Conditionality, coercion and other forms of 'power': international financial institutions in the Pacific

Abstract

Conditionality Recent relationships between Papua New Guinea (PNG), the International Monetary Fund (IMF), and the World Bank have been stormy. At various points in the loan negotiations students rioted, the Prime Minister told the World Bank to ‘go to hell’, and the World Bank’s chief negotiator defected to the PNG side. He was later jailed. The relationship between the Asian Development Bank (ADB) and its South Pacific clients were also sometimes uneasy, and led its Board of Directors to commission a self-assessment. The article compares the use of loan conditions by the International Financial Institutions (IFIs) in Papua New Guinea and six small island states of the South Pacific. In spite of their juridical sovereignty, their small size may make them particularly vulnerable to international pressure. It is part of a wider study of ‘institutional transfer ’ which sees ‘conditionality’ as one of the mechanisms by which institutions are borrowed, transplanted or imposed on other countries. Conditionality lies on a continuum that runs from voluntary ‘lesson drawing’ at one extreme, to direct imposition of a policy on the other. Show more