Britain threatened to withhold $94m (£50m) of its contribution to the World Bank on Thursday, if the organization doesn't change the way it handles the donation of aid to poor countries.
The announcement came as the annual conference of the World Bank and its sister organization, the International Monetary Fund (IMF) got under way in Singapore.
"It's a way of demonstrating that Britain takes this issue very, very seriously," British International development secretary, Hilary Benn Benn told BBC Radio in an interview from Singapore, "I want to see the evidence that this practice is changing."
The move was welcomed by several charities and pressure groups who have previously criticized World Bank President Paul Wolfowitz's hard-line mission to tackle corruption in poorer countries and the resulting conditions attached to the donation of aid. Wolfowitz's campaign has led to countries such as Chad, Congo, Ethiopia and Bangladesh having loans of hundreds of thousands of dollars and contracts being suspended since he took over as head of the bank last year.
"This is a very welcome development and vindicates Christian Aid's long-held belief that economic conditions imposed on poor countries by the World Bank and the International Monetary Fund can be disastrous for poor countries," said Christian Aid spokesman Charles Abugre. He also urged Britain "to go the extra mile" and withhold all of its contributions.
A commitment of $2.4bn (£1.3bn) was made by Britain last year to the International Development Association of the World Bank. It also pledged $94m (£50m) for the implementation of World Bank reforms, to be paid in 2007, on the proviso that the World Bank changed the conditions for the donation of aid. These conditions – which Wolfowitz says are designed to protect funds from abuse by corrupt governments and officials – have been condemned by various organizations as disastrous and having done more harm than good.
``We can't tolerate the misuse of our funds,'' Wolfowitz told reporters. ``If we're going to get out of poverty, the money has to go where its supposed to go and not line the bank accounts of government officials,'' he said.
Benn said that payment will be withheld until it is clear that the World Bank is paying greater attention to the needs of aid recipients and is actually implementing a change of policy.
"I think when it comes to fighting corruption, to improving transparency, upholding human rights, above all making sure the money is spent on reducing poverty, I'm all in favor of attaching conditions, but when it comes to economic policy choices, in particular things like privatization and trade liberalization, I don't think it's right that we should be telling other countries what to do. The U.K. doesn't do that anymore with its aid," he said.
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