very important issue today in several African countries: how to at the same time get good economic growth and improvements in governance in order to achieve sustainable development.”
Despite the crisis, Ethiopia was one of 19 countries the International Monetary Fund approved 100 per cent debt relief for last week – part of an agreement reached by the Group of Eight nations to cancel multilateral debt to the world’s poorest nations.
The IMF, to which Ethiopia owed $161m, makes its decisions based on macroeconomic stability, not governance issues. The World Bank, to which Ethiopia owes about $3.5bn, is due to announce its decision on debt relief next year.
(FT)