The World Bank cares about democracy, sorta

In late December, the World Bank released a terse, almost telegraphic, statement on the crisis in Cote d’Ivoire:

We can confirm that the World Bank has currently stopped lending and disbursing funds to the Ivory Coast.

The World Bank’s office in the Ivory Coast has been closed.

The World Bank and the African Development Bank have supported ECOWAS and the African Union in sending the message to President Gbagbo that he lost the elections and he needs to step down.

A peaceful and rapid resolution is critical both for the people of Côte d’Ivoire and the region as a whole.  

In the context of the general international condemnation that has showered down upon Gbagbo and his cronies, there was nothing noteworthy about the Bank’s statement. But viewed through the prism of the Bank’s history, it’s a potentially important acknowledgement that democracy can, in certain circumstances, be a precondition for international economic aid.

The Bank is far from acknowledging this as a general principle. It lends billions every year to nondemocratic governments. And there are serious, smart people who argue that it’s best to keep democracy and development separate. But the Bank’s squishiness on democracy has provided plenty of fodder for critics. Bill Easterly, in particular, has relentlessly exposed the international aid system’s indifference to democracy, which he argues hasn’t changed all that much from the dark days of the Cold War, when international aid was often used to prop up politically important dictators.

The international aid system has a dirty secret. Despite much rhetoric to the contrary, the nations and organizations that donate and distribute aid do not care much about democracy and they still actively support dictators. The conventional narrative is that donors supported dictators only during the cold war and ever since have promoted democracy. This is wrong.

More recently, Easterly has taunted World Bank officials about their unwillingness to state clearly that democracy is a fundamental part of their development strategy. (He’s also pointed out acidly that the Bank’s chief economist is a Chinese official who has seemed to endorse an authoritarian development model.)

Whether the Cote d’Ivoire case means anything is hard to tell. The country is a strategic afterthought for most of the Bank’s key shareholders. And Gbagbo made the critical mistake of allowing somewhat free elections and then disregarding the result. Most other dictators are more savvy. If there’s a principle somewhere here, it may be this: that the Bank will happily lend to nondemocracies but may cut off countries (particularly small ones) that have obviously and unapologetically flouted the popular will. Would-be authoritarians should make sure they know the rules of the international game.

Addendum: I asked the World Bank about the implications of the Cote d’Ivoire decision and was told they have nothing to say beyond the above statement.