Donors Plan To Withhold $375 Million From Ethiopia

 Donors are to withhold direct budgetary support worth about $375 million from Ethiopia following the government's brutal crackdown on opposition supporters last month, western development officials said Wednesday, reports The Financial Times (UK).

           
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.

           
The quandary for donors, who pump about $1 billion 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," 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."

           
The BBC (UK) notes that May's parliamentary election was the most closely contested in Ethiopian history, and resulted in the opposition winning more than 100 seats in parliament. The opposition leaders, reporters and aid workers appeared in court on Wednesday a month after their arrest - complaining that they had not been allowed access to their lawyers – and charged with conspiring to overthrow the government. Aid donors' frustration with Ethiopia's government has grown in recent months. In November, the British ambassador to Ethiopia, Bob Dewar, put out a strong statement on behalf of the EU and the US. It called for respect for human rights, an end to mass arrests, the lifting of restrictions on the opposition and for the freeing of political detainees.

           
But a spokesman for the European Commission told The BBC the Ethiopian government had failed to reply to the statement, and therefore hundreds of millions of dollars of funding were now being reviewed. The money involved had been earmarked for budget support. These funds can be used at the discretion of the Ethiopian government, and is not tied to specific projects. No final decision has been made. But although the money would be missed by the Ethiopian authorities, it is unlikely that food aid, which regularly feeds around five million of the country's poorest people, will be touched, says The BBC.

           
The Financial Times further notes that despite the crisis, Ethiopia was one of 19 countries the International Monetary Fund approved 100 percent 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 $161 million, makes its decisions based on macroeconomic stability, not governance issues. The World Bank, to which Ethiopia owes about $3.5 billion, is due to announce its decision on debt relief next year.

           
Reuters adds that Britain announced earlier it planned to freeze an approximate $35.36 million increase in aid to Ethiopia. The Horn of African country is sub-Saharan Africa's second most populous and is ranked the seventh poorest in the world. Foreign donors finance about one third of Ethiopia's annual budget.