Donor Nations Insist Aid Recipients Show Anti-Poverty Results

President Arnoldo Aleman’s feud with the official in charge of keeping his government honest started as a domestic dispute. But it became an international incident when the Nicaraguan leader struck a deal with the political opposition to overhaul the auditor’s office. Now four Nordic nations have suspended $1.4 million in aid until they see the outcome of the reforms.

“What’s new is that we put action behind our words,” said a Nordic representative. “We would like to see results before we spend any more taxpayers’ money.”

Donor nations are increasingly insisting that aid recipients show results. They want proof that programs are fighting poverty and that governments are doing their share, in part by preventing corruption and allowing greater citizen participation. Such demands are at the center of a World Bank debt-relief program for 40 of the world’s poorest countries.

Diplomats warn that this is an issue relatively prosperous Colombia will face as it seeks international help to overcome the rural poverty that encourages farmers to grow opium poppies and coca, the plant used to make cocaine.

As part of the emphasis on results, donors are growing more critical of extravagance, such as the national holiday and diplomatic reception--complete with $50-a-bottle French champagne--that Aleman ordered up when Nicaragua met the initial requirements for the World Bank debt-relief program.

“It was disgusting,” said one European diplomat. “They were celebrating being one of the poorest countries in the world.”

Aleman has responded angrily to donors who have expressed concerns about his government’s use of aid money. “Go to your own countries to make those observations,” he advised diplomats during a January news conference.

However, donors have found other options. Governments that cannot prove they use international aid effectively and honestly are increasingly being circumvented as wealthier nations channel their contributions through private charities.

One European nation that provides direct government-to-government aid as a matter of policy is considering making an exception in Nicaragua by switching its funding to private groups. “Draw your own conclusions,” said a diplomat from the donor country. “What does it mean when you change partners?”

The United States places increasing emphasis throughout the world on “in-kind” contributions, such as equipment and supplies, U.S. diplomats say. Even aid to government agencies usually is channeled through private consultants, they say.

While its member nations sometimes pay for government programs, the European Union gives aid through grants that are jointly administered by the alliance and the communities that benefit, said Candido Rodriguez, head of the EU delegation in Colombia. The aim is to ensure the involvement of ordinary citizens at the community level, increasing the chances that programs will work.

Such efforts are based on consensus, and developing them takes time. For that reason, European diplomats are worried that the more than 1,000 programs proposed by the Colombian Ministry of Planning to provide citizens with alternatives to growing poppies and coca may not meet EU criteria.

A gathering of potential contributors who might join the U.S. in supporting Colombia’s anti-drug plan is scheduled for July, said Rodriguez, leaving little time to develop so many community-based projects. “We have yet to receive a request for aid,” he said.

Nevertheless, Colombian officials are counting on $1 billion in aid from Europe and Japan to help pay for the anti-drug plan.

But while the Europeans are sympathetic to the proposal, Rodriguez said, the lack of information so far “has made the European Union adopt an attitude of prudence in relation to the Colombian [anti-narcotics] plan.”

Jaime Ruiz, an advisor to Colombian President Andres Pastrana, minimized the differences between his government and foreign donors, saying they are a matter of tactics. “We made a mistake by not talking to the diplomats first. We went directly to the governments.”

More Community Involvement Sought

However, he predicted that such errors will be overcome once the programs are presented. He added that Colombia would be quite content with international cooperation administered by private groups or the United Nations.

Still, European diplomats insist on more: They want assurances that communities, Marxist guerrillas and right-wing private armies in Colombia support each program and will allow representatives to work in safety.

That level of community participation in planning is hard for most Latin American governments to accept, said former Nicaraguan Foreign Minister Emilio Alvarez Montalvan. “Our countries do not have a lot of experience in democratic life,” he said. “We’re bad students, but we need help--and anyone who asks for help has to listen to advice.”

At the same time, donor nations have come to accept that they cannot simply ignore governments in favor of private charities in poor nations.

The scandal here over the auditor’s office is a prime example. Foreign governments agreed to pay for modernizing its facilities and operations partly because Nicaragua has applied for a special debt-relief program. This nation owes other governments and international lenders $6 billion--three times its gross domestic product. Lenders accept that the country, like many in Latin America and Africa, cannot pay its debt.

But before lenders wipe out the loans, they want some assurances about how Nicaragua will use the money it saves. In September, the world’s seven richest countries set up new guidelines for an international debt-forgiveness program, linking relief to success in improving the lives of each nation’s poorest citizens. In the case of Nicaragua, that concern has come to focus on more effective government, said Ulrich Lachler, the World Bank representative here.

To that end, the U.S. government Friday donated $750,000 to strengthen six Nicaraguan watchdog and justice agencies, including the auditor’s office.

U.S. Ambassador Oliver P. Garza explained: “If you are giving aid to a country, including by deferring or forgiving debt, that country then has additional resources to use. We feel it is only natural that there exists a strong and independent [auditor’s] office to make sure that there is no malfeasance.”

Thus, donors were concerned when a bargain between Aleman and the Sandinista National Liberation Front, the main opposition party, substituted a panel of five auditors for the single auditor who had been raising questions publicly about government spending.

Many diplomats already considered the auditor’s office too weak: “David without a slingshot,” according to one foreign official. The reforms appeared to further dilute its power. So the Nordic countries decided in December to suspend indefinitely the $1.4 million meant to fund the auditor’s office.

“They want to see how the institution will function,” said Deputy Foreign Minister Jose Adan Guerra. “Germany, Spain, the Netherlands and the United States have continued to cooperate.”

Nicaragua’s Use of Storm Aid at Issue

Pressed on the issue, he snapped, “In reality, it is we poor countries who should be passing judgment on the rich nations.”

Meanwhile, Nicaragua has disappointed donors by missing a February deadline for explaining to donor nations how it has used aid that arrived after Hurricane Mitch in 1998 killed an estimated 9,000 Central Americans, mostly Nicaraguans and Hondurans.

The presentation, rescheduled for next month in Washington, also will include Nicaragua’s plans for using other promised aid.

“We needed to consult more with civic groups,” Guerra said. Despite the delay, several diplomats said they are encouraged that the Nicaraguan government recognizes the importance of discussions with its citizens.

Lachler, the World Bank representative, noted that there is a positive side to the controversy over good administration in countries seeking aid: They’re moving from opening markets to opening government.

“In the 1990s, we started removing the main obstacles to growth and got to the areas that are left,” he said. “The increased emphasis on [good government] indicates that other obstacles have been removed.”