The European Union and Africa: The Restructuring of North-South Relations:

The European Union and Africa: The Restructuring of North-South Relations

WILLIAM BROWN

I.B.Tauris Publishers

The European Union and Africa

The European Union and Africa The Restructuring of North-South Relations

WILLIAM BROWN

I.B.Tauris Publishers LONDON • NEW YORK

To my parents, Richard and Jane Brown

Published in 2002 by I.B.Tauris & Co Ltd 6 Salem Road, London W2 4BU 175 Fifth Avenue, New York NY 10010 www.ibtauris.com In the United States of America and in Canada distributed by St Martins Press, 175 Fifth Avenue, New York NY 10010 Copyright ©, 2002 The right of William Brown to be identified as the author of this work has been asserted by the author in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. Except for brief quotations in a review, this book, or any part thereof, may not be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. ISBN 1 86064 660 3 A full CIP record for this book is available from the British Library A full CIP record for this book is available from the Library of Congress Library of Congress catalog card: available

Printed and bound in Great Britain by MPG Books Ltd from camera-ready copy edited and supplied by the author

Contents

Acknowledgements

vi

1

The Lomé Convention in context

1

2

Origins, history and evolution of the Lomé Conventions

31

3

Lomé IV and structural adjustment

73

4

Political conditionality: the mid-term review of Lomé IV

115

5

Zimbabwe and Lomé: the politics of accession

138

6

Lomé IV, adjustment and Zimbabwe

167

7

The EU and Africa beyond 2000

188

Endnotes

199

Appendices

210

Tables and Figures

214

Acronyms

215

Bibliography

218

Index

238

vi

Acknowledgements In producing this work, which has been far too long in the pipeline, I have received help from more people than I can reasonably mention here but to whom I owe a debt of thanks. However, I wish to register my thanks to a number of people in particular. Much of the initial research, on which significant parts of the current work are based, was undertaken while studying for my doctorate at Leeds University Department of Politics and was made possible with to a studentship funded by the UK Economic and Social Research Council. That project, and subsequent work, benefited enormously from the guidance and help of Morris Szeftel. Over the years I have also received invaluable moral and intellectual support, advice and encouragement from Simon Bromley for which I am deeply indebted. Grateful thanks are also due to Anne Hunt and John Hunt of the Open University who took on the burden of getting the manuscript into a fit state for publication and who have done such a marvellous job. Thanks also to Howard Cooke for undertaking the indexing. I also received a great deal of help while conducting research, both through interviews and in the supply of documentation, from the officials of the European Commission in Brussels and its Harare Delegation office; from various of the nongovernmental development organisations in Brussels and elsewhere; from the World Bank offices in Harare; and from other organisations in Zimbabwe. Some parts of this work have appeared in earlier form in the Review of African Political Economy. In particular, parts of Chapter 6 appeared in a previous form as: Brown, W. (1999) ‘The EU and structural adjustment: the case of Lomé IV and Zimbabwe’, vol. 26 no. 79, pp.75–92; and some elements of the Introduction and Conclusion appeared as: Brown, W. (2000) ‘Restructuring north-south relations: ACP-EU development co-operation in a liberal international order’, vol. 27 no. 85, pp.367–384. On a more personal level I wish to thank my parents, Richard and Jane for their constant support and belief. Above all, I give my love and thanks to Fiona, who has always been there for me and without whom all the problems would have been so much worse.

The Lomé Convention in context

1

1 The Lomé Convention in context

Introduction In June 2000, the representatives of over eighty states put their seal on an agreement designed to govern development co-operation between the European Union and African, Caribbean and Pacific states for the next 20 years. The new ACP–EC Partnership Agreement was heralded, as its predecessor the Lomé Convention had been twenty five years before, as representing a new era in relations between North and South. This book is about the historical evolution of relations between these two groups of states, about the formalization of the relationship in a series of development co-operation agreements and about the changes in North–South relations which it reflects. More generally, therefore, this book is concerned with the relations between two groups of states at either end of the spectra of power and wealth; with the origins of a system of relationships based on sovereign equality between these two extremes; and with the direction and dynamics of change in this relationship. Specifically, it is about the rise, transformation and decline of the Lomé Convention – an elaborate regime defining the rules, regulations and arrangements governing trade and aid relations between the European Union (EU)1 and the African, Caribbean and Pacific states (ACP) – and with its replacement in 2000 with the ACP–EC Partnership Agreement. The book outlines and explains the elements of this regime, and the changes that have taken place within it. However, it seeks to do more than simply relate the evolution of what, at times, are detailed and specific issues of trade and aid policy. A central concern is to explain how a discrete relationship between these two groups of states forms a part of, and reflects, changes in the broader pattern of relations between North and South. At the time of its formation, the Lomé Conventions represented the culmination of attempts by the two groups of states to define the regulation of their relationship in the context of the historic transformation of the world political system, as independence, self-determination and sovereignty replaced subjugation and colonialism as the ordering principles of the relations between the continents of Europe and Africa. As such, the subject matter extends to the much-debated issue of the nature of the post-colonial relations between North and South, questions of the extent of co-operation and conflict between independent states in the

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international system, and the changing principles by which the international political economy operates in the post-colonial era. This chapter will seek to provide some background to understanding the Lomé Convention and an outline of the analysis put forward in the rest of this study. First, I shall provide a very brief overview of the Convention and how it developed. I will then consider four broad ways in which the Lomé relationship has been interpreted in the past. Noting some of the shortcomings of the existing literature I will then outline an alternative approach to the Convention. Specifically, this will argue that we need to see Lomé in the context of the evolution of North–South relations and development co-operation. To do this we need to first outline the nature of international co-operation itself, before assessing what is specific about co-operation between North and South. We can then place Lomé within this wider context and assess what the evolution of the Lomé relationship demonstrates about the political economy of North– South relations more generally.

The Lomé Convention The Lomé Convention was an important agreement because for a long time it sat at the apex of a ‘pyramid’ of EU agreements with developing countries (Mishalani, Robert et al. 1981; Overseas Development Institute 1989). The EU has had a range of such agreements for some time. These include association and co-operation agreements with the countries of the Mediterranean (Morocco, Algeria, Tunisia) and the Middle East, covering trade relations and financial aid, which were begun in the 1970s; the ‘Euro-Arab dialogue’ during the oil crisis of the 1970s; and a variety of agreements with countries of Latin America and Asia which involve commercial agreements, provision of trade preferences, development assistance and humanitarian aid (CEC-DG X 1989; Edwards and Regelsberger 1990). However, the Lomé Convention was the most extensive of these agreements and dominated EU relations with the countries of Africa, the Caribbean and the Pacific islands. It was more extensive in terms of issues covered and signatories than any other EU agreement with developing countries, and ‘set the tone’ for EU policies in agreements with the rest of the developing world lower down the ‘pyramid’ (Overseas Development Institute 1989). The origins of the Convention lay in the attempts to manage the transition from a colonial relationship to a post-colonial one, with the setting up of new, formalized arrangements covering aid and trade. The Yaoundé Conventions of 1963 and 1969, between the EU and the Associated African and Malagasy States (AAMS), were the first, limited, attempt by the EU to define a formalized, inter-regional relationship following the independence of African countries. This was substantially expanded in the early 1970s due to the accession of Britain to the EU (and the consequent need to incorporate Britain’s Commonwealth), and the demands by the existing and potential ‘associates’ for a redefinition of the terms of the relationship. The Convention was first signed in February 1975 and was renewed three times, Lomé IV being signed in 1989 and revised in 1995. The signatories increased in number from nine to

The Lomé Convention in context

3

fifteen EU member states and 46 to 71 ACP states. The Convention was a legally binding agreement and covered the provision of aid to the ACP, preferential trade access to EU markets, stabilization of export earnings of the ACP and commitments to deal with a whole range of development co-operation issues. It also contained mechanisms and institutions for joint administration of the agreement, as well as for periodic ‘dialogue’ between the parties on its implementation. While the original Convention responded to a general pattern of North–South relations, involving commitments from the EU to the ACP countries’ development and demands from the ACP for such support, it also reflected more specific concerns of the ACP for a reformed relationship with the international economy and, on the EU side, concerns over raw material supplies and its future relations with the South. These issues remained, but declined in importance as the Convention evolved and as North–South relations moved into a new phase in the 1980s. As we shall see, this focussed on an increasingly conditional offer of development co-operation from northern states in particular, demanding economic, and subsequently political, reforms by southern states in return for aid. The Convention thus came to reflect this agenda incorporating such economic and political ‘conditionality’ in its terms. As Lomé IV drew to the end of its life in 2000, a more far-reaching recasting of the institutionalized relationship was undertaken with the creation of a new Partnership Agreement between the same groups of states. While preserving much of the scope of the Lomé Convention, the terms of the new partnership Agreement pushed further the transformation of EU–ACP relations already under way. The EU–ACP relationship is thus notable in that it does not constitute a common market, free trade area or a political alliance, although elements of all are included – it provides a trade regime and political issues are raised by the ‘dialogue’. Furthermore, it is more than simply an extension of EU member states’ bilateral aid relationships in that it is a formalized, negotiated agreement rather than a series of ad hoc agreements over aid programmes. Finally, it is an institutionalized relationship established by sovereign states on the basis of legal equality of the parties. Lomé and its successor are thus extensive agreements that institutionalize political and economic relations between two groups of states across the North–South divide. Furthermore, the relationship spans a period that has seen far-reaching changes in North–South relations, and the unique character of the Convention has led to divergent views as to its role and the nature of the EU–ACP relationship.

How Lomé has been interpreted in the past Development co-operation as technical policy choice During its lifetime, the Commission of the EU argued that the Lomé Convention should be taken at face value: as a joint agreement between sovereign states on the basis of equality with the aim of furthering the development of

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the ACP states. It was therefore not driven by ulterior political or economic aims but rather was simply an agreement of ‘development co-operation’. Indeed, the Commission has proclaimed Lomé as ‘… the most extensive co-operation agreement in the history of North–South relations …’, covering trade, aid, joint management and funding for a wide range of ‘development’ actions (CECDG X 1989). The Fourth Convention aimed to ‘… promote, and expedite the economic, cultural and social development of the ACP States …’ and to create ‘… a model for relations between developed and developing states… ’ (ACP– EEC 1989: Article 1). In this way we find that discussions and statements about the Convention are (at least in public) couched in terms which concern the developmental ‘benefit’ of the agreement to the ACP states. The various changes to the Convention which have been introduced – and much, although as we shall see, not all, of the discussions of its replacement in 2000 – are thus claimed to be ‘neutral’, ‘apolitical’ and ‘technical’ in nature and intended to achieve more effective development co-operation in the interests of the ACP countries. EU interests and policy agendas are not seen to be the main driving force behind the modifications introduced – the discussion of the internal policies of ACP countries in Lomé III was proposed as being intended only to allow more effective implementation of Lomé aid projects; the introduction of funding for structural adjustment was presented as a Community response to a developmental need in the ACP states; and the shift in many areas of the Convention to an emphasis on encouraging the private sector, reducing the role of the state and, more recently, of reforming the state itself, are also presented as enhancing the possibility of development. The Commission therefore asserted that, ‘The ideological neutrality of Lomé rules out the possibility of the Community living by doctrines …’ (CEC-DG VIII 1992d:16). More recently, the re-evaluation of the whole relationship has been driven by a recognition of past policy failures and problems and the desire to ‘fix’ such problems with a restructured relationship and revised co-operation policy (CECDG VIII 1997c).2 This technical approach to Lomé – which eschews considering such changes as ‘political’ in terms of being aimed at, or having the effect of, achieving policy aims of the EU and its member states other than simply ‘development of the ACP’ – is replicated in some of the literature on the Convention.3 Such literature concentrates on analysing the areas where policy could be improved, where there are problems for the EU in achieving the aim of ‘development of the ACP’, and assessing the changes to policy which might be required.4 This includes some of the more academic and ‘development studies’ oriented literature (Stevens 1985; McQueen and Stevens 1989; Stevens and Killick 1989b; Davenport and Hewitt 1995) as well as the interventions of Brussels-based European non-governmental development organizations.5 This work, which accounts for a great number of the published assessments of the EU–ACP relationship, includes some of the most developed and detailed analyses of the workings of the Convention, the impact of the various regulations, and assessments of proposed and agreed changes to regulations over the history of the Convention. As such, it represents a valuable source of information on,

The Lomé Convention in context

5

and analysis of, the EU relationship with the ACP countries and often draws attention to problems, tensions and contradictions that exist in EU policy. At times this work implicitly and explicitly challenges the commitment of the EU to its stated objectives. However, such work often neglects the underlying politics of the Convention, the politics of the changing international political economy in which this particular set of relations is set, and political and economic agendas other than concern for ‘development co-operation’ which may exist in EU policy. It thus fails to grasp important elements of the reasons for, the dynamics of change of, and the constraints on, development co-operation policy in the Lomé Convention. It also fails to draw the lessons from an analysis of the Convention for our understanding of North–South relations, an issue with which this work is particularly concerned. The literature shares a failing – one which goes well beyond that of EU–ACP relations – of an absence of critical awareness of the historical, social, economic and political contexts in which this institutionalized relationship has evolved. Granted, such an analysis is not an immediate concern of the works cited. However, if we are to properly place the Convention’s purpose and evolution in its international context we need to go beyond this point – to ‘step outside’ the confines of the details of the Convention and form a more critical assessment. Arguably, this is necessary even from the point of view of development policy practitioners. While it may be readily recognized that the success or otherwise of development co-operation depends on the social, political and economic context in which it is practised, this is often not extended into an analysis of the deeper structures of state, politics, economy, and society that set the context for development policy in the first place. So this work is concerned to widen and deepen the understanding of the Convention and its successor agreement in this sense, both for wider reasons of enquiry (what do EU–ACP relations Lomé tell us about North–South relations?) but also because it is necessary to understand, within the confines of the agreements, the dynamics, importance and implications of the various elements of the relationship and the changes they have undergone.

Steps to equality and interdependence Some analyses of Lomé have, of course, had certain of these wider and deeper issues in mind. Broadly speaking, the early attempts to analyse the Lomé Convention polarized around two rather different conceptions of its nature and importance when it was originally formed – issues and debates which, to an extent, carry over into more recent commentaries. The first argued that the signing of the original Lomé Convention represented a step towards interdependence between former colonies and their previously dominant colonial powers. Instead of direct relations of domination, the post-colonial era was witnessing the growing equality between nations and between the two main continents represented in Lomé – Europe and Africa. There are several examples in the literature on Lomé which place the Convention within this understanding of international relations. The general

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argument common to all these writers is that, for the ACP, Lomé represented an important step away from a colonial, dependent relationship towards a more equitable, interdependent relationship with Europe. Gruhn argued that Lomé represented an ‘inching towards interdependence’ whereby ACP unity, coupled with Europe’s need for energy resources, enabled co-operation and pursuit of mutual interests through the Lomé regime (Gruhn 1976). The benefits of trade preferences, the stabilization of exports scheme (Stabex), EU aid for ACP industrialization and the potential for joint administration of aid contained in Lomé all testify to the new level of co-operation (Gruhn 1976). Gruhn concluded that Lomé I ‘… does cross some important watersheds and does point to some new directions for the future economic relations of the industrial and non-industrial countries of the world’ (Gruhn 1976: 258). Echoing this analysis, Cosgrove-Twitchett has argued that Lomé represented a movement ‘from association to partnership’, as colonial relationships were replaced by co-operation based on growing equality (Cosgrove-Twitchett 1976). Zartman, too, emphasized a growing equality in EU–ACP negotiations as African countries moved towards greater independence, economic development and a multilateralization of international ties, and away from dependence on the old colonial power (Zartman 1976). This analysis draws on liberal approaches to international relations in general and those that emphasize interdependence in particular. Broadly speaking, this approach has argued that while the international state system may or may not be characterized by anarchy, in the sense of the absence of an over-arching authority above nation-states, nevertheless substantial areas exist for cooperation between states in the pursuit of mutual gains (for example, see Keohane and Nye 1989; Ruggie 1998). These may exist in any arena of international relations, but are particularly apparent in attempts to govern the economic relations between states where joint agreements about standards and rules have proliferated, representing a substantial proportion of the range of multilateral arrangements that exist. The existence of regimes of rules and procedures help to lessen transaction costs, thus facilitating the transnational spread of networks of interdependence (Ruggie 1993; Mahler 1994; Williams 1994). Two things flow from this which have importance to liberal analyses of the Lomé relationship. First, the existence of interdependence is asserted in the mere fact of ‘co-operation’ between states, in the attempt to define the mutual interests of each party in the agreements and in the growth of new (multilateralized) channels of connectedness between states. This results in the widening of relations in two ways: in the move away from bilateral ties of the colonial era to multilateralized ties between two groups of countries; and in the expansion of the issue areas covered in the relationship – from imperial economic linkages to issues of aid, economic support, political dialogue and regional politics (Morse 1970). The second, and more prominent, issue to flow from this is the assertion of the possibility, or actuality, of growing equality between the two groups of states. As Keohane and Nye originally argued, the development of interdependence also allowed the growth of a more complex

The Lomé Convention in context

7

picture of power relations between states: dominance in one field did not necessarily transfer into others (Keohane and Nye 1989). For Lomé, the undoubted military and political advantages of the Europeans could not conceal the existence of dependencies in other areas, notably, this literature argued, in raw materials. Thus, an era of growing interconnectedness could also presage the arrival of more equal relations, which were then codified in the content of the Convention. It might also allow developing countries – weak states in conventional international relations terms – to ‘punch above their weight’ in negotiations over economic relations such as Lomé (Zartman 1971).6 Furthermore, to an extent, this interdependence literature saw such developments as stemming from the growth of complexity in the economic field, and linked these international manifestations of interdependence to the modernization of developing countries (Gruhn 1976; Zartman 1976).6 The literature therefore drew on and reflected one side of the then current (1970s) debate between the ‘modernization’ theories of development and its critics – the ‘dependency’ writers – to which I turn below. Modernization theory postulated a ‘maturation’ process, as societies moved from being ‘traditional’ to ‘modern’. In terms of their international relations they moved from a situation of dependency on a single power to a fully integrated set of relations with a multitude of other powers. The achievement of economic take-off by the developing countries would therefore also mean a greater level of integration and diversification in external economic relations and foreign policies (Morse 1970). There are really two claims being made within this approach to the Lomé Convention: an argument that it represents a step towards greater equality between formerly very unequal states; and an argument that Lomé in some sense needs to be understood as a regime, and therefore should be placed within the wider context of regimes and international co-operation. The former is open to an obvious and rather simple repudiation, whereas the latter has more truth to it. The claim about greater equality was challenged at the time of the first Lomé Convention, as we will see below. However, it was widely recognized by nearly all commentators at the time of the second and third Conventions that, if Lomé was ‘inching towards interdependence’ (seen as greater equality or mutual dependence), then the movement had at least stalled, if not gone into reverse. Both Gruhn and Cosgrove-Twitchett admitted to a persistent inequality in the relationship (Cosgrove-Twitchett 1981; Gruhn 1985). As we shall see, the factors which appeared to give greater balance to EU–ACP relations (and North–South relations more generally) in the 1970s had all but vanished by the mid-’80s. By then, the claimed mutual vulnerabilities, based on Europe’s concerns over raw material supplies from ACP states, had fallen well down the agenda of northern states. Claims that the situation represented ‘asymmetrical interdependence’ (Ravenhill 1980) really did the relationship little justice. As Herbst argued, asymmetry cannot be a completely elastic term, and at some point it has to be recognized that interdependence does not exist (Herbst 1987). The claim that in a general or specific sense Lomé and its successor represent

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a ‘regime’ has somewhat more mileage in it. They both, certainly, have key features of regimes: rules (often very detailed) governing trade relations between the two groups of states; procedures for allocating aid and renegotiating the terms of the agreement; institutional aspects in the shape of joint committees of ministers and political representatives, and a functional role both in a general sense of ‘promoting development’ and in the more mundane but important sense of regulating economic interactions (see also Mahler 1994). Mutual benefits often assumed to be present in regimes are, as we have seen, subject to some qualification, given the divergent power resources of each side, and there is reason to at least query the extent to which transaction costs are reduced (Herbst 1987). Nevertheless, the Lomé Convention certainly expressed some kind of shared interests in co-operation, demonstrated in the voluntary acceptance and promotion of the Convention by the two sides. However, what this does not tell us is the nature and content of this co-operation, what those interests are, nor how the Convention related to the wider structures of North– South relationships – issues to which we shall return below.

Domination by other means The alternative approach which developed in the early debate on Lomé drew a rather different picture. In place of mutual vulnerabilities and growing interdependence, many observed a continuation of colonial-type patterns of economic relations. For these writers, Lomé represented the maintenance of a relationship forged in the colonial era and which the intervention of political independence had done to little to alter. Domination by other – mostly economic – means continued, and in various ways the new Convention was a mechanism of dominance and control. And just as the interdependence writers drew on liberal international relations theory and the modernization approach to development, these more critical analyses clearly drew on the main critique of post-colonial relations that emerged in the 1960s and ’70s – dependency theory. Dependency theory argues that, contrary to expectations of growing equality between states and increasing development of Third World countries, there was in fact a process of underdevelopment of the Third World countries by the industrialized nations.7 Dependency theory postulated a bifurcated world divided between ‘core’ and ‘peripheral’ areas, with a conflict of interests based on economic exploitation of the periphery by the core, rather than co-operation, as the basis of the global system. It has thus been claimed by dependency writers that national independence of the former colonies masked a continuing subservience to the ‘metropolitan’ powers. The emphasis was therefore on the inequality in global relations and the lack of development in the former colonies and Third World. From this perspective the Lomé Convention reinforced a dependent relationship, through an emphasis on primary product exports to Europe from Africa, through a lack of promotion of industrialization in Africa and through promoting a reliance on financial support from former colonial masters. Three main factors were highlighted to support these claims. The first concerned issues of trade. Lomé was interpreted in this literature as being

The Lomé Convention in context

9

both an example and a means of perpetuating dependency through what was perceived to be its encouragement of a colonial-style international division of labour. Thus an unequal situation, where the Third World exports primary products – food and raw materials – and Europe exports manufactured goods was mirrored in the Lomé regime. This is a major theme in the literature on Lomé and is put forward by several writers.8 Behind it is an argument or assumption common to dependency theory that such a division of labour is not only unequal, but exploitative, self-reproducing and a root cause of underdevelopment. The theories of unequal exchange of, for example, Emmanuel (Emmanuel 1972; Brewer 1987, for a survey), are obviously a major influence here, although this kind of theoretical background is rarely made explicit. Lomé is therefore seen to encourage the continuation of inequality by giving support to primary exports through the Stabex system; by not allowing enough market access for manufactured exports to the EU from the ACP; and by not financing industrialization through Lomé’s aid provisions. As there is ample evidence to support the claim that Lomé did not radically change ACP– EU trade patterns, the argument can easily be made that here was a prime example of a dependent relationship.9 Lomé was also seen to foster dependency through its claimed effects on African unity or prospects for pan-African regionalism. Shaw (1986) argued that the maintenance of ‘vertical’ ties to Europe inhibited the forging of ‘horizontal’ ones in Africa. Thus, attempts at African regional unions (for example, as outlined in the Lagos Plan of Action) were thwarted by the preponderance of ‘extroverted’ links to Europe (see Luke 1985). Such vertical linkages were particularly marked in the more developed African countries and thus exacerbated the problem, as these countries, with the closest links to Europe, were often the very ones at the centre of regionalist ventures. Similar arguments have been made in relation to the Economic Community of West African States (ECOWAS) by Olofin (1977). Galtung also pointed to the ‘structural imperialism’ of the Lomé regime, which, he argued, forced a regional (and unequal) division of labour through the preponderance of ‘vertical’ ties to Europe (Galtung 1976). Thus, while Lomé may have allowed the development of ‘local capitalism’, it could not be anything but a ‘trap’, diverting the ACP from their attempts to develop self-reliance (Galtung 1976). The third area in which writers have claimed EU–ACP relations as ‘dependent’ is in relation to the relative structural positions of Africa and Europe in the world economy. The writing of Samir Amin, in which he outlines how Africa is in a situation of ‘blocked development’ because of its position in the reproduction cycles of international capital, has had some influence in this area (Amin 1976; Blomström and Hettne 1984: 142–4 for a useful summary of Amin’s position). Clearly, within the Lomé context the Convention is seen to perpetuate this dependent relationship by maintaining the links to the ‘metropole’ that ensure development remains blocked. Nabudere in certain respects supports this argument, also claiming that capitalist development is impossible without moves towards self-reliance for Africa and a break with Europe (Nabudere 1979: 151). In addition, others such as Lister (1988) and

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Kahler (1982b) lend weight to this argument by pointing out the historical continuity present in the Lomé relationship and the dominance of colonial links in defining the signatories to the Convention. The emphasis of most of this school is on the lack of development, particularly industrialization, promoted by Lomé (and which is explicitly portrayed as, or at least implied to be, the EU’s intended outcome from Lomé), although others within this approach have argued that Lomé in fact allows a limited, dependent development based on the relocation of declining European industrial sectors (Mytelka 1977; Mytelka and Dolan 1980; Marcussen and Torp 1982). However, this latter position, which parallels that of Cardoso and Falletto (1979) within dependency theory, and Fröbel, Heinrichs and Kreye (1980) on the subject of the international division of labour, still sees this limited industrialization as maintaining a dependent position in relation to Europe. Within this context, dependency analysis appears to have considerable weight, given the evident lack of development in ACP countries, a failure which, by the end of the 1990s, all commentators, including the EU Commission, were only too ready to acknowledge (see for example CEC-DG VIII 1997c). However, the general underlying weaknesses, and the inability to explain key factors of the Lomé relationship in particular, indicate important limits to the usefulness of this approach. In general terms, dependency theory (at least in its stronger version) had been largely discredited by the 1980s (Blomström and Hettne 1984; Leys 1995). The adamant claim that no development was possible within the world capitalist economy, and that development would remain blocked unless a radical break with the capitalist world was undertaken, simply did not begin to describe the post-colonial experience of developing countries and the claimed mechanisms of exploitation within the world economy remained obscure (Leys 1977; 1995; Harris 1986). The rise of the Newly Industrialized Countries (NICs) in the 1970s and ’80s merely pointed out in an empirical way the short-comings of the theoretical claims. Indeed, to the extent that the early debate about Lomé mirrored the wider modernization-dependency debate, it was subject to the same failings and would have become mired in the same impasse had it not slipped from view after a few years.10 In more specific terms, the approach fails to explain key features of the Lomé relationship. Not least among these are the reasons why the ACP countries should engage in, and continue to value, a relationship which is apparently – if dependency theory is to be believed – so obviously to their detriment. If the Lomé Convention was as unequal and exploitative as was claimed, then it is difficult to see how it was able to exist for such a long period, and to be superseded by a new arrangement, without some form of compulsion from the EU states. In fact, the numbers of the ACP Group grew from the original 46 to 71 by the time of the Partnership Agreement precisely because the relationship with the EU appeared to offer some benefits. In this respect, Herbst pointed out that if Lomé was an instrument of exploitation and dependence then it was a rather poor one, given that it did not constrain the ACP states to rely on the EU as much as the dependency writers argued, nor did it deliver the kind of economic benefits to the EU that dependency theory claimed (Herbst

The Lomé Convention in context

11

1987: 651–5). As such, dependency approaches have tended to merely replace an oversimplistic view of mutual co-operation with an equally, if not more simplistic notion, of conflict, dominance and exploitation. Nevertheless, both approaches pay some, if at times unexplored, heed to the relevant interests on each side of the relationship. For others, this has been a starting point and it is to the relevance of particular state interests as a means of interpreting Lomé that we now turn.

State interests Perhaps surprisingly, given the prominence of realism in international relations theory, few analyses of the Lomé relationship have developed anything approaching a full analysis of the nature of state interests in the EU–ACP relationship and the extent to which the relationship reflected those interests. Indeed, to a significant extent realism has been far more concerned with relations among the major powers than with the position of developing countries in the international system.11 Partly because the Convention was viewed primarily as an example of co-operation, it has been of more interest to liberal writers keen to analyse areas of international co-operative endeavours. Granted, dependency writers, who have had their own axes to grind in terms of North–South relations, have emphasized the selfish interests of the EU states in the relationship, but, as we have seen, these are couched in terms and surrounded with processes that are at best highly questionable. However, there have been some attempts to explain the evolution of the EU–ACP relationship which implicitly share some of the core concerns of realism by focussing on the self-interests of the European states.12 Some commentators have argued that ‘donor interests’ dominate the use of aid over (unspecified) ‘recipient interests’, ensuring that the self-interests of the European Union countries are carried through into the delivery of aid (see Olsen 1998). Others have focussed specifically on French interests in the foundation of Lomé and in its use of aid. Among all the European states it is France which has always had the greatest commitment to the relationship with the ACP – a role that has been noted by many and which I deal with in chapter two (Ravenhill 1985; Lister 1988; Clapham 1996; Bretherton and Vogler 1999). In particular, the Convention has been seen as a means by which France was able to off-load to its European partners some of the costs of maintaining a relationship with Africa, and that maintaining this African relationship is itself important to France’s middle-power status, thus emphasizing the ‘power-politics’ origins of apparent co-operation (see Herbst 1987; Chafer 1992; Clapham 1996). Others have focussed more specifically on the way this influenced Lomé, particularly in the use of aid, which has been biased towards Francophone countries (see Anyadike-Danes and Anyadike-Danes 1992). Such claims, to the extent that they specify particular state actions and interests, are clearly going to be relevant to any explanation of the Convention, which is, after all, an agreement between sovereign states. But where donor interests are claimed to exist without any more specific elaboration, this approach is unenlightening, and those who concentrate more on identifying specific

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interests can be incorporated within other approaches – there is nothing unique to a realist approach to international relations in claiming that states will have particular concerns and interests that they will pursue in the international arena. The important task is to identify what these are and what the basis of cooperation is – in essence, nothing very remarkably different from the task left by liberal analyses. Furthermore, the emphasis on the pursuit of selfish interests leaves us with a similar problem to that left by dependency analysis: why would the southern states participate, particularly if, as Olsen argues, donor interests are so dominant and given that there is no direct or indirect coercion to participate in the agreements? We should note, as Krasner argued in relation to North–South relations more generally, that southern states do indeed have their own agendas and aims in negotiations with the North (something that is clearly true) although the goal of this interaction is not simply ‘to maximize their power’ (Krasner 1985: 12).13 As will become clear in the subsequent discussion, insights from this large (if at times not very well known) body of literature on the Lomé Convention are at times valuable. However, a more satisfactory specification of the fundamental characteristics of the EU–ACP relationship and the global North– South context in it has arisen and evolved is necessary. In particular, this book will seek to achieve a number of broad aims. First, it will seek to provide an analysis which can examine the deeper issues of political economy underlying the more specific debates about effective development co-operation, and one that can critically assess the rather obvious claims made on behalf of its development co-operation policies by the EU Commission and its supporters. This, in turn, requires an analysis that can place the Lomé Convention and the successor Partnership Agreement within the political, economic and historical context in which they have arisen and developed. Only by doing this, and by specifying the nature of North–South relations at this wider level, can we then identify the origins and nature of the co-operation involved in the relationship and the sources of tension and conflict that also arise within it. Finally, this will allow us, through an assessment of the significant changes in North–South relations that have occurred over the lifetime of the Lomé Convention, to offer a more firmly grounded analysis of the evolution of the Convention and the nature of the post-Lomé accord in the context of the restructuring of North–South relations that has characterized the post-colonial era. An outline of the beginnings of such an approach is the task of the next section.

A revised understanding of EU–ACP co-operation As has been indicated above, this study seeks not only to understand the specific evolution of EU–ACP co-operation in terms of the changing forms and modes of development co-operation, but to formulate a broader and deeper analysis of the EU–ACP agreements as specific moments in the wider evolution of North–South relations. This needs to be done in two ways. First, the Lomé Convention and the Partnership Agreement are interpreted as indicative of

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the character of relations between Europe and the ACP states – the text and implementation of the agreements are an institutionalization of those relations. Second, this attempt to characterize the relationship seeks to go beyond a simple identification of biases one way or the other in terms of who benefits most, or who exercises most influence over the relationship, and to place the relationship and its historical evolution within the context of the development of the relations between North and South more generally. Such a task requires us to discuss the nature of inter-state co-operation in general, and the particularities of co-operation between North and South in the post-war era. We shall first identify some basic features of international co-operation within a nation-states system and the international economy, and then identify the nature of North– South relations in this period and the important changes in North–South relations in the post-independence era. Once these tasks are done, we can return to the origins and evolution of the EU–ACP relationship within this broader context.

Development co-operation in context: some key features of international co-operation The Lomé Convention and the EU–ACP Partnership Agreement are interstate agreements, established on an inter-regional basis (i.e. between two groups of states), and deal with economic and political issues arising from the pursuit of the development of the ACP states. They are both voluntary and co-operative, in the sense that they are established between sovereign, independent and legally equal states.14 The EU–ACP relationship represents both a particular instance of international co-operation per se, and an example of North–South relations in particular. I will first identify the nature of efforts at international cooperation, before assessing the particularities of North–South relations. A number of key questions need to be asked: what is the nature of international co-operation between states? Why does international co-operation take place? And over what issue areas? International relations can include a variety of relationships between states from outright conflict and war to zerosum competition and rivalry in the international hierarchy to collaboration and positive-sum co-operation. In addition, the potential ways of organizing the international system of states can vary enormously, and in the twentieth century have included particularistic bilateral relations between individual states (Nazi Germany’s international relations, for example) to relations of dominance and political inequality between states (the Soviet Union’s relations with states of Eastern Europe after 1945), to direct political ownership of and authority over other territories by imperialist powers (for example, European colonialism) (Ruggie 1993). Ruggie has argued that in the twentieth century the means of organizing the state system has increasingly been multilateral. The term multilateralism refers to ‘… an institutional form that coordinates relations among three or more states on the basis of generalized principles of conduct: that is, principles which specify appropriate conduct for a class of actions, without regard to the particularistic interests of the parties or the strategic

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exigencies that may exist in any specific occurrence’ (Ruggie 1993: 11). Multilateralism can refer to international order (the general principles governing relations in the international system), regimes (in particular, more concrete systems of rules) and organizations (Ruggie 1993). Ruggie argues that historically, multilateralism emerged initially between sovereign states needing to define property rights (due to the territoriality of the state); then to solve co-ordination problems (for example, of international communications) and then for collaboration purposes over a range of economic and political issues (Ruggie 1993). In the twentieth century, multilateralism became increasingly institutionalized in the creation of international organizations, above all the ‘universal and multifunctional’ United Nations. But what is the basis of multilateralism as a form of interstate co-operation and what is the content of such co-operation, in the post-Second World War era? Bromley has argued that the emergence of multilateralism must be seen as arising from the same social transformations that produced the modern, liberal, capitalist, sovereign state (Bromley 1999). While the modern state has its origins in Western Europe, it has become the dominant form of political authority, spreading first across Europe and to the Americas in the nineteenth and early twentieth centuries and to Asia and Africa in the latter half of the twentieth century. As has been summarized elsewhere, modern states represent a unified, impersonal, bureaucratized and regularized system of rule over a defined territory and relatively permanent population, exercising a monopoly over the legal use of force and the elimination of rival sub-national, and external, sources of authority (see for example, Held 1995; Poggi, 1978). The state is both liberal and capitalist, in the sense that it arises out of the creation of a distinct political sphere consisting of the rule of law and citizenship and separate from the economic realm of wage labour, private property and the market.15 Unlike previously existing, feudal social relations, therefore, capitalist social relations are divided into two apparently separate realms. This implies limitations on the state both in terms of the space or territory it claims jurisdiction over; the areas of social life in which it will seek direct control (as opposed to authority), and the type of actions it will engage in (see Thomson 1995). In the modern liberal state, these are regulated by constitutions and the rule of law. The key institution which organizes political rule on this basis is sovereignty, but what is the meaning of this and how does it affect the form of inter-state relations? The concept of state sovereignty has been used in a number of different ways, from the ability of a state to directly control everything within its borders, to its ability to control transnational flows of various kinds, to the legal recognition of a state as the ultimate authority over a particular territory (see Krasner 1999). However, sovereignty in its liberal form (the dominant form taken by the modern state) implies certain principles of internal rule and a particular type of external relationships between states (Bromley 1999). Internally, as we have seen, liberal sovereignty entails the location of final authority over a specific territory in the state; the limitation of the state by law and the constitution, and the separation of this political realm from the economic sphere. But these sovereign rights of the state have international

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implications. This is particularly so given that the universalistic nature of ‘rights’ implies that the possession of rights entails their extension to all similar agents. For the states system, logically, rights claimed by a particular state for final authority within a given territory implicitly acknowledge the rights of similar entities over other territories. Historically, with the rise of the modern state, sovereignty was asserted both against rival sub-state powers and against outside state and non-state actors (Bromley 1999; also Hirst 1997). Liberal sovereignty therefore is not just a property of individual states but emerged as a property of the state system and has been defined as ‘… a unified set of inter-state and intra-state norms which both facilitates the interaction of states within the international system and establishes a specific kind of rule within and among those states’ (Bromley 1999: 15). The rules of conduct between these sovereign powers will therefore also tend to be universalistic, establishing principles of conduct for a class of actions, i.e. be multilateral in character. The multilateral, mutual recognition of rights of states is therefore a central feature of the interstate system, and establishes a ‘positive-sum’ relationship whereby the recognition of other states’ rights reinforces, because it is mutual, each individual state’s own claims. The content of such inter-state co-operation, particularly in this liberal, multilateral sense, will vary and has changed over time, but two main arenas of co-operation should be noted. First, there is a ‘political’ dimension to cooperation which seeks to reinforce states’ sovereignty and, insofar as this is done on a liberal basis, to define and reinforce the liberal nature of sovereignty. As mentioned already, this occurs at the level of property rights, at the level of co-ordination and at the level of collaboration. In this ‘political’ sense it includes actions such as recognition of jurisdiction, definition of territory, diplomatic representation, and, in the latter half of the twentieth century, the codification of regimes defining individual human rights and freedoms (Ruggie 1993). As we shall see below, the central act of confirmation of sovereignty and inclusion of new states within the international system, and the manner in which this is accomplished, has important consequences for the development of relations between North and South. Second, there is an ‘economic’ side to co-operation. Coterminous with the rise of the modern state was the development of the capitalist international economy. A central feature of the liberal state is, as we have seen, the apparent separation between the political and economic realms. This largely removed the state from authoritative direction of economic relations and allowed and involved the liberation of economic relations from the direct political relations characteristic of the feudal era and created a ‘private sphere’ of market relations, private property, wage labour, capital accumulation and the growth of the national and international economy. Given that economic relations were no longer defined by the political, the national, territorially bounded form of political rule – the nation-state – does not imply the same for economic relations, and in fact the liberal form of state sovereignty is the basis for the growth of the international economy as well as of various other transnational interactions focussed on by theories of interdependence (Bromley 1999).

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Historically, the international economy has its origins in the nascent capitalist societies of Europe in the fifteenth century and developed through the overseas expansion of European powers. This occurred first through the overseas explorations of the Spanish and Portuguese, later the Dutch and the British, and the development of competitive, mercantile trade. This was further consolidated through the development of the slave trade, incorporating Africa and Latin America in particular into economic relations with the North (Magdoff 1982; Bernstein and Crow 1988). European control reached its zenith with the second wave of colonialism in the late nineteenth century, at the end of which a fifth of the world was under imperial control (Barraclough 1967). Indeed, it was not until the nineteenth century that a rapidly growing, integrated, industrial, international economy became consolidated (Kenwood and Lougheed 1992). By the end of the nineteenth century this international economy was based on the capitalist centres of Europe, North America and Japan and was characterized by a relatively high level of liberalization and integration prior to the First World War, albeit with various forms of non-liberal economic exchanges with pre-capitalist and peripheral areas in Africa, Asia and Latin America. Between the two World Wars the international economy fragmented into competitive, and often antagonistic, trading blocs centred on the protective imperial systems of the European powers, the bilateralism of Nazi Germany and the protectionist isolationism of the USA (Kenwood and Lougheed 1992; Hirst and Thompson 1999). As we shall see, the post-Second World War era involved essentially a reconstruction of the world economy along liberal (or liberalizing) lines. For international co-operation, the rise of an international economy opened up a range of problems and challenges to states. At their most simple, these related to co-ordination issues over the infrastructure of international trade and investment, such as the definition of communications standards, which created some of the earliest multilateral organizations (Ruggie 1993; also Picciotto 1991). More difficult were areas of co-operation relating to the principles of international economic order, rules governing international trade and investment and areas of attempted collaboration in economic policy. Here the interests of states in economic growth should be noted. First, the state has a ‘functional’ interest in an expanding economy as a source of revenue on which the state’s own actions (administrative, legal and political, military) rely and on which its own power and standing in the international hierarchy ultimately depends. Second, the state has a ‘political’ interest in the expansion of the domestic economy, insofar as economic growth can help to ameliorate the social and class struggles within its borders (Clarke 1988a; Clarke 1991; Burnham 1994). In addition, given the spatial and temporal unevenness of capital accumulation, different states will face differing pressures at different times, creating tensions in terms of priorities and direction of policy and regulation. These constraints would seem to imply a simple competitive relationship between different ‘national’ economies and states for a greater share of economic growth and wealth. However, in an integrated international economy, ‘domestic’ economic expansion is at least partially dependent on the expansion

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of the whole economy, ensuring that states have a shared interest in creating the conditions for economic growth at the international level, and this will be enhanced by the reduction of barriers to the movement of capital in finance, trade and investment, reducing transaction costs and collaborating on policy and regulation (Burnham 1994). In addition, the consolidation of liberalization of the international economy through co-operation (for example, through free trade agreements) further reinforces the liberal nature of rule, enforcing the dominance of market principles of allocation over authoritative allocation by states. Relations of competition and co-operation between states over economic issues are therefore fundamental features of the international system (Burnham 1994). Three further aspects of co-operation should be noted. First, that the extensiveness of co-operation has increased to encompass more complex and difficult areas of collaboration, including detailed regimes over economic regulation, trade, investment and monetary relations and over individual and collective human rights of various kinds. Second, this extensive co-operation has become increasingly institutionalized, that is, involving codification in, and governance by, international agreements and organizations (Ruggie 1993: 23). This change is exemplified by the creation of the United Nations system, which is not only multifunctional but also universal in membership. This raises new arenas of conflict over purposes, decision making and activities. However, the institutionalization of inter-state co-operation in this explicit manner also creates problems of change, particularly in the economic arena. This is not only because of the existence of elements of competition between states noted above, but also because of the spatial and temporal unevenness of capital accumulation internationally, which is reflected in the constantly changing patterns of economic growth across the international economy. These, in turn, will affect individual states’ positions in the international hierarchy, their power resources, influence and interests. The attempts to secure collaboration are therefore subject to two sources of change: change driven by the changing conditions of accumulation and uneven development of the international economy which reshape influence; and change driven by changes in the overall distribution of resources and power, which may then conflict with institutionalized arrangements that reflect a previous pattern of power distribution.16 The attempts to forge formalized co-operation agreements thus institutionalizes a temporary pattern of relations between states, in an effort to solidify what may ultimately be passing and contingent conditions for agreement. Given different positions in the international system, and different resources on which to draw to shape such agreements in their own favour, such regimes also institutionalize the relative power positions of the states involved. Any institutionalization of a particular set of relations between states or groups of states is therefore built on shifting sands. The conditions for co-operation and conflict change, as political and economic conditions in different states and in the world change and develop. Regimes may try to manage this instability for states by concretizing and institutionalizing what is a shifting relationship, and

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by attempting to exert control over the direction of change. The attempt to control the international political environment (as well as the domestic political situation) in this way will therefore be an ongoing one and will involve different objectives and possibilities at different times. In the context of the immediate post-Second World War period, the growth of liberal multilateral institutional structures should therefore be seen as an explicit project to manage a radically altered pattern of international relations bequeathed by the war and to address the contingent pressures faced by the leading states. This process was characterized above all by the dominance of the United States, which had not only emerged from the war with an overwhelming superiority over its western allies and the defeated states, but also had a central interest in establishing the conditions for renewed growth at the international level along liberal principles (see Ruggie 1993). This was to push the international state system and the regimes governing the international economy in a liberal direction.17 This development was significant, given the substantial obstacles to a liberal order that had emerged in the first part of the century. Given that liberalization of the economy is closely dependent on the liberal nature of sovereignty, as we have seen, the extent to which the world economy, and indeed the interstate system, had become dominated by non-liberal forms prior to the Second World War is indicative of the crisis in capitalist social relations that had arisen. In this period the advance of a liberal international order faced considerable challenges with the erosion of the separation of the economic and political realms – the reliance in the 1930s on empire and protectionism and the Fascist states’ nonliberal forms of economic exchange being prime examples. The reconstruction of a liberal international order in the post-Second World War era was therefore on one level an attempt to resolve issues of economic growth, but also a project of starting to (re)consolidate liberal forms of sovereignty among the leading capitalist states. Alongside the ‘political’ collaboration embodied in the United Nations system (insofar as it was concerned with granting independence and maintaining peace and security), the key institutions created to promote joint moves towards economic growth and liberalization were the Bretton Woods system of monetary relations guided by the International Monetary Fund (IMF), support for economic reconstruction and development through the World Bank, and the promotion of freer trade through the General Agreement on Tariffs and Trade (GATT). The long-post war boom in the world economy up until the 1970s is seen (at least in part) as a product of this project of multilateral liberalism which allowed the simultaneous expansion of international and domestic economies (Clarke 1992).18 This renewed, liberal, multilateral order, created in the wake of the Second World War, was signal of the triumph of a liberal international order over two main challenges – Fascism and empire. Nevertheless, it was subject to two important qualifications. First, it faced a global challenge in the form of Communism as a different and competing form of social relations and international order (Halliday 1989; 1994). This not only had a huge impact on

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the geographical scope of the liberal order and the capitalist world, and the extent and exercise of US hegemony, but had important consequences also for North–South relations, as we shall see. Second, the creation of a liberal order had first to overcome the continued existence of the imperial systems of the European powers, and then the nationalist or ‘Third Worldist’ challenge to the principles governing the international economy which the new states posed. In addition, as we investigate more fully in the next chapter, and partly as a consequence of the above, the creation of this order was a gradual, incomplete, and far from unproblematic process. It is the second of these challenges, the relations that were established between the new states created from the dissolution of the European empires on the one hand, and the former colonial powers and industrialized states on the other, that is our chief concern. And it is to this – the origin and evolution of what became known as ‘North–South relations’ – that we now turn.

The political economy of North–South relations North–South relations, as an inter-state phenomenon, are a creation of the post-war era, the roots of which lie in the process of decolonization. This was an historic process for the modern international system. At no other time has so great a number of sovereign states been created in so short a space of time: between 1945 and 1960 more than 40 new states came into being, representing a geographical spread of the state system of enormous importance (Barraclough 1967). In addition, it represented the triumph of the revitalized liberal order over one of the competing forms of international order – empire – which, as we discuss in the next chapter, was still seen as a viable project in the immediate aftermath of the Second World War, at least by the imperial states (Kiernan 1982; Louis 1977). But why are North–South inter-state relations distinctive? We have seen above that the principles for organizing the international order have been increasingly multilateral, defined by the liberal character of the state. We have also noted the content of international co-operation as focussing on the existence of collaborative efforts between states, to ensure the political (mutual recognition) and economic (expanded accumulation) conditions necessary for the maintenance of individual state sovereignty. However, the emergence of relations between the new states of the South and the richer, more powerful states of the North entailed a qualification of this liberal order. This is paradoxical insofar as, at one level, the extension of sovereignty to former colonies and the creation of independent states, where previously there were none, represented the application of liberal, multilateral norms: the recognition by existing states of rights to final authority over other territories for the new states, institutionalized in a ‘right to independence’. In addition, the end of empire represented the demise of one of the rival forms of international order. However, the means by which this process came about, and the kinds of statehood that were brought into being, had important consequences for the character of international co-operation that was established between North and South.

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The means by which sovereignty was gained by southern states was distinctive in terms of the overt, activist nature of the process at the international level. As we have seen, one of the defining features of sovereignty in the modern world is its mutual nature – and this is a feature of the state system, not of particular states seen in isolation (Bromley 1999). However, one of the most striking characteristics of the decolonization process was the importance of external actions to the achievement of sovereignty by these new states. This was so at the level of the role of the decolonizing power, but, more importantly, it was so in terms of the legal and institutional aspects of decolonization and the role in particular of the United Nations system. Jackson has characterized these novel features as representing ‘negative sovereignty’ in contrast to the more straightforward and self-dependent ‘positive sovereignty’, of the stronger states in the international system (Jackson 1990). Thus, whereas the older, ‘positive sovereignty’ was achieved by a demand for recognition made to other states by the new state and was dependent on the achievement of certain minimal standards and capacity of internal rule by the new state (what became in the late nineteenth century and early twentieth century the ‘civilization test’, see Jackson 1990), the newer (post-1945) ‘negative sovereignty’ represented a much wider, all-encompassing ‘right to independence’ for all nations and peoples. This was institutionalized in the United Nations Charter and subsequently reinforced in the 1960 General Assembly declaration, and explicitly excluded consideration of the character of, and capacity for, internal rule by a state, or the level of economic development, as factors in granting or withholding sovereign status (UNGA 1960; Jackson 1990). As Clapham notes, Jackson’s picture is ‘overdrawn’ and the distinctions are far from being as clear-cut as is suggested (Clapham 1998). This is so in two ways. First, as we have seen, the attainment of sovereignty by ‘positive sovereignty’ states was not simply a process purely of self-assertion of their existence as states and their capacity to rule. Instead the emergence of sovereign statehood in Europe was based on joint assertion by would-be states against rival claims to authority (Hirst 1997). As discussed, the role of inter-state cooperation and collaboration are also key features of the maintenance of sovereignty of all states (Clapham 1998; Bromley 1999). Second, in historical terms, the existing ‘society of states’ has, even before the era of negative sovereignty, taken a leading hand in the creation and protection of new, ‘weak’ states; examples include smaller European countries such as Belgium as well as the independence of Latin American countries (Clapham 1998).19 In addition to these objections, although Jackson emphasizes the change in international norms which underpins ‘negative sovereignty’, we need to avoid the tendency to downplay the causes of this change rather than to analyse its political and material bases. The role of nationalist liberation forces in the colonies, the gradual discrediting of the racism (in the colonies and in the western states themselves) which attempted to legitimize colonialism as a form of rule, and the material weakening of European power, were all vital factors which underpinned the recognition of the end of empire in the formal principles of international law.

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These issues notwithstanding, the process of decolonization did lead to important qualifications of the liberal multilateral order. First, domestically, there was only a weak institutionalization of liberal sovereignty. Although initially the decolonizing powers often enacted independence through an electoral process and bequeathed superficially ‘western-style’ political systems, for many states, particularly in Africa, this was a hurried process (Allen 1995). As Allen notes, this was deliberate in some cases – allowing the better organized, more conservative, elite-dominated forces to gain power before more radical, mass movements developed (1995). However, the effect was to institute regimes with a weakly established political base, which coalesced around clientilist and personalized relationships. Across the developing world, various forms of authoritarian rule, often involving the military, came to dominate the post-war era. The lack of recognition and protection of individual rights by the state, and indeed the routine abuse of such rights – as well as the rejection of rights as ‘western’ and therefore non-universal – were all counter to liberal norms. Second, this political illiberalism had closely linked economic dimensions. The new states faced major problems of underdevelopment, narrow export bases, colonially established patterns of trade and infrastructure and their social consequences of low levels of literacy and education, health and welfare. It was towards the latter of these that the imperial powers had directed their limited ‘modernization’ and improvement budgets (Kiernan 1982). This economic weakness, and the consequent limited nature of domestic class formation, meant that the state had both an overwhelming economic as well as political role (Clapham 1996). Access to the state and state positions was often the most obvious route to economic wealth, which, given the dominance of clientilist politics, was also necessary for securing and maintaining political power (Allen 1995; Clapham 1996). As has been noted elsewhere, it is often in weak states, or rather states facing significant political challenges, that the liberal separation of economic and political realms comes under pressure, with political pressures on the state forcing direct and overt authoritative interventions in economic relations which themselves become politicized (Bromley 1999; also see Burnham 1995). This situation was prominent in the South because of these specific features of the post-colonial situation. The questions then arise as to why such weakly consolidated states survived? What was the role of external support? And what were the implications for the character of North–South international relations? (Jackson 1986). As mentioned above, the achievement of sovereignty was somewhat paradoxical. It was consolidated through the application of a universal norm perfectly in line with liberal international relations, namely, a right to independence for all non-selfgoverning territories. However, it carried a proviso (at least in the form institutionalized in the UN declaration of 1960) that this would be without regard for issues of internal rule. But, as we have seen, the internal and external are closely linked as far as sovereignty goes. This created two features of North– South relations. First an ‘international support structure’ involving the active engagement of external powers, international institutions, international law and international norms in the maintenance, support and development of

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southern states to bring reality to the right to independence of these new weak states, and a concomitant pressing reliance by the southern states on the various forms of international support for their survival as states, and for the survival of the systems of internal rule that developed (Jackson 1990; Clapham 1996). Second, an ongoing tension over the principles and nature of governance of North–South relations was created by the differing degrees to which liberal norms were consolidated in states of North and South. The ongoing role of North–South relations in its various guises is testament to the fragility of the project of state creation entailed in decolonization and the persistent problems that it continues to throw up. Let us take the ‘international support structure’ first. International support for developing states has three main forms. One is the legal and institutional dimensions of the sovereignty of the southern states. The existence of the norms of a right to independence and non-interference is a fundamental part of the creation of what became known as the Third World. This was reflected in the Charter of the UN and in declarations and resolutions of the General Assembly, and reiterated in numerous international agreements as well as being reinforced by the day-to-day practice of international relations in which the new states participated, and in which they demonstrated an international civility quite in contrast to their ‘domestic’ behaviour (Jackson 1990). Thus, despite the many interventions that did take place by leading states, particularly driven by the exigencies of the Cold War, these did not fundamentally question the existence of the states concerned as states, although the allegiance of the state to one side or the other in the global conflict certainly was important and the effect of these interventions may have been to undermine the viability of the state even further.20 Second, while the existence of many states in the South owed much to the application of a universal, multilateral norm – the right to independence – these new states were granted exemptions and special treatment with respect to other multilateral regimes. This was particularly so in the realm of trade, where derogations for countries at a low level of development exempted them from much of the burden of reciprocity in the GATT structure (see Adams 1997 for an account of how this came about). In addition, at the political level, universal norms covering human rights were weakly implemented, and developing countries indeed used one general multilateral principle (nonintervention) to nullify others (human rights regimes). This differential treatment was accorded to southern states because of their low level of development, thus explicitly recognizing a reality of inequality between sovereign equals and representing a major infringement of multilateral principles. Third, international support became institutionalized in the more direct, concrete form of development aid. While the origins of development aid may lie in the improvement and modernization efforts of some western states (mainly Britain and France) in the later years of colonial rule, development aid as an inter-state relationship is, along with North–South relations, a post-war creation (Jackson 1990). The overt and institutionalized recognition of southern states’ sovereignty also entailed a commitment on the part of the international

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community in general, and the richer states in particular, to help to bridge the gap between their formal existence as states and the reality of problems of underdevelopment. This in turn was institutionalized (albeit more weakly) at the international level in a panoply of development organizations – the World Bank and UN Development Programme (UNDP) among them – and in the more ad hoc but important bilateral efforts of the major powers. Not surprisingly, post-colonial patterns of aid were heavily based on colonial relationships, with Britain and France for a long time dominating aid to ‘their’ African countries to which they owed ‘special obligations’. From the point of view of the developing countries, these sources of external support were always important, often vital. This had a general form, in the sense identified in the previous section, of the need for economic growth to consolidate political stability and fund the state’s activities. But in the postcolonial states there was also a more specific role. For a start, while it may be the case that the stability of any particular regime is dependent to some extent on economic prosperity, for regimes that came to power at the head of a popular movement which sought to eradicate colonialism in order to eradicate its negative social effects, economic growth and development had a particularly prominent role in the legitimacy that such regimes were able to establish (for a discussion, see Clapham 1996). Furthermore, for particular regimes, power lay in the clientilist links and the patronage that occupation of state positions made possible, and access to external resource flows were a major element in this. The granting of international support to southern states, in a context in which the internal nature of rule was not subject to the condition that it conform to basic liberal standards, therefore enabled the survival of states in which liberal sovereignty was, at best, only weakly consolidated. To summarize, the basis of North–South relations reveals a particular form of the relations of co-operation between states. From the point of view of the northern states’ relations with the South, institutionalized in the new field and in organizations of development co-operation, such co-operation was based on a commitment to the project of the expansion of the state system which decolonization represented. This was reflected in the legal and empirical support on offer to the South. From the point of view of the southern states, such support was necessary for the continued survival of their weak states, as well as for the more specific survival of particular regimes in charge of those states. This co-operation covered all three fields of North–South relations identified above – the legal principles pertaining to sovereignty, the regimes governing economic and other interactions, and the concrete forms of development aid on offer to the South. Furthermore, just as we have argued that international co-operation and the regimes it may produce can be seen not as external to the participating states but as expression of those states’ sovereignty, so too North– South relations reflect the differing imperatives of sovereignty on each side of the relationship. However, while these factors describe the basis for North–South relations, we also need to assess how these relations developed. Indeed, the evolution of North–South relations can, to an extent, be seen as the playing-out of the

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tensions thus created between the North, where liberal norms were more fully entrenched, and the South, where liberal sovereignty was much weaker. Two key developments need to be identified: the attempt by southern states to use this particular configuration of international relations to further their own development as states, and which reached a peak in the 1970s; and later, in the 1980s and ’90s, a more concerted attempt by the leading states to entrench liberal principles of economic regulation and liberal forms of rule in the states of the South. This pattern of international relations created, for the South, the possibility to press for increasing the quantitative amounts of support on offer and, the terms on which this was received, and for achieving more far-reaching, qualitative changes to the international regimes covering the economic issues closest to developing countries’ interests – trade, commodities and aid. This possibility, or ‘space’, for political action had two main sources. For a start, the developing countries benefited from the Cold War division of the international system. Mayall has noted how the involvement of the Soviet Union in India’s first fiveyear plan and the Cuban revolution galvanized US development efforts and made ‘development’ an arena of Cold War competition (Mayall 1990). Furthermore, the existence of the Soviet threat meant that a greater divergence from liberal principles was tolerated in individual state’s national development efforts, allowing substantial national controls on international economic exchanges and wide-ranging state involvement in the economy to emerge across the developing world. This was reinforced by then current thinking on development strategy, which emphasized the role of the state as either leading the modernization process or limiting the negative effects of international capitalism, depending on where you stood in the modernization/dependency debate. Second, the shared background in colonialism, and the identification of common problems faced in the post-colonial era, created the basis for forging a political alliance that was to have a significant international impact. Proclaimed originally and forcefully at the Bandung conference in 1955, the ‘Third World’ states developed a common identity, platform and set of organizations (the Non-Aligned Movement and the Group of 77 in particular) to push demands at the international level (Adams 1997). This challenge sought to bolster existing domestic development strategies by garnering greater external support, and to seek significant modifications to the liberal principles of the international economy which had been established in the post-war era. In short, it sought to establish a ‘right to development’ alongside a reaffirmation of the ‘right to independence’ that had already been gained (Jackson 1990). The culmination of these efforts came in the demand for a New International Economic Order in the early 1970s, and had a crucial influence on the origins and content of the first Lomé Convention. The response of the richer states to this programme had been to grant partial concessions to these demands (such as derogations from trade rules) followed by outright hostility to the more ambitious plans of interventionism, thus demonstrating the limits of co-operation between North and South. What

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followed in the 1980s was a process of restructuring the nature and character of North–South relations. The rebuttal of the South’s NIEO demands represented the limits of toleration of the diversion from liberal forms that had been followed by the South, and an insistence on the part of the North that while ‘national’ encroachments on liberalism would be tolerated, the extension of these to the management of the international economy would not. This coincided with an important shift within northern states which had themselves, through the era of social democracy, engaged in substantial interventionist practice which had reached a crisis in the 1970s. The response, with the election of right-wing governments in the USA and Western Europe, was a project of reasserting liberal principles of the free economy with a concomitant strengthening of the state around its core functions.21 In a parallel process, the scope that had been open to southern states to pursue ‘independent’ development strategies was progressively closed down. Rather than being able to push for ever more generous and unconditional international support, the South now faced an assertive strategy by the North which sought to redefine the role of the state, and indeed the development process, in the South. Initially, this focussed on the international response to the debt crisis, in which donors could insist on a neoliberal programme of privatization, devaluation of currencies, curbs on inflation and budget deficits and ‘market-friendly’ policies in return for a resumption of lending and rescheduling of debt payments. As such, the North’s policies attempted to address the underlying weaknesses and constraints in the South’s development strategies, driven as they often were by internal political priorities, that were coming to the fore in the 1970s. The emergence of the debt crisis itself marked the exhaustion of the previous, post-colonial, pattern of development as well as marking the reform of the existing principles of international support of southern states. The adjustment of the economies in the South was only part of the process of restructuring, however. For it was not just an isolated ‘economic’ change that was taking place in the South, but also a political change. As is investigated more fully in chapter four, the 1980s and ’90s have seen a recasting of the range of political and economic relations and structures in the developing world. Alongside the limits of state-led development policies, so too the political regimes in place in the developing world came under increasing pressure, as the failing performance of the economy eroded the wealth needed to sustain clientilist power bases, and indeed eroded the remaining legitimacy of regimes that claimed to be leading national development (Allen 1995). The growing ‘internal’ demands for political reform and democratization that arose were added to by donors who were extending the remit of conditionality of aid into reform of the state itself. This took different forms, as we shall see, and stemmed at least partly from problems encountered in trying to ensure that economic adjustment conditions were being met, but extended into demands for ‘good government’, human rights and democratization. This project of ‘political conditionality’ was also given a much freer reign with the end of the Cold War, which fundamentally reshaped western interests in the developing world and

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further limited the scope for manoeuvre of developing countries. The restructuring of North–South relations which these changes entail are significant and provide the context within which to understand the evolution of the Lomé Convention. Certainly, key aspects of North–South ‘co-operation’ that were identified above, remain. There remains a mostly unquestioned commitment to the continued existence of sovereignty of southern states, even in cases where the decay of development has extended into the collapse of state itself (Zartman 1995).22 There also remains the commitment – engaged in by both sides – of aid for a ‘development process’ and, if anything, an increased engagement of the major institutions in, and direction of, this process. What has changed is that, while the international support structure for southern states remains, such support is geared more explicitly to a liberal process of state reconstruction and development. In a sense, the western policy towards the South was always liberal – as we have seen, the extension of sovereignty to southern states and the efforts made to ensure they remained within the western orbit formed part of the creation of a liberal international order. The events of the 1980s and the end of the Cold War have given these aims a much freer reign, although the continuing challenges to this project remain very substantial. In summary, the origin of North–South relations can be traced to the particular process whereby the southern states became states. This created a distinctive form of international co-operation, within which developing countries sought to pursue an unsuccessful attempt to extend interventionist, authoritative forms of economic management, on which their development efforts were mostly based, into the international arena. This represented a limitation to the dominant liberal, multilateral order and to an extent still does. However, from the 1980s this has been restructured, making these strategies of the South far less possible and redefining North–South relations more clearly along liberal lines.

The Lomé Convention in North–South context The preceding section establishes a number of key issues necessary to understand the evolution of the EU–ACP relationship, the Lomé Convention, and the Partnership Agreement including the nature and scope of international co-operation, the particular characteristics of North–South relations and the attempts by both sides to reshape these relations in the post-independence era. I will now assess the Lomé Convention as a particular example of an institutionalized North–South relationship. The EU’s negotiation of a formalized arrangement with Third World countries in the Lomé Convention of 1975 built on a long history of relations between Europe and Africa, extending back to the imperial control of the continent and before. However, it was the processes of the formation of the EU, and the decolonization of European empires, that laid the basis of what was to become the Lomé Convention. At the very formation of the EU, a provision was included in the Treaty of Rome for the ‘Association’ of the colonies of France and Belgium with the new organization. While this was fundamentally a colonial arrangement – and, indeed, was a part of a last attempt

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by France to maintain its imperial relations, the establishment of a formalized link between Africa and the EU was carried over into the post-colonial era. The Yaoundé Conventions of 1963 and 1969 reflected the ongoing ties between former colonies and former imperial powers that formed an important part of the emerging North–South relations. And, as we have seen, these encompassed a means of support for the new states. Yaoundé provided both aid and trade access to the EU market (although the latter was given only on a reciprocal basis, and therefore did not match the ‘special treatment’ in terms of nonreciprocal trade benefits that developing countries were establishing in the GATT at a global level). It showed that the EU would play a role in the international support that was afforded to the development and stability of the new states. While the move represented something of a multilateralization of post-colonial ties, in that the agreements were with the whole EU rather than simply the former colonial power (Clapham 1996; Morse 1970), it also reflected French priorities in North–South relations, protecting as it did France’s postimperial ties with Africa. The transformation of this limited arrangement into the Lomé agreements was driven by a number of factors. In terms of the geographical scope of Lomé, the association of some countries of the South with the EU had to be expanded in order to accommodate the entry of Britain into the EU in 1973 and the consequent need to establish some kind of arrangement to deal with Britain’s Commonwealth. The offer of entry into a joint agreement was only open to some – the ‘associable’ Commonwealth – which excluded the Asian Commonwealth countries (Jones 1973). This was done on the argument that these larger, more developed countries would require different forms of cooperation and thus could not be easily included within a new association. It was an admission of the limits of the EU’s willingness to engage in North– South relations and of the limits of the kind of support that would be offered from the EU to southern states. Perhaps as importantly, the new agreement was transformed politically in terms of the content of co-operation that was to be established. The negotiation occurred at the very time when, as we have seen, the South was attempting to extend the scope of international support in the areas of trade and aid – for more beneficial and managed trade relations and more aid with less conditional terms. All played a role in defining Lomé co-operation. Trade access to the EU, which under the Yaoundé Convention was to be reciprocal, was now given to the new ACP group on a non-reciprocal basis. Aid was to be increased, although nothing like as much as the ACP hoped, but was to be administered ‘jointly’ with the ACP countries themselves gaining certain rights to determine the use of aid. Elements of the managed trade projects of the NIEO campaign were incorporated within Lomé, particularly the Stabex scheme for the stabilization of export earnings. That these factors were included in Lomé, when the South failed to achieve them in the global arena, rests on the particular issues of concern facing the European states at the time. These were focussed on the future of raw material supplies and future relations with the South, and forced the EU to seek to establish a more extensive accommodation with the developing

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countries than was ever likely at the global level. However, although the new agreement reflected the high point of southern attempts to redefine North–South relations to include a ‘right to development’ alongside their established right to independence, it was also based on the better established principles of North–South relations identified above. The more ‘political’ aspects of the agreement reflected the ‘negative sovereignty’ pattern of post-colonial relations in their formal recognition of equality between the parties, recognition of ‘sovereign rights’ of the ACP states, in particular over their development strategies, and in the formality of the agreement as one conducted between equal, independent states. That all these formal declarations were included in an agreement based on one side granting financial and trade support to the other is a perfect illustration of the Convention as an example of this wider pattern of North–South relations. While these formal aspects of Lomé co-operation remained in place, the subsequent evolution of the Convention demonstrated the rebuttal of the more far-reaching southern demands for reforms to the international economy and the restructuring of North–South relations. As we have seen, this centred on the debt crisis but implied a fundamental reorientation of the political economy of development insofar as it involved internal economic and political changes in the South and a tighter control over the availability of the international support that developing countries could call on. Within donor aid policies this was, as we have seen, demonstrated in the rise of conditionality. And just as the first Lomé Convention had reflected some of the South’s demands for reform, so the subsequent evolution of the Convention reflected these reformulations of North–South relations. This was particularly shown in the introduction of support for structural adjustment in Lomé IV (and the move towards this in Lomé III) and in the explicit political conditions that were introduced in the revised Lomé IV (Lomé IV/ii). That North–South relations had moved into this ‘new era’ was increasingly intoned by EU officials and governments as the renegotiation of the entire post-Lomé IV relationship proceeded and the basis for the new ACP–EC Partnership Agreement was laid in 2000. In summary, the institutionalization of EU–ACP relations in the Lomé Convention and its successor should be understood as one among many forms of co-operation between states. Such co-operation establishes rules over a wide range of trade issues and formalized procedures for the granting of financial aid, as well as procedures and institutional arrangements for the management of co-operation, and provides a forum for discussions and exchanges on a wider range of issues. In addition, this co-operation relates to familiar areas of inter-state co-operation, from the specific ‘economic’ issues of the need to seek increased accumulation (for the ACP, through new forms of trade and aid, and for the EU, initially at least, in the form of securing a future basis for raw material supplies), and in the wider sense of co-operation as a means of entrenching sovereignty (for the ACP, in a very direct way of confirmation of their status as sovereign equals and by providing some material means to try to ensure their rule in the future; and for the EU in a more general sense of the legacy of support they were to give to the states that had been brought into

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being through decolonization). It is therefore a case study of co-operation, but more importantly, of North–South co-operation. And, as has been identified in institutionalized forms of co-operation more generally, pressures for change driven by changing patterns of economic and political forces also demand a restructuring of those institutionalized forms, clearly evident in the periodic renegotiations and eventual replacement of the Convention. The transformation that EU–ACP co-operation has undergone is also a case study of the transformation of North–South relations. The changes in the EU–ACP agreements are therefore indicative not so much of apolitical, technical needs of development assistance, but of changes in the relations between North and South at the global level, played out in a regionalist element of the architecture of North–South relations. ✼ The following chapters will therefore seek to analyse the rise, evolution and eventual replacement of the Lomé Convention in the light of this understanding. The next chapter deals with the origins of the Convention in the process of decolonization and the establishment of formal ties between the African countries and the EU. It shows how this relationship was recast in the early 1970s, with the accession of Britain to the EU, and the reform of the terms of this co-operation under the impact of developments in North–South relations and in the world economy in the early 1970s. It also summarizes the content of the Convention and how this was modified in the next two – Lomé II and Lomé III. Chapter three provides a detailed analysis of the more far-reaching changes introduced in Lomé IV, and again places these changes in the context of the restructuring of North–South relations in the debt crisis and the rise of conditionality. It shows how, despite Commission claims to the contrary, the introduction of support for structural adjustment into Lomé followed and complemented adjustment conditionality of the major donors, and international institutions rather than offering a differentiated approach. Chapter four shows how this process was repeated in the revision of Lomé IV in 1995, when major changes were again introduced into the terms of co-operation that the Convention offered. Here, more overtly political conditions were added to Lomé’s provisions, with respect for democracy and human rights becoming essential elements of co-operation between the EU and ACP. The following two chapters detail a specific case study – that of Zimbabwe – in its experience of Lomé co-operation. The case study of Zimbabwe is included to illustrate, at the level of the individual ACP state, the key developments highlighted above. The case allows us to see the place Lomé has within the context of Zimbabwe’s external relations and shows how the relationship with the EU, through Lomé, reflects the more general character of Zimbabwe’s relations with the West at independence. These issues, covering aid and trade in Lomé II and III, are dealt with in chapter five. The case of Zimbabwe also reveals very clearly how the relationship institutionalized in Lomé changed, particularly in Lomé IV,

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and how the issue of structural adjustment has come to dominate that country’s relations with the EU. This process is analysed in chapter six. Chapter seven concludes this work by detailing the replacement of the Lomé Convention in 2000 with a new agreement of development co-operation – the EU–ACP Partnership Agreement – and seeks to show how this latest innovation in EU– ACP relations further restructured this North–South relationship.

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2 Origins, history and evolution of the Lomé Conventions

As outlined in the previous chapter, the Lomé Convention needs to be understood in the context of North–South relations, which in turn need to be set in the historical context of decolonization and independence in the postSecond World War era. It was this process which established the terrain on which North–South relations would be conducted and to a large extent conditioned the character of those relations. It is therefore in the means by which the colonial empires of the European powers were dismantled, and the particular character of relations that this initiated for the newly created states, that we find the broad context in which to position the creation of the Lomé Convention and its predecessors . The Lomé Convention built on a history of formal relationships between the EU and the African countries. The first of these arrangements was an ‘association’ of France’s colonies with the EU in the Treaty of Rome of 1957. This association at first existed alongside the last French colonial political relationship with its colonies, the French Community, which was established in 1958. The French Community came to an end in 1960, with the achievement of political independence by most of the colonial territories. However, the EU response to independence was to offer to renew its association with the former colonies. This took place under the two Yaoundé Conventions of 1963 and 1969, between the EU and the Association of African and Malagasy States (AAMS). The accession of Britain to the EU in 1973 raised the question of the relationship of Britain’s Commonwealth to the EU. A reformulation of the EU’s relations with developing countries resulted in the Lomé Convention of 1975, which included the former French and British colonies in Africa, the Caribbean and Pacific Islands.1 Before looking at the formation of the Lomé Convention, it is therefore necessary to investigate this post-colonial background and the development of post-war relations between Africa and Europe. This chapter will be divided into three main sections. First, I shall consider the process of decolonization and the related process whereby some African states were ‘associated’ with the European Community. Second, I shall assess the factors that underlay the expansion of this relationship and its modification into the Lomé Convention in the 1970s. And third, I will review the evolution of the Convention in Lomés II and III.

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Decolonization and Association The origins of the Lomé Convention lie in the preceding institutionalized relationships which the EU established with a group of African countries, namely, the Yaoundé Conventions and, prior to that, the associated status of certain colonies in the Treaty of Rome of 1958, which founded the EEC. However, to put these into context it is necessary first to establish the international processes of political decolonization and economic liberalization that reshaped the post-Second World War world.

Decolonization The process by which the European empires – primarily those of Britain and France – were dismantled, and the concomitant creation of 40 newly independent states between 1945 and 1960, represents one of the major historic processes of the twentieth century (Barraclough 1967: 153). And the means by which this was achieved has influenced not only these countries’ subsequent evolution as societies and as states, but also the type of relationships established with the older industrialized states and, for our purposes, the relationship created between the EU and Africa. As was outlined in chapter one, the Lomé Convention can, at one level, be interpreted as forming a part of the ‘international architecture’ of North– South relations. Seen from one side, it is part of the structures of ‘negative sovereignty’ helping to uphold the survival of new, weak, sovereign states in the international system. Seen from the other, it is one of the avenues through which these new states were able to pursue claims on the richer countries for greater economic and political support. As we saw, it must be positioned in this sense alongside the better known, and more substantial, multilateral development institutions such as the IMF, World Bank and UN agencies, as well as the various bilateral relationships existing across the North–South divide. As a precursor to assessing the EU’s early involvement in this relationship, we need first to assess the process of decolonization which reshaped Europe’s relationship with Africa in the post-war era.

The road to independence As argued in chapter one, the post-war era saw an activist project of statecreation focused on the dismantling of the European empires in Africa, Asia, the Caribbean and South America. This resulted in one of the most remarkable expansions of the state system, with almost all of Africa, large parts of Asia and the Caribbean achieving independence in a relatively short space of time. As we have seen, reflecting and accelerating this process was a fundamental change in international norms regarding the legitimacy of different types of rule, which outlawed colonial government and instituted a ‘right to independence’ for colonially dominated peoples (Jackson 1990: 82–85).2 However, this change in international norms, which was consolidated only gradually in the initial discussions at the end of the Second World War, in turn

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reflected and supported various political and economic changes which spelt the end of empire. Therefore we must also deal with the more material changes that underlay the demise of colonialism, including the rise in US power and the process of post-war reconstruction which it led, the decline of European power, and nationalist movements in the colonial territories.

US hegemony and post-war order The United States ended the Second World War as the leading power in the world. Much has been written about US hegemony in this era and its subsequent evolution and this is not the place to do more than a cursory summary of the USA position.3 US power has been variously interpreted, however, and for our purposes we can note that it was based on economic, military and political components (Bromley 1991: 84). Most writers recognize the dominance of US economic power in the post-war years. By 1945, the USA controlled 70 per cent of the world’s gold and foreign currency reserves and 40 per cent of the world’s industrial production making it by far the strongest area of the global economy (Brett 1985: 62–7). Its economy had grown by 50 per cent in real terms, while its competitors in Europe, the Soviet Union and Japan had been devastated (Nye 1991: 70). It was a driving influence behind the creation of the main economic institutions and remains the most important economy in the world. The USA was also the leading military force and held for a time a nuclear monopoly over the rest of the world (Nye 1991: 70–1). Finally, the USA exercised political leadership over the capitalist world as the leading antiCommunist power. However, it is important to note here the important limitations placed on US actions and the compromises that the USA was prepared to engage in as the post-war order took shape, as these had a direct bearing on the course and pace of decolonization. Nye has outlined how the post-war balance of power and US hegemony was severely constrained by the existence and power of the Communist bloc (1991). Whereas the USA was able to exercise power based on economic preponderance, nuclear capacity and liberal ideology, it was confronted by a Soviet Union which had conventional force superiority and advantageous geographical location (a key determinant of US containment and nuclear strategy), and ideological power based on the appeal of Communism not just in Europe but, importantly, also in the colonial world (Nye 1991: 71). Thus its overwhelming dominance of the capitalist world was considerably constrained by the existence and challenge of an alternative social system in the form of Communism (see Nye 1991; Halliday 1989; Bromley 1991). This not only curtailed the geographical scope of the emerging liberal order, but directly limited the USA’s ability to get the other western powers to accede to core US goals in respect of the liberal reconstruction of the world economy and the political aim of anti-colonialism in the short-term. Both were to have a bearing on the process of decolonization.

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Political aims Politically, anti-colonialism was deeply ingrained in US policy, harking back to the country’s own origins in fighting British rule. In the Atlantic Charter of 1941, the right to self-determination was uppermost in the allies’ war aims (although Britain conveniently assumed that this naturally only applied to the European countries, not its own empire), (Wilson 1994). In the discussions towards the end of the war, particularly relating to the formation of the UN, these aims came into clear focus. Of particular concern was the immediate future of the colonies – Japanese and Italian possessions, European possessions in Asia taken over by the Japanese, and the existing empires of the European powers. Discussions focussed on the scope and principles of trusteeship status to be established by the new organization and the declaration in the Charter regarding non-self-governing territories (Louis 1977; Wilson 1994; Adams 1997). Here the USA dilemma was particularly stark. An end to colonial rule was a long-standing policy aim, seen by some as an article of faith and supported before his death by President Roosevelt (Louis 1977). As a result, one stand the USA could have taken was for all colonial territories to be placed in trust status – which would have required the administering power (which may have been the existing European power) to be subject to UN inspection and monitoring – and for the ultimate aim to be that all territories become independent. Indeed, this is what some in the USA delegation to the 1945 San Francisco conference, forming the UN organization, wanted (Louis 1977). Several factors militated against such an ambitious stance. The USA was concerned in the immediate term about the strategic value of the Pacific islands liberated by the Japanese, and was prepared to argue against rapid independence for ‘strategic trusts’ (Louis 1977). Initially, such concerns were directed at controlling Japan, but the strategic value in confronting the Soviet Union also soon came into the picture. Second, the USA was concerned about the potential for Marxist and Soviet influence in the colonies and the prospect of independence opening the way to an increase in the Soviet sphere of influence. In such circumstances, a maintenance of European control was preferable to a Communist-led anti-colonial movement (Bromley 1991: 78–9). This concern was brought into clear focus in the subsequent Truman doctrine and influenced US actions towards, among others, Vietnam. Finally, the USA faced the opposition of the European powers, which had no intention of rapidly decolonizing. Thus, at the inception of the UN, a compromise was agreed whereby Trusteeship was limited only to the colonies of the Axis powers and the League of Nations Mandates, and the UN Charter made a commitment only to eventual ‘self-government’ and not ‘independence’ (UN Charter Chapter XI; Louis 1977; Wilson 1994: 82–3; Adams 1997: 50). Nevertheless, the Charter pointed the way to eventual independence of all colonies and the final agreement at San Francisco was a fudge (Wilson 1994: 82–3). Although Chapter XI on non-self-governing territories merely proclaimed the obligation ‘… to develop self-government, to take due account of the political aspirations of the peoples …’, Chapter XII dealing with trust territories

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stated the aim of ‘progressive development towards self-government or independence as may be appropriate.’ (UN Charter; Wilson 1994: 82–3). This compromise satisfied the British, who could still believe they had made no firm commitment to ending colonialism, and the USA which could claim to have upheld its anti-colonial heritage (Wilson 1994: 82–3). However, subsequent events demonstrated the inexorable move towards the end of empire. The subsequent development of the UN and the growing Third World command in the General Assembly further reinforced moves at the level of international institutions towards ‘independence by right’. This was confirmed in 1960 with the passing of Resolution 1514, the ‘Declaration on the Granting of Independence to Colonial Countries and Peoples’, which called for ‘immediate steps’ to be taken to ‘transfer all powers’ to the peoples of non-self-governing territories, and that ‘inadequacy of political, economic social or educational preparedness should never serve as a pretext for delaying independence’ (UNGA, 1960).

Economic aims This outcome, of a long-term commitment moving in the direction of a liberal order, combined with short-term concessions to the colonial powers, was repeated in the economic field. Indeed, the economic liberalization undertaken in the reconstruction of the world economy was intimately linked to the pressures for political decolonization and figured large in US plans for a liberal international order. The USA argued for the granting of independence to the colonies on the basis of political principle, but also for the benefits to be gained from the opening up of the imperial economies to US capital (Armstrong et al. 1984: 47). Despite its overwhelming economic dominance, the USA required the economic growth and liberalization of the rest of the world economy in order to achieve its own economic expansion (Brett 1985). Both were problematic. First, the Europeans and Japanese had suffered far greater destruction of infrastructure and productive capacity than the USA and were unable to achieve economic growth without assistance. Second, the persistence of European colonial systems seriously limited access to world markets for US companies (Armstrong et al. 1984: 46–7). Indeed, as with the political aspect of decolonization, economic liberalization represented a major shift in terms of the structures of the international political economy. Fundamentally, this meant a move from a world economy dominated by relatively closed protectionist systems of trade and payments, with both the major colonial powers engaging in preferential systems privileging their access to raw materials and markets within their imperial reach, to one based on freer trade, the reduction of overt political direction of the international economy and a rule-based international economic order. The pre-war period had seen the fragmentation of the world economy, the use of protectionist measures and the consequent restriction of world trade.4 The principles of a multilateral, liberal, economic order were a direct challenge to this existing set of arrangements, and its establishment entailed the decline of the imperial economic relations.

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A compromise between the USA and Europeans saw the USA finance the reconstruction of the war-ravaged economies (particularly through the Marshall Plan) and accept the retention of imperial controls by the colonial powers in the short term. This enabled the European countries to rebuild, establish expansive, Keynesian economic policies and achieve rapid economic growth. However, in return, the USA gained from the other powers a commitment to move towards a liberalized global economy in the long term (Brett 1985; Clarke 1992). This laid the economic basis for the decline of the European empires. The institutional basis for this post-war reconstruction, liberalization of trade and payments and the expanded growth of the world economy was set up at the Bretton Woods conference in 1944, under US leadership (Brett 1985; Williams 1994). The institutions included the International Monetary Fund (IMF), to regulate balance of payments between countries and administer a system of fixed exchange rates between the advanced countries; and the International Bank for Reconstruction and Development – the World Bank – initially to fund the war-damaged countries, later the developing world. Two years after that the General Agreement on Tariffs and Trade (GATT) was agreed to manage the liberalization of trade barriers.5 The new structures rested on the USA dollar, which, backed by gold, formed the central international currency underpinning the fixed exchange rates of the Bretton Woods system (Armstrong, Glyn et al. 1984: 291–5). Importantly, the system also allowed for the development of international credit, which, along with planned reconstruction, liberated national governments from many of the constraints on expansionist economic policies (Clarke 1992: 145). From the end of the Second World War until the early 1970s, the world economy underwent the largest and most sustained period of growth in history. From 1950 to 1973 average annual growth in output in the advanced countries was 4.9 per cent (Armstrong et al. 1984: 167). This expansion strengthened the liberalization of the world economy, as growth in national economies became increasingly integrated with global accumulation. Both liberalization and growth undermined the continuation of colonialism. The long-term European commitment to liberalization gained by the USA at Bretton Woods necessitated a withdrawal from imperial protection. The move to monetary convertibility by the end of the 1950s by the European powers, and major trade liberalization in the GATT rounds of the 1960s, secured the decline of the rigid colonial monetary and trade relations (Brett 1985: 110). In addition the rapid growth of the world economy, recovery and expansion in the European economies, and the increasing integration of the world economy – particularly between the developed capitalist countries – undermined protectionist pressures. Although the war had seen an increased reliance on the colonies for both Britain and France, the net value of the French empire declined rapidly in the 1950s and Britain’s trade moved inexorably away from the Commonwealth and towards Europe and the USA (Waites 1994). Colonial expansion and protectionism had itself been encouraged by economic depressions in the European states in the 1870s and in the 1930s. The restoration of sustained growth after the Second World War meant the economic rationale

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of the commitment to empire weakened. However, even had this alternative – integration with and expansion within the world economy – not been on offer, the ability of the Europeans to cling on to empire faced considerable barriers, regardless of US pressures, due to the decline of European power and the rise of nationalist challenges to colonialism.

The decline of European power and the nationalist challenge Alongside the rise of US power and hegemony over the western states was the parallel decline in European power. By the end of the war European economies were in ruins. Britain’s pretence at accompanying the USA at the head of the western alliance was not a total fiction: the USA welcomed the commitment of British troops to the global anti-Communist containment strategy, which limited US pressure on Britain to decolonize. However, by the mid-1950s Britain’s role as a central international power was fading fast, and sterling’s role as a central currency was in rapid decline, undermined by the weakness of the British economy (Brett 1985; Gamble 1986). Despite these changes in the distribution of power at the international level and the strong challenge at the level of international norms to colonialism, the European powers were hardly accepting of their fate. At the end of the war Europeans refused to countenance the idea of independence for their colonies, particularly those in Africa. Even during the San Francisco conference, at which an end to colonialism was signalled (if not achieved), the British put forward an ambitious plan for the re-organization of colonial administration on a regional basis – the Poynton-Robinson project (Louis 1977: 463–72; Wilson 1994: 74–80). A year earlier the Free French had reformed their empire at the Brazzaville conference of 1944, establishing the French Union and declaring the exclusion of ‘… any idea of autonomy, any possibility of evolution outside of the French imperial bloc …’ (Waites 1994: 54). Even after the war, British commentators such as Margery Perham thought it highly unlikely that independence would be gained by the African countries before the end of the century (cited in Barraclough 1967: 159). However, the growing strength of nationalist forces in the colonies and declining military power helped the imperial powers to reassess these comforting assumptions. The fiasco of the Suez crisis, where British and French troops failed to secure control of the Suez Canal and were forced into a humiliating retreat, and were bereft of US support, merely confirmed the decline of European power. From the very end of the war, colonialism faced a series of challenges. This was particularly so in Asia, where nationalist forces fresh from fighting the Japanese were immediately thrust into a fight against a reimposition of European colonialism. The Dutch were unable to contain the struggles of the Indonesian nationalists and the French eventually gave way to the USA in Vietnam, in spite of having 25 per cent of all French officers in the region (Barraclough 1967: 156; Kiernan 1982: chapter 14). Britain too gave way in the face of Ghandi’s non-violent struggle in India, and Ceylon and Burma quickly followed. In Malaysia, success was achieved against insurgent forces, but by

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1957 independence had been granted to a conservative regime. As the focus shifted to Africa the French jumped from ‘the Vietnamese frying-pan into the Algerian fire’ (Kiernan 1982: 217), while Britain fought violent nationalist revolt in Kenya and non-armed opposition elsewhere. As Kiernan notes, the years following the Second World War saw British and French troops engaged almost continually in some area of their empires (Kiernan 1982). The nationalist movements themselves were developing rapidly. From backward-looking defence of tradition, nationalism in Asia evolved into a more forward-looking, modernist movement intent on forming new states and taking an equal place at the international table, and from narrow reforms demanded by traditional rulers to the emergence of a modern elite and often mass campaigns for independence (Barraclough 1967: 177–98). In Africa the evolution took place even more rapidly. The war and recovery from it had a major impact on the continent, both in terms of the participation of African troops (in Britain’s case, outside of the continent) and the revitalized role of the economies in supplying the core states (Kiernan 1982). Although African nationalism and pan-African movements emerged after the First World War these gathered pace after the Second World War, particularly in the 1950s. As colonial powers moved to institute forms of self-government, and for French colonies limited participation in the French National Assembly, electoral processes helped to initiate the formation of political parties – however unsatisfactory this proved to be (Allen 1995). The notion that the granting of independence to Asian countries would stop short of the African continent was rather rapidly undermined both by the emerging unity across the developing world, typified in the Bandung conference of 1955 and Asian criticism of European repression in Africa (Kiernan, 1982: 221), and by the reinforcement, with every act of decolonization, of the new norms of sovereignty and ‘independence by right’ (Jackson 1990). Between 1956 and 1962 no fewer than 28 African states achieved independence, with 16 in 1960 alone (Adams 1997: 52). By the end of the decade only the recalcitrant white minority states of Rhodesia and South Africa, the Portuguese colonies and the odds and ends of empire remained outside the new norm of sovereign independence. In summary, decolonization was reflected in and supported by a change in international norms regarding rights to sovereign status, but this was a shift that the colonial powers came to accept only slowly and reluctantly, between the self-government concession of the UN Charter and the ‘wind of change’ of 1960. Furthermore, it was a change that was consolidated by the pressure of the USA for the creation of a liberal economic order in the capitalist world, the weakening of the European powers and the increasingly robust challenge from the colonies. And while this shift in international norms over sovereignty made independence more accepted and had a significant impact on subsequent relations between North and South, the turning of formally- equal status into reality, particularly in the economic field, would occupy these states for much longer.

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Association As we have seen in the previous chapter, a whole raft of international instruments was dedicated to the purpose of aiding these new states. These ranged from the multilateral organizations like the World Bank, IMF and regional development banks to the varied UN organizations, its Development Programme and its regional economic agencies, as well as bilateral aid initiatives of the leading states and political forums such as the Commonwealth and the French–African summits. Alongside these institutions – indeed, prior to independence – the EU had already moved to establish its own relationship with the new states of Africa. It is to the background and development of this ‘association’ between Europe and Africa that we must now turn. And for this we need a closer look at French policy, which was the main determinant of the association status offered by the EU to African states.

French policy The French imperial system rested on three key elements: the trade system, the Franc Zone, and the political relationship. The trade system involved a protective trade area based on the ‘surprix’ system, whereby France paid above world market prices for the exports of her colonies and received above world market prices for her mainly manufactured exports (Hayter 1966: 71–9). Manipulating the differentials allowed France to maintain a positive balance of trade with the colonies and gave guaranteed markets for manufactured exports (Hayter 1966: 71–9). The Franc Zone entailed a monetary union between France and most of its colonies in west and central Africa, set up in 1948, which provided for a fixed exchange rate between the CFA (colonial) Franc and the French Franc (see Low 1983; Overseas Development Institute 1990a).6 This created a unified monetary system, providing for easy investment, and repatriation of profits and wages meant the colonies provided the main export market outside Europe in the post-war period, taking over one third of French exports between 1930 and 1950 (Kahler 1982a: 77). Even by the 1980s many French sectors such as autos, transport, construction, engineering and agricultural machinery realized up to 20 per cent of their sales in the countries of the Franc Zone (Low 1983: 88). In addition, the balances in trade and financial flows (such as capital and profit repatriation, wages paid to French officials and workers, as well as trade surpluses), did much to counter the high expenditure of the French state on the colonies’ administration and infrastructure (Hayter 1966: 33–5). The third element of the French imperial system was its political relationship. This underwent considerable change in the post-war era and was central in influencing EU relations with the Third World (see Hayter 1966; Lister 1988). France’s immediate post-war relationship with its colonies was defined in the constitution of the Fourth Republic and by the French Union, formed in 1944. The French Union allowed for direct parliamentary representation in France for those of its colonies classified as part of the Republic. This was a product of a French ideal of ‘assimilationism’ whereby it was assumed that after a long enough period of French influence, the colonies would share French culture

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and become part of a ‘Greater France’ (Hayter 1966: 18–25; Kahler 1982a: 56). However, in the post-war period the political relationships of the French Union were challenged by the demands for independence from colonies in Indochina and North Africa, as we have seen. By 1956 France had conceded independence to Vietnam, Laos and Cambodia, Tunisia and Morocco and by the end of 1960 to all of her west African colonies. However, despite presiding over this withdrawal from empire de Gaulle’s initial impetus was to preserve and protect the political relationship between France and her colonies. This was pursued by two means. First, de Gaulle sought a commitment in the treaty forming the EU (then the EEC) for an association of France’s colonies to the EU itself (see below). On the other hand, de Gaulle offered a new political relationship to the colonies, based on the notion of ‘association’ in the French Community (Hayter 1966; Lister 1988). The French Community involved a ‘balkanization’ of the African territories into self-administrating areas, but with considerable French power over their institutions and policy (Hayter 1966: 30; Lister 1988: 6–9). The colonies were given the chance to vote on whether to join the Community in 1958. Although in the event only Guinea, under Sékou Touré, voted against and became independent, the precipitous French withdrawal (which occurred within three days and involved the removal of all personnel, infrastructure and machinery down to the light bulbs (see Hayter 1966: 30; Lister 1988: 6–9), failed to serve as a warning to other colonies considering following suit. In 1960 the Federation of Mali opted for, and was granted, independence and a continuing relationship with France as an ‘associate’ (Hayter 1966: 30–1; Lister 1988: 9). This opened the way for further independence demands and by the end of 1960 all 13 states of the Community were independent in a rapid transfer of political power. However, while de Gaulle’s attempt to maintain direct colonial relations had failed by 1960, the other strategy, that of association to the European Community in 1957, proved more durable.

The Association Agreements: the EU’s relations with Africa In the negotiations founding the EU in 1957, France, the major colonial power, insisted on establishing a formal relationship between the new EU and France’s African colonies. The association of the ‘colonies and overseas departments and territories’ was achieved in the face of opposition from Holland and Germany by de Gaulle, threatening a veto on the whole Treaty of Rome (Lister 1988). The question of the colonies was the last issue to be finalized before the Treaty was agreed in February 1957 (Lister 1988: 10–18). For France and for de Gaulle, the new relationship was a means of maintaining its relationship with the African colonies, and thus helping to protect France’s increasingly dubious international standing as a world power, at a time of increasing pressure on the imperial system, and transferring some of the costs of that relationship to her new partners in the EU (Clapham 1996: 88–105; Hayter 1966; Kahler 1982a). In the Treaty of Rome, the overseas dependencies and colonies of the member states were associated to the EU under Part IV, Article 131 and by the

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appended ‘Implementing Convention’ (Lister 1988). The administrations and governments of the colonies were not consulted about the association, and the relationship and policy as a whole was determined by the French. The association transferred French imperial preferences to the rest of the EU and the newly formed Common Market. Thus the associated countries and territories would get equal access to the markets of all EU members at preferential tariff levels. In return, the other five EU member states would have the same access to the associates – in terms of tariff levels, rights of establishment and granting of contracts – as France. The EU, in addition, was to provide 581.25 million units of account (mua)7 of aid to the associates under the first European Development Fund (EDF) (Lister 1988: 18–19). The Treaty of Rome association was important mostly for the significance it held for future EU policy towards, and relations with, the Third World. Here, at the very inception of the EU, the imperial relations between Europe and Africa were recognized and incorporated into the EU’s external policy. The association policy reflected the colonial status of the African territories, which were not consulted on the creation of the new relationship to the EU. By achieving the association of the colonies with the EU, France could maintain some of its colonial economic benefits, while transferring some of the costs of colonialism to the other EU countries (Hayter 1966: 12; Kahler 1982a: 79). For the associates, the new relationship offered some benefits in cushioning a possibly more precipitous dilution of French preferences and adjustment to world market competition (Lister 1988: 29), albeit at the price of a continuation of the relationship of European domination. As such, it demonstrated two key features of the post-colonial relationship. First, the beginnings of a multilateralization of North–South ties with an albeit gradual dilution of French preferences among the EU partners (Clapham 1996: 88–105). Second, it presaged the ability of the African states to make claims on the former powers for a variety of forms of support, including direct aid and protection from full world market competition. The impact of the new preferential arrangements was, in fact, marginal and the actual implementation of the new trade measures very gradual, as was the case for the new Common External Tariff (CET) of the EU itself (Lister 1988: 25). This meant that traditional French–African patterns of trade were not significantly altered in the short term. While non-French EU trade with the associates grew and French trade with the non-French colonies grew, the association did not usher in a radically different pattern of trade (Lister 1988). The dependence of the French colonies on France for administrative costs was only marginally affected by the new aid from the EU, a factor which the very slow implementation of the EDF aid reinforced (Hayter 1966: 40–3; Lister 1988: 20–5). The aid that was dispersed also reflected the old French, rather than the new European, relationship with most of the contracts for aid work going to French companies already existing and operating in the territories (Lister 1988: 20–5). Following the independence of the African states in 1960, the EU decided that it wished to renew the association. This continuation of the relationship

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with France’s former colonies was achieved through the Yaoundé Conventions of 1963 and 1969. Eighteen African states accepted the EU’s offer of renewed association and formed the group of Associated African and Malagasy States (AAMS).8 The first Yaoundé Convention was signed in July 1963 and gave free access for most AAMS exports to the EU (except products covered by the Common Agricultural Policy – the CAP). It also stipulated a second EDF of 730mua of aid, with much of the increase on the previous EDF in the form of loans by the European Investment Bank (EIB). As independent states, the AAMS had to agree to the terms of association and could not simply have terms dictated by the EU, as had been the case with the Treaty of Rome association. However, the prospect of preferential access to the EU market for exports, and continuing aid from the EU, was attractive to the newly established states. These benefits, combined with the largely pro-French attitudes of the African leaders meant the AAMS accepted the new association on the EU’s terms (Lister 1988: 35–6). Importantly, these terms involved the EU insistence on so-called ‘reverse preferences’. This meant that, in return for preferential access to the EU market, the associates had to grant better terms of access to EU products in their markets than they gave to imports from other countries (Holland 1980). In what was an obvious continuation of French imperial trade regulations, ‘reverse preferences’ maintained close economic links between the associates and the EU countries and retained the economic benefit to the EU of access to the associates’ markets. It was to become an issue – along with wider Third World demands for ‘special treatment’ in the trade field – that would return in the Lomé negotiations. The second Yaoundé Convention, signed in 1969, also made few changes to the terms of association. Signed on 29 July 1969, Yaoundé II included an EDF III of 918mua of aid (65mua of which was to compensate for falling commodity prices) and reiterated the trade regulations of Yaoundé I (Lister 1988). Acceptance of Yaoundé by the associates demonstrated the influence of France on their external relations and reflected continuing dependence on France in both trade and monetary fields (Holland 1980). It continued preferential access to the EU market, thus giving the associates some protection from reliance on exports to world markets where competition from other Third World countries would be greater (Holland 1980). There was little impetus for changed terms from the EU, whose economic interests were less focussed on the former African colonies, as the integration of the EU and the increasing liberalization and internationalization of the world economy increased other economic links. Indeed, the Conventions did not lead to closer integration of the EU and AAMS economies. Trade between the EU and the AAMS grew less quickly than EU trade with any other group of Third World countries (Frey-Wouters 1980; Lister 1988). There was, if anything, a decline in importance, even a stagnation, of the associate relationship as wider economic interests in the Third World and with other developed economies increased in importance for the EU countries. This was shown, for example in an increased interest in the development of links between the EU and other Third World countries. The Treaty of Rome had

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included a provision in Article 238 for other Third World countries ‘of a similar level of development’ to the AAMS, to reach trade and other agreements with the EU (Frey-Wouters 1980; Jones 1973). Under this regulation, the EU formed agreements with Tanzania, Uganda and Kenya in the Arusha Conventions of 1968 and 1969 (which had the same duration as Yaoundé II), and with Nigeria in the Lagos Convention of 1966 (which never came into force because of the Biafran war) (Jones 1973; Lister 1988). In addition, it introduced a Generalised System of Preferences (GSP) in 1971, which involved reductions in external tariffs for all developing countries and weakened AAMS preference in relation to the rest of the Third World. Such developments were established on an ad hoc basis as and when the other Third World countries requested negotiations for trade access to the EU. They did, however, expand the range of formalized agreements between the EU and southern states and further added to the range of instruments and commitments to southern states. The actual terms of ‘association’ were therefore very similar to the Treaty of Rome policy, despite the new independent status of the associates (Green 1980). Nevertheless, association and the broadening range of other agreements demonstrated that the EU, under French leadership, had secured a role within the emerging architecture of North–South relations. France’s role in EU policy was vital and France’s bilateral role outside of the new Community structures continued to be crucial in terms of support for the new states and the regimes that ruled them (see Clapham 1996: 88–105). However, the Yaoundé agreements established the EU as a key player in determining the nature of relations between Europe and the former colonial territories in Africa. And the new relationship of ‘association’ bore many of the hallmarks of the new international norms – recognition of formal independence and equality with the ex-colonies, combined with a commitment (however inadequate) to address the ‘empirical’ weakness of the former colonies through aid and trade. But association did not satisfy the demands the new states were starting to make on the international system. The very term ‘association’ smacked of neo-colonialism, and the issue of reverse preferences went against the claims to preferential treatment being demanded in other forums. By the early 1970s a series of factors were to lead to a more thorough reformulation of the EU’s relations with the Third World. And in this process the southern states were able to push their economic demands further, to reaffirm their political independence and seek to address their economic weakness.

The origins of the Lomé Convention The history of the EU’s association agreements provided much of the form and structure of the Lomé Convention. It also indicated the way in which EU– African relations formed a part of an ongoing relationship with former colonies in the post-colonial age. However, the global context within which the Lomé Convention was negotiated played a vital role in determining the content and the tenor (what was later referred to as the ‘spirit’) of the new agreement. This was characterized, above all, by the economic and political crises associated with the end of the long post-war boom in the early 1970s, and in particular

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the culmination of the Third World’s demands for a New International Economic Order (NIEO). It produced an agreement that accorded with much of the politics of negative sovereignty: recognition, and indeed celebration, of formal equality between what were patently unequal partners, commitments to the sovereignty and, through the provision of aid, the survival and development of the southern states, and the demands from the weaker states for a relationship that would help to translate the formal equality they enjoyed into resources to secure the domestic survival of their regimes. I will first review why the EU felt it necessary to reformulate its association arrangements before assessing the global context in which it was formed. The following section shows in detail how this was played out in the negotiations and text of the Lomé Convention.

British entry, the Commonwealth and association The early 1970s saw the first enlargement of the EU, with Britain, Ireland and Denmark joining in 1973. The key issue of relevance to this thesis was the relationship of Britain’s Commonwealth to the EU. Like France, Britain had tried to maintain its imperial system after the war. Also like France, Britain’s empire (later the Commonwealth) had been most important in the inter-war years and had involved a system of tariff protection and monetary relations based on the sterling area (Brett 1985; Cohen 1991). In the post-war era, Britain attempted to maintain an international role for sterling as the Bretton Woods system took shape. Compromise by the USA, based on its desire to maintain the global role of Britain’s armed forces to counter the Soviet Union, gave Britain the scope to do this (Brett 1985: 145). However, the weakness of the British economy made any such strategy highly problematic. Successive currency crises and the devaluation of the pound in 1967 highlighted such difficulties, and undermined the centrality of Britain’s role even in the sterling area. Subsequent entry into the EU, and the eventual move to floating exchange rates, signalled the end of sterling’s role as an international currency (Brett 1985: 155–60). It was the growing realization of the problems faced by Britain if it continued to try to rely on the Commonwealth, and a recognition of the diminishing importance of the Commonwealth and increasing importance of Europe for accumulation within Britain, which underlay the initial approach to join the EU (Brett 1985).9 As with the case of France, the post-war boom undermined the close integration of accumulation established in the protectionist era, as integration into the liberalized international economy in general, and increasing cross-integration among the central capitalist countries in particular, gained greater significance. Given British reluctance to reduce the role of the Commonwealth, the first application to the EU failed (ironically, given the close France–Africa relationship, because of d Gaulle’s veto). A successful application was eventually made under the Heath government of 1970 and Britain joined the EU in 1973. However, Britain’s accession still required some form of accommodation between the enlarged EU and Britain’s Commonwealth, even if Britain subordinated protection of the Commonwealth to joining the EU (Cohen 1991;

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Ravenhill 1985). There were two main areas to deal with here.10 The first –the overall structure of the relationship –was barely questioned. Britain was in a much weaker position than France had been in 1957, in demanding compensation for loss of imperial preferences (Lister 1988). Whereas France could have effectively wrecked the whole Treaty of Rome in 1957, accession to the EU had become a priority for Britain and was a key element in the strategy of Heath’s government. Britain therefore had to accept the existing framework of relations with the Third World – of preferential association based on regionalist links, not the more liberal and ‘globalist’ policy favoured by Britain (Lister 1988; Mayall 1986). The second problematic issue stemmed directly from the first and concerned the unity of the Commonwealth in relations with the EU. The Treaty of Accession of Britain, Ireland and Denmark to the EU divided the Commonwealth into ‘associable’ and ‘non-associable’ countries. This was based on a 1963 declaration by the EU, to offer associate status to countries of a similar structure and level of development as the AAMS (Jones 1973). The associable countries thus included the independent African Commonwealth and the Pacific and Caribbean islands. It specifically excluded the Asian Commonwealth and Hong Kong, as well as the older dominions of Canada, Australia and New Zealand, on the grounds that they were too large, too different from existing associates or too developed for association to the EU, although India, Bangladesh and Sri Lanka did negotiate trade agreements with the EU following Britain’s accession (Cosgrove-Twitchett 1976). As a result of these two factors, Britain’s Commonwealth relations were made to ‘fit’ the relations existing with the French system. The ‘associables’ (as they became known) were offered a choice of three types of agreement with the EU in Protocol 22 of the Treaty of Accession. These ‘choices’ involved a joint or separate associate agreement to succeed the Yaoundé Convention; an association agreement or agreements under Article 238 of the Treaty of Rome; or reciprocal trade agreements under Article 113 of the Treaty of Rome (Jones 1973: 1–2; Nabudere 1979: 123–5). The first would establish an extensive trade and aid arrangement along the lines of Yaoundé; the second would be a weaker association similar to the Arusha and Lagos accords of the 1960s; and the third would entail the negotiation of mutual trade preferences (the same option offered to the ‘nonassociable’ Commonwealth). Despite earlier antagonism to the notion of ‘association’, some of the Commonwealth countries concerned had already made agreements with the EU in the Arusha and Lagos accords. By the 1970s there was therefore a much greater likelihood of the associables accepting some kind of agreement with the EU. The threat of losing preferential access to the UK market after Britain’s entry made this even more likely, and was particularly acute in the case of the sugar producers of the Pacific and the Caribbean (Ravenhill 1985). As we shall see below, in the course of the Lomé negotiations the Commonwealth countries eventually united with the existing associates to form the ACP group of states. It is indicative of the imperial roots of the Lomé Convention that the ACP group was defined almost entirely by the preservation of links with a selection

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of France and Britain’s ex-colonies. Rather than any newly defined set of relationships or new set of criteria to aid southern development, Lomé reinforced and defined the prime area of the Third World for the EU as that with which it had had imperial relations. It thus contributed to a confinement of the EU’s role in North–South relations to specific regions of the developing world, centred on Africa and a privileging of these regions within EU external relations.11

The global context: changes in the international economy If the previous association agreements defined much of the structure of the new agreement (preferential trade and aid) and the accommodation of parts of Britain’s Commonwealth defined the geographical scope, it was the context in which it was negotiated that had a key influence over its content and rhetoric. Crisis and instability in the global system shaped the interests of Third World countries, brought forward their demands for greater international support and also reinforced the EU’s interest in a formal political relationship with certain areas of the Third World.

The end of the long boom The global economic and political scene in the early 1970s was characterized above all by the end of the post-war capitalist boom (which had seen high rates of economic growth from the 1950s) and the collapse of the institutional arrangements which regulated it. The end of the boom signalled a crisis of overaccumulation of capital12 and was manifested in heightened competition between firms, greater industrial strife and attempts to develop new, profitable markets (Clarke 1988b; 1992). Internationally, these developments were felt in particular by the USA which was challenged by Germany and Japan as the leading capitalist power. Economic weakness resulted in a weakening of the dollar’s position as the reserve currency, leading to devaluation and abandonment of the gold standard in 1971, thereby abrogating the Bretton Woods system (Armstrong et al. 1984: 291–95; Marglin and Schor 1991). Problems of profitability also led to increasingly speculative, rather than productive, investment. Such speculation was encouraged by the attempt by western governments to maintain growth through expansionist economic policies in the early 1970s, which instead produced ‘stagflation’ (Armstrong et al. 1984: 300–3). Growth in the advanced countries fell from 8 per cent per year in the first half of 1973 to 3 per cent in the second half, followed by a recession in 1974–75 when industrial production in the advanced states fell by 10 per cent over ten months (Armstrong et al. 1984: 310, 314; Clarke 1992: 145).

The Third World and the New International Economic Order For the developing countries, the end of the long boom built on growing political dissatisfaction and demands for changes to the structures of the international economy to give increased support to their development. This was the political expression of the economic nationalism that came to dominate the Third World following independence. As we saw in chapter one, these demands stemmed

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ultimately from the problems associated with their creation as states and their economic and political weakness. Given the importance of a growing economy and the ability to raise revenue from it in the survival and stability of any state, economic matters assumed an increasing importance for Third World regimes. This was particularly politicized in countries where the state, and state involvement in the economy, was very pronounced (which was most Third World countries at this time), and in which the amount of economic revenue controlled by the state had a very direct impact on the survival and stability of particular regimes. This arose particularly where access to the state provided the main means of accumulating wealth, and thus became both a reason to seek, and a means of maintaining, political power (in relation to Africa, see Allen 1995; Clapham 1996). But more generally, for states which had been formed on the basis of securing ‘national development’, it was difficult to meet the aspirations of the population raised by independence with at best a weak economic performance and marginal role in the international economy. Their weak position in the international system confronted the developing states with financial crises, lack of revenue, balance of payments deficits and foreign exchange shortages, and the domestic political challenges and struggles to which they inevitably gave rise. The long post-war boom had served a role in ameliorating this contradiction for a time and for some states. Indeed, some developing countries experienced high rates of growth, particularly those which were to become labelled as ‘newly industrializing countries’ (NICs) in the 1970s and 1980s, but it was also true for the slower growing African countries whose exports of raw materials increased as a result of increasing demand from the core states. However, the major problems remained, and Third World leaders and radical commentators were ever alert to the apparently disproportionate benefit being enjoyed by the richer states. Whereas for the advanced countries average per capita income grew annually by 3.9 per cent from 1960 to 1970 and by 2.2 per cent from 1970 to 1980, for Africa the growth rates were 2.2 per cent from 1960 to 1970 and 0.8 per cent from 1970 to 1980 (Gill and Law 1988: 138–40, Tables 9.3 and 9.4). However, whereas the boom years had at least provided the economies of the Third World with some scope for growth as demand rose in the industrialized centres, the end of this boom threatened catastrophe for these states.13 These problems facing Third World states prompted increasing efforts to improve their position in the world system and gain access to the kind of economic benefits that they argued were their entitlement. Domestically, economic strategies were often based around attempting to diversify the economies away from their colonially created, raw material-based character, and protectionist measures to safeguard a market for domestic production and to attract foreign capital to produce within protective walls. Termed ‘import substitution industrialization’, the policy characterized a strategy by the Third World states to ensure that a larger proportion of global accumulation occurred within their territory and was intended to enable the developing states to cope both with economic problems and the political demands being made on them. These strategies, combined with nationalism and the economic prescriptions

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of theorists such as Raoul Prebisch and others, helped to create a Third World ‘identity’ in the international system (Gill and Law 1988: 283). The clash of this protectionism in the Third World with US-driven global liberalism had a direct impact in the demands for reforms to the international system intended to improve these states’ position in the world system and allow greater scope for such domestic strategies (Brett 1985; see also Krasner 1985). With a numerical majority at the United Nations by the early 1960s the new nations were able to gain a voice in the international arena, in particular via the formation of the United Nations Conference on Trade and Development (UNCTAD) where many Third World demands for change were articulated. Thus, at the 1964 UNCTAD meeting, Third World countries gained agreement to the principle of preferential treatment – that agreements on liberalizing trade barriers requiring reciprocal actions (particularly under the GATT) would be waived for developing countries, so that they could build up domestic industry while still benefiting from industrial country liberalization. This was further elaborated at the 1968 UNCTAD meeting, where industrialized countries agreed to create general preference systems for Third World countries14 (Frey-Wouters 1980: 217–18; Adams 1997). The Third World countries demanded a host of measures which they believed would improve their position in the world economy, including an agreement to support the prices of their commodities; a greater say in international institutions; control over transnational corporations (TNCs); measures to increase the transfer of technology; changes to the International Law of the Sea; greater access to industrialized countries’ markets; and more freedom to protect their own economies (Adams 1997). These various demands were aggregated by Third World states into the ‘Charter of Economic Rights and Duties of States’ by the ‘Group of 77’ developing countries and put to the UN as the ‘Programme of Action for a New International Economic Order’ (NIEO). A resolution detailing ‘the Programme of Action’ was passed by the sixth Special Session of the UN General Assembly in May 1974 (FreyWouters 1980: 222–3). In essence, these demands represented the logical extension of the postwar order for developing countries. This, as we have seen, granted as a right their status as sovereign states, equal with their former colonial rulers. Yet the wealth, economic growth and consolidated rule necessary to secure this status –in some cases even for the state to fulfil its most basic functions, much less to achieve the settled stability of particular regimes and domestic political systems – was either not forthcoming, or at best problematic. It was often inadequate to prevent threats of state collapse, or at least regime collapse, let alone reduce the inequality with the richer nations. Granted, the acceptance of the right to independence necessitated that the powerful states accept some responsibility for the survival of these states, and this was reflected in the range of bilateral and multilateral schemes promoting development and the various forms of intervention and management of the South by the North. But the kind of managed international economy that these states argued was necessary challenged the very basis of the liberal international economy. While Third World states managed to have resolutions passed and agendas

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for discussions set up with the industrialized countries, they had few means to force any action. In the organizations which had some power – the World Bank, IMF and GATT – it was the industrialized countries which dominated, and even in the UN five members of the EU and the USA had opposed the NIEO resolution (France, Italy and Holland abstained) (Frey-Wouters 1980: 223). During the rest of the 1970s a series of conferences and meetings both in UNCTAD and under wider UN auspices, which became known as the ‘North–South dialogue’, kept the demands of the Third World on the agenda. The industrialized countries pursued a policy of talking without making concessions (Gill and Law 1988: 287–9) or in the words of Sonny Ramphal, later Commonwealth Secretary General and a key Third World figure in these (and the Lomé) debates, ‘… dialogue without decision, decision without action, despair piled upon frustration …’ (cited in Helleiner 1980: 7). The debates eventually petered out by the early 1980s, in the face of opposition from new right-wing governments in the industrialized countries, deepening crisis in the world economy and splits and weakness in the Third World (Gill and Law 1988: 287–9). However, while the call for a NIEO ultimately achieved very little, its influence was greatest at the very time the ACP countries were negotiating the Lomé Convention. And although the EU countries were generally antagonistic to the demands, they made some accommodation to them in Lomé. Indeed, in the early 1970s Third World states were at least able to raise issues important to their own position in the international arena. This influence of the Third World rested on a number of factors. In general terms the industrialized states were themselves weaker. The over-arching dominance of the USA which had created the post-war system had been challenged by the end of the boom, and was evident in the devaluation of the dollar and ending of the gold standard in the early 1970s. The divisions between the core capitalist states were increased, undermining attempts to cope with the decline of the Bretton Woods system. The increasing instability of the world economy, reflected in volatile financial relations, weakened the ability of these states to manage the crises within and without their own borders. Thus the impact of a relatively united Third World pushing its own strategy for a new international order was bound to be felt. In addition, the economic downturn at first appeared to hit the industrialized world hardest. During the early 1970s Third World growth rates almost equalled those of the advanced states and by the end of the 1970s they were nearly twice as high (Armstrong et al. 1984: 353). This conjuncture enhanced Third World influence.

The commodities crisis Within these general conditions were a number of specific crises, of which the most important for Lomé was the crisis over natural resources. This had two aspects: general commodity price problems and worries over the security of supplies. Both were exemplified in the oil crisis of 1973. Fig. 2.1 shows that commodities had experienced gradually falling terms of trade with manufactured goods during most of the post-war boom. However, in the early years of the

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1970s one of the biggest peacetime booms in commodity prices occurred (Armstrong et al. 1984: 303). While the lack of investment over a relatively long period in raw material production had laid the basis for declining supply, a combination of cuts in stocks, rising demand (due to the ‘mini-boom’ of the early 1970s) and speculation on the futures market (itself a product of economic crisis and lack of profitable productive investment) created large increases in prices (Armstrong et al. 1984). In addition, crop failures in specific commodities exacerbated the general trend (Armstrong et al. 1984). Fig. 2.1 Index (1977-1979 average = 100)

150 140 130 120 110 100 90 80 70 1950

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The oil crisis was due to more particular circumstances but added to a growing concern in industrialized countries about the supply of raw materials. In response to the Middle East war of 1973, the oil producers organization, OPEC, cut production and instituted an embargo on oil supplies, ostensibly to hit the USA and increase pressure on Israel. With compliance from the major oil companies prices increased fourfold in the winter of 1973–74 (Armstrong et al. 1984: 309–14). Coinciding with monetary restrictions in the industrialized countries to curb inflation (which had been fuelled by the boom of the previous year) the oil price rise was a contributory factor in pushing the world economy into recession (Armstrong et al. 1984). The oil price rise also revitalized general commodity price rises (and incidentally coincided with the opening of the Lomé negotiations). The impact of rising prices, and the implications of more to come as successful producers’ cartels in the Third World drove them up, was significant. The general concern over commodities because of prices, lack of production and low investment rates (itself based on fears of nationalization and instability in the Third World) added to a widespread insecurity about raw material supplies to the industrialized countries, reflected in, for example, the influential ‘Club of Rome’ report, The Limits to Growth, which detailed threats to raw material supply and reserves (Meadows 1972).

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Negotiation of the Lomé Convention We have seen that the impact of the post-war boom had undermined the imperial relationships of France and the other European powers, and that this was reflected in the looser ties between the ex-colonies and the EU. The relationship of the EU and the associates had thus been changed by the economic and political transformations of the post-war world, and there is little doubt that the African countries had a reduced importance for the French economy and the EU as a result. However, by the early 1970s there was a renewed interest in maintaining and reforming the EU’s relationship with the Third World, because of the problems over commodities, the crisis in the world economy and Third World demands for change. For the EU there were specific reasons for reinforcing relations with developing countries. The EU was particularly exposed to the Third World, with up to 45 per cent of EU imports, excluding intra-EU trade, coming from the less developed countries in 1975 (Vaitsos 1982: 173). This exposure was greatest in the field of raw materials with imports making up significant proportions of supplies of crucial minerals (for example, iron ore (79 per cent imported), copper (81 per cent imported), aluminium (61 per cent), among many others (Frey-Wouters 1980: 84–9)). Furthermore, Africa was a key supplier of these raw materials, holding significant proportions of world reserves of such minerals as copper (20 per cent), uranium (30 per cent) and platinum (40 per cent). With much of the remainder of reserves being in the then Communist world, Africa’s importance was central for the EU’s raw materials supply during the Cold War (Adisa and Adigun 1986: 130–1). In a context of concerns over raw materials supply, Africa was therefore to feature high on the EU agenda. The more general crisis reinforced this focus and old preferential ties were to be given a renewed prominence.15 Real economic interests and a degree of real bargaining power on the part of southern states therefore added to the more general commitment by the EU to construct some kind of relationship with the developing countries. The combination of the crisis in the world economy, together with the specific crisis over raw materials, enabled a space in the international debates and allowed an impact of the Third World on the strategies being formed in the international arena which was unique. This ‘threat’ from the Third World, epitomized by the OPEC embargo and the demands for a NIEO, was therefore a problem for the EU. Its exposure to, and concern with, the Third World was compounded by the EU’s position in the international system. Because of relative weakness compared to the USA and Japan, the EU was in a more constrained position. It could not simply dictate to the Third World, but nor would it agree to the kind of reforms being demanded. The EU’s role in the debates over the future of the world economy was thus characterized by attempts at compromise and a desire to develop a more effective common Third World policy among members, but also a commitment to the status quo and opposition to ‘international dirigisme’, as the EU saw the Third World’s programme (Frey-Wouters 1980). The EU position therefore varied on different issues, being antagonistic to Third World attempts to control production and price of commodities but

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favourable towards export stabilization and investment measures that would create more secure supplies of raw materials (Vaitsos 1982). It was this wider and changing context, characterized by the restructuring of relationships in the international system, combined with the historical evolution of the EU’s policy towards the Third World (and the specific problems of incorporating Britain’s ex-colonies into this policy) that formed the conditions under which the Lomé Convention was negotiated. While the ACP countries sought to achieve within Lomé many of the aims of the NIEO, the EU sought to come to terms with the contradictions in its own international position in the crisis-ridden early ’70s. This situation came to the fore as the EU sought to renew the Yaoundé association and incorporate Britain’s ‘associables’ into its Third World relations.

The Community position By the start of the 1970s the EU Commission was faced with having to formulate a policy to deal with four aims – the need to find a successor to the Yaoundé Convention; the need to create a new relationship with Britain’s Commonwealth; the need to deal with the commodities question; and the need to respond to the Third World’s demands. This policy formulation process can be traced through a series of documents from 1971 to 1973, which were produced as the Commission and the Community moved beyond the Yaoundé relationship in its external relations with developing countries. The overall tenor and direction of this emergent policy was to maintain the existing structure of association; to widen the association to accommodate Britain’s Commonwealth; and to reform association to take account of the demands of the proposed partners. It also aimed to widen, at a general level, the relations between the Community and the Third World by extending its policy of creating ‘managed relationships’ with different areas of the Third World. It maintained the traditional colonial link supported by France (and to a lesser degree Britain), but made some moves towards reforming its relations with its former colonies, at least on paper, as an accommodation of the growing demands by Third World countries for reform of their position in the international system. In 1971 the Community moved for the first time towards defining a global, common development policy by way of an overall framework for the EU’s development co-operation. The aim of these policy proposals was to move beyond the existing relationships with the AAMS in Yaoundé, which, as we have seen, evolved largely as an out-growth of France’s post-colonial policy. In a Commission memorandum to the Council of 1971, and at a European summit of 1972, the Community and member states also recognized the need to move beyond simple tariff arrangements, wanting to develop a greater role in terms of aid, commodities and regional co-operation (CEC-DG VIII 1971; FreyWouters 1980; Ravenhill 1985). However, the scope of this policy was still to be limited by the reassertion of the specificity of Africa as an area for an exclusive type of relationship (Jones 1973). While the Commission claimed that its division between an associate relationship for some of the Third World and general measures for development for the rest of the Third World ‘… puts

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an end to the sterile dispute between regional and world-wide solutions for development problems’ (CEC-DG VIII 1971: 48), the policy reflected more a means of keeping its existing close post-colonial ties while extending its influence and interests beyond simply the ex-colonies.16 A Communication from the Commission to the Council, known as the Deniau Memorandum (after the then Commissioner for Development, Jean François Deniau),was released in April 1973 and proved to be central in shaping the EU’s policy towards the proposed associates (CEC-DG VIII 1973). The memorandum expanded the policy outlined in the 1971 document in arguing for a separation between associate and non-associate relations with the Third World. It called for an enlargement and a deepening of the associate relationship through the inclusion of the existing associates, the associable Commonwealth and any sub-Saharan African countries ‘… with comparable products and structure …’ who wanted to join (CEC-DG VIII 1973: 6). Two of the most important aspects of the memorandum were the ending of ‘reverse preferences’ – under which the Yaoundé associates gave the EU preference in trade tariffs over third countries in return for preferential access to the EU – and the question of stabilization of export earnings. The memorandum called for an end to reverse preferences by stating: ‘The acceptance by the associates of the mutual free trade area principle does not entail any obligation for them to grant preferences to the Community’ (CEC-DG VIII 1973: 7). Second, the memorandum proposed the creation of a system to help stabilize the export receipts of the associated countries. It was to cover a specified list of products for those countries with a sufficient dependence on them (CEC-DG VIII 1973: 18–21). This was proposed as a Community policy in the absence of any international agreement on the issue, and in response to growing Third World demands for mechanisms to stabilize their export earnings. In addition, the memorandum gave a critical review of the success of the Yaoundé Conventions on which the proposed changes were based; an outline of principles for association based on equality and non-interference in the policies of the associates; and proposals for the institutions to administer the association which was suggested to last five years (as before) to allow modifications when needed (CEC-DG VIII 1973). These proposals, with which the Commission entered the Lomé I negotiations, clearly still reflected the colonial heritage of the Community’s links with the Third World. By singling out a group of developing countries which Europe had historically dominated for a special relationship it highlighted the persisting influence of colonially-inherited relations.17 However, the EU went beyond its previous policies. Aside from the adjustments to take account of Britain’s accession, the proposals for export stabilization, for an end to reverse preferences and the various undertakings to seek a relationship based on ‘full equality’ all pointed to significant changes. In large part this represented an acceptance that Community policy had to adjust to a changing external reality. As well as the need to make the offers of association attractive enough to the associable Commonwealth, the Commission was also responding to broader demands for change. These Third World demands were expressed

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both by the existing associates in the Yaoundé Convention and more widely, by the Third World countries. The Commission’s proposals were thus an extension of the North–South relationship and one that responded to the vociferous demands of the developing countries. However, the adoption and inclusion of these measures, and the Commission’s proposals in general, were by no means straight-forward (Ravenhill 1985: 85). The translation of the initiatives of the Deniau Memorandum into commitments from the Community would, in fact, only be achieved during the course of the formal negotiations, as member states agreed their positions. It is worth noting that there were tensions between member states. While Britain was in favour of a wider global agreement with developing countries, France sought to limit its scope, preferencing its own ties with Africa (FreyWouters 1980: 18–9). In addition, the new Labour government of 1974 sought to renegotiate its terms of entry into the EU, part of which was a desire to reform the links with the developing world, particularly the poorest countries. The British, represented by Judith Hart, also strengthened the social democratic tendencies in the EU and were supported by Commissioner Cheysson (who had succeeded Deniau) and the Dutch Development Minister Jans Plonk. They partly overcame the conservative opposition of France and Germany to widening the association, removing reverse preferences and recognizing more fully the associates’ demands (Holland 1980: 162). This stance on reverse preferences had the support not only of the Commission but also the USA, which had economic interests in the Caribbean and growing anti-Soviet interests in Africa, and which engaged in an active campaign against the maintenance and extension of reverse preferences (Cosgrove-Twitchett 1976; Frey-Wouters 1980). These additional pressures meant that the EU did not simply seek a repetition of Yaoundé. The positions which the member states adopted were, in the end, only expressed through the directives to the Commission agreed in the Council of Ministers as the negotiations proceeded. The negotiating mandate for the Commission (which represented the member states’ position) was therefore only agreed piecemeal, and in some ways followed the progress of the negotiations, moving from agreement on general guidelines to agreement on details. It is therefore necessary to look at the ACP response before detailing how the negotiations proper proceeded.

The demands of the ACP Given that the Yaoundé Convention was noted even by the European Commission as being inadequate and in need of change, it begs the question as to why so many more Third World countries wanted to join in negotiations for its replacement. The choice to enter the negotiations in the first place was, in fact, fairly circumscribed. There was a very real fear of losing limited preferences in a hostile world economy, which applied particularly to the French associates and the banana and sugar producers of the Caribbean and Pacific (Holland 1980). This reflected the demands for reforms to the liberal economic order that had gathered pace from decolonization onwards, and the nationalist and

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protectionist tendencies in the developing world that were driving the global North–South debate (Mayall 1990; Adams 1997). Given that many developing countries, particularly those in Africa, had limited external relations, still dominated by the ties to the former metropole, the options were limited (Clapham 1996). Despite criticism of the Yaoundé relationship, some form of relationship with the EU was therefore likely, even necessary, and the need was to try to reform this relationship. In this aim they were encouraged by the tone and content of the Deniau Memorandum (Ravenhill 1985). The future partners of the Community could have formed up to four different groups: the anglophone and francophone African states and the Pacific and Caribbean countries and islands. However, a more united approach emerged. Following a series of meetings under the auspices of the Organization of African States (OAU) in April and May 1973, a unified list of demands was agreed, on the basis of which the ACP formed a single group. The demands the ACP took into the negotiations were for: non-reciprocity of preferences; the extension of EU economic rights of access to third countries; a revision of rules of origin provisions (see below); a revision of rules governing movement of capital to take account of monetary independence; separation of aid provisions from any trade relationship; completely free access to the EU market for all ACP exports, regardless of the CAP; the guarantee of export earnings; protection of intra-African co-operation; and the transfer of technology (Nabudere 1979; Ravenhill 1985). The commonality of the demands pointed toward the establishment of a joint negotiating platform and representation as a single body with a single spokesperson. Close co-ordination at a ministerial level continued from the May meetings until the end of the negotiations (Bulletin of the EC 4-1974 1.1.01–1.1.05; Gruhn 1976: 252).18 Much has been made of the unity of the ACP countries in the negotiations, in terms of its impact on the outcome (Gruhn 1976). However, just as important was the character of the demands around which they united, which clearly paralleled those of the wider Third World and were summarized in the demands for a NIEO. As with the NIEO, the ACP’s position hoped for the diversification of ACP economies, in order to escape the crisis position of these states in the world economy; a more equal relationship with the industrialized world, reflected in part in the Commonwealth countries’ suspicion of the unequal associate relationship of francophone Africa; and greater national control over their economies, reflected in the desire to have no obligation to return preferences granted by the EU. The political and economic context in which the ACP and its demands were formed was therefore a key element in the negotiations. It is no surprise then, that when the negotiations started, countries like Nigeria, which were leading sceptics of association and were bolstered in strength by the OPEC oil price crisis of autumn 1973, and Jamaica, which was among those leading the Third World’s wider political demands, should come to the fore in the negotiations. It was also true that leading Third World figures in the emerging ‘North–South dialogue’, like Sonny Ramphal of Guyana, would play a key role in the Lomé negotiations too. As well as the oil crisis, the wider commodity crisis strengthened the ACP position and closely mirrored the impact

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the crisis had on the global debates. The contingent factors of the time thus favoured a political strategy which the Third World countries hoped would alleviate the problems facing their governments and states.

The negotiations The first negotiations for the new association took place on 25 and 26 July 1973 in Brussels and were open to all interested associable countries (Bulletin of the EC 7/8-1973 1.1.01). The meeting essentially involved the exchange of initial positions of the negotiating parties and the arrangements for setting up formal detailed negotiations. Ivar Nørgaard of Denmark, as president of the Council, laid out the Community’s position, which did little more than reiterate the aim of forming an association under ‘option one’ of the Protocol 22 of the Treaty of Accession, indicating the lack of progress among the member states towards defining a position (Bulletin of the EC 7/8-1973 1.1.02; Nabudere 1979, pp.125). As such, he repeated the Community’s desire for a single agreement, for protection for the existing associates and equal treatment for new ones, for generally free trade – with exceptions for CAP-covered products – and for a five-year duration (Bulletin of the EC 7/8-1973 1.1.02). This caution was criticized by the ACP states because it was based on the Protocol 22 position, and not the later Deniau Memorandum which had been seen as an advance by the associable states (Bulletin of the EC 7/8-1973 1.1.04).19 Wenike Briggs of Nigeria, speaking for the African countries, argued for the new association to take on a new form, reflecting the African countries’ opposition to the existing nature of relations between rich and poor nations (Bulletin of the EC 7/8-1973 1.1.03). The negotiations proper were launched by a ministerial conference on the 17 and 18 October. Progress was slow up to spring 1974, with only broad agreements on the aims of trade co-operation and aid (Bulletin of the EC 121973 2.3.07). The Community adopted new negotiating directives for the Commission at the Council meeting of 1 and 2 April and recognized the unity and purpose on the ACP side. It also highlighted some problem areas in the negotiations. The new directives gave the Commission scope to start broad agreements on the protection of ACP export earnings. This was in response to an ACP demand for a system to guarantee the purchasing power of commodity exports (rather than the nominal financial value) against sudden falls or deterioration in relation to the cost of manufactured imports (Bulletin of the EC 5-1974 2.3.22; 4-1974 1.1.04). However there was little effective movement on several of the ACP’s demands and Commissioner Cheysson argued that any export revenue protection could only be pragmatic, being based on nominal value of exports and limited product coverage, with anything more ambitious requiring a global agreement (Bulletin of the EC 5-1974 2.3.24). The overall lack of progress prompted the ACP to invite the EU to a ministerial conference in Kingston, Jamaica, on 25 and 26 July (Bulletin of the EC 6-1974 2.3.44; Nabudere 1979: 127). This meeting was to prove the turning point in the negotiations and reflected the growing influence and confidence of the ACP. The unity of the ACP, and the strength of their demands for a new relationship with the EU,

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had impressed the Commission. The changing international scene, in particular the oil crisis following OPEC’s oil price rise of October 1973, and the chaos on the commodity markets (especially sugar), reinforced this influence (Ravenhill 1985: 87). In addition, the passing of the demands for a NIEO at the UN General Assembly Special Session in May 1974 underlined for the ACP the need and apparent possibility of refashioning international relationships between the developed and developing world. It is also indicative of the context in which the Kingston conference took place, as well as an illustration of the more general impact of domestic, class and political pressures on the Lomé negotiations, that a leadership role in this meeting was taken by Guyana and Jamaica (see Frey-Wouters 1980: 32–3; Gruhn 1976: 254). Not only did Guyana’s Ramphal play a key role, reflecting his growing involvement in the North–South debates, but Jamaica’s Prime Minister, Michael Manley, headed a government brought to power on the basis of popular demands and a programme of attempting to reshape the country’s position in the world economy. Indeed, in opening the conference, Manley roundly criticized the EU for its lack of response to the ACP’s demands, and claimed a new deal with the EU should ‘pave the way for a new world economic order’ (Bulletin of the EC 7/8-1974 2.3.32; Nabudere 1979: 129–30). The Kingston conference forced the Community to define its position on a series of issues (Bulletin of the EC 7/8-1974 2.3.32). It was at Kingston that the EU finally accepted the demand for an end to reverse preferences and gave an improved offer for products covered by the CAP. The Kingston meeting also agreed the basis of what was to become Stabex (System for the Stabilization of Export Earnings), although the products covered and guidelines were not defined, and reached agreement that there should be a chapter devoted to industrial development in the new Convention (Bulletin of the EC 7/8-1974 2.3.34-5). In addition, the conference reached some preliminary agreements on the administration and coverage of aid, but though the level of aid was mentioned for the first time, no amount was settled (Bulletin of the EC 7/81974 2.3.32; Cosgrove-Twitchett 1976: 145; Lister 1988: 86). Finally, the Kingston meeting came at a time in the sugar crisis which allowed the EU to fix the market share for Commonwealth sugar, allowing an improved offer to be made between Community and Commonwealth producers, although the price level remained to be fixed (Ravenhill 1985: 93–4). The ‘breakthroughs’ made at Kingston represented advances for the ACP, securing non-reciprocity in trade, a commitment to a stabilization of export earnings scheme, and inclusion of industrial co-operation and concessions in other areas. However, the agreement fell short of what the ACP wanted in terms of export access, rules of origin and CAP products. For the EU, it settled many of the differences among the member states and reaffirmed the policy direction of the Deniau Memorandum more than a year after it had been released. The conference also added an extra impetus to the negotiations, which resumed in their fifth session in August. Council meetings in October and November finalized Community positions on a variety of issues (Bulletin of the EC 101974 2.3.30; 11-1974 2.3.26). The remaining areas of the price for the sugar

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quota, the level of aid, and agreements on rum and bananas were then raised at the ministerial meeting on the 13 January 1975. German insistence on the maximum level of aid it would pay (which, because of a quota system for contributions among member states, set the overall level) meant that the EU offered a financial budget of only 3,390mua, in contrast to the 8,000mua the ACP had demanded, and represented a per capita drop on the level of aid under Yaoundé II (Cosgrove-Twitchett 1976: 145; Ravenhill 1985: 89, 96). The sugar price was fixed at a level linked to the EU’s internal price for a quota of 1.4 million tonnes (Ravenhill 1985: 93–94). The ACP discussed and adopted the text at a meeting in Accra, Ghana, on the 11 and 12 February (Frey-Wouters 1980). The Convention was formally signed on the 28th of February in Lomé, Togo.

The Lomé I Convention: principal content As has been elaborated above, the Convention reflected a number of influences. These included, at the most general level, the politics of North–South relations –a continuing commitment to southern states from the North, and demands from the southern states for greater accommodation to their economic problems and recognition of their ‘rights’ as sovereign states. Specifically, they included the crisis in the world economy and the politics of the developing countries’ demands for a NIEO; the legacy of Europe’s historical dominance of the ACP countries; the concerns of the EU relating to the global economic crisis; and the inherent power of the EU as a group of developed, donor countries confronting a group of some of the poorest countries. Outlined below is an overview of the principal content of the first Convention, and the main changes and reasons for changes in the subsequent two Conventions.20 The preamble to the Convention claimed it aimed to ‘… establish on the basis of complete equality between the partners … a new model of relations between developed and developing countries, compatible with the aspirations of the international community towards a more just and balanced economic order …’ (ACP–EEC 1975). The Convention was based around four areas: financial and technical co-operation (aid) to help the ACP states’ development and improve their position in the international division of labour; a system of financial aid to help stabilize ACP export earnings from commodity exports (known as Stabex); free, non-reciprocal access of ACP exports to the EU market; and joint institutions to oversee co-operation (Long 1980b). We will take these elements in turn.

Aid The Lomé Convention was seen as ‘unique’ in a number of ways. The Convention was legally binding, and aid allocations from it were guaranteed to ACP states and could not be withdrawn by the EU once allocated (Hewitt 1981b). The basic procedure of aid from the Lomé Convention is set out in Appendix 3. However, the principles governing this procedure were a clear reflection of the concern for sovereignty held by the ACP States. The aid

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procedures relied implicitly on ‘joint management’ of aid, with considerable responsibility resting with the ACP states on how aid was utilized. It was to be based on the ‘… active participation of the ACP State or group of ACP States concerned in each of the various stages of a project …’ (ACP–EEC 1975, Article 50). Aid from the Convention was to be used in line with a five-year ‘National Indicative Programme’ (NIP) which would be jointly agreed by the Commission and each ACP state. This was an agreement reached at the start of the Convention’s five-year period on how aid allocated to each ACP country would be used. Crucially, ACP states retained virtually all rights to initiate projects so that aid use was compatible with ACP development strategies and objectives and the ‘programming stage’ ensured that each ACP country came up with a plan of use of aid at the start of the Convention. This basic framework, in which the ACP provided the policy and administrative framework for development co-operation while the EU gave the financial support, was to last until the second half of Lomé IV, despite various qualifications and changes to the content of aid (European Research Office 1994c: 1). However, this basic ACP-determined structure was qualified in a number of ways. The main counter to ACP control came from the fact that the final agreement to fund aid projects was left to the EDF Committee – an EU body which contained representatives of each member state but no ACP representation. This gave member states and the Commission considerable power to block ACP projects with which it did not agree. Such practical questions seriously undermined the partnership principles of the Convention. Many commentators have highlighted this apparent gap between rhetoric and reality (see for example, Hewitt 1981b; Parfitt 1987). However, the process of aid allocation exemplifies the way in which mechanisms of control were retained by the EU. Thus the inequality of the post-colonial relationship was maintained in the Convention’s structure, despite the new language of co-operation. Second, the overall aid ‘cake’ was allocated to each ACP country according to criteria and procedures completely under the Commission’s control and which are not made public (Anyadike-Danes and Anyadike-Danes 1992). This potentially gives the Commission and member states considerable power to favour those ACP states with whose policies or politics they agree. Third, the Commission retained considerable influence over the award of aid contracts from projects funded, allowing it to give priority to balancing the competing demands for contracts among member states who provided that aid, rather than favouring local ACP economies and companies. Finally, as emerged in practice, the process of aid was a problematic one given the severe administrative constraints faced by ACP states, due to seemingly ever worsening political and economic crises (European Research Office 1994c: 1; Price Waterhouse 1992).21 Lomé I provided 3,390mua of aid, of which 3,000mua formed the fourth EDF22 and 390mua was allocated for loan subsidies from the European Investment Bank. Of the EDF, 375mua was set aside for the Stabex system (see below) and 2,625mua for projects and programmes funded through the NIPs to ‘… contribute essentially to the economic and social development …’ of the ACP (ACP–EEC 1975, Article 40). Of this last amount, 430mua was in

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the form of special loans and 95mua in the form of risk capital. Although reliant on the general aid from the Convention, a separate Title on industrial co-operation was included at the request of the ACP states, which reflected the key role industrialization played in their (and wider Third World) strategies (Articles 26–39). This Title stipulated that Lomé aid could be used for projects relating to industrialization through the fields of infrastructure, training, technology, research, small and medium enterprises, industrial promotion and trade co-operation. It included the setting up of a Committee on Industrial Co-operation and a Centre for Industrial Development, which was to seek to promote contacts in industry and undertake research into industrial development in the ACP. The Convention also contained a provision to promote investment in ACP industry (Oyewumi 1991).

Stabex The System for the stabilization of export earnings – Stabex – was intended to ‘remedy the harmful effects of the instability of export earnings’ for ACP states (Article 16–24). The system worked through a calculation procedure, which determined when payments would be made to compensate for losses due to falls in exports earnings for a variety of products. The system covered groundnuts, cocoa, coffee, cotton, coconuts, palm products, raw hides and leather, wood products, fresh bananas, tea, raw sisal and iron ore. An ACP country would qualify if its earnings from one or more of these products satisfied a number of criteria. First, the country had to be ‘dependent’ on the product. The ‘dependency threshold’ was defined as a country relying on the product for 7.5 per cent of export earnings (or 2.5 per cent for ACP states classed as ‘least developed, land-locked and island states’ (LDLIS)). Second, a payment would be made if its earnings fell below the ‘reference level’ of normal earnings from that product (calculated as an average of the previous four years’ earnings). This fall in earnings – the ‘trigger threshold’ – had to be 7.5 per cent below the reference level (2.5 per cent for the LDLIS). The ‘eligible claim’ would amount to the difference between earnings and the reference level. The system gave ACP countries considerable power to determine how to spend the transfers, making it one of the most favoured aspects of the Convention among the ACP. However, the actual transfer did not have to correspond exactly to the eligible claim, and the Commission had power to decide the transfers ‘in the light of the resources available’. In fact, the Convention allocated 375mua for Stabex to be divided equally for each of the five years. The allocations have proven in practice under each Convention to be well below the level needed to fulfil every eligible claim, leaving the Commission considerable ability to decide actual transfer levels. Thus although the system was designed to reflect ACP and wider Third World worries over their exposure to unstable export markets, it proved inadequate compared to the scale of the problem faced. In addition, transfers were to be in the form of non-interest bearing loans which were to be repaid by the ACP States when earnings recovered.

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Trade The trade provisions of the Convention (Articles 1–15) have been seen as among the most important by the ACP countries. They guaranteed free access to the EU market for all exports from the ACP countries. Reflecting the abolition of reverse preferences, the ACP were not required to reciprocate, Article 7 stating, ‘In view of their present development needs, the ACP States shall not be required … to assume, in respect of imports originating in the Community, obligations corresponding to the commitments entered into by the Community …’. However, they were required not to discriminate between EU member states and to give access to EU exports at no less favourable levels than those given to other developed countries. However, there are a number of qualifications to this free access. First, the free access did not cover those products covered by the EU’s Common Agricultural Policy (CAP). For some CAP products the ACP received dutyfree access, often within quota or calendar limits, while for others the EU gave some tariff preference to the ACP over third countries. Second, the Convention included a ‘safeguard clause’ which would allow the EU (as a whole or individual states if the Commission agreed) to restrict ACP product access should exports from the ACP cause ‘serious disturbances’ in the economies of the member states (Article 10). The Convention also contained ‘rules of origin’ (detailed in Protocol 1 of the Convention), which stipulated how much value had to be added to an export in the ACP country (through processing, manufacture or origination of inputs) for it to be counted as ‘originating’ from that ACP country and thus qualifying as having free access to the EU. For most products this was set at 50 per cent of the final value (ACP–EEC 1975). Finally, although the duty-free access provisions appear liberal, it has been estimated that three quarters of ACP exports would enter duty free in any case and most of the remainder would face minor tariffs only. This reflected the fact that around two thirds of ACP exports to the EU are made up of five products – crude oil, coffee, cocoa, copper and cotton (Hewitt 1981b). Indeed, while the EU has persistently claimed that Lomé gives free access to over 95 per cent of ACP exports, this misses the point that the diversity of ACP exports is so limited. The CAP restrictions seriously limit the potential for the ACP to diversify its agricultural export sectors. The Convention also included seven protocols, of which four relate to trade matters. The first of these (defining the rules of origin) has already been mentioned. However, the other three all gave access for products which would otherwise not have free access. These three protocols were those relating to sugar, bananas and rum (Protocols 3, 6 and 7 respectively). The sugar protocol guaranteed the import of a fixed quota of sugar at guaranteed price, which would be based on the EU’s internal price. The banana protocol pledged the EU to protect traditional suppliers of bananas to the EU and help those states to diversify their export markets. The rum protocol allowed for the import of a quota of rum into the Community (the level to be set by the EU) until the EU had established a common policy for spirits. These protocols clearly reflected

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the problems of incorporating Britain into the EU, giving protection to those members of the British Commonwealth, particularly in the Caribbean, who might have suffered from the demise of Commonwealth preferences.

Institutions To underpin the claims of equality between the EU and the ACP, the Convention established joint institutions to oversee the implementation of the Convention which mimicked the EU’s own structure (Articles 69–83). The institutions thus included an ACP–EEC Council of Ministers, a Committee of Ambassadors to do preparatory work and supervise Council of Ministers’ committees, and a Consultative Assembly composed of members of the European Parliament and representatives of each ACP state which would discuss Lomé matters and meet at least once per year (for a summary, see Oyewumi 1991).

Assessment The Lomé Convention showed all the hallmarks of the politics of postcolonialism inherent in the negative sovereignty era. The formal equality of the parties and ACP sovereignty was reinforced in the founding principles of the Convention and the institutions. The recognition of ACP claims to economic independence were reflected in the ACP countries’ rights to determine aid priorities and development needs to which (on paper at least) the EU would respond. The non-reciprocal rights of access in trade were a reflection of what had already been achieved through UNCTAD and the GATT system – of ‘special, preferential treatment’ – and furthered the limitations to a strictly multilateral system of trade. In more specific terms, the Convention repeated much of the aims of the NIEO demands. As we have seen, gaining more space for state-led development strategies was an important part of the NIEO demands, and stemmed from the response of the state in the developing world to domestic struggles it faced and its position in global accumulation. In addition, the inclusion of a chapter on ‘industrial co-operation’ reflected the key place industrialization played in these states’ attempts to improve their position in the international division of labour, and the Stabex scheme was a small-scale version of the common fund for commodities sought globally. As such, Lomé represented an advance for these southern countries, and one that was particularly notable given the deadlock that the global North–South dialogue subsequently reached. It also showed how the EU, partly under pressure from its own concerns about raw materials, went further than other developed countries in meeting southern demands and indeed further than individual EU countries were prepared to go at the global level. However, as with the gap between rhetoric and reality in global relations, so too in Lomé. As outlined above, the post-war international order upheld the sovereign equality of all states in the system alongside the very real and massive inequality between these states in terms of power, political stability and economic prosperity. In Lomé, the formal declarations of equality, and the instruments designed to tackle economic inequality, were circumscribed by the EU’s retention of key areas of control and leverage. In trade, the EU retained important

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qualifications to the ACP demand for free access, to as to protect the key elements of its own internal policies. In aid administration, the EU retained key controls through the EDF committee, and the Stabex system was also intended to play some role in protecting the EU’s raw material interests. Even the joint institutions reflected the principle of equality, but were subject to the agreement of the member states of the EU through the EU Council of Ministers for any decisions taken. These issues were to become the source of ACP disillusionment in subsequent negotiations, but were perfectly in accord with the global pattern of North–South relations. The Convention also reflected the abiding influence of Europe’s colonial past, and prioritized that past in the EU’s external relations. The very membership of the ACP was determined by the colonial relations of France and Britain. That some of the Commonwealth was excluded was due more to the problems of incorporating them into the agreement than any wellconsidered developmental criteria. The Convention reinforced patterns of trade for those countries which focussed their exports on Europe. As we have seen, these countries were at the time seen as important in solving Europe’s worries over its raw material supplies, reflecting their traditional role in European capitalism. Even the institutions were a simple adaptation of the existing Yaoundé Convention institutions. The extent to which Lomé was ‘unique’ or ‘different’ from other North– South agreements was therefore limited and due to the particular global circumstances of the time. As far as the rhetoric of the Convention went, it appeared to offer some consideration of the ACP’s national strategies and concerns formulated in the NIEO demands. However, even in formal terms these ‘concessions’ were qualified, with the EU retaining some crucially important powers. For the EU and its member states, the Convention again provided a formalized arrangement through which it sought to safeguard and protect certain of its external interests. And while these were characterized by concessions to the demands for reform, they did not lead to further change. Indeed, just as in the wider international economy, and in the domestic economies of advanced states, the end of the 1970s saw an offensive by capital on the reforms of the post-war era, so too the subsequent history of the Convention was of an erosion of those concessions the ACP had won in 1975.

Lomé II Lomé I has been assessed in some detail to illustrate the content of the Convention and to demonstrate how it was shaped by the post-colonial relationships of the EU and the wider changes in the international economy. Much of the purpose and structure of the Convention remained in place in Lomé II and Lomé III. The following two sections therefore do not undertake a similarly detailed description of the provisions. Instead, what is highlighted are the main areas which have been changed and the forces which have prompted those changes. A more fundamental shift in the international context in which Lomé exists, and its reflection in the terms of the Convention, are addressed

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in the following two chapters. The negotiation of Lomé II took place against a parlous economic background for both sides. The attempts of the 1970s to reconstruct a new world order had come to little. For the developed world, the Bretton Woods system had declined and the accompanying social democratic compromises which dominated western states since the war had begun to come apart. For the EU countries, 1979, when the negotiations were concluded, saw the beginning of the deepest recession since the Second World War. For Third World states, the campaign for a world order which reflected their needs and priorities had become bogged down in a deadlocked North–South dialogue, and the re-emergence of the Cold War was dominating many of their relations with the West. The effect of this context was, therefore, not to push forward the reforms of Lomé I but to make virtually impossible any further advance.

The demands for changes The fact that the considerable euphoria which greeted the signing of the first Convention had worn off by the time Lomé II was to be negotiated, and that the rhetoric of Lomé I had been reproduced in no other international agreement, indicated the gap between the rhetoric and the reality of EU–ACP relations (Hewitt 1981b). This manifested itself in often bitter negotiations on a successor agreement, where the ACP sought substantial advances on those they had achieved in Lomé I, whereas the EU aimed to make few, if any, substantial changes. In the Lomé II negotiations, the ACP countries were critical of what they saw as a betrayal of ‘the spirit of Lomé’ by the Commission – exemplified in the threat of export restraints, such as those used against Mauritius’s textile exports by the UK in 1979 (Hewitt 1981b). This argument, however, highlighted how far the apparent EU concessions – for example on principles of equality, joint administration and ACP determination of aid projects – were qualified by a strict application of the letter of the Convention. This meant the EU retained crucial powers, and that the actual functioning of co-operation under the Convention reflected continuing inequality in the relationship and the conflicting purposes of the two sides. The ACP therefore aimed for substantial changes to the Convention and demanded complete free access of products to the EU market, including CAP-covered products; changes to the rules of origin to ease ACP access; increases in access for special commodities such as rum, sugar, and beef; and an end to the safeguard clause for ACP products (Hewitt and Stevens 1981a). Critical of too much Commission power in aid administration and the slow disbursal rate of aid, they argued for faster disbursement of aid and a real per capita increase in aid (Oyewumi 1991). Reflecting continuing concerns over commodities, they argued that Stabex should cover all ACP exports including those in processed form, and be indexed to the real purchasing power of export earnings and not nominal values (Green 1980; Hewitt and Stevens 1981a). They also included a demand for a specific fund for industrial co-operation, in response to the failure of Lomé I to give any significant boost to industry (Aluko-Olokun 1983).

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For the Community, the Lomé II negotiations represented a problem. While wanting to maintain the formalized relations with the ACP countries, it perceived the success of the rebuttal of Third World demands in the wider world and was concentrating on co-operation with other developed countries, rather than with the Third World to tackle the global crisis (Green 1980).23 The Community therefore aimed to give few, if any, new concessions to the South. Facing its own problems of recession, institutional changes and internal conflict (see Cosgrove-Twitchett 1981), it attempted little more than a ‘holding operation’ to maintain the existing Convention and give no new concessions to the ACP. It proposed significant changes in just two areas: the introduction of a human rights clause into the Convention, and a system to bolster ACP mineral production. The first stemmed from Community’s, and in particular the UK’s, embarrassment during Lomé I, because the legal guarantees of the Convention meant it had to continue to give aid to Uganda at a time when Idi Amin’s regime was committing gross human rights atrocities. It thus proposed a clause to allow aid to be suspended if respect for human rights was violated by ACP countries (Young-Anawaty 1980). Second, the Community, and particularly Germany, had become worried by falling investment in the African minerals sector, and the Commission proposed a system analogous to the Stabex regime to revitalize mineral production in areas where it was experiencing falls in production and exports.

The changes introduced The ACP demands for Lomé II combined those of principle with more minor specific reforms. The EU therefore concentrated on the latter, in order to appear to make concessions while giving very little in concrete terms (CosgroveTwitchett 1981). The Community was determined not to concede any further principles and rejected all of the most significant ACP demands. This increased ACP frustration, which had built up through experience of Lomé I and was exacerbated by what they perceived was a high-handed attitude of EU officials in the negotiations (Hewitt and Stevens 1981a). During the negotiations, ACP anger became focussed on the level of aid proposed by the EU in May 1979 (Ecu 5.1bn) which it rejected, stalling the negotiations until October 1979 when the ACP accepted a cosmetic increase to Ecu 5.607bn (Hewitt and Stevens 1981a). This represented a 51 per cent increase in absolute terms, but a 16 per cent decrease in real terms and 25 per cent decrease in real per capita aid (Hewitt 1981b: 32). The only major innovation of Lomé II was the introduction of a system for the stabilization of the minerals sector in ACP countries, known as Sysmin (also referred to as Minex) (Cosgrove-Twitchett 1981; Lomé Briefing No. 1 1988; Long 1980b; The Courier no.120 1990e). The system was to cover copper, cobalt, phosphates, manganese, bauxite, aluminium, tin and iron ore (the latter transferred from Stabex). The system operated along similar lines to Stabex, but with a dependence threshold defined as 15 per cent of export earnings from any of the products covered, and a payment being possible due to a fall of 10 per cent in either productive capacity or export earnings due to reasons

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beyond the ACP country’s control. Unlike Stabex payments, Sysmin transfers were to be used to restore productive capacity, could come in the form of special loans and involved no automatic transfers (Anon 1989). As such, it was more concerned with protecting production of minerals than safeguarding ACP export earnings, and reflected concerns of member states such as Germany at the fall of production of minerals such as copper (Cosgrove-Twitchett 1981). The EU was particularly worried that falls in investment in African mining would lead to the EU relying on supplies from much stronger countries, such as Canada and the USA or from countries more friendly to the Soviet Union (Hewitt and Stevens 1981a). In practice, Sysmin has been more complicated than Stabex, making it more difficult to get payments. Of 30 states benefiting from Lomé financing to the mining sector from 1980 to 1987, only eight projects in six countries were financed through Sysmin (Anon 1989). The ACP did manage to rebuff EU demands for human rights to be included in the Convention arguing that it would be an infringement of their sovereignty and also fearing it was designed to protect foreign property rights as much as human rights – a worry partly based on the EU’s desire to introduce investment guarantees into Lomé (Oyewumi 1991: 133; Rubin 1978). It is notable of the ‘holding operation’ undertaken by the EU countries that on the one issue on which they sought to change the basis of co-operation – incorporating human rights into the aims and conditions of co-operation – they were unsuccessful (Young-Anawaty 1980). While it is true that this was in part due to a lack of unity and purpose on this issue among the EU states, as well as a concern not to have to give any significant concessions to the ACP countries in order to achieve it, it was also due to the firm refusal of the ACP to countenance such ‘interference’ (Young-Anawaty 1980). This mirrored the wider North–South picture, where the North’s human rights agenda has gained ground only slowly, the southern states using the norms of sovereign independence as justification for a refusal to allow discussion of internal political matters. It was not until the end of the Cold War that a more far-reaching revision of such norms – and of Lomé – were to be achieved. Lomé II also included a variety of more minor changes, aimed in part to appear to deal with ACP demands. The coverage of Stabex had already been increased during the life of Lomé I, and this was further extended in Lomé II (Aluko-Olokun 1983; Cosgrove-Twitchett 1981). Lomé II lowered the Stabex dependence threshold to 6.5 per cent (2 per cent for the LDLIS) and increased the amount of aid devoted to it by 45 per cent (Aluko-Olokun 1983). The new Convention included a greater emphasis on funding projects in the field of rural development, including the setting up of a Technical Centre for Agricultural and Rural Development and reflecting growing concerns with food security questions in Africa (Cosgrove-Twitchett 1981; Long 1980b). Trade access was tinkered with involving minor increases of access for CAP-covered products, particularly for out-of-season vegetables, and rum and beef quotas were increased, but there were no changes to the rules of origin (CosgroveTwitchett 1981; Hewitt and Stevens 1981a). Lomé II included a section on investment guarantees. This stemmed, as with Sysmin, from a desire on the

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EU’s part to stimulate mining investment and was thus aimed particularly at protecting against expropriation in the mining sector (Long 1980b). However, it fell short of the guarantee sought by some member states such as Germany, and only assured MFN treatment for EU firms in the investment conditions (Cosgrove-Twitchett 1981). Overall, the EU succeeded in Lomé II in not giving any major concessions and in reducing the real aid burden of the Convention (Green 1980). For the ACP, this created considerable disappointment. The then deputy secretary of the ACP Group claimed, ‘The negotiations have left a sense of emotional bitterness because they are not felt to have been conducted between equals’ (cited in Oyewumi 1991: 133). Insofar as this bitterness caused problems for the EU it merely showed that the Community, ‘… was feeling the backlash of its own abundant rhetoric’ (Hewitt 1981b: 40).Even without significant changes, the ACP, weakened by the recession, by northern inflation and by the oil price increase of 1979, faced considerable pressure to accept any deal which included some new aid (Aluko-Olokun 1983; Parfitt 1981). However, the EU failed to manage any significant changes in the basis of co-operation and the bulk of the Convention remained intact. Indeed, it was indicative of the ‘intermediate’ nature of the second Convention that the EU failed to gain agreement on the human rights question. If the first Convention institutionalized the high point of ACP power on the crest of the wave of Third World radicalism, the second reflected the stalemate of the so called ‘North–South’ dialogue in a context of deep recession in western countries. In contrast, the following Conventions reflected the increasing conditionality (including, ultimately, political conditions) of western policies towards developing countries as they reeled under the impact of the debt crisis.

Lomé III If Lomé II represented something of a ‘standstill’ in ACP–EU relations, Lomé III represented a more significant change in ACP–EU relations and an indication of more fundamental changes to come in Lomé IV. The third Convention was negotiated against a backdrop of two key factors. The first was the continuing weakness of the ACP countries under the impact of recession, increasing debt and, particularly in Africa, food crises and famines. The second factor was an attempt by the EU to redefine its co-operation with the ACP countries. A key element in this process, and an influence on the Convention was the memorandum produced by the new Commissioner for Development, Edgard Pisani, on EU development aid policies, referred to as the Pisani Memorandum. The result was changes to the basic framework of co-operation, which involved increasing the potential for conditionality of aid and a greater focus of aid on rural and agricultural development through ‘sectoral focusing’ of aid. Both represented a move away from the non-interference principle so central to the ACP.

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EU development policy: the Pisani Memorandum The Pisani Memorandum, published by the Commission in September 1982, was a Commission response to perceived criticisms of Lomé based on the apparent failure of co-operation to prevent deteriorating conditions in ACP states (CECDG VIII 1982). It sought to restate the relevance of Lomé and to reformulate EU development policy in the world of the early 1980s (Stevens 1984b; Stevens 1985; The Courier no.120 1990e). The memorandum reviewed the EU’s various aid schemes and reiterated the importance of the ACP and of Africa as a focus for the Community’s development policy while also arguing for the maintenance and expansion of relations with the Mediterranean, Latin American and Asian countries (CEC-DG VIII 1982). Pisani targeted especially the failure of aid projects, which were often grandiose infrastructure projects isolated from the sector and region in which they were built, terming them ‘cathedrals in the desert’, and aimed to move aid from building infrastructure to more focussed development programmes targeted at individual sectors or regions. In particular, and in view of the food crisis in Africa, it gave a specific focus to rural development.24 For projects to succeed, however, the memorandum claimed that the policy environment in which they existed must be open for discussion between donor and the recipient government (Stevens 1984b). However, rather than making aid conditional on certain policies, Pisani claimed it was possible to achieve this discussion of policies without the conditionality of aid of other donors. He claimed that ‘It is absolutely essential that, between rigid conditionality imposed by financing bodies and the irresponsibility of non-conditionality, ways be found of achieving a political dialogue between external providers of funds and local decision makers and that such a dialogue should go beyond the process of mere haggling or simply discussing the technicalities of schemes requiring financing’ (CEC-DG VIII 1982: 65). Pisani claimed this was an ‘inverted conditionality’ because it represented commitments by the ACP countries to follow policies they had ‘freely chosen’ (CEC-DG VIII 1982). While there were reports of disagreements between the member states and Pisani on the proposed reforms (see Gruhn 1985), the member states did support the ‘policy dialogue’ concept. However, this had more to do with increasing the level of conditionality in Lomé aid than improving aid projects (Stevens 1984b; Stevens 1985). Even on Pisani’s terms, the proposals indicated an increase in conditionality. Lomé already provided for the support of selfdetermined development policies which the memorandum called for. Essentially, the introduction of dialogue was an admission that the Community was not satisfied with those strategies and was seeking ways of increasing its influence, particularly over food sector policies (Stevens 1985). As such, it was criticized for turning Lomé into a much more conventional donor-recipient relationship (Stevens 1985). Indeed, both the concept of ‘integrated rural development projects’ which the memorandum promoted and the increasing policy conditionality of aid were reflections of wider donor policies emerging in the early 1980s. While it certainly stopped short of the balance of payments conditionality being introduced by the World Bank and IMF, it would be a

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significant qualification of Lomé’s aid principles and one that the following Convention took much further.

The Lomé III changes The negotiations for Lomé III opened on 6 October 1983 and were concluded with the signing ceremony over a year later on 8 December 1984 (The Courier no. 89 1985b). The negotiations took place against a seemingly ever worsening economic background for the ACP countries, with the ACP facing falling commodity prices, rising debt and falling exports (Stevens 1985). Reflecting the deteriorating situation of the ACP countries, the group failed to put forward a coherent set of proposals for the negotiations, and as a result was cast in the role of responding to Commission proposals for change (Stevens 1984b). As with other Lomé negotiations, the ACP called for free and unlimited access to the EU market; reform of the rules of origin; limitations on the use of safeguards; an extension of Stabex coverage and payments to be made on the basis of falls in the purchasing power of their exports; real joint management of Lomé aid as well as the maintenance of the ACP’s preference over other Third World countries (Stevens 1985). Also, as with the other Lomé negotiations, the ACP were largely unsuccessful in these aims. The Community, on the other hand, concentrated its efforts on reforming the basis of ACP–EU co-operation, particularly in the field of aid. In particular, this involved introducing the concept of ‘policy dialogue’ into the Lomé Convention and the linked idea of focussing aid, in line with the Pisani Memorandum. This was the most important change of Lomé III and the most contentious issue in the negotiations (Lomé Briefing No. 1 1988; Namaliu 1985). Article 215, which dealt with the programming process, ensured that dialogue on policies would be carried out in the discussions over the ACP countries’ NIPs. It provided for, ‘… exchanges of views between representatives of the ACP State concerned and those of the Community in order to ensure the maximum effectiveness of co-operation schemes …’ to enable, ‘… the Community to gain knowledge of the development objectives and priorities of the ACP State concerned, both parties to identify … the sector or sectors on which Community’s support will be brought to bear … and the ACP States to ensure that the operations thus agreed are inserted harmoniously and effectively in their development strategies …’ (ACP–EEC 1984: Article 215). The proposals for policy dialogue and sectoral focussing were met by considerable ACP resistance, based on the (correct) assertion that such a change eroded their rights in the Convention. However, the determination of the Community to modify its aid policies and to stop spending aid on projects that it regarded as little more than useless, as well as the ACP’s weakness in the negotiations, meant the Community achieved its aims. In addition, even before the Lomé III negotiations the Commission had promoted its new approach to aid through the funding of ‘food sector strategies’ in four African countries, and one Commission official argued that the claimed success of these sector strategies was important in overcoming ACP resistance to policy dialogue in practice (Interview, Brussels 25 May 1993; Stevens 1988).

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Lomé III also moved Lomé towards more ‘thematic’ aid actions. This was reflected in the Convention, which defined ‘priority areas’ of co-operation including rural and agricultural development, development of fisheries, industrial development, mining and energy, drought and desertification and so on (ACP– EEC 1984; CEC-DG VIII 1982; Stevens 1988). Of these, the focus was clearly on the first, with the EU’s president of the EU Council of Ministers, Peter Barry, claiming at the signing ceremony, ‘… we have placed agricultural development and food security at the forefront of our objectives for the next five years of ACP–EEC co-operation’ (Barry 1985: 7). Indeed, Lomé III concentrated aid on rural development with three quarters of NIPs allocating an average of 70–80 per cent of NIP money to actions in this field (Stevens 1988: 3). The reformulated approach to aid was reflected in the Convention itself, which was substantially reorganized to contain five main Parts: general provisions and objectives of co-operation; areas of co-operation (outlining the aid themes); instruments of co-operation (the trade and aid regulations); the operation of the institutions; and the final provisions (ACP–EEC 1984). The Convention also included a variety of other changes (summary from The Courier no. 89 1985a). The Community sought to achieve greater control over the use of Stabex aid and partially achieved this aim with a provision that such aid would be subject to a joint agreement on its use, although this was broadly defined (Stevens 1985). Stabex was widened in coverage and the dependence threshold and trigger thresholds were lowered to 6 per cent (and to 1.5 per cent for the LDLIS). Sysmin was also modified to allow transfers to be used for diversification projects and not just restoration of mining production. Lomé III included as well a greater role for the ACP–EEC Council of Ministers, and in recognition of the new dialogue renamed the Consultative Assembly the ‘ACP–EEC Joint Assembly’. Although there was some support for liberalizing trade access both from the European Parliament and from the Commission, the Council vetoed any significant changes making trade changes in Lomé III very narrow indeed (Stevens 1984b; Stevens 1985). The Convention mentioned the issue of human rights for the first time in an annexe to the main Convention. However, it reflected ACP criticism of the EU’s policy towards South Africa as much as the kind of respect for human rights that the EU sought to include. In retrospect, Commission officials view the changes introduced to EU– ACP relations by policy dialogue as among the most important of any Convention. However, as was maintained by a British aid official, this change was important not because it fulfilled the Commission’s aims for a more effective aid policy but because it introduced some form of conditionality into Lomé aid policies (Interview, Brussels, 27 May 1993). Indeed, one official confided that in practice, as a result of ‘policy dialogue’, the Community would often fund what it considered to be a ‘bad’ project in return for an agreement that the ACP country would follow a ‘good’ sectoral policy (Interview, Brussels, 26 May 1993). In addition, the complicated nature of the ‘integrated rural development’ schemes promoted by Lomé III, and which involved several projects combined in a broad development effort focussed on a particular region

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or sector often led to problems of implementation. This led to a more restrictive approach to projects in Lomé IV and a more fundamental review of project financing in the mid-term review of Lomé IV (Interview, Brussels, 26 May 1993). Thus, the conditionality that the new dialogue brought to Lomé was the key change (Interview, Brussels, 25 May 1993). While originally conceived as an attempt by the Commission to gain influence over the use of aid and over the policies of the ACP countries without resorting to the increasingly pervasive strict conditionality of the Bretton Woods Institutions (BWI), ‘policy dialogue’ did in fact lead Lomé down this path. As well as reflecting some of the wider donor concerns with rural development and a different style of aid project, Lomé III also therefore reflected the rise of policy conditionality in relations between donors and recipients. That this was not more forthright in Lomé III was largely due to the Commission’s (and Commissioner Pisani’s) preferences and the institutionalized nature of relations with the ACP, which made substantial change difficult to force. Nevertheless, Lomé III involved the EU with the policy environment of its projects and – inevitably, given the context of increasing BWI involvement in the debt and structural adjustment of ACP states – this involvement became swamped by the priorities of those institutions and processes.

Conclusion This chapter has charted the history of EU relations with the ACP countries from the end of colonialism and the negotiation of the first Lomé Convention to the conclusion of the third Convention. We have seen how the specificities of the decolonization process influenced the position of the southern states in the emerging liberal international order. This determined that they would be recognized as nation-states enjoying sovereign equality, while having to deal with the political problems confronting them as a result of their weak domestic political structure and, above all, their weak economic position. This condition led these states to seek to modify and reform the structure of the liberal order, and in particular the international economy, in order to bolster the rewards that southern states could get from the international economy. At best, this might allow greater scope for their ‘domestic’ policies of national development and promote their attempts at economic transformation and industrialization. More often, in African states it helped to ensure the political security of particular regimes. We have also considered how this pattern of North–South relations influenced the EU’s relations with African countries, prompting, as it did the EU to establish a formalized ‘association’ with the African countries and taking its place as a contributor to the architecture of North–South political economy that followed independence. We have seen how the specific demands the southern countries were making at the time of Lomé I crucially influenced the content of the agreement, and how the EU’s own concerns about raw material supplies led it to concede principles in the Convention that were not agreed in the wider global negotiations. However, as with the wider picture of North–

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South relations, the first Convention merely demonstrated the gap between the rhetoric of equality and the reality of weakness. This was not addressed in the way the ACP wished in the subsequent Conventions. Indeed, the evolution of the Convention also demonstrated the problematic nature of such formalized relations between groups of states in a rapidly changing international environment. The process of renegotiation is a recognition of the periodic need to restructure institutionalized relationships. They therefore also serve as distinctive junctures on which evaluation of that relationship can focus. In this context, Lomé III signalled a move to change the principles of ACP–EU cooperation and reflected a wider process of change in North–South relations. Fundamentally, this involved the re-assessment of the support on offer to southern states with increasing conditions being placed on it. The subsequent Convention – Lomé IV – therefore indicated not just a change in the EU–ACP relationship, but reflected a fundamental shift in the character of post-war North–South relations. This focussed initially on economic policy and the restructuring of state-economy relationships in southern countries. It subsequently moved to the character of political regimes in the South and even the nature of the state. These changes were faithfully reproduced in the EU’s dealings with the South and are the subject of the next two chapters.

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3 Lomé IV and structural adjustment ‘It was truly a grand design … What was advocated was, in fact, fundamental changes in the socio-economic systems of Sub-Saharan Africa.’ Svendsen 1996: 401 ‘It is hard to think of anything more political than deciding how money is spent.’ Gillies 1996: 105 ‘Adjustment has become the daily bread of the vast majority of the countries of Africa and a sine qua non of their dialogue with the outside world.’ Frisch and Boidin 1988a: 67

If the first Lomé Convention reflected the post-colonial era in terms of the character of North–South politics, the demands of the South for development assistance and international economic reform and the extent to which the North would accommodate these demands, then the fourth Convention showed the far-reaching change that the North–South relationship was undergoing. Beginning in the 1980s, we see a shift in the aid regime which reduces southern states’ ability to determine the terms on which they receive support from the North, and the beginning of a more substantial change in the relations between North and South, the politics of southern states and the economic options open to them. All were centred around the debt crisis, which has dominated the economies of Third World states for much of the 1980s and ’90s. And while these changes have not challenged the right to independence, and for the most part the principle of non-intervention, they did substantially change the conditions under which the international community, institutions and donor states were prepared to give assistance to southern states. There was demonstrated an increasingly active engagement of donors with what were presented as the internal failings of Third World states, focussing initially on their economic management, but moving in the post-Cold War era to wider

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and more ‘political’ questions of the governance of these states and the nature of their political systems. All of this formed a part of a more general process at the level of the international political economy involving the rise of a more liberal international outlook. A central part in these trends was the rise of aid conditionality based on policies of economic reform – Structural Adjustment Programmes or SAPs – implemented in return for balance of payments support to debtor countries. Together with ‘political conditionality’ (see chapter four), it represented a more overt strategy of reformulating the relationship between state and market in the developing world and the relations between North and South. For Lomé, it represented an important change in that it drew the Lomé relationship directly into contact with the policies of the World Bank and the IMF and was a very clear demonstration of the way in which change in ACP–EU relations reflected the wider changes in the political economy of North–South relations and the political economy of the developing world. This chapter contains three parts. First, it outlines the changes at the international level in the 1980s which led to the rise of the debt crisis and structural adjustment policies. It argues that, although presented as ‘technical’ measures intended to achieve ‘development’ in debtor countries, the policies in fact pointed to a more far-reaching restructuring of the political economy of developing countries. The second section outlines the negotiations for Lomé IV and summarizes the main changes introduced to Lomé. Here it is argued that, while much of the Convention was kept as it was, the key change was the introduction of structural adjustment support into the Convention, which demonstrates the adaptation of the Convention to changing political economy of relations between developed and Third World countries. The third section therefore deals with the process whereby adjustment support was introduced into Lomé IV and assesses the indications as to how the policy has been implemented. It also assesses how far this new dimension of the politics of ACP–EU relations has affected the character of the rest of the Convention. In addition, there is a brief consideration of the changes to Lomé trade regulations in the light of the new adjustment policy.

Debt, adjustment and conditionality As we saw in chapter two, the 1970s witnessed the onset of a crisis in the world economy and in the institutional order that regulated it. We also saw the high point of political assertiveness by Third World countries, which pushed to new limits their claims on the international community for support for their statehood. These claims took the form both of a demand for more financial resources to address their economic weakness and prop up the regimes which ruled them, and for changes to the institutions and rules of the world economy designed to help translate their formal sovereign equality into a more empirical reality at the level of the world economy. These demands appeared to achieve some success in terms of shaping international agendas and, and as we have argued, influenced the first Lomé agreement. However, this apparent success

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was short-lived. By the end of the 1980s these demands were virtually off the agenda. In their place was a strategy for the restructuring of relations between donors and the South and the restructuring of state-market relations, and later even the political systems, of states of the developing world. As such, it represented a marked change in the policies towards the South, an erosion of the claims of the South to determine the terms on which they received support from the North, and an overt policy of donor influence of the restructuring of the economies and states of the South. The key to this process was conditionality of aid given in response to the debt crisis of the South.

The debt crisis The economic crisis of the mid-1970s and early ’80s had dramatic and longlasting political and economic effects. At the most general level, it saw the breakdown of the institutional arrangements which had regulated the long boom (particularly the Bretton Woods exchange rate system); the end of the political social democratic consensus (especially in Western Europe); the end of the existing forms of economic policy (Keynesian intervention); and the demise of the ‘class settlements’ between labour and capital (relating to wage bargaining and productivity) and the institutionalized forms of those settlements.1 It also saw the onset of a much less assured era in the world economy, with severe recessions in 1973–4, 1979–81 and the early 1990s replacing the assumption of continuous economic growth that had characterized much of the 1950s and ’60s. Domestically, the crisis signalled the move from Keynesian demand management to monetarism, and a priority aim of control of inflation through higher interest rates and control of public expenditure. The emphasis on ‘tight money’ also served as the means to restructure industry, employment relations and the state and was accompanied by the withdrawal of the state from many economic activities through the privatization of state assets. As such, the new right-wing agenda represented a move from a system of partially politicized economic decision making to a depoliticized one whereby key economic decisions were off-loaded to ‘independent’ agencies and actors, thereby reducing the political costs to the state of the negative effects of this restructuring (Burnham 1999). In Britain, the Thatcher governments, which came to be seen as synonymous with these new policies, were engaged in an attempt to regain the autonomy of the central state from political forces in society and to reinforce the strength of the state around its core functions to accompany the greater freedom given to the market through liberalization (Bulpitt 1986; Gamble 1988). This was reflected internationally by a more thoroughgoing commitment to international economic liberalization, shown in the demise of state controls over exchange rates and finance and the liberalization of world trade. For the developing countries, this change came at a crucial juncture. The immediate impact of the economic problems of the 1970s had been temporarily to increase the growth (and political influence) of developing countries through a short-lived boom in commodity prices (as we have seen), and to fuel further economic growth through a rapid expansion in credit. Increasing credit had in

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any case helped to fuel the post-war boom, particularly in the 1960s.2 However, with the downturn in the developed countries and in additional sources of credit stemming from the OPEC oil price rise of 1973 (the funds from which were deposited in western banks) there was a rapid increase in lending to developing countries. This supply of credit found ready borrowers in those developing countries seeking to boost their economies and increase the flow of funds through the state for political and developmental purposes (as well as for reasons of personal enrichment), and who were finding the financial support from developed states insufficient for their needs. However, the move to more restrictive economic policies in the West from the mid-’70s onwards entailed increased interest rates in order to combat inflation, and these were rapidly transmitted to developing country loans. In fact, the southern states were hit by a series of external ‘shocks’ – an increase in the interest rates payable on loans, the decline in commodity prices due to the fall in demand associated with the recession in the world economy and deteriorating terms of trade for commodity exports, the 1979 oil price increase and, following Mexico’s declaration of default on external debt in 1982, the drying up of new loans. However, the crisis was not simply externally driven. Although these events undoubtedly triggered it, they also signalled the exhaustion of the development strategies employed by much of the Third World. More than simply being the end of the road for nationalist and protectionist ‘import substitution industrialization’ (although it was apparently this too), these events entailed a crisis for the relations of political power centred around the state and which were a key feature of weak sovereign states. For African states – our main focus of concern – political power had often rested on access to the state, or to positions within the state with which to gain access to the revenues necessary to buy political support through clientilist relationships (Allen 1995). The decline of export earnings because of falling commodity prices, the decline of western aid, the increased drain on foreign exchange in order to pay off debt and the drying up of new foreign loans, therefore spelt political as well as economic crisis. The fall in economic growth undermined any remaining, more general, claim to loyalty or support from the population based on the achievement of ‘national development’. As support bases dwindled and opposition increased the precarious political stability in many states weakened and ethnic conflict intensified as politicians fell back on communal appeals to secure or maintain political power. As the crisis progressed, the empirical weakness of some states led to the collapse of the state itself (see Zartman 1995). The response of donors to the debt issue was to tackle what, for many countries, was seen initially as a short-term process of economic stabilization under the management of the IMF. This soon broadened into a longer term programme of economic reform or ‘structural adjustment’ and, as we shall see in chapter four, into a more thorough examination of the whole character of these states’ political systems. It was in defining this response that the IMF and World Bank came to play a central role.

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Structural adjustment and the Third World The Bretton Woods Institutions’ (BWI)3 led the response of the donors to the debt crisis and had two general aims. One was to manage the debt repayment of developing countries and to ensure both the eventual repayment of the debt and preventing the international financial collapse threatened by potential default of major debtors. This was to be achieved by the rescheduling of loans for those reaching agreement with the IMF, and the arrangement of new official lending to cover imbalances in the short-term, together with an eventual resumption of private lending. The second general aim was to address the structural economic imbalances in developing country economies. The central element of this was the insistence that debtor countries give firm commitments to implement a package of policies known as Structural Adjustment Programmes (SAPs) before new lending or rescheduling of debts would be agreed. Such programmes became the touchstone of many Third World countries’ relations with the North and SAPs, conditionality and economic reform represented a major transformation of northern attitudes towards aid for the weak states of the South. The type of policies which became characteristic of SAPs had started to emerge in the 1970s, and had been characteristic of the financially conservative nature of IMF balance of payments lending. However, it was the World Bank which first adopted structural adjustment funding as such in 1979, in a policy shift from funding projects (such as infrastructure and rural development) to programmes of economic policy reforms intended to achieve a restructuring of the economies in developing countries (Mosley, et al. 1991a: chapter 2; Stevens and Killick 1989a). The new programmes themselves evolved from a concern with short-term balance of payments problems to more medium and longterm perspectives on broader economic policy issues (Stevens and Killick 1989a: 5–6). Developing this new policy, the World Bank published in 1981 what became known as ‘the Berg Report’ in response to the failing performance of African economies (World Bank 1981). It argued for a reduction in state intervention, de-nationalization, and the removal of protectionist policies in the Third World, and played a significant part in creating a unified policy approach to debt and restructuring among the international institutions, banks and western governments (World Bank 1981; see also, Barratt-Brown 1993). The IMF soon followed suit, introducing its Structural Adjustment Facility (SAF) and later the more concessional Enhanced Structural Adjustment Facility (ESAF) in the 1980s, both conditional upon compliance with SAPs (Mosley et al. 1991a; Stevens and Killick 1989a: 11). By the end of the 1980s, adjustment support had become an ubiquitous feature of developing countries’ economic policies. Between 1987 and 1989 the IMF and World Bank supported adjustment of some form in more than 70 developing countries, 30 of them in sub-Saharan Africa and 39 of them from the ACP Group (from Krueger 1995). In what became termed ‘the Washington consensus’ the two institutions, backed by western governments, put forward a set of policies that varied little in their essentials between different countries. The measures included currency devaluation; public expenditure cuts; freeing of prices; positive interest rates

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and a squeeze on credit to combat inflation; import liberalization; and privatization. These neoliberal policies were designed to achieve a number of aims. Primarily, and particularly in the early SAPs, the focus was on an austerity drive to reduce consumption to levels that did not require further external borrowing and would allow reduced government deficits and reduced balance of payments deficits. Secondly, the policies aimed at repayment of debt through increased incentives to export, cutting overvalued exchange rates (and thus making exports more competitive and imports more costly), ‘getting prices right’ to enforce world market competitiveness and liberalization of trade. In particular, there was an emphasis on focussing a country’s export efforts on its ‘comparative advantage’, which often meant traditional exports rather than the industrial and manufacturing products that much of the post-independence development effort had supposedly been aimed at creating (see Stoneman 1989 for a critical analysis). In addition, the policies were intended to retrench the state, cutting the role of public expenditure in the economy, removing state ‘distortions’ of the market through deregulation and privatization and improving the market allocation of resources within developing economies. In summary, the policies represented an international extension to the Third World of the neoliberal economic approaches trumpeted in the developed world.4

The impact of SAPs SAPs were presented as ‘technical’ policy ‘fixes’ – a correction to the wrongheaded and misguided statist and nationalist economic strategies which had dominated the post-war era and were primarily responsible for the debt problem. And much of the debate about adjustment accepted this appearance and focused on how far these policies did or could ‘work’ in terms of increasing economic growth and ‘development’. The debate was exemplified in the disagreement between the World Bank and the UN Economic Commission for Africa (ECA) in 1989 (see Parfitt 1990 for a useful summary of the debate). The World Bank claimed that those pursuing adjustment most fully were experiencing the highest rates of growth, while those rejecting adjustment, or those only partially implementing reform policies, did significantly worse. The ECA for its part challenged the Bank’s figures and claimed the opposite was true – that adjustment undermined growth.5 In 1994 the Bank reiterated its stance in a second review of adjustment programmes, arguing that ‘good adjusters’ had improved their growth performance by two percentage points between 1981– 86 and 1987–91 whereas ‘bad adjusters’ saw a decline of 2.6 percentage points between the two periods (World Bank 1994). Such debates are indeed difficult to resolve. As has been noted elsewhere, the problems of evaluating the impact of SAPs on growth is complex (EngbergPederson et al. 1996). Among many complicating factors such an effort would require are an ability to distinguish the impact of external factors (growth in the world economy and shocks such as droughts), the growth impact of increased aid which accompanies adjustment programmes, distinguishing which was and was not an ‘adjusting country’ (how far policies had in fact been implemented), and the many problems of macroeconomic data in developing

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countries (Engberg-Pederson et al. 1996). Notwithstanding these problems, the record of African countries (almost all of whom have had some form of reform programme) is not good. As shown in Table 3.1, sub-Saharan Africa saw its growth rate decline from 2 per cent per capita in the period leading up to the economic problems of the 1970s to negative growth in the 1980s and ’90s. Latin America (the other main region which has seen closest IMF and World Bank involvement) also posted poor performances, particularly in the 1980s.

Table 3.1 Economic growth and developing countries real GDP growth and per capita GDP growth

1966–73

1974–90

1991–7

real

per capita

real

per capita

real

per capita

World

5.1

2.9

2.8

1.1

2.3

0.8

High income countries

4.9

3.8

2.7

2.0

2.3

1.4

Low and mid-income countries

6.4

3.9

3.2

1.2

3.2

1.4

Asia

5.5

2.9

6.3

4.3

8.5

6.9

Latin America

6.6

3.9

2.5

0.3

3.3

1.5

Sub-Saharan Africa

4.7

2.0

2.1

-0.9

2.4

-0.2

Source: World Bank 1998a: from tables A2-1 and A2-2: 194–5

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Table 3.2 Debt and developing countries (total debt and source) US$bn1

1991

1995

1999

Total developing countries

1245.0

1688.6

1942.3

Of which: official

600.3

770.2

755.7

bank and private

644.7

918.4

1186.6

Sub-Saharan Africa

193.6

232.8

227.7

Of which: official

135.0

174.1

165.8

bank and private

58.8

58.8

61.8

Source: IMF 1999b: table 39: 200

Table 3.3 Debt burden and developing countries (total debt as % of GDP and debt service payments as % of export earnings) 1991

1995

1999

% GDP

% export

% GDP

% export

% GDP

% export

Total developing countries

38.1

9.9

36.2

8.4

35.1

12.5

Sub-Saharan Africa

66.2

10.0

76.5

8.2

71.9

11.7

Source: IMF 1999b: tables 41 and 42: 204–5 1

For conversion of US$ to Ecu see Appendix 2.

In addition, the level of debt and the debt burden on developing countries has

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proved difficult to resolve. As we can see from Table 3.2 above, the total amount of debt has increased steadily throughout the 1990s to nearly US$2 trillion (about Ecu 1.7 trillion). And although Africa’s debt is not large by global standards (total sub-Saharan debt is comparable to that of one of the larger Latin American countries on their own), it is large in comparison to the size of the economy. Table 3.3 demonstrates that total debt has risen to 71.9 per cent of sub-Saharan Africa’s GDP, compared to 35.1 per cent for the whole developing world. This means these countries are more dependent on external assistance – official development aid accounting for over 5 per cent of the region’s GDP by 1999 and up to 60 per cent in the case of countries like Mozambique (World Bank 1998b). It is also worth noting from Table 3.2 that the greater proportion of sub-Saharan African debt is owed to official sources (multilateral institutions and governments), creating a greater degree of leverage for the donor community over African countries as compared to other regions of the developing world. Indeed, Africa has seen the most concerted attempt to impose conditionality of all the regions of the developing world. Given the poor growth rate noted above, this does little to dispel the idea that, at best, adjustment has failed to improve economic performance and at worst may have contributed to the decline.7

Evolution of donor policies The chequered history of adjustment has led many to expand the criticisms of it and for donors to reassess policies in three main areas: the issue of debt relief; the social effects of adjustment and need for poverty alleviation; and the broadening of the process of reform to encompass issues of institutional capacity and governance.8

Debt level Absolute levels of debt for developing countries increased markedly through the 1980s as old loans were rolled over and added to by new adjustment lending, and reached over US$2 trillion (Ecu 1.7 trillion) in the 1990s (Table 3.2 above). The donor community has been resistant to write-off of debt throughout the debt crisis, particularly because of the moral hazard such a move would pose, to say nothing of the problems created for creditor banks, including the multilateral lending institutions, in recycling funds. Nevertheless, there have been some efforts at debt reduction (Hall 1988; Mailafia 1996; Strange 1998). For Latin American debtors, the Baker Plan of 1985 and the later, and more significant, Brady Plan of 1989 involved the writing down of debt, rescheduling loans and additional private and official lending. This strategy helped to ease the financial community away from the threat of major bank failures9 . Of more importance for the poorest debtor countries, and those most severely burdened by debt – the African countries figuring large among them – were the British government initiatives unveiled at meetings in Toronto in 1989 and Trinidad in 1990. These involved the reduction of interest rates, conversion of loans to grants and rescheduling of loans with longer repayment periods. Although the Trinidad terms included the principle of debt write-off, the actual

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impact of these measures was rather limited for the poorest and most indebted countries. By the mid-1990s a more concerted effort to reduce the debt burdens of the poorest countries was underway, focussed on the World Bank and IMF’s Highly Indebted Poor Country (HIPC) initiative (IMF 1999a). The HIPC programme aims at the writing off of debt to highly indebted poor countries (defined by total debt to export and GNP ratios) as long as they can satisfy the requirements of adherence to IMF ESAF adjustment programmes for two three-year spells. It is envisaged that up to 80 per cent of a country’s debt stock can be written off. In 1998 Uganda became the first country to qualify, with 20 per cent of debt written off, and seven other countries followed suit, among them Mozambique whose debt stock was reduced by over 60 per cent (IMF 1999a). Critics have argued for an acceleration of the programme, with larger write-offs and shorter qualification periods, and maintain that the conditions are still too tightly linked to strict macroeconomic adjustment criteria rather than poverty-reduction indicators (Oxfam-UNICEF 1999). These programmes of debt reduction and rescheduling have led some to argue that this demonstrates the continuation of ‘special treatment’ for the weak states in the world economy, which were not being required to accept the full responsibilities of statehood (Jackson 1990). However, a number of factors should be noted. First, the amount of debt reduction has so far been relatively minor, as we have seen, and an enormous amount of debt has been repaid. Second, debt forgiveness is not entirely new and there are numerous examples of such moves going back to the last century (Strange 1998). Finally, it can be argued that such treatment, where it does occur, is intended as a temporary rather than permanent arrangement and is designed to allow the states to assume more normal responsibilities. Indeed, the IMF and World Bank’s aim is to reduce debt to ‘sustainable levels’ so that economic reform can proceed and achieve its aims (IMF 1999a). In this way it is little different in principle from the exemptions to GATT/WTO regulations enjoyed by developing countries, which will be progressively reduced once states enjoy a higher level of development (Jackson 1990: 131–5).

Social dimensions Perhaps the most vociferous criticisms of the adjustment process (as opposed to debt in general) has been what has been termed the ‘humanitarian critique’ (Mailafia 1996), led by non-governmental organizations (NGOs) such as Oxfam and exemplified in UNICEF’s response to adjustment which called for ‘adjustment with a human face’ (Cornia et al. 1987). While not questioning the overall logic of adjustment, nor its necessity, such criticisms did point out the high social cost of economic reform in higher unemployment, falling wages, reduced social provision and higher food prices. Others have argued that adjustment has placed a particularly severe burden on women (Elson, 1991).10 The persistence of severe absolute poverty has led the World Bank to shift its position which has arguably evolved through three main phases (EngbergPederson et al. 1996: 56–60). From 1980–7 the Bank pursued a fairly ‘hard line’

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on adjustment, focussed almost exclusively on macroeconomic stabilization. Poverty would be reduced by growth, avoiding adjustment would be worse than going through with it, and over-extended social services contributed to government deficits and thus specific poverty-focussed measures were unnecessary. In response to some of these criticisms, from 1987–92 growing attention was given to what were termed the ‘social dimensions of adjustment’ (SDA). From 1987 onwards SDA funds were sometimes tacked on to adjustment programmes, the first being Ghana’s Programme to Mitigate the Social Costs of Adjustment (PAMSCAD) (Engberg-Pederson et al. 1996: 57–8). From 1992 onwards the Bank has moved towards a much more overt poverty-reduction focus highlighting the need for labour-intensive growth, protection of social expenditures and social safety nets (Engberg-Pederson et al. 1996). This shift in policy, reinforced under the Wolfenson Presidency, has been faithfully followed by other donors, the British government and EU among them,11 although it remains a crucial question whether reducing poverty through increased growth amounts to anything more than adjustment.

Governance In a further illustration of some of the limits of the neoliberal approach, the donors have also had to address issues relating to governance and adjustment. The World Bank’s repeated assertion in the debate over growth was that where adjustment policies were implemented properly (‘strong adjusters’ in the World Bank’s terminology), they worked. Nevertheless, the Bank was increasingly forced to acknowledge that there were significant barriers to implementing policy. The neoliberal approach assumes that the problematic of adjustment is to get policies ‘right’. It soon became apparent, however, that the significance of adjustment went beyond a matter of ‘political will’ and addressed much deeper factors structuring development in the Third World (Bromley 1995). As we have seen, developing country economic policies prior to the adjustment era were more than simply ‘bad policy choices’, but rather the products of the origins and history of the state concerned and the development project they were engaged in (Bromley 1995). The Bank’s move from its initial anti-state stance to one which recognized the barriers to reform posed by the nature of governance in developing countries, was a partial (if unannounced) recognition of this. Nevertheless, its response was to call not just for better economic policies but also for better institutional capacity to deliver these improved policies (World Bank 1991). As such, they were an attempt to achieve a better and more transparent implementation of policy reform and to ensure a more thoroughgoing commitment to reform from developing countries. Aside from a simple inability of states to implement reforms due their complex and detailed nature, the issue of governance also sought to overcome some of the more ‘political’ obstacles to reform caused by the recalcitrant attitude of some adjusting states, and elements within the state, to conditionality. It was hoped that, by improving governance and the involvement of civil society in policy, the ‘ownership’ and hence commitment to reforms would be improved. This was a particular problem because of the nature of the conditionality relationship.

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Although the whip hand was certainly with the donor community in a whole series of ways, the BWIs did face dilemmas over implementation of policies (see Mosely et al. 1991a; Kahler 1992). Should a country accept conditions and the accompanying funding and then renege or foot-drag over implementation, what should the response of the donor be? To carry on funding a less than satisfactory programme creates additional moral hazard problems. To cut off aid risks losing the reforms that had been achieved. A reform of the ability of the state to implement reforms, and the creation of the conditions in which adjustment would be more forcefully adopted by the debtor state, were both to be addressed by reforming the governance of the state. As we shall see in chapter four, these more overtly political aspects led to an expansion of conditionality into the arena of governance and political systems more generally.

Assessment of SAPs and impact on North–South relations Despite this greater political focus, reforms were still presented as neutral, technical measures of – or, as far as governance goes, the achievement of better institutional capacity for – economic management. They thus demonstrated a persistent resistance to openly recognize the very political nature of the change that was underway. As one commentator has argued of the adjustment strategy, ‘It was truly a grand design … What was advocated was, in fact, fundamental changes in the socio-economic systems of Sub-Saharan Africa’ (Svendsen 1996: 401). Indeed, the fact that SAPs have been pursued for over a decade with limited ‘success’, in terms of leading to growth and development, indicates a political and economic agenda behind the ‘neutral’ policy conditions. Some structuralist and dependency writers have therefore seen in the debt crisis merely the latest stage of the metropolitan countries ‘blocking development’ in, and removing ‘surplus’ from, the Third World, and a programme of deindustrialization (e.g. Bradshaw and Huang 1991; Ihonvbere 1992; Hoogvelt 1990; Onimode 1989a: 31). In fact, the strategy is more to do with redefining the political economy of Third World countries, and it is to these broader implications of the adjustment process that we must address ourselves if we are to make a proper assessment of it and of the importance of the introduction of adjustment support into Lomé IV. At one level, adjustment was an attempt to address the economic crisis of capital and represented a shift in the balance of forces between capital and labour – as were the economic strategies of ‘new right’ governments in the West. In these terms, opening up economies to international competition has the effect of forcing inefficient industries to restructure or go out of business, and weakens the potential for workers to demand better wages and conditions. The retrenchment of the state and the removal of subsidies cuts social provision to the poorest, refocusing consumption on market-determined areas. The privatization of parastatals and state-run industries – to the extent that they have been achieved – has the effect of removing areas of institutionalized power of producer groups. Furthermore, the whole adjustment process furthermore is one of the subordination of the state and the economy to capital – to the world market through trade liberalization and to money through the

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imperative to repay the debt (Bromley 1995; Cleaver 1989; Elson 1994). In a parallel process to the depoliticization of economic management in the developed states, the adherence to a donor-specified economic strategy put at one remove key areas of economic decision making, helping to insulate them from domestic, popular, democratic and class pressures. It is worth noting that such a process was often of great value to the regimes in power, who found it politically expedient to point the finger at the IMF and World Bank while offering little but rhetoric as an alternative. In a twist to the debate over the success or failure of SAPs, therefore, the extent to which this restructuring was achieved may mean that a failure in development (growth) terms hides a ‘success’ for capital in redefining the political economy of Third World countries, reforming class relations in the Third World and ensuring that labour, and not capital, pays for the debt (see Cleaver 1989; Ruccio 1991). However, as well as this, it was the particular character of politics and political forces in the developing world that was under attack. Certainly, the urban working class was hit by retrenchment, cuts in subsidies, falling real wages and rising unemployment. It is also true that the poorest sections of the population – those most dependent on social provision and education and health services where they existed – suffered from the cuts in public expenditure. But the policies hit as well those in power who had come to on rely on state controls to fund their clientilist relationships and bases of political support. This explains why authoritarian and corrupt governments often engaged in populist attacks on the BWIs. And this dimension alerts us to the role of adjustment in ending the previous pattern of southern political economy. For conditionality meant that the scope to follow statist, interventionist or nationalist economic strategies of whatever kind was severely reduced. As we have already seen, the post-war era was one in which the nature of political power in southern states was closely linked to the particular character of southern states. Thus the very means by which independent statehood was guaranteed, coloured the nature of post-colonial relations with the North. As we have seen (and notwithstanding all the means by which influence continued to be exercised over the South), the post-war era allowed southern states a certain ‘freedom’ in the international system based on the recognition of their right to independence (and in the context of Cold War competition), and this led to partially successful attempts to gain special treatment in issues of aid and trade and the pursuing of nationalist economic policies centred around a prominent role for the state. This in turn allowed the ruling elites access to enough material support to remain in power – or at least for the state to continue to function – despite the continuing weakness of the state and the precariousness of their own position. The move to a policy of economic conditionality represented a major change. For a start, it reduced considerably the scope for such ‘heterodox’ economic policies as import substitution industrialization, control of foreign exchange and imports and pricing controls. While strictly speaking southern states could try to maintain such strategies, for the most part the economic costs were too great and some accommodation with external donors was likely. In addition,

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conditionality signalled a qualification of the claims to external support exercised by southern states. Even if the northern states reiterated the commitments to international aid, increasingly this would only be extended on their terms. As we have noted, policy changes were justified on the grounds of their efficacy (an argument repeated by the EU, as we shall see). But the fact that adjustment conditions were insisted upon also demonstrated a political concern with the domestic affairs of southern states, and one which was characterized by a desire to extend the liberal principles of (depoliticized) economic management to the South. As such, they addressed not just the ‘policy choices’ of individual states but the political and economic relations within the developing world and between North and South. The extension of this agenda into the political arena further reformulated the nature of the relationship between North and South. The adoption of these new policies towards the South signify more than apolitical policy choices, and instead entail a new donor practice towards the Third World (Bromley 1995: 341). Conditionality therefore can be seen as a means of tackling immediate problems of economic imbalances; a longer-term strategy addressing the profitability of capital; the end of what had been the dominant form of political and economic relations in developing countries since independence and its replacement with increasingly liberal forms; and a reformulation of North– South relations. As we have seen, the Lomé Convention had reflected and formed a part of the post-colonial pattern of relations between North and South and in some respects had gone further than other arrangements in recognizing southern claims to assistance and special treatment. The introduction of adjustment support into Lomé would therefore entail a fundamental shift in the EU–ACP relationship, and raise important issues about the links between the Convention and the BWI.

Lomé IV: negotiations and changes It was the politics of the adjustment process which dominated the relationship of ACP countries with the EU in the late 1980s, when Lomé IV was to be negotiated. The result was that policies of balance of payments support for structural adjustment became a key feature of development co-operation in the Fourth Lomé Convention. This evolution of Lomé, under the impact of a changing global situation in the 1980s, represented another adaptation of the institutionalized relations between the ACP countries and the EU. The adaptation of Lomé represented a significant political shift in the Lomé relationship, which again showed the way in which Lomé reflected wider changes in the North–South relationship. It is necessary to give an overview of the negotiations for Lomé IV, before looking in more detail at the key issue of adjustment in the new Convention.

The Commission and ACP negotiating positions The Commission’s approach to Lomé IV was first outlined in its proposals submitted to the Council on 15 March 1988 and later elaborated in the opening statements of the negotiations (Bulletin of the EC 3-1988 2.2.44; Pangalos 1988;

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The Courier no. 109 1988: Yv-vii; The Courier no. 112 1988). The key factor for the Commission was to leave much of the Convention intact, but to ensure the introduction of structural adjustment funding into Lomé IV. The Commission stated that (structural adjustment aside), ‘… there is nothing to suggest we should be negotiating any radical changes in the Convention …’ but, that ‘… since Lomé III was signed, the new and essential factor which has altered ACP– EEC relations (and the context of the forthcoming negotiations) is, clearly, the profound crises of debt and commodities’ (The Courier no. 109 1988: Yv-vii). In a concession to ACP demands for debt cancellation, the Commission dropped the requirement to repay Stabex disbursements in order to lessen the EU’s contribution to ACP debt (Bulletin of the EC 3-1988 2.2.44; The Courier no. 109 1988: Yv-vii). The Commission also proposed making most of the Convention permanent, reflecting its desire to preserve the main structure of Lomé. The Commission’s proposals for the negotiations were discussed and endorsed by the Development and General Affairs Councils of 31 May and 13–14 June respectively (Bulletin of the EC 6-1988 2.2.51). The main division, and a long-standing one, was on trade issues, with differences between the ‘northern’ and ‘southern’ EU states: the northern states such as Britain wanting more trade liberalization and limits on aid while the southern states, more subject to competition from ACP tropical agriculture, wanted more emphasis on aid increases (Financial Times 3 October 1988; Bulletin of the EC 5-1988 2.2.36). This conflict was only resolved towards the end of the negotiations (Bulletin of the EC 9-1988 2.2.35). The President of the EU Council warned the ACP against relying on texts such as the Convention to solve problems which were wider than the Convention in order to pre-empt ACP demands for more substantial changes (Bulletin of the EC 10-1988 1.3.4). The implication was that the ACP should not expect the EU to make sacrifices to solve ACP economic problems (such as the fall in commodity prices and the high level of debt), which it saw as global problems and not its ‘responsibility’. The Lomé IV negotiations took place in the most unpromising conditions for the ACP countries (Oyewumi 1991; Ravenhill 1993). The ACP approached the negotiations wanting to see major innovations to deal with their debt crisis and the worsening trade position. Edwin Carrington, then Secretary General of the ACP Group, said ‘… the Convention was to be an instrument for creating a model for relations between developed and developing countries and a move to achieve a more balanced world economic order. So, if Lomé is to remain faithful to its original target, we must seek to take another major step towards that objective’ (Lomé Briefing no. 0 1988a). ACP proposals included a familiar list of demands: the ending of all tariff and non-tariff barriers for ACP exports to the EU; a relaxing the rules-of-origin criteria and safeguard provisions of Lomé; the maintenance of the special provisions for ACP trade; a simplified Sysmin system; wider Stabex coverage and a safeguarding of its purchasing power (Greenidge 1988; The Courier no. 112 1988). The ACP requested that the Commission take account of population increases, as well as increases in size of the EU and ACP, when deciding the level of aid and demanded better and quicker EDF procedures (The Courier no. 113 1989a). The Group accepted the

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introduction of adjustment into Lomé, but demanded that the Convention develop an approach independent of the IMF and World Bank, with funding additional to EDF resources so as not to divert resources away from long-term development projects (The Courier no. 113 1989a). They also demanded that member states as well as the Commission should take steps to reduce ACP debt, with the Commission cancelling all ACP debt owed to it and the member states cancelling debt owed to them (a much larger amount) by the least developed ACP countries (The Courier no. 113 1989a). The similarity of ACP demands to earlier negotiations is significant and demonstrated how many southern states were uncomfortable with the emerging relationship with the North, particularly over aid. As previously, an over-riding aim was to secure external support would address their political and economic crises. This was evident particularly in one ACP official’s claim that the ACP agreed to an EU role in adjustment hoping it would provide a ‘social cushion’ which would lessen the social and political opposition to adjustment in their own states and give them greater stability (Interview, Brussels, 28 May 1993). The provision of any extra financing (for adjustment or project aid) would give a degree of relief to the ACP states. However, the hope that adjustment support would come with more lenient conditions than those given by the BWI was not fulfilled. The ACP also called for more help for the private sector and for more foreign investment, and highlighted a decline in the currency of economic nationalism which had been so prevalent in the 1970s.

The negotiations The negotiations opened in October 1988 at a meeting of the ACP–EEC Council of Ministers in Luxembourg, and followed a familiar path of slow progress and eventual agreement to most of the EU’s proposals (Bulletin of the EC 10-1988 1.3.2; The Courier no. 112 1988). In particular, the lack of intraEuropean Union agreement on the ACP request for liberalization of trade held up progress, as did the lack of clarification of issues around the structural adjustment proposals (The Courier no. 115 1989). As if to underline the extent to which agreement among the EU member states was more important than with the ACP, internal agreement at the EU General Affairs Council in July speeded up progress considerably (Bulletin of the EC 7/8-1989 2.2.32). This meeting agreed concessions on the issue of ACP trade access to the EU, allowing the liberalization of around 30 CAP-covered products, but with strict volume quota limits in deference to the southern EU countries which would face the most competition (Overseas Development Institute 1989). A further Council meeting in October 1989 finalized further EU positions and made for significant progress towards the final agreement achieved in November (Bulletin of the EC 2 February 26).12

Lomé IV: overview of changes The Fourth Lomé Convention was signed in Lomé, Togo, on 15 December 1989, by representatives of all the ACP and EU countries and the European Commission. However, while the rituals of the Convention were observed,

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Lomé IV reflected a fundamental political change in the relationship between the EU and ACP states and was recognized as such by the Commission (Frisch 1992; Marin 1990). Before going on to look at the most important aspect of this changed relationship – the introduction of structural adjustment into Lomé – it is necessary to outline the main changes introduced by Lomé IV. The overall text of the Convention was based on Lomé III, with sections on general provisions, areas of co-operation and instruments of co-operation but with new elements added within each section (ACP–EEC 1989). The introduction of structural adjustment (Articles 239–250) is dealt with in depth in the section below on adjustment support and Lomé. The Convention detailed the overall amount of aid for Lomé IV, and the sectors in which it would be allocated, in the Financial Protocol. Table 3.4 gives the breakdown of Lomé IV aid. As agreed in the negotiations, the Convention for the first time was to last for ten years, but with two Financial Protocols which were to last for five years each. The details in Table 3.4 are for the first Protocol, and the second Protocol (1995–2000) is dealt with in the next chapter. Table 3.4 Lomé IV financial protocol Aid Lomé IV (First Financial Protocol 1990–’95) Of which: • European Development Fund (EDF) Of which allocations made to*: - Grants for national and regional indicative programmes

Amount (mill ion Ecu) 12,000.00

6,215.00

10,800.00

- Structural Adjustment Support

1,150.00

- Stabex

1,500.00

- Sysmin

480.00

- Emergency Aid

250.00

- Refugee Aid

100.00

- Interest Rate Subsidies

280.00

- Risk Capital

825.00

• European Investment Bank (EIB) own resources for national and regional projects

1,200.00

(* note: of the total amount available, Ecu 1,250m was to be used for regional co-operation) Source: ACP–EEC 1989; CEC-DG X 1990b

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Lomé IV granted Ecu 12bn in aid for the seventh EDF, which was some Ecu 0.8bn short of the amount sought by Commissioner Marin and called for by the European Parliament during the Lomé IV negotiations (Bulletin of the EC 10-1989, 2 February 27; The Courier no. 121 1990). In addition, the funds for structural adjustment were Ecu 1.15bn and not the Ecu 2bn originally sought (The Courier no. 121 1990). Agreement on the level of financing proved one of the most problematic areas of the negotiations between the Commission and the member states and among the member states themselves. The ACP had requested Ecu 15.5bn, but some member states (notably Britain and the Netherlands) had argued for the same nominal amount (i.e. a reduction in real terms) as Lomé III (Ravenhill 1993). The Commission’s claim for Ecu 12.8bn was thus seen by some as a bargaining tactic to force more money out of the member states (Ravenhill 1993). The Commission was aided in this by the French who were reported to be eager to see negotiations concluded during their presidency of the EU Council (Ravenhill 1993: 54–5). The total finance represented a 40 per cent increase over the Lomé III aid level (Ecu 8.5bn in all); however, this was only a 20 per cent increase in real terms (The Courier no. 120 1990). In per capita terms the increase was even less, with an estimated 7 per cent rise in ACP population since Lomé III, further added to by the accession of Namibia when it became independent in 1990. It has been concluded by some, therefore (particularly given the new uses to which it was to be put), that Lomé IV offered no increase in aid for the ACP (Cosgrove 1993: 65). However, the fact that over 92 per cent of the EDF money was in the form of grants, compared to 75 per cent of the Lomé III fund, improved its usefulness to the ACP (CEC-DG X 1990b). The increase in the grant element came through the abolition of ‘special loans’ of the EDF and the fact that Stabex and Sysmin resources would be non-repayable. Also, EIB loans were reduced in cost (Marchés Tropicaux et Mediterranéens no. 2302 1989; The Courier no. 120 1990c). However, although these moves were designed to reduce ACP debt in the future, the overall amount of aid was not a significant increase when compared to the serious deterioration in the state of the ACP economies during the 1980s, the level of the debt problems they faced or the number of new features of Lomé IV which required funding – a point made by the ACP at the signing ceremony of Lomé IV (The Courier no. 120 1990a). Aside from the level of aid, there were changes to the regulations governing the implementation of aid. The general provisions (Chapter 1), although rewritten, were broadly similar to the previous Convention in setting out the principles of financing, guidelines, scope and sectors. There were changes to the scope of financing to include the possibility of aid for structural adjustment through General and Sectoral Import Programmes (GIPs and SIPs), and the use of Counterpart Funds (CPFs), which are dealt with below in the section on adjustment. Also, in terms of the eligibility for financing, there was an expansion of those who could receive Lomé aid to include more businesses, financial bodies promoting investment in the ACP countries and more community, trade union and NGOs. This was in accordance with the moves towards greater ‘decentralized’ aid projects in Lomé IV, as well as the general trend of

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Commission policy (and that of other donors) against state-led development. Perhaps the key change of Lomé IV in terms of its general objectives, and one which was to achieve a much greater importance than was recognized at the time of its signing, was a more specific emphasis on human rights. A commitment to human rights had been included in an Annexe to Lomé III. Now the Commission and member states had succeeded in their wish to make it more explicit in Lomé IV. Article 5 of Lomé IV thus claimed that development co-operation ‘… entails respect for and promotion of all human rights …’ and that ‘… development policy and co-operation are closely linked with the respect for and enjoyment of fundamental human rights.’ It regarded human rights as including, ‘… non-discriminatory treatment, fundamental human rights; civil and political rights; economic, social and cultural rights.’ The significance of this Article was to become increasingly apparent in the implementation of Lomé IV. One Commission official said that, with hindsight, it represented one of the key changes of the Lomé IV Convention over previous ones (Interview, Brussels, 25 May 1993). This issue is addressed more fully in chapter 4. For the present we need only note that, soon after the signing of Lomé IV, Frisch claimed the Convention now demanded a ‘more straightforward’ dealing with ‘purely political issues’, and that the pressure had been increased on the contracting parties to respect human rights (Frisch 1990: 7). Of the new ‘areas of co-operation’ introduced, the title on the Environment was the most notable, in response to growing awareness of the need to take environmental matters into consideration in aid project design (Articles 33– 41). The most concrete part of this section was a specific commitment to ban the transport of toxic waste between the ACP and EU countries. The areas of co-operation also included sections on commodities (Articles 69–76), enterprize development (Articles 110–3) and services (Articles 114–34). These ‘areas’ generally reflected the growing importance attached to the private sector – a trend also apparent in the title on Regional Co-operation, which included a shift in emphasis towards regional economic integration rather than infrastructure projects. While the actual articles covering trade issues (Articles 167–181) remained virtually unchanged, there were some alterations to the regulations in respect of products covered by the CAP. These preferences are granted mainly in terms of the withdrawal or reductions of duties on some products, either for specified times of year (the European ‘off-season’) and/or for certain quantities and are detailed in Annexe XL to the Convention – the ‘Joint declaration concerning agricultural products referred to in Article 168 (2) (a) (ii)’. In terms of the Protocols attached to the Convention, of which there were nine, there were some minor changes to Protocol 1 on the rules of origin, and to Protocol 4 on the safeguard clause (which gives the Union the right to withdraw preferences to prevent ‘harm’ to EU production). A new statement was annexed to the Banana Protocol (5) pledging the EU to protect traditional banana suppliers, and Protocol 6, on rum, made provision for the creation of the Single European Market. There was also an increase in the beef quota (Protocol 7). The sugar regulations were defined in Protocol 8 (itself a simple reiteration of Protocol 3

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of Lomé I) and were unchanged from the first Convention except that the price paid for ACP sugar altered in line with that paid to sugar producers in the EU. It is notable that the Commission went to some lengths to prevent new countries from joining the Protocol. Not only was the Dominican Republic specifically excluded, as a condition of its accession to Lomé, but countries such as Zambia and Papua New Guinea were also denied access because of the economic and financial problems this might cause the EU. The details of these changes to Lomé regulations are discussed below in the section on trade and Lomé IV. The disputes between member states on trade access which have also been noted, were a major barrier to more substantial changes (Frisch 1990). The Stabex system was again amended, with dependency thresholds lowered from 6 per cent to 5 per cent (from 1.5 per cent to 1 per cent for the LDLIS). However, such relaxing of controls had already proved to be an inadequate response to the problem given Stabex’s lack of resources with which to make transfers. The ACP claimed that between 1980 and 1984 Stabex had been able to fulfil less than 10 per cent of eligible claims, and that in 1987 coffee and cocoa claims by themselves accounted for the whole of Lomé III Stabex resources (Greenidge 1988). In 1988 alone, funding amounted to under one third of the ACP’s eligible claim (Overseas Development Institute 1989). Lomé IV granted Stabex Ecu 1500m – a rise of 62 per cent. However, the rise failed to provide enough funds for Stabex transfers again in 1992. One Commission official claimed that the ACP only reluctantly accepted a much-reduced payment from the EU because of lack of funds to cover eligible claims (Interview, Harare, 4 February 1994). This further demonstrated the limited capability of Stabex to deal with the commodity earnings crisis of the ACP. In addition, although both Stabex and Sysmin transfers were also to be in grant form rather than loans, in an attempt to curb ACP debt to the EU, these changes came at the price of greater EU control over the use of transfers. Lomé IV introduced a provision for an agreement to be drawn up between the Commission and the ACP states whenever an ACP state received a transfer from Stabex, which would be legally binding and cover the uses to which the Stabex money would be put. It represented a significant lessening of ACP discretion and control over aid uses, and was introduced to answer Commission concerns about corruption and misuse of Stabex money. However, it also further extended the scope for the Commission to discuss an ACP’s economic policies towards a particular sector and the economy in general. Given that Stabex represented one of the innovations of the first Lomé agreement and was symbolically important for its close relationship to the NIEO demand for a common fund for commodities, this was an important shift. There were also minor changes to Sysmin. Finally, Lomé IV made explicit provisions for Namibia to be accepted into the Convention upon independence.13 Lomé IV was to last for ten years instead of the previous five, and provision was made for the Financial Protocol, and any other Articles either of the parties wished to be renegotiated, to be discussed twelve months before the expiry of the first Financial Protocol in March 1995 (Article 366). In the event, this renegotiation was to be a much more significant

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process than was envisaged at the time of Lomé IV’s signing and is discussed in chapter four.

Evaluation of changes Before considering the introduction of structural adjustment, it is necessary to evaluate the overall balance of benefits gained by the two sides in the negotiations. Ravenhill has argued that Lomé IV demonstrated the ability of the ACP to gain concessions from the EU by using their weakness (Ravenhill 1993). He maintains that it was by highlighting their own weakness that the ACP managed to ‘embarrass’ the EU into granting more concessions than it would like to have done. Certainly, the ACP were in a fundamentally parlous position, reflecting their position in the global system and their status as weak states. The influences at the global level that had allowed certain ‘gains’ to be made in Lomé I had long gone. And while the EU retained its commitment to grant support to the ACP states, this was under increasingly strict control by the EU. For the ACP, the need to maintain any sources of external support was increasingly critical as the economic and political crisis deepened, and any strategy that jeopardized future aid – such as refusing to sign which was the ACP’s only real sanction (Ravenhill 1993: 55) – was very unlikely. A strategy of emphasizing weakness indeed reflects the position of Third World states in the post-colonial era: a demand for assistance, even a claim of a ‘right’ to aid, was made in response to, and in recognition of, their empirical weakness as states. However, while this may be true, Ravenhill is wrong to claim that this was ‘successful’. In fact, contrary to Ravenhill, the ACP achieved few of their demands and it is arguable that on issues of principle the ACP have achieved no single demand since the original Convention. In Lomé I, principles of equality, joint administration and recognition of ACP sovereignty were achieved. Since Lomé I the ACP have conceded much which undermines those principles, both in terms of the practical implementation of the Convention and in the rising conditionality of aid in Lomé III and IV. Apart from the main innovation of adjustment, which was a change driven by the Commission and the member states, the changes to Lomé IV were superficial rather than fundamental. The trade changes (dealt with below) were minor in comparison both to the problems facing ACP trade and to the demands of the ACP. However, Lomé IV consolidated the process of aid introduced in Lomé III, which contained serious erosions of ACP rights originally agreed in Lomé I, and extended this with adjustment support. Ultimately the carrot of more aid and continued trade access, however given, would always be enough to get ACP agreement. It is therefore a bit perverse to characterize this weakness as a ‘strength’, as Ravenhill does (Ravenhill 1993). The continuation of EU support under tighter conditions reflects the wider shift in North–South relations that conditionality represented and which further constrained the position of ACP states. To add to this, the member states’ commitment to Lomé appeared both less certain and subject to more conditions. In part, this stemmed from different perspectives among member states. France was the leading supporter of Lomé

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– a position which owed much to that country’s long-standing concern to protect whatever international influence its relationship with Africa afforded – while the southern European states had little at stake in the Convention (Ravenhill 1993). Britain did play an active role in the negotiations over trade but was a negative influence as far as the ACP were concerned on the aid issue, wanting less aid, greater dominance of the BWI over adjustment, and reliance on free trade. However, the Commission itself (including leading officials such as Dieter Frisch, head of DG VIII) also had much invested in the Lomé relationship. Its desire to be involved in the structural adjustment process (supported by member states such as Britain and Germany who wished to see more Lomé aid go to supporting the BWI-led adjustment strategy) testified to an ongoing concern to maintain formalized relations with the ACP countries. That much of the structure and principles remained intact, indicated also a continuing commitment to and role for Lomé in structuring the EU’s relationship with the ACP. As a consequence, the Convention had developed, as one very senior Commission official put it, in a ‘bolt-on’ fashion, with new issues being added to existing structures which the EU could not easily change but which became ineffective as new issues assumed prominence (Interview, Brussels, 26 May 1993).14 For Lomé IV, the key new issue was the introduction of adjustment into Lomé. While it did not change the formal structure of the Convention– being just such a ‘bolt-on’ part – the adjustment issue itself, the scope the Commission had for influencing Lomé’s implementation, and the broader context in which Lomé IV operated, meant it had an impact beyond the partial change to the formal aspects of the Convention. It is to this that we must now turn.

Lomé IV and structural adjustment As was outlined earlier in this chapter, the rise of adjustment policies in the 1980s represented a key development in the politics of Third World countries. For the ACP countries themselves, and for the Commission, this change was important – for the former, because it introduced a new player in the debt field and changed the circumstances under which these countries would receive external aid from the EU; for the latter, because it meant a new departure for EU development policy and a reinforcement of the way in which its relationship with the ACP reflected wider patterns of change in the North–South relationship. Two main issues concern us. First, how far did adjustment policy in Lomé reproduce or depart from that followed by the IMF and World Bank? If Lomé’s adjustment did differ in important respects from the BWI approach, then this qualifies the extent to which Lomé reflects wider changes. If, on the other hand, the Lomé approach to adjustment differed very little from that of the BWI towards the debtor nations, then it supports the general process already outlined. The second question is whether the change towards adjustment funding was a significant one in relation to the Convention as a whole – i.e. was support for adjustment an important part of Lomé IV or was it a minor part of the Convention? If the answer to the first question is that Lomé adjustment did follow that of the World Bank and IMF, then it could be argued that, while

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this may be so, it does not represent a major change for the Convention because most of the rest of the Convention has remained the same. The key issues here are whether adjustment aid has dominated aid from the Convention and whether adjustment priorities influence other areas of the Convention. It is necessary therefore to outline the process by which adjustment was introduced into Lomé, discuss the problems this policy presented in relation to the two questions outlined above, and assess the implementation of adjustment support under Lomé.

The introduction of structural adjustment funding The Commission had become increasingly convinced during the life of Lomé III of the need to become involved in the adjustment and to incorporate adjustment support into its policy towards the ACP countries. Primarily, as was explained by one EU official, this was because the Commission had become increasingly concerned about the effect of the macroeconomic situation in ACP states on Lomé aid projects, with both Lomé II and III aid projects suffering from deteriorating conditions (Interview, Brussels, 15 May 1993; also see Stevens and Killick 1989a: 15). As Stevens and Killick noted, ‘Lomé aid has had to take account either implicitly or explicitly of the economic policy changes undertaken by the ACP states as part of a SAL [structural adjustment loan]’ (Stevens and Killick 1989b). As the Commission recognized, ‘Adjustment has become the daily bread of the vast majority of the countries of Africa and a sine qua non of their dialogue with the outside world’ (Frisch and Boidin 1988a: 67). A Commission official claimed that, in practice, the long-term perspective of aid funding hoped for in Lomé III had become unrealistic, because the required stability in the ACP countries was a rarely met criterion (Interview, Brussels, 27 May 1993). The Commission therefore wished to give more attention to ‘stabilizing’ countries’ economies and to be involved in the instigation of adjustment policies rather than simply having to cope with the consequences (Stevens and Killick 1989a: 39). Lorenzo Natali, then Commissioner for Development, wished to change the EU’s role from one in the past where ‘… we have to a certain extent played a ‘fire brigade’ role …’, to one where the Commission would ‘… contribute to … reform policies by giving direct support to countries pursuing policies and who are looking for this support’ (Lomé Briefing no. 0 1988b: 5). The actual introduction of adjustment support in fact stemmed from a process of policy formation by the Commission which had its roots in Lomé III. Although it was in Lomé IV that adjustment support was introduced into the Convention, some moves towards the involvement of Lomé in balance of payments support were taken with Lomé III’s inclusion of provision for funding of ‘sectoral import programmes’ (SIPs). SIPs permitted the provision of foreign currency for importing goods funded from an ACP country’s NIP. This could take place if a country was experiencing balance of payments problems which were causing difficulties in a sector in which Lomé money was being used as part of its Lomé III Indicative Programme (ACP–EEC 1984: Article 188). The provision was therefore designed to support Lomé III’s sectoral focus and

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not structural adjustment, or macroeconomic policy reforms, as such. The Commission claimed, in response to criticisms in a European Court of Auditors report on the Lomé III programmes, ‘The fact is that the Lomé III import programmes provided the Commission with a necessary trial run prior to the formal inclusion of structural adjustment policies in Lomé IV’ (European Court of Auditors 1994: 102–123). However, it is unclear that this was an intentional outcome. It seems more likely that it was an accidental result of the increased emphasis the Commission was forced to give SIPs during the life of Lomé III, due to the worsening economic situation in the ACP. This view was supported by Commission officials working in the adjustment department (Interview, Brussels, 15 May 1993). However, as well as import programmes, Lomé III perhaps more fundamentally paved the way for structural adjustment being introduced into Lomé by its programming procedures. As we have seen, Lomé III introduced policy dialogue into the programming and use of Lomé aid, which inevitably opened the route for discussions between the Commission and ACP states on macroeconomic issues. This point was made by a British aid official, who claimed that while the Lomé III dialogue was limited, it was soon expanded into a wider political discussion and conditionality which directly challenged traditional Lomé principles (Interview, Brussels, 27 May 1993). Indeed, in terms of the relative lack of acrimony in the Lomé IV negotiations over the adjustment issue compared to the Lomé III arguments over policy dialogue, it appears that the bitter disputes over the introduction of the policy dialogue made it much easier for the Commission to win the argument over adjustment support in Lomé IV (Nötzold and van der Ropp 1990). As with the Lomé IV negotiations, the desperate need of the ACP for any financing also helped the Commission’s case. Before adjustment could be introduced into Lomé IV, the deteriorating economic situation in the ACP during the life of Lomé III prompted the Commission to try to enhance its role in the adjustment process under Lomé III. In June 1987 the Group of Seven (G7) World Economic Summit in Venice moved to support a World Bank and IMF-led, multi-donor initiative – the ‘Special Programme for Africa’ (SPA) – to help indebted sub-Saharan countries. The Commission proposed that EU and Lomé funds should be involved and called for a fund of Ecu 100m, in addition to Lomé III import support, to contribute to the new BWI programme (Bulletin of the EC 6-1987 3.7.21; 111987 2.2.35-36; The Courier no. 106 1987: Yiv). This proposal was agreed by the Development Council in its November meeting of 1987. Unlike the Lomé III money, some of the funds of the Commission’s ‘Special Programme for Highly Indebted sub-Saharan African Countries’ were to be for general as well as sectoral import programmes, i.e. they were to apply to the general macroeconomic adjustment programmes of the countries concerned, not simply to particular sectoral problems. The new EU support came with explicit reference to the BWI programmes and was to be integrated ‘as far as possible’ with the World Bank and IMF (Bulletin of the EC 11-1987 2.2.35-36; The Courier no. 106 1987: Yiv). Countries

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benefiting from the new fund had to fulfil three criteria: (i) be low income and unable to access capital markets; (ii) be highly indebted and experiencing serious import problems; and most importantly, (iii) be undertaking major policy adjustment programmes and reforms (Council of Ministers (Development) 1987a: emphasis added). Although it might fund programmes which had no formal IMF or World Bank approval, this would still be done ‘… in close co-ordination with the World Bank and the IMF’ (Council of Ministers (Development) 1987a). The money provided, however, was not in fact to be ‘new’ money but was made up of unused funds from previous Conventions (amounting to Ecu 40m) and an additional Ecu 60m of recycled loan repayments (Council of Ministers (Development) 1987a; Council of Ministers (Development) 1987b; Goodison 1988b). In addition, the programme utilized Ecu 472m of funds made up of Ecu 261m already earmarked for import programmes under Article 188 of Lomé III and Ecu 211m from the reserves which the Commission created for each Convention. This totalled Ecu 572m for the special EU programme altogether (CEC-DG VIII 1993e: 36-37). Another Ecu 265m was allocated from various countries’ NIP funds for other import programmes administered outside of the Special Programme by the end of 1992 (CEC-DG VIII 1993e: 40). Most of the money was therefore governed already by Lomé provisions for SIPs. Only the ‘new’ Ecu 60m was available for General Import Programmes (GIPs), thus limiting the general macroeconomic, rather than specific sectoral, impact of the EU’s programme (Stevens and Killick 1989b). This clearly demonstrated to the Commission, if it was not already aware, that if it was to create a role for itself in the adjustment process through the Convention, Lomé would have to be changed. During Lomé III, and in parallel with this new funding, the Commission also started a process of policy formation in order to define a general approach to the adjustment issue. This paved the way for the inclusion of an adjustment policy in Lomé IV. One of the early contributions to this process came in a paper co-written by Dieter Frisch (the then head of DG VIII) and Jean Claude Boidin. In many respects, Adjustment, Development and Equity seemed to be pointing the EU towards a different type of adjustment policy than had been followed by the other main donors (Frisch and Boidin 1988a; 1988b). The document argued for a modification of the traditional approach to adjustment which had so far shown disappointing results, endangering social and political order in the countries concerned (Frisch and Boidin 1988a: 72). Criticizing the ‘over-theoretical’ approach of the BWI, Frisch argued that there could be no question of a Commission doctrine for adjustment as the problems were entirely ‘practical’ and the need was to ‘… devise pragmatic solutions – and there is every reason to suppose they differ from one country to another …’ (Frisch and Boidin 1988a: 67). The approach put a premium on the development of adjustment programmes by the adjusters themselves, as opposed to programmes imposed from outside, on flexibility in the pace and duration of reforms and on the inclusion of measures to take account of the negative social consequences of adjustment (Frisch and Boidin 1988a: 70–2). Nevertheless, with 32 ACP countries undergoing adjustment programmes and another 12 in the process

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of agreeing to programmes at the time of the Lomé IV negotiations, Frisch made it clear the Commission saw no choice about adjustment itself for the ACP: ‘They cannot choose between adjustment and the status quo. Their only option is ordered, properly managed adjustment or forced adjustment’ (Frisch and Boidin 1988a: 68; The Courier no. 121 1990). As we shall see below, the relationship to the BWI policies remained a tension at the heart of EU policies on adjustment for some time. The EU position on adjustment was then formalized in a Development Council resolution of 31 May 1988 on the adjustment process in Africa (Council of Ministers (Development) 1988). This resolution, based on the Commission’s proposals, claimed that its approach to adjustment would be more realistic, pragmatic and differentiated than that of the Washington institutions (Council of Ministers (Development) 1988). It would ensure that ‘… reforms should be conceived and carried out in a pragmatic and differentiated manner, with due respect for economic policy options and taking account of the peculiarities and constraints of each country’ (Council of Ministers (Development) 1988). It also included commitments to make sure adjustment was compatible with social justice, did not harm the most vulnerable groups in society, would be implemented at a rate which was bearable for the country’s people, and that adjustment was compatible with long term development (Council of Ministers (Development) 1988). However, it also committed the EU to ensure ‘… effective co-ordination between the Community, on the one hand, and the World Bank and the IMF, which play a leading role in the dialogue on adjustment, on the other’ (Council of Ministers (Development) 1988). A following resolution in May 1989 on the internal EU co-ordination of adjustment policies reiterated the approach to adjustment previously outlined but also called for the EU approach not to ‘… open up paths parallel to those followed by the World Bank or the IMF or making Community activities subject to decisions taken by them alone’ (Bulletin of the EC 5-1989 3.4.1). The Commission’s approach to adjustment was put to the ACP countries in the Lomé IV negotiations in July 1989. The ACP voiced fears over the terms of adjustment support, the bureaucratic problems of co-ordinating EU support with BWI support and the problem of keeping adjustment funds separate from EDF development funds, thus protecting long-term development aid (The Courier no. 118 1989). This reiterated their earlier stated position for adjustment support to fulfil three criteria – adequate funding, separate and distinct funds and no influence from bodies external to Lomé over how they were spent (Bulletin of the EC 10-1988 1.3.2). In the event, Lomé IV included a policy which very much reflected the Commission’s public statements on the adjustment issue (ACP–EEC 1989: Articles 239–50). As stated in the Convention, support for adjustment would aim to resume or accelerate GDP and employment growth in the ACP countries; improve public sector management and private sector incentives; achieve diversification of the ACP economies and improve balance of payments and foreign exchange performance. In a direct reiteration of the Commission’s policy it also pledged that adjustment would be ‘… economically viable and socially and politically

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bearable’ (Article 243). It argued that the ACP states should have prime responsibility for analysing problems and suggesting reform programmes and claimed the assistance would be ‘… supportive of the ACP State’s priority development objectives …’; would ‘… take place within the framework of the political and economic model of the ACP State concerned …’; would ‘… deal with the negative social effects that may result from the process of adjustment efforts …’; would encourage a realistic pace of reforms and would be of quickdisbursing aid (Article 244). The Convention granted Ecu 1.15bn of EDF funds for this purpose (over 10 per cent of the total grant aid available) as well as allowing for a limited part of the NIPs to be used for adjustment (Articles 245 and 281). The support could also either be in the form of SIPs or GIPs or technical assistance to adjustment programmes (Article 247). The Convention states that, in principle, all the ACP countries are eligible for adjustment support depending on the scope of reforms being undertaken, their effectiveness, and the social and economic situation being experienced by the states (such factors as indebtedness, balance of payments problems, rate of growth, monetary and budgetary situation, unemployment and so on). However, in an oblique reference to IMF and World Bank adjustment demands, Article 246 (2) states: ‘ACP States undertaking reform programmes that are acknowledged and supported at least by the principal multilateral donors, or that are agreed with such donors but not necessarily financially supported by them, shall be treated as having automatically satisfied the requirements for adjustment assistance.’ As is discussed below, such a policy fell short of ACP demands for autonomy from the BWI and repeated the ambiguous stance of the Commission’s approach to the issue. The Convention’s wording reflected Commission claims that it would be more flexible in its approach than the BWI, yet clearly left open the possibility of a much closer relationship to the BWI than the ACP had wanted. Despite the predominance of the Commission’s views on the issue, Commissioner Marin claimed it was ‘… the first time there has been a “North–South Agreement” on the philosophy underlying structural adjustment’ (The Courier no. 120 1990). The fact that the Commission could claim such ‘agreement’ for a section of the Convention which appeared to be entirely dictated by its own policy, did not bode well for the ACP being able to achieve the more independent adjustment support that it wished for through Lomé. Following the signing of Lomé IV the Commission further elaborated its role in the adjustment process. In particular, this involved the issue of Counterpart Funds (CPFs). CPFs are funds generated in the local currency of an ACP state by the transfer of foreign exchange to that country, which is then sold on, as money or goods which have been imported with the adjustment funds, to local operators, e.g. companies, banks, traders and so on. CPFs are also generated by operations such as food aid, when food supplied to a country is sold on to traders or consumers. The revenue thus generated for the government then enters the national budget (CEC-DG VIII 1992d). CPFs achieved greater importance under adjustment both because the amounts involved increased and because the issue of the national budget was an essential

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part of reform programmes anyway. A Council resolution in May 1991 on the use of CPFs stated, ‘… the management of counterpart funds must be consistent with the stabilization and adjustment targets agreed under the reform’ (CEC-DG VIII 1992d: Annexe 3). In a further statement on CPFs agreed by a sub-committee of the Special Programme for Africa, which included all the major donors as well as the Commission, it was agreed that ‘… CPF management must be consistent with the objectives of external adjustment, non-inflationary growth, and the priority public expenditure programme agreed between the recipient country and the BWIs …’, and that donors should refuse to release CPFs to governments if their use was not agreed to by the donor (CEC-DG VIII 1992d: Annexe 4). The aim of this policy was to ensure that the government did not spend CPFs received in a way which might be counter to the aims of financial discipline required by adjustment. Its importance is that it involved the Commission not only in provision of adjustment money and the conditionality that entailed, but also in the budgetary process and policy of the recipient government. Indeed this was explicitly recognized by the Commission which claimed that the CPFs issue allowed ‘… the donor to become tactfully involved in policies and procedures, and influence and observe economic and social trends in the recipient country from the inside’ (CEC-DG VIII 1996: 25).

Lomé, adjustment and the Bretton Woods Institutions The Commission’s stated policy and the policy as contained in the Convention itself did differ in important respects from the traditional SAPs. The Commission’s adherence to what it saw as an independent policy was, it asserted, a reflection of the special nature of the Lomé relationship. It was also claimed to be a response to the growing criticism of the failure of SAPs as they had been applied in Africa to that date (Interview, Brussels, 15 May 1993). However, it is necessary to assess how far this is true. As has been argued, the adjustment policies pursued in many ACP states up to and beyond Lomé IV represented a restructuring of the economies and politics of developing countries and their relationship to the North. The extent to which Lomé follows this pattern in adjustment is therefore important in two respects. It is important in respect of the degree to which Lomé reflects the wider developments in the global political economy. It is also important in how far rhetoric of equality in Lomé was evident in this new and central departure of Lomé IV. The ACP had clearly stated that ‘The programme should not be linked to or governed by the conditionalities characteristic of international financial institutions, but should reflect the appreciations special to our ACP/EEC cooperation …. Clearly, the access to any structural adjustment programme should not require an IMF or World Bank imprimatur’ (Greenidge 1988: 15). The ACP hoped that the Commission involvement in the adjustment process would provide a ‘social cushion’ to countries undergoing adjustment (Interview, Brussels, 28 May 1993). On the face of it such a position was supported by the Commission and reinforced by a host of public statements. The Commission claimed that the much criticized diktats of the IMF and World Bank had no

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place in Lomé: ‘The ideological neutrality of Lomé rules out the possibility of the Community living by doctrines, be they neo-liberal or otherwise’ (CECDG VIII 1992d: 16). The May 1988 Council resolution stated that ‘… reforms should be conceived and carried out in a pragmatic and differentiated manner, with due respect for economic policy options and taking account of the peculiarities and constraints of each country’ (Council of Ministers (Development) 1988, emphasis added). In addition, the same resolution pledged the EU to an adjustment policy which would take the social impact of the policies seriously by taking into account ‘… its [adjustment’s] social dimension … to reduce any negative effects it may have on the most vulnerable sections of the population …’ (Council of Ministers (Development) 1988). In addition, the Commission would take greater notice of regional dimensions to adjustment than had hitherto been the case for the BWI (Interview, Brussels, 27 May 1993) (CEC-DG VIII 1996). These statements, if acted upon, contain important political implications. As we have seen, the adjustment policies pursued by the IMF and World Bank represented a change in the terms on which southern states could expect to receive external support and the pursuit of a liberal agenda for reform of these countries. The Commission’s proposals, if taken seriously, represented a weakening or moderation of this stance, and hence the preservation of the hitherto existing basis on which aid was given to southern states. Furthermore, the commitment, also contained in the wording of the Convention, to respect the economic and political models of the ACP countries, clearly points towards acceptance of development strategies other than those based on the free market. Such an adjustment strategy would clearly be contrary to the hard-line, free market approach of the BWI. Thus if the Commission’s approach was to be followed, it would mean a moderation of the political, economic and class impact of the reform process. However, there was substantial cause to doubt the Commission’s, and in particular the member states’, seriousness of pursuing an ‘alternative’ adjustment policy. The EU’s policy, and that of the Convention itself, is more ambiguous and problematic than Commission statements suggest. For example, the May 1988 resolution committed the EU to ensure ‘… effective co-ordination between the Community, on the one hand, and the World Bank and the IMF, which play a leading role in the dialogue on adjustment, on the other’ (Council of Ministers (Development) 1988). In many respects the Commission policy was ambiguous trying to satisfy genuine criticisms of current SAPs and a superficial adherence to existing Lomé principles while at the same time being involved in a process which was a fundamental challenge to those principles. It sought to differ from the BWI approach while not being totally divorced from it. Some of this ambiguity stemmed from the rhetoric and forms of the Convention. The Commission had to pay lip service to the Lomé principles of equality, acceptance of ACP development strategies and non-conditionality of aid even though these are directly challenged by any adjustment policy linked to the BWI. However, the Commission’s ambiguity also reflected differences of emphasis among the member states of the EU. This was revealed in particular on the

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question of co-ordination of adjustment policies within the EU. While the French Minister for Co-operation stated, ‘The IMF and World Bank have a too purely economic view of it [adjustment], while we are trying to bring in social objectives …’, Britain objected to the Commission’s attempts to distance itself from Washington. The Minister for Overseas Development, Chris Patten, claimed, ‘It makes no sense to argue one course in Brussels and another in Washington’, and that ‘… close co-ordination with the Bank will be vital. Indeed the quickest and most effective way to support recipients’ macroeconomic reforms is to work alongside the Bank …’ (Patten 1988). Member states’ reservations undermined Commission attempts to gain greater influence over the BWI through co-ordination of member states’ and the Commission’s adjustment support. The Commission and member states’ aid to sub-Saharan Africa combined accounted for two thirds of aid received by the region (Stevens and Killick 1989b: 29). However, as was noted by commentators at the time, the UK in particular ensured that such co-ordination would be followed only ‘as far as possible’, thus allowing those who opposed a watered-down commitment to the BWI a ‘get-out clause’ from any ‘European’ policy they disagreed with (see Parfitt and Bullock 1990: 100). Furthermore, it was argued in one interview that states such as Britain, who had a powerful voice in the BWI, would not give this up to a Commission which they saw as having no special role or expertise in adjustment matters (Interview, Brussels, 27 May 1993). In practice, member states on the EDF Committee that would decide the granting of any Lomé adjustment support money, would also have considerable power to block any deviation from the Washington Institutions (Parfitt and Bullock 1990: 110–11). Such member states’ influence was also evident in the Financial Regulation for Lomé IV – which was adopted by the EU to formally set up the EDF and was agreed in July 1991 – and which ensured that funds for structural adjustment support from the EU would be integrated into ‘… the framework adopted by the ACP States, in particular where those programmes are supported by the main international donors …’ (OJ L266/10 21.9.91; emphasis added). The ambiguous and vague guidelines for adjustment and the lack of clearly defined criteria in the Convention thus left open the possibility for the EU to take whatever line it wished in implementing the adjustment policy of the Convention (Abugre 1989: 2).15 A key part of the Commission’s stated approach was to take account of and mitigate the damaging social effects of adjustment. However, even this policy was less distanced from the BWI policy than the Commission implied. Although the Commission claimed it had been successful in raising and keeping on the agenda the issue of the ‘social dimensions of adjustment’, this was actually in line with the then shift in World Bank policy, which, before Lomé IV, began to include programmes to cover the social dimension of adjustment, as we have seen. This point was supported by one World Bank official, who vigorously argued that the Bank was concerned with poverty alleviation and the social sector before the EU (Interview, Harare, 17 February 1994). The EU was merely responding to the then currently accepted criticisms of the neglect of the social sector by SAPs.

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Even without all these barriers to a more independent policy, more practical problems were highlighted before Lomé IV was signed. It was argued that the Commission did not have the political will (only partly due to the member states) nor the institutional capacity to develop its own adjustment conditionality (nor even adequately to monitor, evaluate and try to amend the policies being advocated by the BWI), because of lack of personnel, experience and skills (Interview, Brussels, 25 May 1993; Stevens and Killick 1989a: 45; Stevens and Killick 1989b). Nor was the policy to receive anything like enough funding to alter the balance in favour of more nuanced adjustment policies. The Lomé adjustment fund was Ecu 1.15bn over five years, compared to an estimated World Bank expenditure of Ecu 2.15bn per year from 1986 (Stevens and Killick 1989a: 8). Some argued that if an independent policy was followed, Lomé could have an impact in practice out of proportion to its financial size (Stevens and Killick 1989b). Such an argument sees Lomé funds achieving a ‘critical mass’ in countries where NIP funds outweigh those from the BWI. However, it was recognized that even if this happened, it would be in those countries with little or no BWI involvement (Stevens and Killick 1989a).

Implementation of Lomé IV in relation to the BWI The Lomé III import support programmes, effectively the forerunners to adjustment support in Lomé IV, demonstrated a clear tendency to follow, rather than modify, BWI-dominated reform programmes. Of the Lomé III import programmes, 25 had been implemented in 21 countries by the summer of 1989, of which 19 had IMF or World Bank programmes and two others were negotiating them (Parfitt and Bullock 1990: 111–12). In implementing the Lomé III SIPs, a Commission memorandum claimed that ‘Without creating any formal link between such [Fund/Bank] programmes and SIPs, their existence or the fact that one is being negotiated should be taken into consideration when deciding whether or not to finance a SIP’ (Parfitt 1989b).16 The implementation of adjustment support in Lomé IV was indeed rapid. In 1992 the Commission advised the first 14 ACP states that they fulfilled the criteria for adjustment support (The Courier no. 137 1993), and by the end of 1996 a total of 37 ACP countries had been allocated money in support of structural adjustment (CEC-DG VIII 1997a: 21). Indeed, by the end of 1996 nearly the whole SAF fund was allocated. As table 3.5 demonstrates, 95.5 per cent of the SAF had been decided and 88 per cent disbursed compared to 75.3 per cent and 28 per cent respectively for programmed aid (NIP and regional aid).

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Table 3.5 Adjustment funding from 7th EDF (Lomé IV part 1), situation at the end of 1996 (Ecum) Total

From SAF

(% of SAF)

From NIPs

% NIP use

Decisions

1,514

1,070

(95.5)

444.2

9.6

Payments

1,298

1,017

(88.0)

282.0

15.8

Source: CEC-DG VIII, 1997a; CEC-DG VIII, 1997b

The use of this aid appears to have followed the trends set in the earlier Lomé III programmes, as all recipients had arrangements with the Bretton Woods Institutions. Indeed, it was widely admitted that, in practice, the Commission did not have an independent approach to adjustment. In the words of one official, Lomé adjustment represented ‘de facto support only for World Bank or IMF programmes’ (Interview, Brussels, 15 May 1993). Others argued that in any one country there could only be one reform programme, thus subordinating Lomé support to that of the BWI. In addition, it was claimed by the EU and World Bank that there was no question of the EU in practice funding any adjustment programme without IMF and World Bank approval (Interviews, Harare, 25 February 1994; 17 February 1994). A British aid official criticized the Commission’s public position, and claimed that the rhetoric of a ‘different’ approach from that of the BWI merely reflected the reluctance of the Commission (and some member states) to admit to World Bank leadership in the field of adjustment (Interview, Brussels, 27 May 1993). However, it was claimed that Britain was content with the Commission maintaining this position – although it saw no value in it – only because it made no difference to the practice which was firmly in line with BWI approaches (Interview, Brussels, 27 May 1993). Indeed, it was claimed by one World Bank source that, far from being more sensitive and flexible to ACP needs, the EU is in practice more restrictive over issues such as uses of adjustment support and control of CPFs than other donors (Interview, Harare, 17 February 1994). The Commission claims that ‘No other countries [apart from those with BWI approval] are eligible yet, although the Commission can, under certain circumstances, send out missions to assess an applicant ACP country’s programme and efforts at its request’ (CEC-DG VIII 1992d: 20). However, the Commission made it clear that such missions would be with a view to ‘mediation and facilitation to help countries without reform programmes with the Bretton Woods institutions adjust viably and in a coherent and palatable way that would attract support from the main funders and international institutions’ (CECDG VIII 1992d: 20, emphasis added). An example of such mediation given is

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EU ‘support’ to Rwanda, to enable the country to achieve a devaluation which had been demanded of it by the World Bank, so that it could then get BWI funding (CEC-DG VIII 1992d: 20). Such involvement is a far cry from that envisaged by some commentators (e.g. Stevens and Killick 1989a: 47–8), which anticipated the Commission modifying BWI demands on behalf of the ACP and not being embroiled in getting the ACP state to fulfil BWI criteria. Indeed, while one Commission official claimed that the Commission sought to play a ‘mediating’ role in ‘triangular’ negotiations between the BWI and the ACP states, he admitted this involved not only trying to modify the conditionality of the BWI, but also ‘achieving conditionality’ by getting ACP states to accept the need for certain measures (Interview, Brussels, 25 May 1993). The Commission claims that the key aim is to ensure that its priorities are voiced when adjustment negotiations are being undertaken (CEC-DG VIII 1996). As it is much more likely that the Commission would ‘succeed’ in influencing an ACP government than it would the World Bank and IMF, it is not hard to see on which side of this ‘triangle’ the EU would have most effect. One commentator concluded that ‘… EU adjustment support is indistinguishable from that of the IFIs …’ (Mailafia 1996: 112). The policy also failed to solve the more practical problems already highlighted. It was admitted by officials that the limits on human and administrative resources were a serious constraint on Commission activity, resulting in the Commission inevitably adopting the framework for reform established by the IMF and World Bank (Interview, Brussels, 25 May 1993). The established leadership of the World Bank over all areas of development policy is particularly apparent in the adjustment issue, where, together with the IMF’s ‘gate-keeper’ role, the two institutions exercise enormous influence over the use of adjustment funds (Engberg-Pederson et al. 1996). In addition, the financial backing for adjustment from Lomé was relatively small, and less than the Commission had sought during the negotiations – reduced from the desired Ecu 2bn to Ecu 1.15bn in the Convention (Parfitt and Bullock 1990: 109). Without the level of co-ordination among EU member states that the Commission may wish, the ‘critical mass’ necessary to challenge BWI priorities is not there. Rather than develop a separate macroeconomic policy approach, the Commission has developed increasingly close contacts with the BWI. Officials in the adjustment unit of DG VIII claimed that there were regular informal contacts between the Commission and the BWI in a more or less permanent dialogue (Interview, Brussels, 15 May 1993), and one wrote that ‘Consultations with other donors, notably the World Bank and the IMF, have been intense’ (Laidler 1991: 10). However, the effect of these contacts has been less to promote a Commission position in the BWI than to develop coordination with BWI-determined policies. One official stated bluntly that although the Commission had raised some issues, there was little evidence of any influence on BWI policies and the contacts had resulted in no concrete changes or alterations to World Bank policy (Interview, Brussels, 15 May 1993). The 1990s have seen these contacts develop further, with co-ordination in the field, the setting up of three pilot projects on co-ordination, and participation

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in high-level seminars between the two institutions. Some of this may be desirable as co-ordination is partly intended to reduce the administrative burden on hard-pushed developing states that having to deal with numerous donors creates. And this co-ordination has been facilitated by the increased attention given to poverty alleviation, particularly under the Wolfenson presidency of the Bank and which as we noted above, chimes with Commission rhetoric. However, it also means that there is a more unified donor stance and less room for manoeuvre for the developing countries. And little of this has fundamentally questioned the logic of adjustment, nor the ability of funding (and indeed debt relief) to be withheld from those straying too far from the neoliberal path. There is little evidence that Lomé adjustment support has had any influence other than to line up another donor and more aid funding behind the adjustment project. The second question which needs to be assessed is the impact of this new move into adjustment support on Lomé as a whole. If traditional Lomé aid was to remain largely intact, then even if (as proved to be the case) the Lomé adjustment support differed little from that of the BWI, its political impact would be lessened, particularly in terms of the Convention. In addition, if Lomé did not protect ‘traditional’ aid, then the myth of the ‘special character’ of the Convention would be further exposed and its subordination to wider – at this stage BWI-dominated – political trends and forces reinforced. The Commission claimed in the negotiations for Lomé IV that structural adjustment support would in no way undermine traditional, long-term, development funding. It would be introduced without ‘… diverting to urgent financing the resources that remain absolutely vital to sustain investment and training’ (The Courier no. 109 1988: Yv-vii). Lomé principles, it was claimed, would enable the Commission to maintain a balance between adjustment and development (The Courier no. 109 1988: Yv-vii). The Commission stated, ‘The Community has always insisted that it would be wrong to convert the aid earmarked for long term development … into adjustment support’ (CEC-DG VIII 1992d). Again the member states were more ambivalent on this issue. Britain and the Netherlands, in particular, argued for adjustment to dominate all aid from the Convention while Ireland, Italy and France opposed this (Overseas Development Institute 1989; Stevens 1988). The then British Minister for Overseas Development stated in a speech made during the negotiations that ‘Supporting those who pursue adjustment should be at the centre of our strategy for aid …’, and ‘We must concentrate more of these [Lomé] resources on quick disbursing aid to support economic reform’ (Patten 1988: 25; Financial Times 4 May 1988). On the other hand the French, as we have seen, were closer to the Commission’s rhetoric. Such differences limited the scope for the Commission to live up to its stated policy even if it wanted to. Some argued at the time for a conversion of all NIP money into adjustment aid. In clear defiance of the ‘non-conditionality’ of Lomé aid this would have represented a much more serious subjection of Lomé to the politics of adjustment. In the event, the Commission maintained its claims to protect development concerns (although the practice appears to be somewhat different,

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as we shall see below). However, even this commitment was qualified, because the Commission also argued in the negotiations that aid such as Stabex may be used to support adjustment (Parfitt 1989a). The Convention itself is unclear about how large a proportion of the NIPs should be used to support adjustment in addition to the adjustment fund itself. The Convention states simply that ‘… where appropriate, a limited part of the programmable resources not allocated to the focal sector which the ACP State proposes to use for structural adjustment support [may be used for that purpose] …’ (ACP–EEC 1989: Article 281 (2) (e)). This clearly leaves open the possibility that, in the actual implementation, considerable amounts of aid will be diverted to adjustment support in particular because the focal sector allocations are sometimes not much above 50 per cent of the NIP.

Implementation of Lomé IV: impact of adjustment on aid The implementation of Lomé IV does indeed show that adjustment priorities exercised a considerable influence over other areas of the Convention, even if this was not to the extent that some countries, such as Britain, may have wished. There were several indications that this would be so. The European Council resolution of May 1988, which set out the EU’s adjustment policy, acknowledged that other areas of Lomé co-operation should be ‘co-ordinated’ with any adjustment effort (Council of Ministers (Development) 1988). During the Lomé IV negotiations, the Commission also announced its intention to use other areas of Lomé co-operation in support of adjustment aims (Parfitt and Bullock 1990: 108). Frisch, speaking after Lomé IV was signed, cited the use of Stabex and Sysmin in this way and another Commission official claimed that Lomé aid, such as food aid and Stabex, were being implemented in co-ordination with adjustment priorities (Interview, Brussels, 15 May 1993; Frisch 1990). Furthermore, in the programming of Lomé IV NIPs it was clear that adjustment support had a major influence. One Commission official wrote, ‘… the programmers have made continuous efforts to ensure that these [adjustment aspects of Lomé] are seen as a part of an integrated approach. Structural reform is not an add-on, or a separate development tool … as such it is important to relate it to the medium and long-term sectoral strategies defined in programming and vice versa’ (Laidler 1991: 9–10). As Table 3.6 shows, funds specifically for adjustment purposes (the Structural Adjustment Facility – SAF) accounts for around 10.6 per cent of the total aid available under the 7th EDF (Lomé IV/i). However, this has been added to by allocations from participating countries’ programme aid (NIPs – the ‘traditional’ project aid) and regional funds (RIPs). Concerning aid decisions, 9.6 per cent of these funds have been diverted to adjustment support, rising to 15.8 per cent of payments by the end of 1996. If we assess total adjustment funds (Funds from the SAF and NIP and RIP funds), they represent 15.7 per cent of the decisions of the total EDF and 23.7 per cent for payments.

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Table 3.6 Adjustment support and Lomé aid situation at the end of 1996 Type of aid

Amount (ECU m) /%

Total EDF

10,800

NIPs+RIPs

6,215

as % total EDF Total SAF as % total EDF NIP+RIP used for adjustment (decisions) (as % of total NIP+RIP) NIP+RIP used for adjustment (payments) (as % of total NIP+RIP)

Total adjustment (SAF+NIP+RIP) (decisions) as % total EDF Total adjustment (SAF+NIP and RIP) (payments) as % total EDF

57.5 1,150 10.6 444.2 9.6 228.2 15.8

1,514 15.7 1,298 23.7

Source: CEC-DG VIII, 1997a; CEC-DG VIII, 1997b

A number of things are worth noting about these figures. First, they represent a significant change in the balance of Lomé aid towards supporting adjustment programmes. Second, the shift is not limited to the specific dedicated adjustment fund but includes diversions from ‘project’ aid. Further, the figures above indicate how much of the total ACP allocation of national and regional funds has been diverted to adjustment support. Given that not all ACP countries get adjustment support, the amount of diverted funds for individual countries undertaking adjustment is likely to be considerably greater (as we shall see in the case study of Zimbabwe, up to 24 per cent of its NIP was directed to its adjustment support programme). It therefore suggests that for those countries undergoing adjustment, the change in balance of use of aid towards adjustment in Lomé IV is considerably more than the aggregate figures indicate.

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In addition, the balance of ‘programmable’ to ‘non-programmed’ aid has also changed between Lomé III and Lomé IV. Programmed aid (that implemented through ACP countries’ NIPs) has fallen from 63.3 per cent of the Lomé III EDF to 57 per cent of the Lomé IV EDF (CEC-DG VIII 1993e).17 Consequently, non-programmed aid has risen to 43 per cent of the Lomé IV EDF. This is important in two respects. First, it reduces the amount of aid which, at least nominally, is under the discretion of the ACP states. Although such discretion has been substantially reduced since the policy dialogue of Lomé III was introduced, there still remains the opportunity for ACP states to have some control over the use of national programmed funds. This is not the case for some non-programmed aid such as adjustment support, emergency and food aid. Although the use of Stabex and Sysmin funds was formerly under ACP control this changed with Lomé IV, as we have seen, and the Commission now has far more say in how these allocations are used. Second, whereas there are limitations as to how much of the NIPs are likely to be used for adjustment support, the Commission made it clear that it wanted other aid such as Stabex and Sysmin – which directly affect the balance of payments – to be coordinated much more thoroughly with adjustment support. So not only has aid shifted away from ACP control, other funds outside of the NIPs have moved more in the direction of adjustment-dominated uses. As Parfitt notes, ‘Clearly DG8 is mobilizing as much EU aid as it can for adjustment programmes’ (Parfitt 1996: 57).18

Assessment of Lomé and structural adjustment Overall, the implementation of adjustment funding from Lomé IV appears to show that the EU’s involvement in adjustment has not been independent of the World Bank and IMF, but has in fact been closely tied to the programmes that the BWI have pursued. Second, Lomé adjustment funding has significantly shifted the focus of Lomé aid away from ‘traditional’ aid programmes (a shift begun under Lomé III) and towards adjustment. These two points will be investigated in more detail in the case study on Zimbabwe, which assesses the role of Lomé in its adjustment programme. The importance of this trend is twofold. First, the move to adjustment policies in Lomé clearly demonstrates another adaptation of the institutionalized relations between the ACP and the EU to changing world realities. Second, rather than simply being a technical change intended to improve the development co-operation between these two groups of states, the move into adjustment policies has an important political character. The fundamental change to the political economy of North–South relations represented by adjustment has been outlined above. That the EU should involve itself in this process through Lomé, without significantly changing the character of adjustment programmes, thus represents an important political change in the Lomé relationship. The closeness of the EU’s adjustment funding to that of the BWI brings the content as well as the practice of the Convention into line with wider donor and developed country policies. However, it is also necessary to assess the role of trade in Lomé, because

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trade as a development policy has itself become increasingly bound up with adjustment strategies. This further reorientates the Convention in a way which increases the restructuring of the ACP states in the interests of capital.

A note about Lomé IV and trade While the focus of change in the Lomé relationship has been on issues to do with aid, it is also necessary to consider the question of trade in Lomé IV, which represents a key part of the Convention and is closely linked with adjustment policies. Trade issues are an integral part of SAPs. A central aim of adjustment is to achieve competitive production within the adjusting country and a consequent rise in exports, thus solving the external balance problems. Considering the Commission’s own policy in Lomé IV of promoting adjustment, the role of Lomé trade regulations in allowing and promoting a growth of ACP exports has a key relevance. It is therefore necessary to give a brief evaluation of how far Lomé IV does this. At the time of the Lomé IV negotiations there was widespread pessimism about the trade performance of the ACP, shared by the EU and ACP alike. This was not without cause. In aggregate terms ACP trade with the EU has fallen. While in the five years prior to the first Convention in 1975 the ACP took 8 per cent of the EU market (5.3 per cent of non-oil exports), in the ten years after 1975 they took just 6.5 per cent (3.6 per cent of non oil exports) (McQueen and Stevens 1989: 239). In addition, the ACP have declined as exporters relative to other developing countries. Of exports to the EU market from developing countries, the ACP share of developing country exports for the same time periods show a fall from 20.5 per cent to 16.6 per cent (McQueen and Stevens 1989). However, while the Commission argued that this demonstrated the limits of using preferences to promote export growth, the ACP called for extensions to preferences. And in fact a series of studies argues that, although in aggregate terms the ACP performance has been poor and therefore Lomé regulations have not been very beneficial, in certain sub-sectors the Lomé preferences have allowed some growth and diversification of ACP export products to the EU.19 Two studies (McQueen and Stevens 1989; Stevens and Weston 1984) have argued that, while the overall picture is a disappointing one for the ACP, there is a more encouraging detailed picture. In particular this analysis has focussed on the growth of ‘non-traditional’ exports – i.e. nonprimary products or primary products not previously exported to Europe, which have shown rapid growth, albeit at small absolute levels and from very small base levels (McQueen and Stevens 1989; Stevens and Weston 1984).20 It is argued that although these developments can only partly be linked to the regulations of the Convention – other factors ‘internal’ to the ACP are also involved – the Convention has nevertheless had an impact through lack of duty and volume restrictions (McQueen and Stevens 1989; Stevens and Weston 1984; see also Riddell 1990). This analysis would suggest that Lomé IV could have extended these limited ‘successes’. Lomé IV did introduce a variety of changes to the rules on ACP trade access to the EU, but, given that the adjustment-oriented development policy

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of Lomé IV implicitly relied on a much better ACP export performance, these changes were marginal rather than fundamental. Changes included rules governing products covered by the EU’s CAP, extensions of volume and calendar regulations on products for which the ACP receive preferential duties over third countries, and changes to the beef and rum protocols (The Courier no. 120 1990c; CEC-DG X 1990b). In addition, the rules of origin were modified with the basic value-added criterion being reduced from 50 per cent to 45 per cent of the value of the finished product, and the Commission declared that it would consult the ACP before taking any safeguard actions (Marchés Tropicaux et Mediterranéens no. 2302 1989; The Courier no. 120 1990c). Indeed, the Commission’s long-standing argument was that there was little more the EU could do in terms of extending access as the Lomé preferences were already very extensive. Instead the real problem was seen to be in the ACP countries themselves. The Commissioner for Development at the time of the Lomé IV negotiations, Lorenzo Natali, claimed in the Lomé IV negotiations that ‘… the real problem with ACP–EEC trade does not lie in the trade arrangements under the Convention but in the competitiveness of the ACP countries’ (The Courier no. 112 1988). Implicitly, the Commission’s view was that it was restructuring in the ACP economies themselves, primarily through structural adjustment, which was the answer to the lack of competitiveness of ACP products and therefore of their poor trade position. In addition, there was considerable opposition to more ACP access from ‘southern’ EU member states (Spain, Greece, Portugal and Italy) who would face most competition from temperate agricultural products from the ACP (Overseas Development Institute 1989). Thus, despite the fact that this position was directly challenged by the UK in the internal EU debates on the negotiations – Chris Patten, British ODA minister, claimed ‘… we have been pressing in these Lomé negotiations, and will continue to press, for further trade liberalization’ (Financial Times 4 May 1988; The Courier no. 117 1989: 7) – there were few changes in the provisions in Lomé IV. This outcome failed to address long-standing concerns about the barriers to ACP trade from within the Convention, and from the ACP’s position failed to address the increasing competition they faced from third countries. Within the Convention, Lomé IV did not tackle the widely acknowledged problems caused by the CAP in terms of the barriers to their exports, which would compete with products of southern EU nations nor the problems created for ACP economies by the EU’s subsidized agricultural exports (Badiane 1993).21 Lomé IV did not significantly alter the rules of origin – the amount of value added for an export to qualify as an ACP product (for example, see Green 1988; McQueen and Stevens 1989; Nötzold and van der Ropp 1990). These have been criticized for being overly restrictive, and rule out the kind of basic export assembly and manufacturing which has been the beginnings of some of the industrialization of some of the NICs in Asia. Ironically, it is precisely the examples of these countries which the EU, World Bank and others (rightly or wrongly) use to persuade the ACP of the need for adjustment and exportled development. Lomé IV also did not curtail the safeguard clause, which has

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been seen as a disincentive for potential investment in the ACP to supply the EU market (Nötzold and van der Ropp 1990). Indeed, following the Gatt Uruguay Round there is, if anything, greater scope for the EU to take safeguard actions (withdraw preferences) against countries with which it has preferential trade agreements (Financial Times 16 December 93). These limitations were added to by external development, which reduced the value of the ACP’s preferential access, in particular the creation of the Single European Market (SEM) and the GATT Uruguay Round (see Ojo 1996). The creation of the SEM – often referred to as ‘1992’ because of the target date for agreeing the necessary rules changes – involved the removal of direct barriers at the frontiers between member states to form a single market covering the whole EU; the harmonization or co-ordination of internal national regulations; and broader general commitments to move towards a single currency and single social standards (Stevens 1990). The effects of this development are complex. However, it is estimated that any increases to developing country exports will be concentrated among the wealthier developing countries, further marginalizing the ACP (Overseas Development Institute 1990b; see also Brune 1990: 197; Stevens 1990). In addition, changes to internal rules, taxes and duties may threaten particular products of concern to the ACP; for example, the upward alignment of duty on tobacco was estimated to cause a reduction of imports of 10–15 per cent (Overseas Development Institute 1990b: 2–3). Similarly, it was feared that the harmonization upwards of health and slaughter regulations would lead to rising health restrictions on meat exports from all developing countries (Overseas Development Institute 1990b: 3). The GATT Uruguay Round of negotiations to extend and reform the GATT were begun in 1986 and concluded in December 1993.22 Their aim was to reduce barriers to trade through tariff reductions on imports; bring new areas of trade such as agriculture, investment and services into the GATT structure; and modify and strengthen the GATT rules over issues such as dumping and subsidies. While the tenor of the aims was for a liberalized world trade system very much in line with prevalent economic orthodoxies, the barriers to achieving these changes because of protectionist pressures in the main western countries (typified in the EU–US dispute over agriculture) meant the negotiations were prolonged and crisis-ridden. It also meant (as with the single market) that developing country concerns would come second to solving disputes between developed countries. The main issue for the ACP has been the loss of preferences, particularly over other developing countries, and the ACP were vociferous in demanding that these trends be dealt with through protection of preferences or compensation for lost exports (Greenidge 1988; The Courier no. 113 1989a). UNCTAD estimated that the ACP countries would lose an average preference of 20 per cent, with higher losses on particular products (Business Herald 10 February 1994). On tropical products, for example, the Uruguay Round agreed reductions of over 40 per cent, which would harm important ACP exports such as coffee and cocoa (Financial Times 13 December 1993). In the view of EU and World Bank officials, developing countries should rely less on particular preferences and would sooner or later have to compete

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in the world market, so should concentrate on developing their competitiveness (Interviews, Harare, 4 February 1994, 17 February 1994).

Assessment: adjustment and trade If we were to accept at face value the notion that introducing adjustment conditionality was a technical and politically neutral change designed to further ACP development, then there is a strong argument to suggest that these continuing barriers to ACP exports should be reduced. That they have not been, or rather that the changes have been so minor and more than outweighed by ‘external’ developments, signals two things. On one level there appears to be an inconsistency in the Commission’s position. If, as is claimed by some detailed analyses of ACP trade, Lomé preferences have shown a small but significant positive impact, then there is a strong argument to say that if the Commission is genuinely interested in ACP development and believes that this will be best pursued through export promotion and integration into the world market, it should give as great market access as it can to the ACP countries. That it does not certainly reinforces the view that – as has been the case for the whole adjustment process – the burden of change is on the ACP (and debtor) countries. Aside from minor debt relief, and some rather slow progress to general liberalization for developing country exports, adjustment has meant adjustment of the debtor countries, not the donors (Bromley 1995). However, notwithstanding these continuing limitations, at another level there is a certain logic to the Commission’s position. The unwillingness to pursue greater ACP preferences reinforces an argument that special treatment for the ACP should be replaced with a more uniform approach to all developing countries as far as trade is concerned, and any market access to the EU to be based on internationally accepted criteria of levels of development as defined in the GATT and World Trade Organization. Thus the refusal to extend ACP preferences is, in fact, consistent with the trend towards a liberal order, since it implies that, consistent with the logic of adjustment, developing countries should have to face the full weight of world market competition. As such, it is a further erosion of the kind of preferential treatment that developing countries were able to secure in the post-colonial era. The ACP were arguably the most successful in achieving these aims, at least as far as the EU was concerned – it should be remembered that the trade regulations of Lomé I were seen as one of the key achievements of those negotiations. At the time of Lomé IV this removal of preferential treatment was as much by attrition by wider trends and did not involve a re-design of the whole framework of trade regulations. However, by the end of Lomé IV this latter option was also being pursued.

Conclusion Lomé IV marked a watershed in ACP–EU co-operation. The first Lomé Convention was created in a context where Third World countries were able to build on the international recognition of their sovereignty and make some progress in their demands for greater assistance for their development needs. It also ensured that they would further develop ‘special’ treatment in areas

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such as trade. Long-standing principles affirming ACP sovereignty, equality and partnership were included in the Convention. While these principles were reiterated in Lomé IV the Convention saw a major shift in EU–ACP relations. In the place of ACP assertiveness came the subordination of development policy to the Bretton Woods Institutions, in the place of ACP determination of the use of aid came conditionality, in the place of preferential access, competition in the world market. But more than simply challenging the (rather suspect) notion of equality and partnership, Lomé IV demonstrated the change which had taken place in the post-colonial relationship between the EU and ACP states and between North and South more generally. In response to the restructuring of the global political economy initiated by the end of the post-war boom and to the deepening crisis inside Third World states, a process of reforming the social relations within developing countries and between developing and developed worlds was underway. Up to Lomé IV this focussed on structural adjustment conditionality. However, as was noted in our assessment of adjustment, the experience led donor policy to increasingly address political and institutional issues as well as the more directly economic. Even as the negotiations for Lomé IV were concluded, developments in Eastern Europe were to unleash a further wave of change in the international order that ensured the character of North– South relations, and that relations between the EU and ACP would face further change. If the Commission, or the ACP, thought this would be the last major change to Lomé they were to be mistaken. While the Commission had sought a more permanent, ten-year Convention and the ACP had claimed to try to build a ‘… monument more lasting than bronze …’ (as Greenidge overstated it in the Lomé IV negotiations (1988)), the Convention was to be subject to substantial pressures for change almost before any of its provisions had begun to be implemented.

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4 Political conditionality: the mid-term review of Lomé IV ‘In the past we gave support to the likes of Amin, Bokassa or Mobutu. That will never happen again. We want to build a self-confident, new African bourgeoisie based on democracy and the rule of law.’ Manuel Marin, 1993 Commissioner for Development Guardian, 10 September 1993

‘To be workable the governance of African states needs to be systematically rebuilt from the bottom up.’ Pierre Landell-Mills Senior African policy adviser, World Bank Quoted in Williams and Young 1994: 88

The shift in Lomé aid policies achieved in Lomé IV were significant and reflected the changing character of North–South relations, yet Lomé IV (and indeed the whole Lomé structure, some argued1 ) soon appeared to have been overtaken by events. The collapse of Communism in Eastern Europe, the end of the Cold War which had structured so much of post-war international relations, and political change within developing countries as well as moves towards greater European integration were to have a far-reaching impact on relations with the ACP countries and would lead to a further recasting of the institutionalized form of those relations in the Lomé Convention. Indeed, the institutionalized character of the relationship, and its new ten-year duration, now confronted the EU as a barrier to achieving changes it saw as necessary. However, Lomé IV contained a proviso that the financial protocol (detailing aid to be used under the Convention), and any other areas that were deemed necessary, could be renegotiated, with the renegotiations to be complete by March 1995. The ‘mid-term review’ of Lomé IV thus soon assumed an importance not originally planned for. Within the space of a few years the Commission had moved from the view that ‘… there is nothing to suggest we should be negotiating any radical changes in the Convention’ in the run-up to the Lomé IV negotiations (The Courier no. 109 1988: Yv-vii), to arguing the need for a complete overhaul

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of the process of aid administration, programming, content of development assistance and even the basis of the relationship and Lomé’s principles. The focus of this chapter, reflecting the dominant trend in North–South relations at the time of the mid-term review, is the increasing attention given to ‘political conditionality’ and its incorporation into Lomé. However, the review of the Convention also involved the further erosion of principles of cooperation established in the first Convention – in particular, a tightening of the EU’s control over the use of aid – reinforcing the extent to which the aid regime of the post-colonial era was being restructured. Indeed, the mid-term review gave a clear indication that a further reformulation of the relationship would be required when the Convention expired in 2000. This chapter will begin by assessing the background to the renegotiations. In the first instance this was characterized by a change in international donor policies, with an extension of conditionality of aid to embrace ‘good governance’, ‘human rights’ and ‘democracy’ in developing countries. Second, and as a result of this change as well as moves towards European integration, the mid-term review took place amid a general reformulation of EU development policies which had significant implications for the Lomé Convention. The chapter will then detail the process of the review and assess of the main changes achieved.

The context for the mid-term review: changing aid policies Political Conditionality The 1990s saw a major shift in donor aid policies which became increasingly concerned with questions of political reform in recipient states and encompassed the linked issues of ‘good governance’, ‘human rights’, and ‘democratization’. From 1989 to 1991 major donor nations – the USA, Britain, France, Germany, Japan – as well as donor institutions including the World Bank and the EU, all declared an intention to link aid dispersals to recipient countries’ domestic political situations, in particular favouring those undergoing ‘political reform’ (Nelson and Eglington 1992; Baylies 1995). To the extent that this involved conditionality – withholding or withdrawing aid from those resisting or abrogating political reforms – it represented an extension of the aid regime brought about by structural adjustment policies that was firmly in place by the 1990s. As such, it was a further rebuttal of the claims that developing countries had long made for an unqualified ‘right’ to development assistance. Political conditionality,2 as it has become known, can be seen to have three general objectives: the improvement in governmental and administrative capacity in developing countries; the further spread of respect for universal and fundamental human rights, in line with international law and declarations; and the promotion of democratic structures, particularly multi-party elections, as a means of deciding who governs. The extent of conditionality varies from the withholding of aid to countries which do not confirm to liberal democratic

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principles, to aiding states so long as they are moving towards more liberal forms of government, to withdrawing aid only from states who are grossly abusing human rights, and including a variety of ‘positive measures’ to support these aims. In addition, these objectives can be interpreted as reflecting three general causal trends: a response to the problems facing the ‘economic’ conditionality associated with structural adjustment programmes; reflecting and being unleashed by the recasting of the international order in the wake of the end of the Cold War; and reflecting, and to an extent supporting, the ‘internal’ political evolution of developing countries, involving the crisis of authoritarian and corrupt post-colonial regimes and the rise of demands for a more democratic political systems. The importance of these different objectives of conditionality, the strictness of conditionality and the importance of the different ‘causal’ trends differs between different donors and over time. It is therefore necessary to take each aspect of conditionality in turn.

Good Governance At its narrowest, political conditionality refers to the more ‘political’ aspects of structural adjustment conditionality. As we saw in chapter three, donor policies on adjustment evolved considerably over time, addressing various problems that the process of adjustment and the conditionality relationship had created. A key aspect of these was a reconsideration of the role of the state in adjustment and in development more generally. This has been a particular concern of the World Bank. In what has been called a watershed in its attitude to the state (Williams and Young 1994), the Bank argued that adjustment needed to ‘… go beyond the issues of public finance …’ (World Bank 1989: 1) and that market reforms ‘… must go hand in hand with good governance’ (World Bank 1989, according to Barber Conable’s Foreword). It stated that ‘Africa needs not just less government but better government’ and that ‘Ultimately better governance requires political renewal’ (World Bank 1989: 5–6). By 1991 the Bank could argue that the state was ‘the very core of development’, so long as it kept to ‘market friendly’ development, including the provision of the legal framework of the market economy (World Bank 1991). As we have seen, a series of problems of adjustment confronted the Bank and led to this reappraisal of the role of the state. As Toye noted, ‘Rather like the workman who came to put up new wallpaper, and found that the plaster beneath was crumbling and that the brickwork and timber beneath was rotten, so the World Bank has been drawn in to an ever more comprehensive scheme of reforms’ (Toye 1991 cited in Jeffries 1993: 26). One issue was the limitations on the donors’ ability to ensure that the specified policies, agreed at the Paris Club Consultative Group meetings and detailed in the letters of intent, were actually implemented. Particularly in cases where the states involved had entered into agreements with donors only reluctantly, there was considerable scope for governments and state officials to back-track once rescheduling and new loans had been agreed (Kahler 1992). In a broader sense, the Bank has therefore acknowledged some of the political preconditions necessary for reform to proceed, particularly the political support generated for reforms, or, in the

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Bank’s terms the ‘ownership’ of reforms by the country concerned, arguing that there is need to ‘… muster support among the interest groups that have most to gain from reforms’ (World Bank 1994: 15). The improvement of ‘governance’ was seen as facilitating this process by making the measures taken more transparent, by reducing the space for non-implementation and corrupt practices and byimproving the information flows between state and society. Then, even if the political will was present in the debtor country, the administrative capacity to actually carry out the more complex aspects of SAPs was often simply lacking. This was paradoxical in two ways. First, the capacity of the state was often reduced by adjustment conditions themselves, especially where reductions in public expenditure and employment in the bureaucracy were important parts of SAPs and had been implemented. Second, the complex process of adjustment itself often led to an overloading of the state, even though part of the intention of adjustment was to address the overloading of the state brought on by the over-extension of its economic activities in the pre-adjustment period. Furthermore, the limits to state capacity undermined some of the aims of SAPs, including fiscal balance, due to the limited capacity of the state to collect revenue. The Bank thus concluded, ‘Underlying a litany of Africa’s development problems is a crisis of governance’ (World Bank 1991: 60). The close connection with the adjustment agenda is reinforced by the explicit inclusion in ‘good governance’ criteria of ‘free markets’ by donors such as the British and EU (Baylies 1995: 331). These concerns have led to a variety of measures to support good governance, and have included support for policy formulation, institutional strengthening, reform of the civil service and reform and privatization of public enterprises, anti-corruption measures, improvements in accounting, accountability and transparency and strengthening the rule of law (Crawford 1995). However, in a more negative vein, the Bank also warned, ‘… countries cannot expect an increased flow of foreign resources without undertaking the economic reforms necessary … and such economic reforms will probably not take place until the conditions for good governance are established’ (World Bank 1994: 15). Thus, continued or increased external assistance would, in the Bank’s view, become conditional on adopting its and other donors’ agenda for good government. This ‘political’ focus to aid use is somewhat problematic for the Bank in two ways. First, the World Bank’s Charter specifies that ‘The Bank and its officers shall not interfere in the political affairs of any member’ (cited in Gillies 1996: 120), yet here it was proposing to reconstruct the states in developing countries. The Bank has overcome this difficulty by two means. First, it has operated predominantly with a ‘narrow’ or ‘technical’ definition of governance as ‘efficient administration’ necessary for economic reforms. Its concern with ‘politics’ is therefore neutral and a product purely of economic considerations (Williams and Young 1994: 86–7; Gillies 1996: 115–17). This is true of concerns the Bank has with the central government administration and with establishing the rule of law which is justified on the purely ‘economic’ criteria of ensuring sanctity of contracts (Gillies 1996: 117). However, the wider concerns of issues

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of human and civil and political rights are often cited by the Bank, and its ability to maintain such a narrow definition is further eroded by the recognition that, in the words of the Bank’s senior Africa policy adviser, ‘To be workable the governance of African states needs to be systematically rebuilt from the bottom up’ (quoted in Williams and Young 1994). Action on this wider and more overtly political agenda is rather more constrained and can only proceed in response to a UN Security Council resolution, or if there are demonstrable economic effects from the abuse of civil and political rights (Williams and Young 1994; Gillies 1996). However, the Bank can also conclude that the actions (sanctions, withdrawing of aid) by other donors may adversely affect the prospects for Bank programmes to an extent that they too must be suspended (Gillies 1996). Thus, denying the political nature of the Bank, former President Baber Conable was able to claim, ‘Allow me to be blunt: the political uncertainty and arbitrariness in so many parts of sub-Saharan Africa are major constraints on the region’s development … I am not advocating a political stance here, but I am advocating increased transparency, respect for human rights and adherence to the rule of law’ (cited in Gillies 1996: 115, emphasis original). Second, the issue has further highlighted the debate over the role of the state in adjustment and in development more generally. In addition to the constraints of its charter, the Bank’s adherence to neoliberalism has also led it to follow a narrower, rather than wider, approach to political conditionality. Although there are clearly overlaps between all three elements of conditionality, it is possible to have some elements (efficient, effective governance) without others (democracy) (Nelson and Eglington 1992). The Bank has so far not embarked on the more far-reaching restructuring of state-society relations that its (and the whole liberal) agenda would seem to imply. In part this stems from the reluctance of the World Bank to countenance the extension of the state beyond the strong but tightly defined role specified by neoliberalism. Given the tone of the early adjustment policies which were directed at rolling back the state, the new prominence given to the state was a significant shift of emphasis for donors such as the World Bank. Indeed, while adjustment (and, some would argue, development) at one level requires a state autonomous from particularistic societal pressures in order to carry out necessarily conflictual measures of structural change, it also requires the social base to sustain these measures. While the early phase of adjustment could therefore be characterized as being destructive of the previous form of state-society relations (or at least the attempt to be), the attention given to political issues was a partial recognition of a necessary process of reconstruction (see Evans 1992).3 However, the extent of political reform and the boundaries to state action are particularly problematic, given the Bank’s continued adherence to its neoliberal policy framework. The ability to move to a ‘third wave’ of thinking on the state – the first being that the state was the focus of development efforts, the second that it was the main problem – has thus been constrained (Evans 1992) and some have noted the marked tensions the issue has raised for the Bank (Bresser Pereira 1995; Wade 1996; Kiely 1998).4

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Human Rights The promotion of human rights internationally has a somewhat longer history than promotion of democracy and good governance. It also differs in terms of the much clearer codification of human rights in international law, defining a wide range of individual rights which states are required to observe, including elements of the UN Charter, the UN Universal Declaration of Human Rights and its International Covenants and regional charters in Europe, America and Africa (Crawford 1995). The enforcement of these has, of course, often been inconsistent, weak and often subsumed beneath more pressing political and economic priorities. The USA in particular has for a long time proclaimed a concern for human rights in its foreign policy. Particularly in the 1970s, a series of legislative restrictions were enacted on aid to countries violating the security of the person (arbitrary arrest, torture and extra-judicial killings) and the Carter Presidency raised the profile of human rights to new heights in its foreign policy. However, the pursuit of these aims (and the more general promotion of democracy in President Reagan’s rhetoric) was always tightly constrained by Cold War considerations, and in the renewed Cold War of the 1980s Reagan pursued strategic and political considerations above promotion of human rights (see Nelson and Eglington 1992 for a discussion). Nevertheless, the 1990s have seen insistence on respect for human rights become a much more prominent and a more accepted part of foreign policies, as well as of the aid regime. In the face of gross abuse of human rights there would also seem to be more generally and widely accepted opposition in both donor and developing worlds. The universal character of these rights has therefore been progressively enhanced, and the 1993 UN World Conference on Human Rights proclaimed ‘… it is the duty of states, regardless of their political, economic and cultural systems, to promote and protect all human rights and fundamental freedoms’ (cited in Crawford 1995: 78). Most major aid donors have adopted explicit criteria stipulating that abuse of human rights will lead to the suspension of aid, including the USA, Britain, France, Germany and the EU (Nelson and Eglington 1992). It is worth noting that the focus of these concerns has been with civil and political rights, rather than the wider social, economic and cultural rights also defined in international law. The achievement of these is, arguably, the objective of the development project itself, whereas civil and political rights ‘merely’ require a change in the behaviour of states towards their citizens. As well as suspensions of aid for violations of human rights, donors have pursued a variety of measures ranging from strengthening the rule of law, improving the workings and independence of the judiciary, support for civil society and oppressed groups, support for human rights organizations and engagement in conflict resolution (civil conflict being a primary cause of some of the worst abuses of fundamental rights) (see Crawford 1995 for a survey).

Democratization The issues surrounding the process of democratization are perhaps one of the more difficult, and in some ways contradictory, aspects of political conditionality.

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Defining ‘democratic’ government is a rather more contested idea, which is less widely accepted and is dismissed by some (normally authoritarian) southern regimes as a ‘western’ notion of government unsuitable to Asian, African or, less usually, Latin American societies. As with human rights, donors have focussed on the more ‘narrow’ and ‘legal’ definitions of democracy, stressing above all free and fair elections rather than any putative notion of a wider, ‘participatory’ democracy (Beetham 1993; Crawford 1995; see also Saul 1997a; Saul 1997b). Where aid policy extends beyond these formal legal aspects, the attention has been on building civil society groups as a necessary support structure for democracy and on links directly with measures to support human rights and, as far as the World Bank is concerned, good government. It also closely relates to the agenda of facilitating a support base for adjustment programmes, as we have seen above. The bilateral donors and the EU have been less hesitant than the World Bank in emphasizing these most overtly political aspects of the new aid regime, with the USA and UK building on the earlier rhetoric of Reagan’s Cold War proclamations in favour of democracy and against communism (Baylies 1995: 327). Measures taken have included a wide range of projects to support specific electoral processes, as well as some support for human rights, a free press and civil society, which overlaps substantially with the human rights agenda as noted above (Crawford 1995). In addition, many donors have adopted negative measures where countries have refused to initiate democratization of the society, where democratic regimes have been overthrown and where democratization processes that are underway are interrupted (for example, as happened in response to events in Nigeria in the early 1990s). These have ranged from a minimum of suspending new aid, to total suspension of co-operation and wider economic and diplomatic sanctions. There are of course clear overlaps between democratization and the other two aspects of political conditionality – it is difficult to ensure that administration is fair, open and accountable if there are not the structures of scrutiny associated with parliamentary systems, and human rights of free association, speech and press are key features of any democratic system. However, democratic conditionality has been more severely questioned than that of human rights and good governance. This has particularly centred on the issue of whether democracy is ‘good’ for development, or (what for some donors amounts to the same thing) whether it may aid the adjustment process. The World Bank, despite the constraints on the scope of action it can take, has argued that democratization may have some benefits by allowing a more public debate over reform and hence generating more ‘domestic’ support. It has described as ‘patently false’ the idea that democracy makes development more difficult (World Bank 1991: 9) although it is more reticent in saying that democracy is positively good for development. Whereas some fear that democratic politics will lead to more short-term policy making and attempts to satisfy specific constituencies, others argue that authoritarian regimes are just as capable of being beholden to particular interest groups who oppose economic reforms (Haggard and Kaufman 1992a), and indeed in African states this would certainly appear to be

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true. However, the contrary notion that democracies will allow open debate and that this will build support for reforms is only plausible provided that the conclusions of debate are that the reforms are to be supported! Thus, while the assumptions of rational choice would, for the proponents of adjustment, indeed lead to this outcome, other commentators have questioned how realistic it is to expect the twin processes of democratization and economic reform to proceed simultaneously (Haggard and Kaufman 1992a; Jeffries 1993). Aside from the World Bank, the EU has been among the more optimistic donors in claiming democratization could make adjustment more successful and could achieve economic reform where other political structures had failed. An EU Commission document claimed that ‘… it is the countries with a more democratic power structure which have been most successful in instituting the necessary austerity measures and in persevering with them even when they prove unpopular’ (CEC-DG VIII 1992a: 35). Indeed, in line with the World Bank, a Commission official claimed democratization was necessary for countries to ‘internalize’ economic reforms and thus secure their future implementation (Interview, Brussels, 15 May 1993). However, the EU Commission has recognized that ‘Public debate can, moreover, produce a damaging stalemate that compromises the whole [adjustment] exercise …’ while nevertheless wishfully concluding that ‘In an ideal world all decisions adopted by a country on structural adjustment would be the subject of public debate …’ (CEC-DG VIII 1996: 41). In addition, the extent to which a democratization agenda focuses purely on the electoral mechanism means that the impact of reforms may also be limited. For a start, limiting the process in this way to its more institutional and legal forms will reduce the extent to which the society-wide discussion, debate and support-generation for adjustment that donors hope for, will take place. Furthermore, the actual experience of democratization in African countries has disappointed some of the (over-) optimistic forecasts that emerged in the early 1990s.5 In several cases electoral processes have seen the reappearance of old regimes in a multiparty guise. This is further reinforced in democratic settlements (such as in Mozambique and the failed settlement in Angola) where the division of the spoils of politics is defined by allocation of cabinet seats, and the old forms of clientilist politics can resume (Baylies 1995: 334; see also Allen 1995).

Assessment of political conditionality So what are to make of this new agenda? As with adjustment conditionality, much debate has focussed on how successful the policies might be. In this context it has been argued that the problems with definition of aims, the different priorities of donors, the impact of particular donors’ foreign policies and the complexities of some of the processes make the outcomes unclear (Nelson and Eglington 1992; Baylies 1995; Crawford 1995). Donor cohesion, the aid dependence of the recipient, the clarity of aims and the economic weakness of the recipient state will all therefore affect the impact of conditionality (Robinson, cited in Baylies 1995). In addition, the very different domestic

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political situations in the developing countries concerned will determine the extent to which democratization is achieved. But the whole process has substantially expanded the agenda of reform and restructuring of developing countries that was initiated by the rise of structural adjustment. How wide this agenda will go will depend on how far donors are prepared to follow through on the recasting of social relations in developing countries that this project entails. Indeed, what is proposed by the new agenda is the extension of a liberal project towards the developing world (Williams and Young 1994; Young 1995). Two aspects should be noted: first, the evolving character of the aid regime and with it North–South relations more generally, and second, the implications for the likely internal impact of the new conditionality. As has been argued above, the 1980s and ’90s have seen the reconstruction of the relations between North and South. While aid has never been ‘nonpolitical’ and has always involved a variety of specific and general political concerns of donors, nevertheless, ‘… the tying of aid to political performance in so deliberate a fashion as at present does represent a significant change from previous practice and it is not misplaced to characterize it as registering the emergence of a new aid regime’ (Baylies 1995: 321). Indeed, despite the lack of clarity on a number of issues and the problems this project faces, ‘… what is at the same time interesting is the degree of consensus among both donors and observers that a ‘new aid regime’ has indeed come into play.’ (Baylies 1995: 323). In the era from independence until the 1970s, North–South relations were characterized by the international recognition of southern state sovereignty, the provision of economic support from the North to the weak states of the South, and the southern states’ claims that such external assistance should be given, as far as possible, unconditionally. We have seen how this assistance was increasingly subject to the initiation by southern states of programmes of economic structural adjustment. The context of the 1990s allowed, and to an extent demanded, the extension of this conditionality. Thus, not only would donors insist, in line with liberal norms, that the state should curtail its intervention in the economy, but that the state, the bureaucracy, the legal system and the political system should themselves be reconstructed along liberal lines. Of the factors which have prompted this change in policy, possibly the most important is the end of the Cold War. This had a dramatic effect in freeing western policy towards the South. The kind of foreign policy and geostrategic considerations which had led to western support for some of the most repressive regimes in the developing world because they were antiCommunist, and which had given southern states a certain room for manoeuvre in the international system, would increasingly disappear. The hesitations over promoting democratization in the Cold War were thus ‘swept aside’ by the 1990s (Nelson and Eglington 1992). The long-standing project of universal human rights, and the rhetoric of support for democracy, could now assume greater prominence in policy. In addition, the weakness in domestic governance in southern states could be addressed without confronting the impassable barrier of southern opposition,

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for the end of the Cold War reinforced the crisis of domestic rule which the corruption of the post-colonial regimes, exacerbated by the debt crisis, had created. For some, the retreat of existing alternatives to liberal capitalism (both state-led, nationalist, ‘third-worldism’ and the ‘Soviet model’) presented the possibility of creating liberal democratic structures in the developing world that would not run the risk of being subverted by political forces supporting these alternatives (Cammack 1997: 250–1). It thus made democratization ‘safe’ for the donor states. However, democratization and governance was also on the agenda in many developing countries independently of international developments. The 1980s had seen a wave of democratization in Latin America, with military regimes giving way to civilian government. In Africa, the 1990s saw a ‘second wind of change’ encouraged by the delegitimization of the oneparty state in Eastern Europe, but building also on the discrediting of the old regimes, whose manifest failure to achieve national development robbed them of their only fig-leaf of legitimacy at the same time that the debt crisis ensured they were unable to rely on the clientilist side-payments necessary to remain in power. The new aid regime therefore represented two novel developments. First, that the recognition of southern sovereignty, regardless of the internal capabilities and legitimacy of the state (negative sovereignty), would be replaced by an increasing insistence that sovereignty everywhere would conform more to liberal principles. This does not mean, as some have argued, that sovereignty itself has been undermined, nor that international aid has moved away from principles of non-intervention in ’sovereign affairs’ of other states (for example Plank 1993; Gillies 1996). Rather, that the conditions on which aid, which is requested by the recognized government or offered by the donor and accepted by the recognized government, is given, have changed. This may indeed limit the scope of action of the recipient governments and it may (notwithstanding the substantial obstacles to this project) lead to more liberal (capitalist) forms of rule in southern states. To summarize, the new political conditionalities, at their most extensive, entail donors placing a model of a liberal democratic capitalist state alongside the orthodox economic policies of adjustment, or, as former EU Commissioner Marin put it, ‘We want to build a self-confident, new African bourgeoisie based on democracy and the rule of law’ (Guardian, 10 September 1993). Second, the new international agenda reinforced and addressed changes within the developing world. To the extent that they would achieve liberal rule, democratic legitimacy and effective governance of a growing economy, then it could be argued that what was proposed by the donor agenda was a more thoroughgoing project to turn the ‘negative sovereignty’ of the post-colonial era into a more empirical reality. Certainly aid programmes at one level have always had this aim – or at least the aim that the weakness of domestic rule should not degenerate into the complete collapse of the state. What the new aid regime proposed was a recasting of this aim with a liberal formula for the reconstruction of state-society relations in the developing world ‘from the bottom up’. Such a programme, to the extent it remains at the forefront of donor policies, is indeed a ‘grand design’ (Svendsen 1996). The

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operationalization and success of it however, remains a ‘project to be realized’ (Young 1995).

The EU approach to political conditionality Despite these limitations and problems the EU, along with other donors, moved quickly to incorporate the new agenda into its development policy, Commissioner for development Manuel Marin declaring boldly: ‘In the past we gave support to the likes of Amin, Bokassa or Mobutu. That will never happen again’ (Guardian, 10 September 1993). The EU Commission’s own interpretation of this broad trend in western aid policies rapidly took shape in the early 1990s.6 In March 1991 the Commission presented a draft resolution on human rights, democracy and development to the May 1991 Council of Ministers (CEC-DG VIII 1991). The proposals claimed that a series of changes internationally had enabled a higher profile for democracy and human rights in development policies. The member states in the May Council of Development Ministers approved the Commission’s increased attention to the issue and in its meeting of 28 November the Council passed a resolution – Human Rights, Democracy and Development – which remains the key EU decision on the issue (Council of Ministers (Development) 1991a; 1991b). The resolution promoted a common EU policy which would give a high priority in development policies to ‘positive measures’ to support human rights and democratization, such as supporting the holding of elections, creating democratic institutions and upholding the rule of law; strengthening legal systems; promoting the role of NGOs and other bodies in ‘civil society’ and promoting a decentralized approach to development co-operation (Council of Ministers (Development) 1991b). The Council also modified the Commission’s original proposal to make plain the link between democratization and adjustment, with the Council’s 1991 resolution stressing that development required ‘good government’, which consisted of open, democratic, uncorrupt and transparent government, ‘sensible economic policies’ and ‘… the creation of a market-friendly environment for development …’ as well as respect for the rule of law (Council of Ministers (Development) 1991b: 12). Importantly, as well as the ‘positive approach’, the resolution also provided for negative sanctions including suspension of aid to the developing countries concerned. It stated that ‘… in the event of grave or persistent human rights violations or the serious interruption of democratic processes, the Community and its member states will consider appropriate responses …’. These would include ‘… confidential or public démarchés as well as changes in the content or channels of co-operation programmes and the deferment of necessary signatures or decisions in the co-operation process or, when necessary, the suspension of co-operation with the States concerned’ (Council of Ministers (Development) 1991b: 13, emphasis added). The EU’s policy was reinforced by Council statements and actions in following years, including co-ordination of EU foreign policy discussions relating to human rights and democracy with development policy and a declaration to the Vienna World Conference on Human Rights (organized

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by the UN, June 1993) (Council of Ministers (Development) 1992; 1993). Given that this new policy was put in place two years after the Lomé IV Convention had been signed, it could not be included in the formal text of the Convention (even if ACP agreement had been forthcoming). However, the Commission still felt able to implement the new policies on the basis of the existing Article 5 of Lomé IV. Article 5 was the first time overtly political aims had been included in the main text of the Convention, and stated that development co-operation ‘… entails respect for and promotion of all human rights …’ and that ‘… development policy and co-operation are closely linked with the respect for and enjoyment of fundamental human rights.’ It regarded human rights as including ‘… non-discriminatory treatment, fundamental human rights; civil and political rights; economic, social and cultural rights’ (ACP–EEC 1989: Article 5). Despite its broad terms, the Commission maintained that Article 5 of Lomé IV allowed, in the light of the new Commission policy, a much more active application of human rights and democratic conditions within Lomé (Interview, Brussels, 25 May 1993). The Commission used Article 5 as a reason and justification to act against several ACP countries where it felt human rights or democratic processes had been violated. Even prior to the mid-term review, by 1994 the Commission had unilaterally suspended aid on human rights and democracy grounds to eight ACP countries, affecting National Indicative Programme aid worth a total of Ecu 691.5m (European Research Office 1994d). In addition, the EU responded to the new climate by pursuing measures seen as ‘positive’ contributions rather than ‘negative’ sanctions. By 1994 the EU had given support to election processes in 17 ACP countries and sent observer missions from the European Parliament and the ACP–EEC Joint Assembly (ACP–EEC Joint Assembly Working Party 1994; European Research Office 1994b). It also actively encouraged utilization of elements of Lomé which supported building the ‘democratic fabric’ in ACP countries. In particular, the decentralized co-operation concept added to Lomé IV, which focussed on increasing co-operation with NGOs and other ‘civil society’ bodies, ‘… added an undeniable political flavour to the life of the new Convention’ (Laidler 1991). The Commission’s ability to pursue an activist application of its new policy through Lomé, without formal changes to the Convention, says much about the EU’s informal influence over the Convention’s implementation. However, Article 5 remained broad-ranging and was vaguely defined. The Commission wished to incorporate the new political conditionality more fully into the Convention, and the mid-term review offered the first opportunity for this to be achieved. However, the introduction of political conditionality was to be accompanied by an increase in the EU’s control over aid resources, and a significant modification of Lomé aid procedures was also envisaged. These changes, as well as political conditionality, were based on a wide-ranging review of the EU’s entire development policy. This reformulation reinforces in a number of ways the new aid modalities emerging in the 1990s. Before looking at the detail of Lomé mid-term review, it is therefore necessary to provide this background.

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The broader reformulation of EU development policies – ‘Horizon 2000’ The reformulation of EU development policy was a result of three broad factors: greater European integration (including, in Article 130u, a commitment in the Maastricht Treaty to increasing the complementarity and co-ordination of EU and member states’ development policies); the end of the Cold War which opened up the whole question of the future of the international system and Europe’s place within it; and increasing EU interests in developing countries other than the ACP states, as well as Eastern Europe (Interview, Brussels, 25 May 1993; Euro-Cidse Nov/Dec 1993: 1). More specifically, it and the midterm review that followed, sought to address EU dissatisfaction with the uses of aid under the Lomé Convention in ways that were closely related to the new governance agenda. This review, which set out the context for the future of development policy up to and beyond 2000, was released by the Commission in September 1992 (CEC-DG VIII 1992a). The document, which became known as ‘Horizon 2000’ was heavily influenced by the Commissioner for Development, Manuel Marin, and was a key stage in the recent reformulation of EU development policy. It has had a significant impact on all areas of policy change, and particularly on the renegotiations of Lomé IV and the prospects for Lomé beyond Lomé IV. Horizon 2000 represented an attempt to redefine the role of the EU and its relations with the developing countries within the changed global system. It attempted to define how and where the EU should act on the world stage and the policies towards developing countries which would be necessary in order to resolve perceived threats of instability. The ultimate aim of development policy was ‘… to bring [developing countries] gradually into the mainstream of the world economy so that the phenomena of marginalization and exclusion, in evidence today, can be eliminated’ (CEC-DG VIII 1992a: 54). However, the content of the proposed policy directly questioned the future of Lomé in terms of the principles of co-operation, geographical organization, trade relations and aid effort. In terms of aid for the ACP countries, the document sought increased conditionality for limited aid resources. The document argued that much of the aid effort towards developing countries had been inefficient and represented ‘wasted’ resources. Echoing the World Bank’s ‘Berg Report’ of the previous decade, Horizon 2000 cites ‘inefficient’ policies and structures in the developing countries as among the main causes of this failure. However, the new international context (the end of the Cold War and the debt crisis) had allowed the ‘prerequisites’ for effective aid to be enforced on recipient countries. These ‘prerequisites’ include the new political conditionality of aid and the economic conditionality which remained at the centre of development policy: ‘… grants should be linked not only to the creation of viable economic structures … but also to the installation of truly democratic political systems’ (CEC-DG VIII 1992a: 36). It also made it plain that conditionality would remain central to relations with developing countries, and that ‘… the attitude of the recipient country will in future be one of the deciding factors in the allocation of

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development co-operation resources’ (CEC-DG VIII 1992a: 54). Raising the prospect of marginalization of Africa within EU development policy, Horizon 2000 also argued for funding of development aid to be more equally shared between the industrialized countries, with greater resources from Japan and the USA for aid programmes in Africa allowing the EU to devote a greater share of aid to the more commercially beneficial relations with Latin America and Asia. In addition, Horizon 2000 suggested a reorganization of the EU’s regionally based development policies in what a senior Commission official called a ‘uniform range of development policies for countries at different levels of development’ (Interview, Brussels, 26 May 1993). It would therefore define priorities and co-operation measures according to the different development levels of four main regions: sub-Saharan Africa, the Mediterranean, Latin America and Asia (CEC-DG VIII 1992a: 71–80). Each region would have its own priorities for development policy with economic reconstruction (through liberalization and adjustment) and democratization being the primary concerns for sub-Saharan Africa. This approach signalled a reassessment and ‘rationalization’ of the regional basis on which EU development policy had been constructed, which directly questioned the future of the ACP as a group of countries (CEC-DG VIII 1992a: 40). Finally, as we have seen with Lomé IV, Horizon 2000 indicated that the Commission saw greater benefits and coherence in multilateral trade liberalization, with developing countries relying far less on the kind of preferential trade regimes on which Lomé was founded. Horizon 2000 therefore placed a reassessment of the institutionalized relations with the ACP countries alongside the increased conditionality of aid which has been detailed above. These concerns were to dominate the EU’s approach to the Lomé IV mid-term review and beyond

The Lomé IV mid-term review The scope of the mid-term review The only part of the Convention which it was essential to renew was the aid package (financial protocol) as stated in Article 366 of Lomé IV. Indeed, at the time of Lomé IV’s signing the extension to ten years was an attempt to create a greater durability in Lomé’s provisions. The Commission claimed that the extension to ten years was ‘… a practical improvement which will avoid the time, effort and expense of a major renegotiation every five years; it is also the guarantee of a long term EU–ACP commitment and as such should increase the security and confidence of investors’ (CEC-DG X 1990b: 2). However, in view of the wholesale redefinition of the EU’s development policies and priorities, as discussed above, it was clear that the renegotiation would in fact be much more substantial. Horizon 2000 had questioned ‘… the degree to which the Community’s existing instruments … can be adapted … the Convention’s machinery is only partially suitable for the type of negotiations with governments which now seem to be necessary …’ (CEC-DG VIII 1992a: 73). Lomé IV, a Commission official claimed, had been overtaken by events and required a

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radical overhaul (Interview, Brussels, 27 May 1993). Thus the draft negotiating directives put forward by the Commission argued for wide-ranging changes, ‘… to do otherwise would allow much water to flow under the bridge before Community co-operation could be rendered more effective and more in tune with the times (CEC-DG VIII 1993f: 9, Annexe 1).

The chronology and content of the negotiations It was intended that the mid-term review would be completed by March 1995 when the first Financial Protocol expired, and the negotiations at first followed a familiar pattern for Lomé. The Commission announced the areas it wished to renegotiate on the 8 September 1993, although, as we have seen, the formation of Commission policy was also tied up in wider and earlier Commission and member states discussions (CEC-DG VIII 1993g; CEC-DG VIII 1994). This outline was agreed as a negotiating mandate for the Commission at the General Affairs Council on the 8 February 1994 and communicated to the ACP at the end of February (CEC-DG VIII 1994; Euro-Cidse Feb 1994: 1). On the 25 February the ACP issued its own memorandum on the review, which stressed that it did not want to see a full renegotiation of Lomé and emphasized the problems faced by the ACP states (Euro-Cidse Feb 1994: 3). The negotiations were officially launched at the ACP–EC ministerial meeting, in Mbabane in Swaziland on 18 to 20 May 1994, with opening statements from the EU and ACP (Brizan 1994; Pangalos 1994; Euro-Cidse May 1994: 3–4). Like other Lomé negotiations, the pace of progress was slow at first, although by the end of 1994 agreement was reached on a series of issues with the main outstanding obstacles being new trade concessions and the level of aid – i.e., precisely those areas of most fundamental disagreement between member states. Trade issues were resolved in early 1995, but the aid issue was more protracted and is dealt with in detail below. Disagreement on aid delayed the whole package by several months with negotiations deadlocked until the end of June when the final issues were resolved after the Cannes EU summit. The revised Lomé IV was finally agreed on 30 June and signed in Mauritius in November (CEC-DG VIII 1995). The review instigated considerable changes to Lomé IV, and it is to the scope and implications of these to which we must now turn. We will survey the following main areas of change: human rights, democracy and governance; aid programming; aid instruments; policy dialogue; trade regulations and the level of aid.

Human rights, democracy and governance As has been indicated, the issue of human rights, democracy and good government was a major concern for the Commission, and the mid-term review allowed the chance for this type of conditionality to be more formally and comprehensively included in the provisions of Lomé IV. The primary objective for the EU was that human rights and democracy should become an ‘essential element’ of co-operation with the ACP countries. This would replace the present Article 5 commitment and would mean that the Convention could be suspended ‘in part or as a whole’ in relation to countries where there were serious human

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rights violations or interruptions of the democratic process, in line with the EU’s policy (CEC-DG VIII 1993f: 12, Annexe 1). The amended Convention therefore contains a stronger Article 5, stating that ‘Respect for human rights, democratic principles and the rule of law … shall constitute an essential element of this Convention’ (ACP–EC 1995). The mechanism for suspension of the Convention in the case of violations of Article 5 was eventually agreed and is contained in Article 366a. Initially, the Commission’s proposals no procedure for suspension, implicitly leaving in place the existing system whereby the Commission had de facto power to decide unilaterally to suspend aid. However, during the negotiations the Commission responded to ACP, NGO and European Parliament criticism of the lack of transparency in aid suspensions by adopting a French proposal, initially put forward in February 1994 (ACP–EEC Joint Assembly Working Party 1994). Article 366a thus includes a commitment to consultations except in cases where ‘special urgency’ is required (ACP–EC 1995: Article 366a, 2). These consultations involve a ‘troika’ of EU and ACP representatives, although the EU will still be able to suspend co-operation if no agreement is reached by the parties (ACP– EC 1995: Article 366a). Although this procedure clarifies the issue of the mechanism for discussion, it leaves open questions of definition (particularly of ‘democratization’), of what constitutes ‘special urgency’, and of whether trade regulations would be suspended as well as aid (Euro-Cidse December 1994: 3–4).7 Thus it only partially answered one commentator, who argued that ‘The issues relate to the mechanisms for the suspension of the Convention and remain the fundamental questions of: who decides, according to which definition, by which criteria, and to which aspects of the Convention would the suspension encompass … ’ (Euro-Cidse September 1994: 17).8 The EU also sought to promote human rights and democracy through a series of other changes which were agreed, including the clarification and further promotion of ‘decentralized co-operation’ (already in Lomé IV). The review also agreed an EU proposal for the creation of a special fund, or ‘incentive envelope’ (see below), for institutional support to ‘democratization and good government’ in the ACP states, worth Ecu 80m (Euro-Cidse June 1995). A new requirement that all representatives at the ACP–EC Joint Assembly had to be parliamentary representatives and not unelected government officials was watered down after ACP objections, so that such unelected persons could attend the Assembly but only with prior agreement of the Assembly (ACP–EC 1995: Article 32). In addition, the links between political conditionality and the adjustment process in developing countries were emphasized by the inclusion of a new clause in Article 6, that the ACP and EU ‘… recognize the importance of promoting, in ACP States, an environment favourable to the development of a market economy and of the private sector’ (ACP–EC 1995: Article 6, 2).

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Programming The EU made three main proposals for a more effective use of Lomé’s aid. The first was that the development priorities set out by the EU in the Maastricht Treaty and in the ‘Horizon 2000’ resolution should be taken into account in the Lomé Convention. These priority areas included the promotion of human rights, democracy and the rule of law; sustainable economic development; integration of the developing countries into the world economy; the campaign against poverty and special attention to the poorest countries (European Research Office 1993b: 7). The Commission’s original proposals for its mandate suggested that these aims of EU development policy should be included in Article 3 of the Convention (CEC-DG VIII 1993f: 23, Annexe 1). Article 3 states that ‘The ACP States shall determine the development principles, strategies and models for their economies and societies in all sovereignty’ (ACP–EEC 1989). Modifying this to include the EU priorities would thus have seriously qualified formal ACP rights to determine priorities of development and cooperation. Instead, this commitment to EU development priorities was included in Article 4, which states that ‘… due account shall be taken of both the objectives and priorities of the Community’s co-operation policy, and the ACP States’ development policies and priorities’ (ACP–EC 1995: Article 4). Although this leaves in place respect of ACP sovereignty, it clearly increases EU influence over Lomé co-operation policies and the use of Lomé aid resources. The second EU proposal was for the introduction of what was termed ‘phased programming’. Hitherto, aid from the Convention was channelled to the National Indicative Programmes (NIPs) of the ACP states. Underpinning the NIP was a legal guarantee that a certain of amount of aid from the relevant Convention would be available to the ACP state, a commitment intended to give predictability to aid flows. The Commission objected to this continuing because it argued that it led to ‘blocked funds’ if obstacles to the use of aid led to slow implementation of a country’s NIP; it constrained the Commission in negotiations with ACP countries as funds could not be withdrawn; and it introduced inflexibility into the whole aid process (Interview, Brussels, 26 May 1993; CEC-DG VIII 1993f: 21, Annexe 1; European Research Office 1993b: 18–19; Euro-Cidse Feb 1994: 17). All of these claims have been challenged as being both factually inaccurate and as undermining the principles of partnership of the Convention (ACP–EEC Joint Assembly Working Party 1994; European Research Office 1993a; 1994e). Nevertheless, the Commission initially proposed that programmable aid should be divided into several ‘tranches’, with satisfactory performance on each tranche necessary for the allocation and release of the next, making programming a more or less continuous exercise (CEC-DG VIII 1993f). In the event, ACP objections limited this to just two tranches with 70 per cent of aid in the first tranche (ACP–EEC Joint Assembly Working Party 1994; Brizan 1994; ACP–EC 1995: Article 282). Despite this watering down of Commission proposals, the NIP allocation given at the beginning of the programming process will not (as was the case before) be legally binding, but merely an indication of the amount the EU would provide (European Research Office 1994c). In addition, the question of

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how ‘successful utilization’ of the first tranche will be judged remains unclear. The Commission claimed during the negotiations that, ‘… if the EC was not happy with the pace and direction of the economic policy of an ACP state then no second tranche would be made available’ (cited in European Research Office 1994f: 1). As modified, the Convention now stated that the second tranche would be decided on the basis of the speed of implementation of the first tranche; the size of the total NIP; the preparation for the second phase; and ‘the specific situation of the ACP State concerned’ (ACP–EC 1995: Article 282, 4). This still leaves considerable room for interpretation by the Commission in deciding the Convention’s aid allocations, a situation that troubled the ACP countries (see for example The Courier no. 155 1995). A third Commission proposal – that aid should be allocated to ‘incentive envelopes’ – was less successful. The term ‘incentive envelopes’ refers to the creation of special earmarked funds which can only be utilized by ACP states which propose projects or programmes that fulfil the aims of EU policy outlined in the Maastricht Treaty and the ‘Horizon 2000’ resolution (CEC-DG VIII 1993f: 23, Annexe 1). The priorities would include institutional and governmental reform, human resource development, environment, strengthening of the private sector and women in development[(Euro-Cidse Feb 1994: 17). Although designed to further increase EU influence over aid use in the end only one such envelope was agreed – to support ‘institutional and administrative reform measures’ which would enhance ‘human rights, democracy and good government’, worth Ecu 80m (ACP–EC 1995).

Aid instruments and procedures The Commission proposed changes to two areas of aid instruments, the use of technical assistance and the management of projects, and changes to instruments such as Stabex and structural adjustment. The first of these sought to devote more aid to ‘technical assistance’ for project implementation and would be under the control of the Commission, which would thus gain greater control over project preparation and implementation. The proposals stemmed from what one senior Commission official referred to as the ‘reality gap’ between what the formal provisions of the Convention say, and what actually happens (Interview, Brussels, 26 May 1993). It was claimed that in reality the Commission did much of the initiation and administering of the Convention, while the formal provisions provide for joint management and ACP-determined priorities (Interview, Brussels, 26 May 1993). Indeed, the Commission’s proposals for the negotiations claimed that ‘… there is a clear discrepancy between the wording of the Convention and what actually happens’ (CEC-DG VIII 1993f: 2, Annexe 2). Rather than seek to change the implementation of the Convention in practice to fit the equality and joint management rhetoric of Lomé, the Commission sought to adjust the formal provisions so they fit the reality of Commission practice. In the event, the negotiations failed to reach agreement on greater EU control of projects, management and technical assistance, although it did provide for an allocation to be made from each NIP for technical assistance (Euro-Cidse July/August 1995).

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The second area of changes – on Stabex and structural adjustment – saw a further tightening of Commission control over the use of Stabex transfers with possible re-allocation of funds if an ACP state failed to propose an acceptable programme for the utilization of a transfer (CEC-DG VIII 1993f: Annexe 1). The EU also achieved minor alterations to the regulations governing structural adjustment support including a greater emphasis on regional ‘… liberalization of trade, payments and transborder investments …’ (CEC-DG VIII 1993f; Euro-Cidse July/August 1995: 7). Neither of these changes do anything to answer the critical funding problem of Stabex, nor the social problems instigated by structural adjustment programmes. Indeed, the final agreement on aid for in the mid-term review increased the Stabex fund by just Ecu 300m (Euro-Cidse June 1995).

Policy dialogue The Commission wished to introduce a ‘broader and more flexible dialogue’ with the ACP countries to cover ‘… genuine policy themes and issues of a general nature …’ (Pangalos 1994: 10). The EU wanted to be able to undertake discussions with smaller groups of countries than the full ACP Council of Ministers and gained a vaguely worded agreement that ‘enlarged’ dialogue would be possible (ACP–EC 1995, Article 30). The most fundamental challenge this poses is to the concept of the ACP countries acting as a unified body of countries (Euro-Cidse February 1994: 17). The ACP Group was a creation of the EU’s policy insofar as the EU decided which developing countries it wished to include in the Convention. However, in the negotiations for the first Convention, the ACP Group achieved a high level of unity and influence stimulated by wider Third World demands of the time. Since then, the influence of the ACP states over the Convention has waned as wider developing country international influence has declined. The changes to Lomé IV reinforced this decline, presaged the future break-up of the ACP Group, and demonstrated further the influence of the Horizon 2000 document (which recast the EU’s geographical organization of development policy) on the mid-term review.

Trade In the review the Commission reiterated a long-standing argument that the problem of falling ACP exports to the EU was not one of lack of preferences but of the competitiveness of ACP products. Indeed, the failure of ACP trade – ACP exports to the EU grew by 6.8 per cent per year 1985–91 while other developing countries exports grew by 11.9 per cent per year – did not seem to prompt any action from the Commission aside from a renewed emphasis on structural adjustment (Euro-Cidse September 1994: 16). The ACP, however, demanded some consideration of their trade position and argued for attention to be given to the negative effects of the GATT Uruguay Round which, it was estimated, would lead to a, 8–16 per cent drop in the value of tropical exports, which make up 44 per cent of the ACP’s exports to the EU, with some countries, more dependent on single commodities like tobacco, standing to lose more due to the GATT deal (Financial Times 13 April 94).

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As with the Lomé IV negotiations, trade issues revealed considerable differences among member states. On the one hand, Britain has traditionally favoured greater trade access over increases in aid, reflecting Britain’s tendency to support liberalization rather than financial intervention through aid. On the other hand, the southern EU countries opposed greater trade access because of a fear that ACP agricultural exports would damage their own farming sectors. These divisions resulted in very minor changes to Lomé trade regulations. The EU agreed to market access improvements, for example some tariff reductions and quota changes, which in total affected about Ecu 70.2m of ACP exports (on 1993 performance), and exempted products such as olives which were important to the southern EU countries (Euro-Cidse January and July/August 1995). The EU also agreed to allow value added in certain specified countries outside of the ACP and EU to count in rules of origin calculations. However, this excluded ‘sensitive’ products such as textiles, and excluded important nonACP countries such as Mexico and Brazil, only including South Africa, which might have benefited some ACP countries, on an ad hoc basis (Vernier 1995; Euro-Cidse July/August 1995). There was also agreement on a joint declaration and increased resources for traditional banana suppliers, because of changes to EU import policy as well as proposals for a protocol on timber imports and promotion of sustainable tropical timber production in the ACP countries (Vernier 1995; Euro-Cidse Jan 1995: 5).

Aid level The renewal of the financing for the Convention was the main original purpose for the mid-term review. However, as was normal for Lomé negotiations, the Commission and member states made no initial proposal as to the level of aid, arguing that it could not be settled until other changes had been agreed. Nevertheless, there were persuasive reasons to believe that there should and could have been a substantial increase in aid available for the 8th EDF. The EU had seen three new members join in 1995 (Finland, Austria and Sweden) who were expected by the Commission to contribute around 8.1 per cent of the new EDF and up to 9 per cent to the EU budget for development (Euro-Cidse March/April 1994: 18). The Commission argued strongly that this aid should be a real increase on top of other increases and not merely a redistribution of the aid burden from existing member states (Euro-Cidse March/April 1994: 18). In addition, officials of the Commission and member states revealed in interviews that they saw increases in aid as the EU’s bargaining chip in getting the ACP to agree to the wide-ranging changes to Lomé that were proposed (Interviews:, Brussels, 27 May 1993; 26 May 1993). Indeed one British official claimed that this represented ‘bribery’ but was necessary to achieve the Commission’s aims (Interview, Brussels, 27 May 1993). For their part the ACP called for real increases in aid over that of the first protocol and argued for a minimum of Ecu 15.8bn for the second protocol (Euro-Cidse Jan 1995: 6). Despite its crucial role in the review, however, the aid issue was to prove the most intractable. This was particularly due to the British government arguing that it wished more aid to be devoted to bilateral programmes, although

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Germany, Italy and Holland also sought reductions in aid contributions. On the other hand the French, who held the presidency of the Council, argued for a total allocation of Ecu 14.3bn to account for the increase in EU membership and inflation. However, the highest figure which could be agreed was Ecu 11.8bn and as a result the EU failed to reach agreement on a new aid package (Euro-Cidse Feb 1995: 7). The issue was finally resolved at the EU Heads of State summit in Cannes on 26 and 27 June, based on a French compromise (Guardian, 26 and 27 June 1995). Member states agreed to an 8th EDF worth Ecu 12.967bn, or Ecu 14.625bn if funds from the EIB are included (CEC-DG VIII 1995; Euro-Cidse June 1995). The Commission claimed that this represented an increase of 21.9 per cent on the first Financial Protocol of Lomé IV (CEC-DG VIII 1995). The details of the 8th EDF are given in Table 4.1. Table 4.1 Lomé IV 2nd financial protocol Aid

Amount (million Ecu)

Lomé IV (Second Financial Protocol 1995–2000)

14,625

Of which: • European Development Fund (EDF)

12,967

Of which allocations made to: -

Grants for national and regional indicative programmes*

8,192

-

Structural Adjustment Support

1,400

-

Stabex

1,800

-

Sysmin

575

-

Risk Capital

• European Investment Bank (EIB) own resources for national and regional projects

1,000 1,658

• European Investment Bank (EIB) own resources for national and regional projects 1,658 (* Ecu 1,300m of which is earmarked for regional projects and includes Ecu 80m for institutional support for democratization) Source: EuroCidse News Bulletin June 1995; Vernier 1995

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The overall figure, and the claimed increase hide two important factors. First, it does not account for inflation and the new members of the EU (which would have put the EDF – without EIB resources– at Ecu 14.3bn which the Commission had claimed was the minimum acceptable figure). Second, even this reduced figure was not entirely new money, because Ecu 467m of the ‘new’ aid package was made up of unused resources transferred from previous Conventions (Ecu 292m), humanitarian aid transferred from the EU budget (Ecu 160m) and the conversion of special loans into grants (Ecu 15m) (ACTSA News Bulletin summer 1995; Euro-Cidse June 1995). In addition, the funding includes substantial changes in the contributions to the EDF from member states, with France becoming the largest contributor (23.45 per cent) and Britain supplying 12.25 per cent of the new EDF, compared to 16.37 per cent of the 7th EDF, and cutting its contribution by over Ecu 160m (ACTSA News Bulletin summer 1995). More fundamentally, the conflicts over the level of aid are indicative of the wider questioning of the future of the Convention at the time of the mid-term review and it is with these issues that we now turn.

Conclusion: assessment of the mid-term review A number of factors may be noted about the mid-term review. First, there has been an unambiguous incorporation of political conditionality into the Lomé Convention and the EU–ACP relationship. The new Article 5 confirmed the EU’s declared adoption of the agendas relating to human rights, democracy and good governance which had been put in place by the Council resolution of 1991 and by EU aid practice. It further legitimized the use, in particular, of aid sanctions in respect of the flagrant abuse of human rights and democratization. However, as with the wider donor policy, the modification to Lomé suffered from a similar lack of clarity with respect to the operationalization of the new conditionality. This related, as we have seen, to the method by which sanctions could be imposed and the criteria by which recipient states would be judged. Aside from the fact that, as with structural adjustment, there was a nominal North–South agreement on these new modalities, there was little to distinguish the Lomé approach from that of the other donors. Second, the review demonstrated an increasing concern with the good governance agenda. This was so in respect of the political aspects of government and human rights, but also in terms of the aid procedures of the Convention. As discussed, Lomé reflected a claim by developing states for economic assistance over which they sought to exercise some, if not most, control. In Lomé this meant that ACP countries had the right and obligation to propose the aid projects for which they wished to receive aid. However, the empirical weakness of ACP states led to the ‘reality gap’ that the Commission noted whereby, in the face of the lack of capacity of an ACP to propose viable projects, the Commission had a de facto role in developing an aid programme for many ACP states. The changes in the mid-term review in terms of technical assistance to aid programming was explicitly directed at strengthening the Commission’s role in this respect. It is notable that, aside from the small ‘incentive envelope ‘ for human rights and governance, there was little explicit

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concern for capacity building in ACP states. Rather than address the empirical reality to fit the principles of the Convention, the changes shifted responsibility and control towards the EU. Furthermore, the introduction, limited as it was, of phased programming, meant that those states where ‘satisfactory’ aid use was not present would lose some of the allocated aid they would have received under previous procedures. The tightening of EU control over aid use was further emphasized by the explicit inclusion of EU aid priorities in the Convention. Alongside the ACP right to determine their development objectives ‘in all sovereignty’ was the principle that co-operation should address EU development concerns. Given that these included the same aims as political and economic conditionalities (as well as reduction of poverty), it reinforced the new aid agenda in the Convention. The attempt to parcel up aid into several incentive envelopes so that much of the Convention’s financial resources could not be used for anything other than projects which reflected EU aid priorities, was an attempt to achieve by procedural changes what could not be achieved by other means. Finally, the mid-term review revealed that if aid is to be given to the ACP countries, then neither the member states nor the Commission are entirely happy with the terms in the Convention under which it was to be provided. Although the review saw substantial changes to the Convention, it did not fulfil the initial aims of the Commission, nor provide the degree of conditionality of aid foreseen in Horizon 2000. The extent of phased programming was limited so that only 30 per cent of an ACP states’ allocated aid could be withdrawn; the incentive envelopes were limited to just one policy area; and the EU development aims were included in Article 4 and not Article 3. Given that the EU had to agree the renewal of the financing of the Convention, which would remain in effect until 2000, some of the more ambitious aims were dropped in the interests of speedier agreement. This reflects the specific problems presented by the Convention as an institutionalized form of development co-operation. The mid-term review could only modify existing structures, and not create the wholly new ones that the Commission’s initial proposals indicated both it and the member states wanted. The fact that they were dropped, however, meant that those EU member states most critical of the Convention proved unwilling to increase funding for a relationship that was proving more difficult to adapt to changing donor priorities than aid channelled through bilateral avenues or the Bretton Woods organizations. Gaining any adequate aid commitment soon came to dominate the review negotiations. What, if anything, the mid-term review confirmed to the Commission and the member states was that, while it had been possible to modify the Convention to changing North–South relations, these had moved into a ‘new era’. Before the new aid procedures had been ratified, the Commission had embarked on a long-running process to review the entire form of its relations with the ACP countries, in effect to begin again. The replacement of the Convention with new aid procedures and a restructured trade regime was to make Lomé IV/ii the last Lomé Convention although not the end of EU–ACP relations. The details of its replacement, the Suva Convention, are related in chapter seven.

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5 Zimbabwe and Lomé: the politics of accession

So far in this study we have seen the evolution of the EU’s relations with the ACP countries, from the era of independence to the partial recognition of demands for a reformed relationship in the early 1970s, to the economic and later political conditionality in the 1980s and ’90s. The Lomé relationship has been interpreted in terms of its political economy – as reflecting the nature of social relations, political and economic – within developing countries, between developing countries and the developed world and donor institutions and in the international system more generally. This approach has been contrasted with the ‘conventional’ views of Lomé as, on the one hand, a ‘unique’ or qualitatively different type of relationship between North and South, and on the other as an arrangement primarily concerned with apolitical and technical issues of how best the EU can aid the development of its partner ACP states. Instead, we have seen how the Convention, the policies and strategies it supports, the relationship between EU and ACP, the wider North–South relationship and the development process itself, reflect and are constituted of particular forms of social relations. This chapter and the next will investigate these issues in the specific case of Zimbabwe. We proceed from a general consideration of Zimbabwe’s accession to Lomé in the context of the country’s independence, to a more detailed analysis of the aid from Lomé IV and the role of structural adjustment support. This chapter will therefore assess Zimbabwe’s accession to Lomé and its experience of the Lomé Convention prior to Lomé IV.1 We will briefly reflect on Zimbabwe’s independence and consider how far Zimbabwe’s accession to Lomé reflected the politics of independence and western countries’ policies towards Zimbabwe. We will analyse the uses of aid from Lomé II and Lomé III and the treatment Zimbabwe received under Lomé regulations on beef and sugar exports and trade more generally. Chapter six will deal with the introduction of structural adjustment and conditionality into the Lomé relationship. It will seek to assess the two main questions posed in chapter three in relation to adjustment, namely, how far does adjustment support in the Convention follow rather than modify the approach of the Bretton Woods Institutions (BWI), and how far do adjustment priorities dominate the Convention as a whole in the specific case of Zimbabwe? In order to put the

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EU’s role in adjustment in Zimbabwe into context, the chapter will also outline the evolution of Zimbabwe’s economic policies and relationship to the BWI since independence. Zimbabwe’s accession to Lomé, and the aid and trade access it received from Lomé, formed merely one part of a wider set of relationships between the new Zimbabwean state on the one hand, and the western states and donor agencies on the other. Certainly in terms of the quantity of aid in the early years of independence, that coming from the Convention was considerably less than that from bilateral donors (USA and UK) and from the World Bank. The question is therefore not so much whether or not membership of the Convention alone caused any particular course to be followed in Zimbabwe, but whether the relationship with the EU reflects or deviates from the general pattern of relations with the West after independence. It will thus illustrate in a particular case the general argument that Lomé relations have formed a part of a wider pattern of North–South relations. To begin with, it will be argued that the accession of Zimbabwe to Lomé was greatly influenced by the EU’s desire for the newly independent country to solidify its relations with the western states, and that accession formed a part of the process of defining the country’s entry into the international system. This was, in turn, influenced by the political context of the country’s independence. It is thus necessary to begin with a brief outline of the colonial background of Zimbabwe, its independence, the social conflicts which drove the independence struggle, and the way in which the possibilities for resolving those conflicts were limited by the independence process itself. I will also show how, despite Zimbabwe’s late entry into the international state system as a recognized state, it nevertheless demonstrated key aspects of the politics of post-colonial relations that have been analysed already. The chapter will then look at the accession of Zimbabwe to Lomé and will outline the implementation of Lomé II and III Conventions. The argument will be made that a number of key aims driving western policy towards southern Africa in general have had a significant impact on the Convention’s practice in Zimbabwe. It is, however, necessary to begin with a brief consideration of the background to Zimbabwe’s independence and an evaluation of the country within the ACP context.

Background: Zimbabwe in the ACP context Zimbabwe has been chosen as a case study for two main reasons. Two general issues were outlined above: that Lomé reflects rather than deviates from the wider pattern of North–South relations, and that the development policies contained within the Convention’s provisions reflect deeper economic and political processes than simply a ‘technical’ response to a developmental ‘need’. Zimbabwe provides a unique case to assess these issues. First, Zimbabwe’s independence differed from the general pattern. It became independent in 1980, 15 or 20 years later than the vast majority of sub-Saharan African states. The attainment of independence and sovereign statehood was a more drawn out and difficult process than for the majority of states. If the wider claims I

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have made about the nature of southern statehood and sovereignty and the relations established with the international system and with northern countries are to be found wanting, then Zimbabwe would provide a good place to look. As will be argued below, despite this somewhat unusual path to independence, the central features of the sovereignty and development of southern states which have been already assessed are revealed in this case. Zimbabwe’s political trajectory follows much of the general conditions pertaining to southern politics and external relations in terms of independence, a statist and somewhat protectionist development strategy, and a troubled move to structural adjustment under the guidance of the IMF and World Bank. It is useful to illustrate in a specific case the more general arguments that have been made. Finally, this transformation of development policy in Zimbabwe, at the very time adjustment conditionality was introduced into Lomé thus allows us to see what part the Convention played in this change – if it offered alternative possibilities to Zimbabwe or if it reinforced the policy direction of other donors. This itself will again show how far the Convention reflects wider political changes, the nature of apparently apolitical ‘developmental’ co-operation in Lomé, and how the character of relations with the EU, as reflected in the Convention, have changed. Second, Zimbabwe is among the most developed of the ACP countries, with a more diversified economy and a stronger economic performance than most others. This is important for two reasons. First, to the extent that ‘domestic’ weakness leads southern states into a particular type of relationship with the North and a particular place in the international system, this could be modified in this case study. Second, it puts the country in a potentially stronger bargaining position vis-a-vis the EU than other ACP countries. Zimbabwe can thus be used as a test for Lomé. If the Convention can be utilized by ACP countries for the developmental purposes that the EU claim for it, if the ACP country can truly define its development priorities, if the Convention is concerned with ‘development’ conceived in some non-political sense, then arguably this could be shown in a country such as Zimbabwe. If, by contrast, the application of the Convention in Zimbabwe reflects more the EU’s, the member states’, and other donors’ priorities, then it will strengthen the case that this is so for the Convention as a whole. It would not be surprising if a small country with a weak economy, which is highly dependent on the EU for exports and aid, was susceptible to EU pressure to influence the uses of aid and its own economic policy. However, a larger country with a more developed and diversified economy such as Zimbabwe’s could conceivably resist such influence to a greater degree.

The colonial heritage Zimbabwe became independent in 1980, following a prolonged liberation struggle lasting over 15 years. It was initially colonized by Cecil Rhodes’s British South Africa Company at the end of the nineteenth century, and became the largely self-governing colony of Southern Rhodesia from 1923. Following the Second World War it was incorporated into the Central African Federation along with Northern Rhodesia (Zambia) and Nyasaland (Malawi). Throughout

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this period the country was ruled by the white settlers, whose policy was characterized by a familiar series of measures to expropriate land from the indigenous people and by punitive and exploitative economic relations (see Loewenson 1992; Moyo 1986). This 10-year federal system was terminated with the independence of Zambia and Malawi. The British retreat from empire of the 1950s and ’60s saw increased British pressure on the white settlers in Rhodesia for concessions to the claims of a growing black nationalist movement, as a basis to grant full independence from Britain. However, unlike other settler states such as Kenya, and those with much smaller settler populations, the entrenched white interests in Rhodesia resisted British policy, culminating in the government of Ian Smith’s Rhodesian Front making an illegal Unilateral Declaration of Independence (UDI) in 1965. This move, as well as growing repression of the nationalist movement inside the country, led to two outcomes. The first was a programme of international sanctions, which served to isolate the Smith regime from the international community and increase its ties with apartheid South Africa. The second was an upsurge in the liberation struggle and a move to guerrilla war by the nationalist movement increasing in intensity in the mid-1970s.2 One of the political effects of this was to create a de facto state which did not receive international recognition (in contrast to somewhat weaker states which did), but which was nevertheless highly dependent on external support form South Africa. However, it was Zimbabwe’s economy that was particularly influenced by this history. Through the Land Apportionment Act of 1930 and a series of other measures, including the Land Husbandry Act of 1951, the colonial administration divided the country into white-owned areas (which amounted to over 50 per cent of the total land and was concentrated in the most fertile areas), and over-crowded and poor ‘Native Reserves’ (later the Tribal Trust Lands and later still the Communal Areas).3 State support to the white farmers in terms of land expropriation from the peasantry and infrastructural and financial support, thus created and sustained a racially defined, strong capitalist farm sector during the years of colonialism and UDI. With white farms being concentrated in the more fertile areas with better rainfall, and a supply of cheap, migrant labour from the landless peasants in the reserves, multinational agribusiness played an increasing role in the 1970s with British and South African companies such as Lhonro and Anglo-American growing in importance (Loewenson 1992: 36–44). Alongside this export-oriented agricultural sector there also developed a locally based industrial sector, initially through supplying the captive market of the Central Africa Federation in the 1950s (Ndlela 1986: 143). The 1965 UDI sought to protect these white capitalist interests by resisting moves towards black majority rule. As a result of isolation, UDI boosted the local industrial base in Zimbabwe. In response to international sanctions, the Smith government sought to develop alternative supplies of agricultural inputs, to increase the processing of agricultural produce and to follow ‘import substitution industrialization’ to supply consumer goods to the white market. The manufacturing sector grew by an annual average of 9 per cent between 1966 and 1974 (Ndlela 1986: 143).

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At independence, Zimbabwe’s economy thus inherited a higher level of industrialization than many other African countries, containing both a diversified industrial base and a large commercial farming sector. Table 5.1 shows the average contribution to GDP from agriculture and industry for ACP states compared to Zimbabwe for 1985. Zimbabwe has both a higher contribution from industry (38.9 per cent compared to 24.2 per cent for the ACP average) and a lower one for agriculture (11.8 per cent compared to 29 per cent for the ACP average). Table 5.1 Origins of GDP by sector (per cent) – ACP average compared to Zimbabwe, 1985 Agriculture

Industry

ACP

29.0

24.2

Zimbabwe

11.8

38.9

Source: Eurostat 1988.

Although some other ACP states also have high figures for industry, in most cases this is due to the preponderance of mining in the economies (for example, Zambia, which registers 42.1 per cent for industry). For Zimbabwe this is less the case. Table 5.2 Zimbabwe: Origins of GDP, 1981–93 (per cent) Sector

1981a

1985b

1989c

1993d

Manufacturing

25.1

23.9

26.5

21.7

Agriculture and forestry

15.9

16.7

12.7

14.4

Distribution, hotels etc

14.9

12.5

n/a

9.5

Mining and Quarrying

6.2

5.4

7.1

7.2

Public Administration

7.6

7.6

7.9

8.3

Transport and Communication

7.5

6.9

n/a

8.0

Construction

3.4

2.5

1.7

n/a

Source: EIU Country Profiles and Country Reports: a EIU Country profile 1988/89, b EIU Country profile 1992/3, c EIU Country profile 1993/4, d EIU Country report 4/94

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Table 5.2 shows the make up of Zimbabwe’s GDP in more detail from 1981 to 1993. In all this period, manufacturing is the most important sector in terms of its contribution to the economy, providing around 25 per cent of GDP. Mining, construction, and transport and communications combined do not out-perform manufacturing in any of the years covered. Agriculture is clearly the next most important category, contributing 15.9 per cent of GDP in 1981 and 14.4 per cent in 1993. Zimbabwe is also a major trader by African standards, being the fifth most important trader in sub-Saharan Africa after Nigeria, Côte d’Ivoire, Zaire and Cameroon in the 1980s (Riddell 1990). It is also ranked as one of the leading ACP traders, being the seventh largest exporter and the twelfth largest importer among the ACP countries in 1985 (Eurostat 1988). Furthermore, Zimbabwe escapes some of the negative trade dependencies of other ACP countries by exporting a fairly diversified range of products to the region, the EU and elsewhere. Although dominated by South Africa and the EU, Zimbabwe’s trade has shown a fairly wide distribution in geographical terms with the USA, Japan and the southern African region all representing important markets, and to a lesser extent suppliers.1 In addition, within the EU Zimbabwe’s trade has diversified, with Italy and the Netherlands joining Britain and Germany as important markets and suppliers. Zimbabwe’s exports are characterized both by a wide spread of product types (in 1987 there were 15 product groups which earned over Ecu 10m each), with four product groups taking 55.3 per cent of Zimbabwe’s total exports by value in 1987 (Brown 1995). The importance of iron and steel-based products is an indication of the relatively high level of industrialization of the economy, based on the protected domestic market under UDI. In addition, cotton lint, textiles, clothing and footwear all feature among the country’s top 15 exports and with iron and steel make up around 23 per cent of all exports (Brown 1995).2

Zimbabwe’s independence: the late reprise of post-colonial politics The delayed nature of Zimbabwe’s independence and the forced import substitution of the UDI era certainly bequeathed advantages to the new state in terms of economic development. However, what is perhaps surprising is that despite this, the politics of the country’s independence demonstrate many of the attributes of post-colonial politics that have been analysed in earlier chapters. The main features we should note at this stage are the role of international society in recognizing the ‘right to independence’; the Cold War political considerations that impinged on the independence process; the management of the independence process by the donor community and the type of development policies adopted; and the external relations encountered by the new regime. I shall take each in turn. Before independence, the mass of the population was excluded from the benefits of such development. The state had actively expropriated land from the black population and created a hugely unequal society. The richest (white) 5 per cent of the population received around half of total income in 1980. Thus, with a GDP similar to other African countries, Zimbabwe’s whites were

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still able to live in luxury (Stoneman 1988b: 44). However, the inequality and injustices of the colonial economy led to increasing support for the independence war waged by Robert Mugabe’s ZANU (Zimbabwe African National Union) and ZAPU (Zimbabwe African People’s Union) led by Joshua Nkomo. In the mid-1970s these forces united in the Patriotic Front (PF). Apart from the demand for independence and non-racial elections, the struggle focussed on demands for land. Both in terms of its membership and support, the liberation movement contained contradictory pressures for change. It was based on support from poor and landless peasants, while also including conservative class forces such as richer peasants and farmers, business people and educated black elites. The liberation movement espoused non-racial independence, radical land reform as well as more Marxist sympathies and rhetoric (Phimister 1988). The response of the international community, and the USA and Britain (the two most closely involved ‘major powers’) in particular was twofold. First, there was widespread support for Zimbabwean independence on the basis of majority rule, and for international sanctions and non-recognition of the illegal claim to independence of the Smith regime. Indeed, it was British pressure on Rhodesia to move to majority rule that prompted the UDI declaration. Along with South Africa, occupied Namibia and the Portuguese colonies, Rhodesia held out against the tide of independence and was notable precisely because it did not conform to the rapidly created and almost universally accepted new principle of international order: namely, the unconditional right to independence. As such they were in flagrant opposition to the UN declaration of 1960 which called for the transfer of powers to the peoples of all non-selfgoverning territories. As far as the new sovereignty regime was concerned, the internal nature of rule – by a white settler elite – disqualified these countries from the right to statehood and represented a concern with the internal political character of the countries that was notably absent from all other countries on the continent and was based on recognition of the racist nature of the regimes (see Jackson 1990; Clapham 1996). The Portuguese colonies gained independence in 1974, Namibia in 1990, and South Africa was not fully recognized until the end of apartheid and the first democratic elections in 1994. For Rhodesia, recognition as a sovereign state came with a managed electoral transition – in which the country had to revert to formal colonial status under Britain before independence could be granted – and was renamed Zimbabwe in 1980. Second, for the western states (and the rulers in Rhodesia and South Africa) the independence struggle raised the fear of a radical or even socialist movement (possibly allied to the eastern block or China) taking power.3 As we have seen, the earlier independence process in the Third World posed a similar dilemma for the western powers, between their support for the principle of sovereign statehood based on some version of majority or non-racial rule and the opposition to radical nationalist or Communist-influenced and supported liberation movements that posed a threat to western interests and the liberal international order in the context of Cold War. In the case of Zimbabwe, such

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western fears had been raised by the liberation of Mozambique and Angola. The independence of Portugal’s two southern African colonies in 1975 brought to power the Marxist movements of the MPLA (People’s Movement for the Liberation of Angola) and Frelimo (Front for the Liberation of Mozambique). This led to an increasing involvement of western states (the USA and Britain in particular) in the politics of the southern African region (Goodison 1988a). They sought to ensure that independence struggles in Zimbabwe, Namibia and above all South Africa, did not also result in increasing Communist influence. A key figure in the strategy, Henry Kissinger, stated ‘… we have a stake … in not having the whole continent become radical and move in a direction that is incompatible with western interests … ’ (quoted in Stoneman and Cliffe 1988: 29). A key aim for the western states was to undermine the role and influence of the Soviet Union in Angola and Mozambique.4 In an era of détente between the superpowers, Africa had become an arena of competition for influence. By the time the Zimbabwean liberation came to a climax, renewed Cold War made such considerations even more crucial for the West. Western policy was therefore to try to broker a peaceful transition in Rhodesia to one of majority rule, in a way which was deemed ‘acceptable’ to capitalist interests inside and outside the country. The independence of Rhodesia’s neighbours increased pressure on Smith from western states, and even South Africa, to find a negotiated settlement to the war in order to prevent the radicalization of the liberation movement in Rhodesia. Following failed US-sponsored negotiations in Geneva in 1976, Smith attempted to forge an ‘internal settlement’ by holding elections from which the liberation forces were excluded and which gave victory to the black Bishop Muzorewa in 1979 (Hanlon 1986; Mandaza 1986c). These elections were not internationally recognized even by the new right-wing Thatcher government in Britain which had been sympathetic to Smith (Goodison 1988a; Stoneman and Cliffe 1988). The internal and international pressure merely increased for more negotiations. These were called for September 1979 and took place at Lancaster House in London. It was here that the independence of Zimbabwe was finally secured. It was also here that the West largely succeeded in limiting the possibilities of radical change in Zimbabwe. Talks were held before the insurgents had won the war and before the white regime had collapsed. A compromise was therefore still possible for Smith and the liberation movements were encouraged to negotiate.5 This gave the western powers considerable influence over the content of the settlement. The Lancaster House agreement provided for a ceasefire, free elections for independence and a new constitution. However, it was the provisions of Lancaster House for the new constitution that were the most important influence over Zimbabwe’s future political direction (Stoneman and Cliffe 1988). These ensured that even though Mugabe’s ZANU won an landslide victory, its options were severely constrained. Lancaster House provided for the maintenance of 20 white-only seats in parliament (which all went to Smith’s Rhodesian Front), but also that changes to the constitution would be prevented for ten years except by a unanimous vote in parliament, thus giving the whites

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a veto (Stoneman and Cliffe 1988). This was a crucial step in ensuring the most important element of the Lancaster House agreement, which was the question of property rights. The constitution ensured that any land reform programme had to be on the basis of ‘willing seller-willing buyer’, and also that a market rate had to be paid for land redistributed and in scarce foreign exchange (Stoneman and Cliffe 1988). This severely limited the ability of any government to undermine the entrenched, and massively unequal, position of the white farmers in the new Zimbabwe. As part of the deal to get the Patriotic Front to agree to this, the USA and Britain promised a substantial development fund to help with land reform, but this never came about (Stoneman and Cliffe 1988: 32–3). Thus, while the independence process allowed the liberation movement into government, it meant that on the main issue on which it united and fought, it was severely constrained. Furthermore, the destruction caused by the war, the maintenance of much of the colonial state, the need to revitalize the economy, and the attitude of the western powers, all contributed to a post-independence politics in which the white capitalists and farmers retained a crucial role (see Mandaza 1986c; Stoneman and Cliffe 1988). So not only was there an attempt to reconcile the races, there was also a reconciliation with capital (Sibanda 1988: 262). The government did undertake a rapid expansion of health and education services for the poor, but followed only a slow-moving and cautious land reform policy.6 Reforms which were undertaken were done so as not to attack the wealth or position of the white capitalist class. Zimbabwe’s independence was thus based on a class compromise which was central to Zimbabwe’s political economy for the next decade.7 This was clearly reflected in the government’s economic policy. Given the need to satisfy popular demands while not attacking the position of the main business interests, the government pinned its hopes on rapid economic growth. In the first two years after independence this happened, based largely on rising government expenditure and wages, increased international financing and good rains (Mkandawire 1985; Stoneman 1988b). However, with the deepening international recession and a drought in Zimbabwe, this growth came to a sudden halt in 1982. Its failure led to hard choices in the struggle between the competing class claims. Falling export earnings and rising import prices and debt repayments produced balance of payments problems in 1982. The debt service ratio rose from 2.9 per cent in 1980 to 26 per cent in 1983 (Mkandawire 1985: 246). Zimbabwe turned to the IMF and agreed a loan in early 1983. In a rehearsal for what was to come in the 1990s, the government claimed that the required programme of adjustment was ‘home-grown’, although it was remarkably similar to other IMF programmes involving spending cuts, a wage freeze and restrictive economic policy (for details see Mkandawire 1985). However, conflict soon emerged when the government refused to liberalize investment controls to the extent the IMF demanded, and the IMF programme was suspended in 1984 (Mkandawire 1985; Stoneman 1988b; 1989). The rest of the 1980s saw a policy which has been described as ‘selfadjustment’ (Lehman 1990). This involved some ‘orthodox’ economic measures

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such as wage restraint, but controlled trade and investment and administrative allocation of foreign exchange replaced liberalization and an important distance was maintained from the IMF and World Bank (Kadhani 1986; Mahlahla 1989).This policy also meant that any notion of ‘socialist planning’ was relegated to a secondary place behind short-term economic management. This ‘eclectic’ policy reflected the struggle between aims of social equity and the capitalist interests in Zimbabwe (Lehman 1990). The overall result of this policy of fiscal and monetary adjustment, combined with controlled trade, was an average real GDP growth rate of around 4 per cent per year for the 1980s and an increasingly diversified export performance, with exports as a whole rising by 40 per cent from 1985–88 (Lehman 1990: 60; Stoneman 1993a: 96). While this average includes the one-off massive growth of the first two years of independence, it also includes the contraction of 1982–84, the droughts of 1982–84 and 1987, large debt repayments and the effects of South African destabilization (Stoneman 1993a). 8 This growth thus sustained the class compromise of independence through the 1980s. However, Zimbabwe did have to contend with some severe economic problems towards the end of the 1980s. The debt service ratio rose to a peak of 33 per cent in 1987 (Knight 1990: 223) and soaked up much foreign exchange, which limited imports. The allocation system of foreign exchange was opposed by the private sector, which perceived a bias towards parastatals and led to some limitations on exports as the necessary inputs and investment could not be made (Lehman 1990). Such constraints were only partially relieved by attempts by the government to increase exports from 1984, including a World Bank financed Export Revolving Fund, an ‘Export Incentive Scheme’ and tax breaks for exporters (for details, see Riddell 1991). As the 1980s progressed there was also an increasing identification of the ruling party with the major economic interests in the country. Eventually these factors led to Zimbabwe abandoning this economic approach in 1990 and adopting a structural adjustment programme – a development which is dealt with in chapter six. In some ways, then, Zimbabwe was an ‘exceptional case’. The economy was stronger than for many other newly independent states, growth in the 1980s was also impressive by African standards (Stoneman 1991). Some commentators, noting the relatively high level of manufacturing combined with considerable state involvement in the economy, have even posed the possibility of Zimbabwe emulating the East Asian industrializing countries (Fransman 1988; Stoneman 1988c; Stoneman 1993b). Politically also, there appeared to be a ‘success story’ in Zimbabwe. The country did not descend into the internal chaos of the worst cases of sub-Saharan Africa, nor did it see rapid moves towards one-party rule. Instead, democratic multiparty elections, political stability and human rights prevailed through the 1980s. However, despite these apparently novel features, in several important respects Zimbabwe actually reflected the experience of other developing countries. Most commentators have doubted the claim of a different ‘Zimbabwean economic model’ and have instead stressed the lack of coherent economic strategy, with policy concentrating on balancing the opposing forces

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of popular demands and the capitalist sector (Stoneman 1988c). The less than impressive record of adjustment analysed in the chapter six does little to qualify the rejection of over-optimistic analyses. Instead, as with other African states, there is a tendency towards economic nationalism, reflected in the policies of control of trade, national ownership (some of which was inherited from the Smith era and accounted for around 25 per cent of GDP in 1983 (Kadhani 1986) and control of foreign exchange as well as a reluctance, in the 1980s, to embrace the kind of liberalization being promoted by the IMF. Politically the picture is also not so rosy. Although the state and government faced significant internal opposition from the white minority, key areas of the whites’ concerns were incorporated into the state’s constitution itself, particularly in the protection of land ownership. In addition, as capitalist interests began to show a partial weakening of the race bar – and parts of the black elite acquired their own commercial interests – the relationship between state and leading economic interests grew closer. This was particularly true in the area of foreign exchange, which became a vital source of potential accumulation and over which the state exercised control. It was also revealed in the familiar and growing series of corruption scandals in the late 1980s and ’90s involving state and government personnel. We thus see the emergence of the state-centred political economy familiar in other developing countries. Furthermore, the tendency for monopoly power grew as white political forces dwindled (and reserved white seats in parliament were superseded). This was starkly illustrated with the merger of Mugabe’s ZANU and Nkomo’s ZAPU in 1987 which followed severe state repression of the ZAPU base of Matabeleland in the mid-1980s. Throughout the late 1980s and ’90s Mugabe has continued to give lip-service to the idea of creating a one-party state, although the need for it, given ZANU’s near complete domination of the electoral system, is highly questionable.9 In the country’s external relations too, Zimbabwe has shown a remarkable similarity with the wider pattern of North–South relations analysed above. As with other newly independent states, Zimbabwe required substantial external aid to reconstruct the economic and social infrastructure (particularly war damage), fulfil its political pledges (particularly land reform) and promote industrialization. As with other developing countries, it was the object of substantial aid effort by western states and agencies. This resulted in a ten-fold increase in aid from 1979–80, with most EU countries, the EU itself and the USA joining the UK in aid operations (Eurostat/Federal Statistical Office (Germany) 1990). The aid effort focussed in particular on the Zimcord donors’ conference of March 1981, organized by the government in order to attract pledges of both public and commercial aid and investment for Zimbabwe’s ‘Reconstruction and Development Programme’. At the conference about Ecu 1.5bn (US$1.7bn) was pledged for specific projects, with the World Bank leading donors with Ecu 3373.9m (US417.4) followed by the USA and UK (Chimombe 1986: 132; Nyawata 1988: 101; Stoneman and Cliffe 1988: 122).10 The aid received had two dimensions, both of which served to support the class compromise of Lancaster House. First, it sought to consolidate the ties

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of Zimbabwe with the West. The aid and loans pledged at Zimcord represented a significant reintegration of Zimbabwe into the international aid, financial and indeed political worlds after the isolation of the Smith years, and came with a more or less implicit conditionality that the new government’s accommodation of white interests and moderate economic policies would continue.11 The second dimension to the aid was its specific uses. Here the key example is the land question. Britain had pledged to fund a land reform programme at the Lancaster House conference in order to gain PF acceptance of the restrictions on redistribution of white-owned lands. However, not only was Britain’s aid for this purpose small compared with estimates of necessary funding (see Stoneman and Cliffe 1988: 122), but it was also directed to individual land tenure in preference to other, more socialist, forms of redistribution. Indeed, of aid given by western states to rural areas, most was directed to individual farmers and mot was destined for the support and development of existing peasant lands, and therefore to existing land tenure patterns, not redistribution (see Loewenson 1992: 60; Sibanda 1988; Stoneman 1988b: 50, fn18; Stoneman and Cliffe 1988). In the context of Zimbabwe’s independence, aid from the West sought to support its earlier policy of limiting the possibility of radical change in Zimbabwe while supporting the new regime. Thus, despite the differences between Zimbabwe and the African states that achieved independence before it, it reproduced key features of the postcolonial relations between North and South. Indeed, the country’s move to independence provided a late reprise of the path followed by many others. So, was this tendency also reflected in relations with the EU? And did the Lomé relationship offer anything that was substantially different from the general pattern analysed already?

Zimbabwe and Lomé The political context which framed Zimbabwe’s independence was therefore shaped by a wider international policy, as the western states sought to ensure that the radical tide was turned in southern Africa. This western policy also shaped the aid relationship with Zimbabwe established following independence, which served to bolster the independence compromise. It is important for this case study of the Lomé Convention to see how far such political concerns were reflected in the accession and implementation of Lomé in Zimbabwe. In particular, to see how far the nature of the aid offered through Lomé differed from or repeated the pattern outlined above. This is important for a number of reasons. First, we can see how far the general argument that Lomé should be interpreted as reflecting wider political changes in the relations between developed and developing countries holds true in the case study. Second, we can see how far the changing political concerns identified in the wider development of Lomé are also present in its implementation in Zimbabwe: if the politics of independence did dominate the Convention’s application in Zimbabwe, for how long was this true and did new factors such as the debt crisis come to the fore?

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Zimbabwe’s accession to Lomé There were reasons for both parties to seek agreement on accession to Lomé. The EU wanted Zimbabwe to join Lomé because it dovetailed with the wider western policy pursued by the EU, the member states, the USA and the BWI towards the country’s independence. Western political involvement in the region, and in the independence of Zimbabwe, clearly influenced Zimbabwe’s accession to the Lomé Convention. At the most general level, accession to Lomé accompanied the acceptance of the new state into international society along with membership of the UN, World Bank, IMF, and Commonwealth. It also provided the kind of economic support characteristic of international policies towards weak states – and the immediate post-independence period was a crucial one for Zimbabwe. The relationship with the EU, through the Convention, also formed a part of this wider set of relationships with western countries and agencies and reflected the policies and concerns of the West in the region. The EU’s involvement in the southern African region before and after Zimbabwe’s independence had been clearly in support of the wider western aims. As well as direct involvement in the negotiations for Zimbabwe’s independence, the Commission was also a key actor in the formation of the emergent regional organization, the Southern African Development Coordination Conference (SADCC), which was launched in April 1980. The EU’s role in SADCC (which was both through and outside of the Lomé Convention) has been documented in detail by Goodison, who argues that, following a ‘cooptational’ strategy, the EU supported the attempts to form a regional organization in order to influence its political orientation in line with the West’s concerns over Mozambique and Angola (1988a). A key question was the membership of Lomé of these two countries, which eventually joined in the mid-1980s (a problematic process, the details of which do not need to be repeated here; see Goodison 1988a; Lister 1988). The general policy was to encourage closer relationships with western countries and agencies in order to reduce Communist influence and to protect western commercial and strategic concerns. As we have seen, this approach formed the basis of the West’s involvement with Zimbabwe, and Zimbabwe’s accession to the Lomé Convention also fulfilled this policy aim. The Commission ensured that moves for Zimbabwe to join Lomé were actually raised during the Lancaster House conference (Goodison 1988a: 213), and Mugabe made his first visit to the EU Commission during these negotiations (The Courier no. 74 1982: Yix). Membership of Lomé was seen, particularly given Mozambique’s and Angola’s absence, as a sign of the new state cementing its relations with the West. The Commission played an active part, with Commission President Cheysson visiting Zimbabwe twice in 1980, including attending the independence celebrations in Harare in April and holding meetings with Mugabe on Zimbabwe’s relationship with the EU (The Courier no. 61 1981: Yviii). One Commission official interviewed claimed that Zimbabwe’s accession to Lomé was closely linked to the wider independence process and influenced by the Cold War considerations of the time (Interview, Brussels, 26 May 1993).

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Furthermore, in contrast to the lack of aid made available to Mozambique and Angola in this period, Zimbabwe received substantial aid from the EU, not only before Zimbabwe had joined, or even applied to join, Lomé but even before it had become independent. Zimbabwe received emergency non-Lomé aid from the EU budget for non-associated countries from the end of 1979. In 1980 this included Ecu 9m for refugees, Ecu 1.1m for cattle health programmes, Ecu 1.1m in food aid through the World Food Programme and Ecu 1m which was provided for NGO work (Dünkelsbühler 1986: 48; Scott 1981; The Courier no. 65 1981: Yii). In addition, once Zimbabwe had announced its intention to join Lomé, a further Ecu 18.5m was committed (at the Zimcord conference) for seven rural development projects (Dünkelsbühler 1986: 48; The Courier no. 67 1981: Yv-vi; The Courier no. 68 1981: Bxiii-xiv). While such aid can indeed be seen as a positive response to the urgent needs of the country, the contrast with the lack of aid to Mozambique and Angola highlights its political nature, reflecting the desire to support the western-guided independence process. At a time when there were still barriers to the socialist countries of Mozambique and Angola joining Lomé, the seven projects initiated in 1980 in Zimbabwe were clearly meant to smooth Zimbabwe’s entry into Lomé and prepare the ground for Lomé-funded projects (The Courier no. 67 1981: Yv). Zimbabwe was also granted mostly free market access to the EU for its exports under the arrangements for the remaining colonies of the EU countries – the ‘Overseas Countries and Territories’ (or ‘OCT’) from the end of 1979 (The Courier no. 61 1981: Yviii; The Courier no. 65 1981: Yi).12 Zimbabwe sought to join the Convention for general and specific reasons. On a general level, the aid and trade concessions that were institutionalized in Lomé were attractive to any Third World state. Although the relationship with the EU had disappointed the ACP’s original hopes, the ACP still agreed to Lomé II because of the deepening crisis in the world economy, which confronted them with worsening financial and economic problems. Indeed, several states had joined since the original 46 who signed Lomé I and Zimbabwe would become the 60th ACP state. Third World countries would take, in this sense, what was on offer. Zimbabwe could not negotiate new concessions or relations with the EU, as the Convention was already in place. For Zimbabwe, the Convention therefore held out the possibility of aid for the urgent tasks of reconstruction and development and also of developing trade with the EU to boost exports. The state in Zimbabwe was, despite the fears of a Marxist orientation on the part of the West, and like many other ex-colonial states which had gone before it in Africa, facing a more or less permanent crisis encompassing the raised expectations and struggles of the populace on the one hand and the reality of the limits of what underdeveloped capitalism could deliver on the other. The new government in Zimbabwe came to power promising land, education, health and development to its liberated people in a world climate where recession was destroying even the developed capitalist states’ ability to deliver (let alone the added problems of dealing with an entrenched, suspicious and sometimes hostile white capitalist class). Zimbabwe’s options in regard to relations with the EU, as well as its wider

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re-integration with the West, were also influenced by the examples of Mozambique’s and Angola’s isolation and the threat of destabilization by South Africa, both of which the Lomé Convention appeared to offer some respite from. In the context of the country’s independence, where many in the West were wary and suspicious of the new government and its socialist rhetoric, membership of Lomé was seen as a necessary indication of the government’s good intentions. Mugabe has stated, ‘… of course the relationship with the EEC also creates an opportunity for us to have bilateral relations with its individual members. It’s easier when they know that you’re associated with them through the Lomé Convention’ (The Courier no. 66 1981a: 13). Such bilateral relationships were seen as necessary by Zimbabwe in order to attract more external financing, reduce dependence on South Africa and ease the supply of much needed capital goods from the western European countries (The Courier no. 66 1981a: 13). Zimbabwe therefore expressed the wish to join Lomé immediately after independence (The Courier no. 61 1981: Yviii). Following the discussions which had already been held, in particular during Cheysson’s two trips to Zimbabwe, the formal negotiations opened in July 1980 and were concluded in October that year. Zimbabwe formally signed the Convention on 4 November (The Courier no. 65 1981). The process of new states joining the Convention entails the 12 EU members and two thirds of the ACP ratifying the accession before the new country is formally a party to the agreement. For Zimbabwe this process took a fairly long time, largely because of the delay in enough governments making the necessary decisions. This meant Zimbabwe didn’t formally accede to Lomé until 1 March 1982, when it also became a full member of the ACP Group (Dünkelsbühler 1986: 48). To cover the time gap, however, Zimbabwe and the EU agreed transitional measures which extended the market access Zimbabwe had received since independence under the OCT terms to give it access equal to the ACP states (Dünkelsbühler 1986: 48; The Courier no. 65 1981: Yi). As has been mentioned, it was also granted several aid projects before joining Lomé. Because the Convention is a formalized agreement negotiated between two groups of states, the accession of another country during the life of the Convention cannot alter the substantive general parts of the agreement such as trade access, the areas for co-operation and the instruments of co-operation. The Agreement on Accession states in Article 1: ‘Save as otherwise provided in this Agreement, the provisions of the Convention and also the decisions and other implementing measures taken by the institutions of the Convention shall apply to Zimbabwe’ (EC–Government of Zimbabwe 1980: Article 1). As a result, the negotiations for Zimbabwe to join focussed mainly on those aspects of the Convention which apply to specific ACP states (The Courier no. 65 1981: Yi). For Zimbabwe, this was primarily areas such as the protocols on beef and sugar quotas, plus the question of tobacco exports which were in any case among the most important economic sectors for Zimbabwe (Scott 1981).13 The question of trade relations had provoked some fears among Europeans that the duty-free access under Lomé would result in rapidly expanding exports

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from what seemed like a much more developed ACP country. These included Italian objections to competition from Zimbabwean tobacco (The Times 17 January 1980). However, the Commission argued that these fears were exaggerated, both because of the scale of reconstruction necessary in the country and as the limitations of the UDI-built industry became apparent (Interview, Brussels, 26 May 1993). In any case, an estimated 80 per cent of Zimbabwe’s exports would have entered the EU duty free either under the Common External Tariff or under the GSP scheme for developing countries (OTDA 1983: 10, 39). Nevertheless, the Agreement on Accession did include the minutes of the negotiations relating to tobacco imports from Zimbabwe in which: ‘… the Zimbabwean Delegation was informed of the special problems that would be caused by any increase in tobacco imports into the Community over and above the average level for the last few years … ’ (EC–Government of Zimbabwe 1980). This was a clear warning of EU reluctance to see any increase in the imports of tobacco to the EU, regardless of the Lomé principles of access. In fact, the production in the EU is mainly not in direct competition with Zimbabwe’s production because Zimbabwe’s exports are of flue-cured Virginia tobacco which is in higher demand, whereas most EU production is of different varieties (OTDA 1983: 51–4). Zimbabwe was also granted quotas under the beef and sugar protocols, which are detailed below. In addition, the trade regime was the subject of an Annex to the Agreement on Zimbabwe’s accession in which it was agreed that: ‘… if any modification to the Zimbabwe customs tariff and to its preferential arrangements with a developed third country is contemplated, the Government of Zimbabwe will enter into immediate consultations with the Community regarding such intentions … ’ (EC–Government of Zimbabwe 1980: Annex 1). This was aimed at preventing any loss of potential exports to Zimbabwe for the EU and at safeguarding the ‘most favoured nation’ (MFN) treatment to which the EU was entitled from the ACP states under Article 9 of Lomé II. While not altering the Convention as such, it does indicate the importance of trade with Zimbabwe as a more developed ACP state and new export market. As with other ACP states, Zimbabwe was also subject to the safeguard rules of the Convention which allow the EU to take action against ‘serious disturbance’ or ‘deterioration’ of a sector of a member state’s economy caused by the Convention’s trade rules (ACP–EEC 1979: Article 12). The prime (though not exclusive) target of these is manufactured products from the ACP, should any develop the capability to penetrate EU markets. For Zimbabwe, which had some manufacturing and steel potential as a result of the years of import substitution under UDI, such qualifications to free access represent a certain level of insecurity in its export access to the EU. Such insecurity was further emphasized when Zimbabwe became the first ACP country to be accused of ‘dumping’ on the EU market, when West Germany complained over imports of ferrochrome from Zimbabwe and requested that the EU institute antidumping measures (OTDA 1983: 15). This merely added to the more general vulnerability to EU protectionism the ACP faced, even within Lomé’s relatively permissive regulations.

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Aid and Lomé II and III As we have seen, Zimbabwe’s accession to Lomé was influenced by the West’s political strategies in the region. It has also been shown that the aid from the West in general was conditioned by its policy towards the new state, and was aimed at preventing radical change and supporting the compromise of Lancaster House. It is necessary, therefore, to see how far this is also true of Zimbabwe’s treatment under the Lomé Convention. This section will first look at how far aid received under Lomé II and III followed the pattern of wider western aid and how far it reinforced this western policy towards Zimbabwe. It will also assess the special treatment Zimbabwe received under the beef and sugar protocols. It will be argued that the use of aid from Lomé II and III was shaped by the political context of Zimbabwe’s independence, and helped to bolster the compromise on the land issue agreed at Lancaster House. It will also be argued that the protocols serve mainly to benefit the capitalist farmers, through guaranteeing exports to Europe. These two areas of aid and the protocols thus illustrate the extent to which even the application of specific parts of the Convention are influenced by wider policy concerns of the EU. While both parties to Lomé (Zimbabwe and the EU) sought certain advantages from Lomé, it is the interests of the latter which have been dominant.

Aid under Lomé II Zimbabwe had already been granted significant aid from the EU outside of the Lomé Convention between 1980 and 1982. The EU gave Zimbabwe a National Indicative Programme (NIP) allocation of Ecu 49m on joining Lomé II (CEC Delegation – Zimbabwe 1994a). This figure was not part of the negotiations but, as with all NIP allocations, was decided unilaterally by the EU. The NIP allocation took account of the fact that it was to cover only three of the five years of the Convention, hence the figures for the funds for Lomés III and IV appear to be a bigger increase than they are. In addition, Zimbabwe was to get emergency aid from the EU totalling almost Ecu 5m during the time of Lomé II, although some of it came from the EU’s own budget resources and was therefore not strictly part of the Convention. This was disbursed as emergency aid both during the years of drought from 1982–84 and as aid for dealing with refugees from Mozambique (CEC Delegation – Zimbabwe 1994a; Eurostat/Federal Statistical Office (Germany) 1990). The aid from the NIP for Lomé II is set out in full in Table 5.3. One of the important elements of how Lomé funds are spent, in particular prior to Lomé III, was that the initiative for projects was left very much with the government (for Lomé II, see Article 108). The EU retained important powers in being able to say whether the projects would be funded or not, but it had limited formal ability to provide a different impetus. Broadly speaking, Lomé II NIP funds were spent in line with the government’s own priorities, which were for development in the Communal Areas (CAs) and for manpower training and education in order to redress the imbalance of the races in skilled jobs (Dünkelsbühler 1986: 50; The Courier no. 66 1981b). As can be seen from Table 5.3 (and Fig 5.3.1) the Commission’s figures show that 74 per cent of the

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Lomé II funds were spent on rural development, with 5 per cent on training and 3 per cent on technical assistance (CEC Delegation – Zimbabwe 1994a). Although projects such as the rural water supply schemes have been classified elsewhere as ‘economic infrastructure’ (which would then account for 13 per cent of the total spent), and the Veterinary Science Faculty at the University of Zimbabwe has been classified as ‘training’ (now up to 21 per cent), both of these projects are essentially for the benefit of the rural areas and should in fact be included under rural development (Eurostat/Federal Statistical Office (Germany) 1990). Indeed, the micro-projects programmes (totalling over Ecu 6.5m) should also be counted under the rural development sub-heading, as the 13 per cent of the NIP which was spent on the three micro-projects programmes consisted almost entirely of small-scale rural development schemes (Interview, Harare, 2 March 1994). This gives a figure of 87 per cent for rural development and a combined total of 13 per cent for the rest of the NIP (see fig. 5.3.2). The total NIP figure of Ecu 49m was increased from an initial Ecu 40m, due to Zimbabwe not needing to utilize Ecu 9m of reserve funds set aside for transfers from Stabex and Sysmin (Dünkelsbühler 1986). This Ecu 9m was initially added to the allocation for special loans, so the overall NIP consisted of Ecu 30m in grant form and Ecu 19m in loans at the discounted Lomé rate. Thus, while most projects were funded by grant aid, some were partially or totally funded by discounted loans. The loan funds were used for the majority funding of the Fruit and Vegetable Development Project, the Matabeleland South Rural Water Supply and the Assistance to the Grain Marketing Board project. These three in total cost Ecu 14.01m, of which Ecu 10.9m (78 per cent) was in loans and Ecu 3.11m (22 per cent) in grants. The rest of the loan funds are not detailed in the figures available, but it is worth noting that the financing proposal for the Manicaland Coffee and Fruit Project (see below) refers to it being funded by a special loan, as does the report of the financing decision although it is not classed as such in the available figures (CEC Delegation – Zimbabwe 1994a; CEC-DG VIII 1984). The loans under Lomé II came at an interest rate of 1 per cent over 40 years with a grace period of ten years (ACP–EEC 1979: Article 102). As such, the loans were at very concessional rates, unlike some of the lending secured at the Zimcord conference, but in the context of rising borrowing by the government in the early years of independence it merely added to the country’s mounting debt. As has been mentioned in chapter three, the Commission recognized this in making all Lomé IV finance in the form of grants.

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Table 5.3 Zimbabwe: Lomé II (EDF V) in Ecu

Source: CEC Delegation – Zimbabwe 1994a; Eurostat/Federal Statistical Office (Germany) 1990. * Ministry of Lands, Resettlement and Rural Development

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Fig 5.3.1 Zimbabwe: Lomé II aid by sector (a)

Fig 5.3.2 Zimbabwe: Lomé II aid by sector (b)

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Under both Lomé II and III, Zimbabwe also got general (i.e. not nationally allocated) EDF funds as risk capital and interest rate subsidies allied to investment from the European Investment Bank (EIB). Allocations from EDF risk capital were directed to the ZDB, totalling almost Ecu 5m over Lomé II and III, and EDF interest rate subsidies amounting to just under Ecu 18m have been provided on EIB loans. (CEC Delegation – Zimbabwe 1994a; CECDG X 1990a). The EIB itself has committed almost Ecu 100m from its own resources in the form of loans. Among the investment undertaken was a loan for the expansion of the Hwange power station of Ecu 20m, in a project also involving the World Bank and the Commonwealth Development Corporation (CDC). While boosting power generation in Zimbabwe, this project has been criticized for undermining regional integration in SADCC by not utilizing cheaper surplus capacity in neighbouring states such as Zambia (Thompson 1991). The EIB finance also collaborated with the CDC in lending to the Cold Storage Commission Ecu 14m to build two new abattoirs in the south of Zimbabwe and a meat processing plant in Harare. In addition, the EIB lent Ecu 6m for the setting up of the ZDB; Ecu 12m for work on the Harare water supply system; Ecu 12m to a paper factory in Kadoma; and Ecu 33m for development of the telecommunications system. The loans were at a subsidized rate due to the EDF funds mentioned, and varied, with the Hwange power station an 18-year loan at 8 per cent and the Harare water supply loan over 20 years at 5 per cent (including subsidies). (CEC-DG X 1990a: 47). As can be seen, most of these funds were directed to infrastructural and industrial uses, and represent virtually the only ‘aid’ to specifically industrial ends from Lomé II and III if we discount the relatively small proportion spent on technical assistance to the ZDB from NIP funds (just under Ecu 700,000) (CEC Delegation – Zimbabwe 1994a). In addition, the ‘aid’ in this sector is of a much more commercial nature, with some EIB loans representing little more than the mobilization of genuine commercial funding. The only other example of aid to industrial development from Lomé is the export promotion funded by the EU, which is discussed below and in any case is also largely market oriented.

Aid under Lomé II and III: an assessment The aid from the EU under Lomé should be understood within the regional political context, in which aid played at least a reinforcing role in terms of the West’s policies towards the newly independent state. It is necessary to judge the Lomé aid to Zimbabwe against the main characteristics of western aid, which focussed on aid to the Communal Areas rather than land reform and was directed at individual farmers rather than other forms of land ownership and use, and these are also observable in EU Lomé aid. In political terms, one of the key characteristics of the aid that was channelled to Zimbabwe, in particular at the Zimcord conference, was its objective of development and improvement of the over-crowded and poor Communal Areas rather than the political and economic transformation of the CAs and rural areas more generally, in terms of ownership and use of land (Stoneman

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and Cliffe 1988). The latter course had been at the forefront of the liberation struggle until the Lancaster House accord when, as we have seen, severe limitations were put on such possibilities. Aid from the EU played a ‘reinforcing role’ in this policy. It was reinforcing, rather than causal, in two ways. First, Lomé aid forms only a part of a much wider aid relationship between Zimbabwe and western countries. Second, according to the Convention’s rules, Lomé aid use is determined, at least in part, by what projects the Zimbabwean government proposes. Although the EU retains important powers to decide which projects are funded, it cannot dictate projects to Zimbabwe. It is therefore indicative, both of the EU’s policy and the extent to which the government’s policy had already been circumscribed by the wider western involvement, that most of Lomé aid followed this pattern of focussing on the CAs. The majority of aid dedicated to rural development, and a significant amount of the overall aid from both Lomé II and III was aimed at such improvements in the CAs. Of the Lomé II NIP (see Table 5.3, above), around Ecu 20.5m or 42 per cent was devoted to projects in and for CAs. If the assistance to the Grain Marketing Board – which was aimed at helping increase the uptake of grain from producers who were not traditional suppliers, mainly from CAs – is included, this adds a further Ecu 7m, totalling around 56 per cent of the Lomé II NIP. For Lomé III there is an estimated allocation to CAs of just under Ecu 34m or 44 per cent, which, if the AFC loan and assistance – which was also directed ultimately at small farmers who are mainly on CAs – is included, raises the figure by Ecu 23.5m and the total to over 70 per cent of the NIP (extrapolated from the figures in Tables 5.3 and 5.4). Of the aid from the EU, only one part of the non-associated states programme, prior to Zimbabwe joining Lomé, and one project from Lomé II, were designed to further the resettlement of rural people from overcrowded CAs to land acquired for land reform. The non-associated states programme consisted of Ecu 4m of EU aid, which covered the government’s 50 per cent share of the costs of a land reform project, the other half of which was funded by the UK government as part of its barely honoured Lancaster House pledge to provide finance for land reform. However, even here the EU specifically excluded land purchase costs from the project (OTDA 1983: 67). As we have seen, the provisions and limitations over purchase of land provided one of the most significant barriers to extensive land reform after independence. The project funded under Lomé II, the ‘accelerated resettlement programme’, was financed by Ecu 3.66m and formed the second phase of this same project. It accounted for just 7 per cent of the total indicative aid under Lomé II. Lomé aid has also been directed at individual smallholder farmers, in line with the general pattern of western aid. Such examples include, under Lomé II, the Smallholder Coffee and Fruit project in Manicaland and the Fruit and Vegetable project in Mashonaland, and under Lomé III, the Ngorima Tea project and the land use projects as well as substantial micro-projects programmes under both Conventions (information relating to this project from CEC Delegation – Zimbabwe 1994a; Interview, Harare, 10 February 1994). Overall, the projects financed in the CAs were conservative insofar as they built on

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existing (unequal) land ownership. The political aspects of this are important in terms of not upsetting the overall class compromise of independence – i.e., trying to satisfy the needs of the poor masses while leaving the wealth of the capitalist class intact. To the extent that such projects did promote change this appears to have been in the direction of the commercialization of the CAs through promoting production for exchange rather than subsistence. This latter feature of aid became more noticeable in Lomé IV, as we shall see.

Aid for regional co-operation As well as aid channelled through each ACP countries’ NIPs (which forms the majority of Lomé aid), each Lomé Convention also sets aside a sum to be used for regional projects. In addition to its national aid, Zimbabwe also received significant regional funding under both Lomé II and III. For Zimbabwe, as a member of SADCC, regional co-operation funding from Lomé was for SADCC projects based in Zimbabwe. Under Lomé II, this included a regional Foot and Mouth disease control programme costing Ecu 12.8m from the regional Lomé funds, and SADCC food security studies costing just under Ecu 0.5m. For Lomé III, aid was provided for a regional isotope laboratory in Zimbabwe and an extension of the Foot and Mouth programme. The regional programmes which were implemented in Zimbabwe, however, also included programmes which were partly funded under the NIP and partly from regional funds, but implemented as national projects in the countries concerned. Examples of these, and among the most important regional projects for Zimbabwe, included the Tsetse and Trypamosamiasis control programmes under Lomé II and III (which covered Malawi, Zambia and Zimbabwe) and the Veterinary Faculty at Zimbabwe University, which was to provide skills for the whole region, under Lomé II. In all, for Lomé II and III, by September 1992, Ecu 27.9m from regional funds had been allocated to programmes in Zimbabwe (CEC Delegation – Zimbabwe 1994a). In addition, Zimbabwe also benefited from regional projects not funded in Zimbabwe, in particular the development of transport links with SADCC countries which were funded by the EU once Mozambique and Angola had joined the Convention. The most important of these was the rehabilitation of the port at Beira, in Mozambique, which was a Ecu 180m scheme for which regional Lomé III funds contributed Ecu 40m. This, along with Zimbabwe’s commitment to provide troops to guard the rail, pipe and road link which provided an outlet for trade to by-pass South Africa, was estimated to save Zimbabwe a potential Ecu 91 on every tonne of trade which avoided South African ports (Traore 1987: 54). This regional aid formed an important part of the EU’s strategy in the region and its involvement with and support of SADCC. However, criticism has been levelled at the regional funding. As has been mentioned, important parts of the regional programmes have been funded and implemented largely as national projects. Of the total US$1bn available to southern Africa under Lomé III, 78 per cent was channelled through the NIPs, which has led to a lack of co-ordination in some projects and an undermining of effective regional co-operation (Thompson 1991: 144). In addition, on the key issue of food

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security in the region, two studies on the issue under Lomé II failed to produce adequate proposals for a regional food reserve programme. The proposals of the first were rejected both by SADCC and the EU as too ‘grandiose’, although the possible benefit to Zimbabwe would have been significant as 85 per cent of the materials could have been supplied by Zimbabwe. The second, however, was much closer to the EU’s views, but denied the need for any extra food storage facilities in southern Africa and instead concentrated on broader policy changes in SADCC countries in order to provide more foreign exchange with which to import food. This not only went contrary to what SADCC believed necessary in this particular instance, but undermined the whole way SADCC sought to work, which was based on the countries defining their own priorities and objectives (see, Thompson 1991: 125–6). In addition, although the funding for the rehabilitation of the port at Beira was an important contribution to SADCC’s strategy of escaping from South African domination, the lukewarm response of the EU to the call for sanctions on South Africa and the failure to put effective pressure on South Africa to stop backing the Mozambican rebels (which was the source of the problems in the Beira transport route in the first place) undermined the positive effect this was to have (Goodison 1988a).

Zimbabwe, Lomé and trade As with other ACP countries, Zimbabwe enjoys quota and duty-free access to the EU market for most of its exports, including all manufactured and mining products and all agricultural products not covered by the CAP. While, as we have seen in chapter three, the Commission has consistently played down the advantages of this access, and instead argued for increases in competitiveness of ACP products to benefit more from trade, Zimbabwe shows some evidence of a potentially more positive picture. In particular Stevens and Weston (1984) and McQueen and Stevens (1989) have argued that, contrary to some people’s assertions that Lomé’s trade benefits have been a ‘failure’ because the ACP have not increased their exports to the EU as much as non-Lomé developing countries, Lomé has in fact been important in stimulating the growth of exports of products which were not traditionally exported to the EU. Although these products make up only a small proportion of total ACP exports, they have demonstrated a very high growth rate and are becoming more significant in ACP–EU trade. Although there are potential future problems, the overall picture is of a changing make-up of trade with the EU. Riddell has applied this perspective to the case of Zimbabwe and identified horticultural and floricultural products, leather and footwear products, textiles and clothing, as among the country’s most important new products (Riddell 1990). In all, the number of product groups exported by Zimbabwe has increased from 47 in 1980 to 72 in 1992 and for product groups worth over Ecu 0.1m per year from 15 to 38 (Brown 1995). As already mentioned, accession to Lomé has seen a diversification of export markets away from reliance on South Africa and the rise in new markets in the EU and elsewhere. Nevertheless, these positive, if limited improvements may well be jeopardized by a number of development s in the trade arena. Some of these

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factors were assessed in chapter three so I will deal with them only briefly here. First, the product coverage of Lomé’s free access rules are severely constrained by the partial exclusion of CAP-covered products, which are subject to various tariff, quantity and calendar restrictions (access detailed in ACP–EEC 1989: Annexe XL). These have only gradually been extended over the Conventions, precisely because the Commission has argued that extending preferences is not as important as ‘internal’ developments in ACP countries. Second, the other restrictions on trade ‘internal’ to the Convention – rules of origin and the safeguard clause – clearly have some impact on Zimbabwe. The rules of origin reduce the extent to which value-added operations in ACP countries, particularly manufacturing products, can take place, and for a country such as Zimbabwe, with its close proximity to the more developed South Africa, this poses a particular problem. The potential of the EU to take safeguard action is also damaging, with exports of the new, ‘non-traditional’ exports such as textiles that Zimbabwe has developed being particularly sensitive to such actions. Finally, outside of the Convention, the loss of relative preferences due to the European Single Market and the GATT Uruguay Round will reduce the competitive advantage that preferences have given ACP countries. As has been argued, these have played an important, sometimes necessary (but not sufficient) condition for the development of new exports (see Brown 1995 for a fuller discussion and Stevens and Weston 1984; McQueen and Stevens 1989; Riddell 1990; Stoneman 1989; 1993a). The advent of structural adjustment has further changed Zimbabwe’s trade potential and will be dealt with in chapter six.

The protocols on beef and sugar In addition to the general trade issues covered here, Zimbabwe also benefited from the special access arrangements for beef and sugar exports that were attached to the Convention. Zimbabwe was granted export quota allocations under the beef regulations for ACP states. Annex 2 of the Agreement on Accession (the ‘Declaration on beef and veal’) stated that with regard to the special regulations set up by the Convention at the time of the Lomé II signing, ‘The Community … is prepared to apply the same regime to Zimbabwe, from the date of its accession to the Second ACP–EEC Convention for the remaining period of the said Convention’ (EC–Government of Zimbabwe 1980: Annex 2). The EU agreed to allow Zimbabwe 8,100 tonnes of boneless beef and veal per annum to be imported into the EU, with a reduction of 90 per cent of the EU’s variable import levy. In return, Zimbabwe undertook to implement an export tax of an equivalent amount which would be used ‘… to meet national priorities in the livestock sector, where these relate to smallholder production …’ (EC–Government of Zimbabwe 1980: Annex 2). In particular this would cover veterinary services, abattoir improvement and training and development services. The major problems Zimbabwe has had in utilizing these regulations have been those of animal health, in particular foot and mouth disease and abattoir standards, which have prevented any beef entering the EU for much of the time (The Courier, no. 74 1982: Yix). In fact, Zimbabwean exports under the

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beef regulations did not start until September 1985 and although a rapid rise in exports meant that Zimbabwe became the first ACP state to fulfil its quota since the beginning of the regulations under Lomé I, when it exported 8,100 tonnes in 1987 earning Ecu 39m, health problems soon surfaced again (EIU 3/86 and 2/88). A new outbreak of foot and mouth disease occurred in May 1989, but exports resumed again in November 1990 (EIU, 3/89; 1/91). The break in exports cost Zimbabwe Ecu 60m per year and although the EU allowed 3,000 tn of the 1989 quota to be added to the 1991 quota, a new outbreak in late 1990 caused the reintroduction of bans in five provinces (Zimbabwe had asked the EU to allow exports from unaffected areas after the previous outbreak) (EIU 1/91). By 1992 the EU would only accept exports from Mashonaland West province because of health problems in all other areas, making it unlikely Zimbabwe would fill its quota (EIU 3/92). The drought also affected the beef industry, with widespread de-stocking, but the level of exports in 1993 was, contrary to expectations (EIU 4/92), quite high and the quota was filled for the first time in nearly four years (EIU 4/93). Zimbabwe was helped in this by the acceptance by the EU of four more areas from which beef exports would be accepted following improvements in animal health conditions by 1994 (The Herald, 25 February 94). Part of the problem for these delays lies in animal health conditions in Zimbabwe which have been the subject of regional and national aid programmes from the EU. However, the EU also has very strict health regulations, and these are perceived by some as a more serious barrier to exports from the ACP than tariffs would be. The EU made a point of briefing Zimbabwe on its health requirements in the negotiations for Zimbabwe’s accession (EC– Government of Zimbabwe 1980). In addition, there are fears that the EU could use these regulations to block exports of beef when there are problems in the EU beef market. Overall, the trend of beef production is upward in the EU while the demand trend is downward, causing problems for EU producers if too many imports are allowed (OTDA 1983: 42–43). It has been suggested that the ACP should try to secure a commitment from the EU that they will not use the regulations to protect their beef industry if it is experiencing problems (OTDA 1983: 42–43). The beef regulations do secure export earnings for Zimbabwe that might not otherwise be available and as such play a positive role for the country’s balance of payments and thus for the financial position of the state. However, in developmental terms the regulations are more questionable. The take-up of cattle by the Cold Storage Commission which markets beef is almost entirely from the commercial farmers. Not only are cattle on CAs used primarily as draught animals, but the health problems on the CAs and the lack of adequate and approved abattoirs to utilize cattle from these areas means production for export is unlikely. The result is that the richer and more prosperous whitedominated ranches benefit most from the regulation. Whereas the aid from Lomé is directed to development in the CAs, which, as we have seen, is both supportive of the government’s efforts and conservative in terms of the prospects for more radical change in the rural areas, the EU’s regulations for

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beef serve as an important prop to the long-standing wealth of the commercial farmers. In the context of Zimbabwe’s independence, where the West sought to ensure the future of such important capitalist interests, such access to the EU market is important. In Lomé IV the beef and veal regulations became a protocol attached to the Convention rather than an EU-determined quota (ACP–EEC 1989: Protocol 7). This made the access to the EU market under Lomé IV more secure as it was now a proper part of the Convention. Under the ‘Protocol on beef and veal’ the EU has to apply a 90 per cent reduction in its customs duties on beef and veal imports as before, but under Lomé IV the ACP countries no longer have to impose their own equivalent export levy. Under Lomé II and III the funds generated from this were to be used for development in the livestock sector, but under Lomé IV the tax is eliminated to give the ACP an added price advantage when selling to the EU market. This creates added competition in the EU market, but by removing a tax on exporters in the ACP countries it also eliminates funds for development projects. This move is clearly in line with the general trend of Lomé IV towards export promotion and trade as the basis for development. The Protocol gives a total quota to the ACP of 39,100 tn per calendar year which is divided between Botswana, Kenya, Madagascar, Swaziland and Zimbabwe, with Zimbabwe’s quota allocation being 9,100 tn, up from the Lomé III figure of 8,100 tn (ACP–EEC 1989: Protocol 7; CEC-DG X 1990b: 7). The elimination of the export levy has the potential to benefit even further the large cattle producers by increasing their EU exports. The major benefit for Zimbabwe remains the contribution these exports bring to the country’s balance of payments. However, under Lomé IV the health problems with beef exports to Europe continued. The potential impact of the resumption of exports in 1992 was endangered by a bureaucratic wrangle with the EU over the level of Zimbabwe’s beef exports in 1993. Under the Convention’s rules, Article 4 allows for an ACP country which is a member of the Protocol to take over another ACP country’s unfilled part of a quota if that country does not want it to be transferred to the following year (ACP–EEC 1989: Protocol 7, Articles 3 and 4). In 1993 Zimbabwe was able to fill its quota and supply 5,100 tn extra to the EU. Zimbabwe wanted this extra amount to count under Article 4 of the Protocol as filling the unused part of the other ACP countries’ quota from 1993. The EU, however, insisted the exports must count as part of Zimbabwe’s 1994 quota which would have left only a further 4,000 tn to be exported for the 1994 year (EIU 3/94; The Herald 24 January 1994). The beef was impounded in European docks for five months before being sold in March 1994 under the 1994 quota while discussions proceeded (The Herald 24 January 1994; Financial Gazette 3 February 1994). Eventually the EU relented and allowed the beef to count as an extra quota for 1993 thus making the full 9,100 tn available for 1994 (The Chronicle 1 March 1994). The delay did, however, cause the value of the beef to be well below the expected Ecu 52m because it no longer counted as fresh (Financial Gazette 3 February 1994). One EU official privately admitted that the dispute was unnecessary, particularly in view of the fact that the extra

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amount from Zimbabwe would make no difference to the EU beef market or to EU beef producers because it was insignificant compared to the millions of tonnes produced in Europe (Interview, Harare, 10 February 1994). The vocal objections to the imports, by France and Ireland in particular, had more to do with their own domestic political farming concerns than any damage that could be done by allowing Zimbabwe’s exports (Interview, Harare, 10 February 1994). That such a row should have erupted is an indication that the fraught farming issue in Europe could well have implications for the future of Europe as a market for Zimbabwe’s beef. A similar favouring of commercial farmers is also evident in the sugar protocol, under which Zimbabwe was granted a quota of 25,000 tn per annum. The quota is notable for two reasons. First, Zimbabwe was accommodated within the protocol while other ACP countries were not. The accession of new countries to the quota has caused problems for the EU for some time, because it was self-sufficient in sugar (OTDA 1983). The 1981 sugar crisis aside, the EU did not need more guaranteed supplies. Existing ACP countries such as Zambia and Papua New Guinea which applied to join the sugar quota had therefore been denied, as was the Dominican Republic despite being a traditional sugar exporter (Bulletin of the EC 4-1991 1.3.45; see also ACP–EEC 1989: Annexe to Protocol 8 on Sugar). Zimbabwe, however, was granted a quota of 25,000 tn under Lomé II on the basis that it was a traditional supplier under Britain’s Commonwealth Sugar Agreement (CSA). This was despite the fact that not only had the CSA ceased to function since Britain joined the EU, but Zimbabwe (or Rhodesia as it was) had been the subject of sanctions since the mid-1960s. As such, it was given considerably more favourable treatment than other ACP countries, with its quota itself being a transfer from those of existing members, Uganda, Suriname and India (Koch 1989: 295–6). Zimbabwe’s quota was raised to 30,000 tn under Lomé III, but this too was without an increase in the overall quota. Second, the quota is notable because the developmental benefits (macroeconomic benefits aside) are more limited and more obviously in the interests of private capital. The sugar regulations have been claimed to have two effects: a ‘stabilization effect’, guaranteeing a certain amount of income from sugar exports, and a ‘transfer effect’ in the form of a ‘quota rent’ (i.e. earnings above what would be achieved on the world market) (Koch 1989). The stabilization effect for Zimbabwe is estimated to be fairly low, as sugar makes up only a small proportion of the country’s total exports which are quite diversified (Koch 1989: 296–7). The ‘quota rent’, calculated by Koch as the difference between the EU quota price and the world market price multiplied by the quota allocation, is estimated for Zimbabwe to be Ecu 54m from 1981– 87 (Koch 1989: 295–6).1 However, as with beef, despite the benefit to the country’s balance of payments, the prime beneficiaries are the private companies which export the sugar.2 In Zimbabwe this is just two private conglomerates, Hippo Valley and Triangle, which run the only sugar plantations in the country and are given a guaranteed export market. As with the beef protocol, the sugar regulations serve to support the white-dominated capitalist interests in

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Zimbabwe. Thus Zimbabwe received very favourable treatment by being admitted to the protocol, and the main beneficiaries of this were the private agricultural capitalists.3

Conclusion It has been argued that the relationship between Zimbabwe and the EU under the Lomé Convention has been influenced in particular by the political conditions which surrounded the country’s independence and by the EU’s involvement in southern Africa. Further, that despite the country’s late independence and stronger economy, its political birth demonstrated many of the hallmarks of post-colonial politics that were assessed in earlier chapters. The accession to Lomé can be seen, as can the Convention itself, as contributing to the entry into international society of the new state and the extension of external support to it from the donor community. However, even in these early stages of the country’s membership of Lomé and before the extensive conditionality that is discussed in chapter six, the aid from Lomé must be seen in its political context. As I have argued, this context was primarily determined by the western-guided independence process, which sought to ensure the sovereignty of the country while protecting against the potential threat of a radical, nationalist or left-wing regime. This possibility was avoided, particularly by the terms of the Lancaster House agreement. The aid from the Convention also supported this strategy through support to the moderate land policy of the new government in line with western concerns to protect capitalist interests. The Convention also granted considerable access for capitalist farmers – in some cases against objections from member states – to the EU market. Given the level of coherence among western countries in their policy towards Zimbabwe, this meant Lomé fulfilled a reinforcing role in support of the wider network of relationships established with donors. For Zimbabwe, the Convention has offered the kind of external support sought by all developing countries to bolster the political position of the regime (in this case, particularly to help cement the political compromise of Lancaster House) and to aid the development of the economy. In this it has in some respects been useful for Zimbabwe. It has allowed export access to the EU market, allowed some export diversification, has guaranteed quotas for some products and has provided aid for development projects in the Communal Areas and elsewhere. However, the benefits derived from the Convention have been shaped considerably by the wider political circumstances in which it has been implemented. Thus, guaranteed access to the EU market has helped growth in the economy, but has specifically aided the capitalist farmers. The aid received has helped with the development of the rural areas, but has not been used for the transformation of property relations and land ownership. However, as we have seen, the extent to which such external support was offered on terms that developing countries wished was radically altered in the 1980s – a change that affected the breadth of North–South relations, Lomé included. Chapter six will chart how this change impacted on Zimbabwe and its relations with the EU.

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6 Lomé IV, adjustment and Zimbabwe The Fourth Lomé Convention was significant above all because it involved the EU aid programme in structural adjustment support for the first time. As such, it signalled the change in the Lomé relationship from one in which external support from the EU to ACP states was given on terms that the ACP states could at least influence, to a situation where such support became much more conditional. As we have seen, by the end of the 1980s these conditions focussed on the prior adoption by developing countries of structural adjustment programmes defined primarily by the Bretton Woods organizations: the IMF and World Bank. Shortly after Lomé IV was signed, in 1990, Zimbabwe, one of the more developed and diversified of the ACP economies, embarked on an economic reform programme with World Bank and IMF backing. The shift, underway in many developing countries, represented a major reorientation of development strategies, social relations and relations with the North. This chapter will investigate this introduction of conditionality into the Lomé relationship and the programme of support for Zimbabwe under Lomé IV. The introduction of support for structural adjustment in Lomé IV brought the Convention and the EU’s relationship to the ACP countries clearly into line with the relationship these countries had with the other donors and the Bretton Woods Institutions (BWI). The EU and the Commission presented this evolution as essential to making development co-operation in Lomé more effective. The EU also claimed that its approach to adjustment in Lomé would be modified to take account of the specific needs of the ACP countries. However, as I have argued in chapter three, not only did the EU approach in practice merely follow the lead of the BWI, but the whole adjustment process was, in fact, aimed at the restructuring of the social relations in developing countries. The EU’s introduction of the politics of adjustment into Lomé thus represented a modification of the institutionalized relations with the ACP in support of this trend. In chapter three two key questions were asked of the EU adjustment support in Lomé IV: first, how far has the politics of adjustment impacted on the Convention as a whole? and second, how far has this support followed rather than moderated, the policy prescriptions of the BWI? This chapter will ask these questions of the application of the Lomé IV Convention in Zimbabwe. It will thus test how far Zimbabwe’s experience of Lomé IV and structural adjustment verifies the general interpretation given in chapter three.

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It will also support the general argument about the extent to which Lomé IV was a reformulation of relations with the ACP states to adapt to new priorities of donors and their relationship with the developing world in general. The chapter will first investigate the political and economic background to Lomé’s implementation in Zimbabwe. This will focus on the change in government policy in 1990 and the adoption of the Economic Structural Adjustment Programme (ESAP). It will detail the changed relationship with the BWI and their increasing role in Zimbabwe. Second, the chapter will undertake a survey of Lomé IV’s aid implementation in Zimbabwe. This will seek to answer the first of the two questions, namely, how important has support for Zimbabwe’s adjustment programme become in Lomé IV. Third, the chapter will detail the adjustment support programmes funded under Lomé IV, in order to answer the second question of how far EU support followed or moderated the role of the BWI in Zimbabwe. Finally, I shall briefly consider the political effects of this process.

Political and economic change in Zimbabwe The adoption by Zimbabwe of the Economic Structural Adjustment Programme (ESAP), published in February 1991 as Zimbabwe: a Framework for Economic Reform 1991–1995 (Government of Zimbabwe 1991), represented a significant political and policy change for the country both internally and in its relations with the major donors. We have seen in the last chapter that Zimbabwe’s economic policy reflected the nature of the country’s independence, in that it sought to fulfil the social aims of the independence struggle without directly challenging the established economic interests. We also saw how the state retained considerable controls over capital, particularly in the fields of trade and foreign exchange. As a result, the government of Zimbabwe was at odds with the BWI for much of the 1980s. Zimbabwe’s IMF-supported adjustment programme from 1982 to 1984 broke down over disagreements on trade and investment policy, as we saw in chapter five, and Zimbabwe was criticized by the World Bank for its economic policies and received little financial support from either the Bank or the IMF for the rest of the 1980s. This criticism by the BWI came despite a relatively healthy economic performance (Stoneman 1989; 1991; 1993a). However, towards the end of the 1980s this pattern of political and economic relations was under increasing pressure. For much of the ’80s, growth in the economy helped to mitigate opposition to the ruling party, but there were increasing signs in the late ’80s that the economic controls retained by the state were obstructing further growth and key economic interests. By that time a combination of two factors led to the move towards an economic reform programme and closer relationship with the BWI: political change inside Zimbabwe and increasing pressure from the BWI to adopt reform. These factors were to signal the abandonment of the ‘social contract’ forged at independence (Loewenson 1991). I will outline these two factors before looking at the reform programme itself.

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First, significant ‘domestic’ political shifts underpinned the adoption of ESAP in 1990. There had been a rightward drift of politics in Zimbabwe since independence, as the more radical aspirations which had driven the liberation struggle became subordinated to the compromise of Lancaster House. The shift was reflected in the gradual dropping of the commitment of ZANU PF (and not least Mugabe himself) to creating a one-party state in Zimbabwe (on this issue see Knight 1990; Shaw 1986; Sklar 1985). However, it was also underpinned by the growth of private economic interests among individuals in the government and party and even of the party organization itself, in contrast to the increasingly rhetorical commitment to socialism (Knight 1990). The rising number of scandals involving government ministers in the late 1980s – of which the infamous ‘Willowgate’ corruption scandal was only the best well known(Knight 1990: 204)1 – merely highlighted one part of a process of selfenrichment by members of the government hoping to join the ranks of the country’s business class. Those in government who had advocated a more nationalist, socialist or ‘statist’ strategy were increasingly marginalized, particularly after the demise of the Communist states of Eastern Europe undermined their position (Stoneman 1993a: 96). Commentators in Zimbabwe even began to talk of a process of ‘perestroika’ in Zimbabwe to weed out ‘inefficiency’ (City Press 4 February 1990). Radical forces outside the government were also increasingly weakened as the overbearing weight of party and state came to dominate the whole political scene (Loewenson 1991: 10–12). Confrontations between the government and students and trade unionists, angry at corruption and the enrichment of cabinet members, resulted in 1988–89 in the repression of union leaders and the closure of the university (Knight 1990). The 1990 election saw a violent and vitriolic campaign by ZANU PF and the state media and security forces against the new Zimbabwe Unity Movement (ZUM) opposition party (Sachikonye 1990). ZANU PF won a huge majority in the election, further limiting the role of opposition forces in the 1990s. As a result, accompanying the move toward economic liberalization was increasing evidence of political repression (Coltart 1991). Against this background, there was a growing need to deal with some of the economic problems that were evident in the late 1980s. The limits on foreign exchange caused major problems for the private sector. In addition, low investment levels and the need to create many more jobs for the increasing numbers of school leavers were becoming a pressing problem (Cliffe 1991). The government also had to make a concerted effort to reduce the level of external debt through the use of scarce foreign exchange and limits on new borrowing. As a result of borrowing generated by the Zimcord conference Zimbabwe’s debt service ratio had risen to a peak of 33 per cent in 1987, although it fell in the following two years (Knight 1990: 203). However, the restrictions on the supply of foreign exchange to which this policy led to were a major constraint. The problems which had been created by the Zimcord borrowing thus ruled out major new borrowing from abroad. Furthermore, ‘public’ lenders such as the BWI were hostile to the country’s economic policy, as we have seen, and unlikely to agree to new funding without a major change

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in policy. With a limited domestic market, growing exports were essential to sustain the capitalist sector and to generate foreign exchange, but the lack of foreign exchange needed for investment if firms were to increase exports meant any export growth would be slow. An answer to these problems came to be seen in terms of an adjustment policy and new financing from abroad (Stoneman 1989: 62). The second element of Zimbabwe’s move to adopt an economic reform programme was the increasing World Bank and donor pressure for Zimbabwe to liberalize the economy towards the end of the 1980s. While the World Bank had funded a successful Export Revolving Fund in 1984, a second proposal to extend the scheme was rejected by the Bank on the grounds that liberalization needed to take place (Lehman 1990; Stoneman 1991). In addition, other donors such as the USA and Britain either cut or suspended aid funds, in the UK’s case on the open admission that it was because Zimbabwe did not have an IMF programme (Mandaza 1986c; Stoneman 1993a). The World Bank also gained increasing influence inside Zimbabwe in the late 1980s and the ’90s. In 1990, in one month alone, there were reported to be 30 World Bank missions to Zimbabwe to assess various sectors of the economy, and the rising influence even extended to the replacement of a key civil servant in the government by a US-trained economist (Cliffe 1991: 28). As Stoneman argues, this pressure for structural adjustment essentially stemmed from the ideological position held by the BWI, which argued that Zimbabwe’s controls over capital were detrimental to development (Stoneman 1989; 1991; 1993a). The Bank argued that Zimbabwe needed to liberalize the economy and reduce the role of government and the state in order to enhance growth, and maintained this position despite considerable evidence that it was misconceived.2 While such a stance was indeed based on a desire to integrate Zimbabwe (and for that matter, all economies) into the world market, it also signalled far-reaching changes in the country’s political economy. Stoneman has also outlined how the Bank had more specific reasons for pressurizing Zimbabwe in particular to reform. By the late 1980s the World Bank was under increasing fire because of the lack of ‘success’ (in terms of growth) of its adjustment policies as we have seen (Stoneman 1991). Zimbabwe appeared as a prime candidate for reform, not only because it was pursuing an ‘independent’ policy and (embarrassingly for the Bank) being relatively successful compared to adjusting countries, but also because its economic health made it a better candidate to be an unequivocally ‘successful adjuster’ (Stoneman 1991). The Bank appeared virtually to concede the argument when its permanent representative in Zimbabwe claimed, at the start of Zimbabwe’s reform process, that ‘Zimbabwe could be the first African country to succeed with such reforms’, seemingly forgetting the fact that the Bank and the IMF claimed they had already ‘proved’ that other ‘adjusters’ in Africa were already succeeding (EIU 2/91; Stoneman 1991; see also for example, Camdessus 1991). Thus a combination of changing internal political forces and increasing pressure from, and influence of, the BWI from outside Zimbabwe led to the adoption of ESAP. ESAP consisted of four main aims: the liberalization of trade; the

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liberalization of foreign exchange regulations; the deregulation of the economy; and the retrenchment of the state. In some respects, particularly in terms of its timetable and in the provisions for continued protection of Zimbabwean companies, the programme was a cautious move towards liberalization. The government claimed it was ‘home-grown’ despite close involvement of the World Bank in its formulation (Financial Gazette 8 March 1991; Africa Research Bulletin 1991; Chimanikire 1991; Southscan 1991b). Zimbabwe appealed for, and gained, donor support for the reforms at its first Paris donors’ conference in March 1991, including Ecu 100m (US$125m) from the World Bank (Financial Gazette 8 March 1991; Southscan 1991a; EIU 2/91). Although it was not committing funds, the IMF also signalled its support for the plan when IMF Managing Director Michael Camdessus visited Zimbabwe ahead of the Paris meeting (Africa Research Bulletin 1991; Southscan 1991b). These pledges of finance seemed to indicate donor approval of the pace and content of Zimbabwe’s reform programme. However, Stoneman has outlined how increasing reliance on donor funds, as ESAP began to be implemented, led to the control of the programme being transferred to the World Bank and IMF (Stoneman 1991). Donors had become reluctant to release the support pledged in March 1991 on the argument that government monetary policy was too wayward, although a desire to have the IMF involved in the programme was also evident (The Herald 17 July 1991; Africa Economic Digest 1991). By June the World Bank was pressing for faster implementation of the reforms, and by mid-1991 slow disbursement of the donors’ financing was causing serious balance of payments problems (EIU 3/91). In October 1991 the government was forced to seek balance of payments support from the IMF. In November the World Bank, which had not released money pledged in March, now made its Ecu 100m (US$125m) conditional on an IMF loan, and the USA and UK refused to release funds until the World Bank did (Stoneman 1991; Zwizwal 1991; EIU 1/92). Following an IMF mission in November 1991, IMF funding was finally agreed in late January 1992, worth Ecu 390m (US$484m) over three years. The extra conditions necessary for this were not made public, although they included devaluation, further budget deficit cuts, trade liberalization and parastatal reform (EIU 2/92). The Ecu 564m (US$700m) already pledged in March 1991 now began to be released to Zimbabwe (EIU 2/92). This in effect transformed support for a ‘home-grown’ adjustment programme promised in March 1991 into support for an IMF programme in 1992 (EIU 1/92; Africa Economic Digest 1991). Through 1992–94 the reform programme continued with a third round of Paris talks in December 1992, at which Ecu 1bn (US$1.4bn) was pledged for ESAP support (The Chronicle 2 December 92) and a fourth in December 1993 (EIU 1/94). Throughout this period donors urged an acceleration of the reforms, including more rapid liberalization of imports, liberalization of foreign exchange regulations and liberalization of profit remittances by foreign companies in early 1994 (Government of Zimbabwe 1993; EIU 1/94). However, a persistently high government deficit led to the suspension of Zimbabwe’s IMF agreement in June 1995, with disagreement continuing until

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1998. The second phase of the reform programme – Zimbabwe Programme for Economic and Social Transformation (‘Zimprest’) – was announced in September 1996, promising greater fiscal control, privatization and deregulation. In June 1998 the IMF agreed a stand-by credit of Ecu 146m (US$175m) to replenish dangerously low foreign reserves following a crisis-ridden six months from November 1997 (IMF 1998a). The move was surprising, given the clear inability of Zimbabwe to address the fiscal imbalance and the somewhat optimistic targets set for the programme (see below), and there followed a running ‘on again, off again’ cycle of new funding and suspensions of programmes. By November 1998 Ecu 44m (US$53 million) of this credit was itself being withheld by the IMF, after the government escalated its fiscal crisis by sending troops to the war in the Congo and by its reneging on guarantees about its land reform policies (Financial Times 2 September 1998; Guardian 30 November 1998). In July 1999 the IMF was prepared to issue new support, in return for a new letter of intent from Zimbabwe committing the government to limit its war spending and ensure that land reform was transparently conducted with proper compensation and dependent on donor funding (IMF 199c). By October 1999 the programmes were again in trouble, amid accusations that Zimbabwe had concealed the true extent of its spending on the Congo war (and hence the level of budget deficit) (Financial Times 6 October 1999). How is this reform programme to be assessed? In terms of economic results the reforms have been disappointing. By the government’s own targets (set out in the 1991 Framework document), ESAP was seen to be failing, one commentator dismissing the early economic targets as ‘ESAP’s fables’ (Moto 1991). Growth averaged 1.7 per cent per year from 1991–95 (over the period of IMF support) compared to the ESAP target of 5 per cent per year. Despite a recovery to 7.3 per cent in 1996, growth was down to 3.5 per cent in 1997 with projected further falls in 1998 (World Bank 1998; IMF 1998a). Indeed, per capita income was estimated to have fallen by 9 per cent over the period 1990–96 (IMF, 1998b). The budget deficit remained stubbornly high – an estimated 13.4 per cent of GDP in 1995, and still over 10 per cent in 1998 (EIU 4/95; Financial Times 11 December 1997). Inflation was an estimated 18 per cent in 1997, rising to over 30 per cent by the summer of 1998 with interest rates similarly high (World Bank 1998). Yet this poor economic performance has been on the basis of hugely inflated foreign borrowing. The original ESAP target of a fairly low proportional level of foreign financing for the reforms (Ecu 2.7bn (US$3.5bn) out of Ecu 12.6bn (US$16bn)), and the maintenance of a fairly low debt service ratio of 20 per cent, has in fact seen Zimbabwe turn into one of the most indebted countries in Africa (EIU 3/94; Government of Zimbabwe 1991). Estimates for 1995 show total debt increased to US$5.1bn, or 91 per cent of GDP, with over one quarter of government spending (equal to 10 per cent of GDP) being used for debt repayment (Financial Times 28 July 1995; EIU 1/95). The World Bank projected the figure would rise to over 100 per cent within a decade (cited in IMF 1998b). Despite some improved export performance, Zimbabwe is now in a ‘debt trap’ (EIU 1/97). The IMF’s suspension of loans in 1995 was a direct result of the failure to

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curb the budget deficit, despite World Bank misgivings that any reductions would harm social programmes (EIU 4/95, 1/97). However, the IMF did advance stand-by credit in 1998 agreeing to targets of deficit reduction that were optimistic, to say the least (5.5 per cent of GDP in 1998 falling to 3.9 per cent in 2000) (IMF 1998a). Such targets seemed all the more unrealistic with Zimbabwe engaged in the hugely costly venture of sending troops to fight in the Congolese war, and committed to an expensive (but long overdue) land reform programme without donor support (The Times 14 September 1998). However, from the point of view of assessing EU adjustment support, a number of other factors are important to note at this stage. First, Zimbabwe developed, at least in the early stages, a ‘home-grown’ adjustment programme. Although this differed little from standard adjustment packages, it did appear to allow a more gradual introduction of reforms which had the potential at least to be tailored to the country’s needs. However, this was soon put more firmly under IMF and World Bank control, as we have seen. Second, Zimbabwe experienced a severe drought in 1992, which certainly exacerbated some of the effects of reforms, yet saw little if any modification of the adjustment programme (see Sachikonye 1992). Despite extra relief aid being granted by donors, it soon emerged that the key priority of the World Bank and IMF was to ensure that the pace and scale of reforms would not be affected (EIU 4/92; Southscan 1992). Third, the reform programme has resulted in severe social problems in Zimbabwe. From its inception, the reform programme required austerity from the masses of the population, and severe problems in education and health sectors have arisen (see Gibbon 1996 for a survey; also Southern African Economist 1992: 7–10). In the job market, ESAP has caused substantial job cuts and a decline in real wages (Sachikonye 1993). Finally, in terms of the country’s economy, the reforms have been implemented with little consideration to protect, much less enhance, the relatively diversified manufacturing base. Indeed, the expansion of the Open General Import License (OGIL), which was intended to be phased to allow existing firms to retool to face increased competition, instead resulted in intensified competition when firms were illprepared and facing additional problems due to drought, recession and renewed South African competition (EIU 3/92; Zwizwal 1991). Assessing these and other factors, an IMF-commissioned report has argued that the programme in Zimbabwe suffered from severe design faults (IMF 1998b). Among the criticisms raised, the report argues that the forecasts for growth were wildly optimistic, thus making budget deficit reduction appear more feasible than it was. In addition, the sequencing of reforms was not even addressed in programme appraisal, with liberalization proceeding ahead of budget deficit control, leading to declining growth and insurmountable obstacles to deficit reduction. This resulted in the programme relying on reduction of social expenditures to control the deficit, betraying a complete disregard of the distributive effects of the reforms by the IMF and scant attention to the political feasibility of the cuts (IMF 1998b). This stance even resulted in tacit opposition to social spending cuts from the World Bank as the IMF cut off support (EIU 1/96).

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These points are all important because they all relate to the kind of pronouncements made by the EU Commission about its adjustment support: that it would be sensitive to the particular characteristics of the country, flexible, attuned to the economic and development priorities of the country concerned and would pay attention to the social effects of adjustment. So how did this new context impact upon Lomé IV, and how far did EU aid live up to the claims made at the time of Lomé IV?

Structural adjustment and Lomé IV in Zimbabwe As highlighted already, there are two key questions to ask of Lomé IV adjustment support: first, how far has adjustment support dominated Lomé’s provision of ‘traditional’ project aid, and second, to what extent has Lomé adjustment support followed or modified the World Bank and IMF-directed reform programme in Zimbabwe? The first of these questions will indicate how far adjustment support is important in terms of the overall impact on the Lomé Convention. The second will show how far EU adjustment support contributes to, and reinforces, a wider process of liberalization promoted by the Bretton Woods institutions.

The impact of adjustment on Lomé IV aid The National Indicative Programme for Lomé IV for Zimbabwe was signed on 29 November 1990, granting Zimbabwe Ecu 88m for aid projects, an increase of around 15 per cent over the Lomé III NIP figure. As part of a new concern to reduce Lomé’s contribution to ACP debt, Lomé IV also ended the special loans element of the EDF and NIP aid, making all aid allocations in grant form. Loans from the EIB (both own resources and risk capital) continued but at reduced rates of interest. For risk capital the highest rate was to be 3 per cent (rather than 5 per cent under Lomé III) and for the bank’s own resources, 3–5 per cent (rather than 5–8 per cent) (CEC-DG X 1990b: 4). The EIB estimated that loans up to Ecu 70m would be available for Zimbabwe and by 1993 Ecu 23m in loans for a sewerage plant (Ecu 15m) and for credit to small businesses (Ecu 8m) had been approved. The aid Zimbabwe has received under Lomé IV is set out in Table 6.1 and its sectoral allocation in Fig. 6.1. In many respects the Lomé IV aid profile appeared similar to previous ones. The NIP maintained the central commitment to rural development of the previous two Conventions, earmarking 65 per cent of the NIP aid funds to this sector (CEC-DG VIII – Government of Zimbabwe 1990). It also continued the emphasis on the communal areas characteristic of Lomés II and III. Furthermore, there were a number of follow-on projects from Lomé II and III – a tendency seen by one official as making it harder for changes in direction of aid policy. Thus there are proposed or financed ‘phase two’ projects of Matabeleland South RWS, Mashonaland East Fruit and Vegetable project and Ngorima Tea project. There is further funding for the Veterinary Faculty at the University of Zimbabwe and the regionally co-ordinated Tsetse control programme (The Herald 27 July 1992).

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Table 6.1 Zimbabwe: Lomé IV (EDF VII) in Ecu Project Title

Allocated from NIP (Ecu)

FOCAL SECTOR: RURAL DEVELOPMENT National Tsetse Programme TA to Department of National Parks and Wildlife

3,000,000.00 175,000.00

Veterinary Faculty of Zimbabwe

7,852,000.00

Development Programme for Cas

6,300,000.00

7th Microproject Programme

8,000,000.00

Gokwe Rural Water Supply (RWS)

6,500,000.00

Matabeleland South RWS (ph. II)

1,000,000.00

8th Microproject Programme Mashonaland East Fruit and Vegetable (phase II)

16,000,000.00 3,300,000.00

Ngorima tea (phase II)

0.00

Wildlife veterinary

0.00

Sub-total

52,127,000.00 (59% of total Lomé IV NIP)

NON-FOCAL SECTOR ZimTrade Studies World travel market Sub-total

10,200,000.00 2,000,000.00 75,000.00 12,275,000.00 (14% of total Lomé IV NIP)

STRUCTURAL ADJUSTMENT Struct Adj Supp Prog supplement (1)

9,000,000.00

Struct Adj Supp Prog supplement (2)

15,000,000.00

Sub total

24,000,000.00 (27% of total Lomé IV NIP)

TOTAL NIP allocated so far

85,102,000.00 (96.7% of total NIP)

TOTAL NIP for Lomé IV

88,000,000.00

Figures from CEC Delegation – Zimbabwe 1994a; and interviews 1994

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Fig. 6.1

The Microprojects Programme also receives increased importance, reflecting the increased role given to decentralized co-operation in Lomé IV, and over two phases is allocated fully Ecu 24m – nearly one third of the total NIP. Other projects such as the environmental project on the Save River, and MidZambezi and Nyanga National Park projects, were postponed until the second financial protocol of Lomé IV because of lengthy preparation times (CEC Delegation – Zimbabwe 1992). A second phase of the Lomé II Manicaland Smallholder Project was shelved until a clearer assessment of phase I had been made (Interview, Harare, 10 February 1994). Zimbabwe also received some aid from outside the NIP. Both funding for the stabilization of exports (Stabex) and aid to support the mining sector (Sysmin) had previously been of little value to Zimbabwe, because it did not meet the regulations for transfers from these two funds (detailed in chapter two). Specifically, Zimbabwe had not suffered large enough falls in earnings and was not dependent enough on the products covered, while important products, in particular tobacco, are excluded from Stabex (OTDA 1983).3 However, under Lomé IV Zimbabwe did receive Stabex payments amounting to Ecu 20.7m in 1994, Ecu 18.4m in 1996 and Ecu 18.4m in 1997 (Interview, Harare, 4 February 1994; CEC-DG VIII 1999a). That under Lomé IV the transfers will be non-repayable is important in not further increasing the country’s debt burden at a time of increased foreign borrowing and structural adjustment. The payments were subject to an agreement which ensured their use was compatible with the wider reform programme. Zimbabwe also received 80,000 tonnes of food aid from EU (raised at a SADC conference in Geneva) to help with the food shortages caused by the devastating drought of 1992 and

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around Ecu 0.5m to help cope with the influx of refugees from Mozambique (due to the war) in eastern Zimbabwe (CEC Delegation – Zimbabwe 1994a; McIvor 1992: 46). However, this continuity masks changes in the direction of aid in Lomé IV, which took two linked forms. First, and most generally, there is some evidence, both from the data and from interviews, that greater importance was given to ‘income generation’ and employment rather than social policy as a means of improving the position of the poorest sectors of the population under Lomé IV (CEC-DG VIII – Government of Zimbabwe 1990; The Herald 12 April 1990; Interview, Harare, 4 February 1994). This shift was recognized as being consistent with the then new moves of the government towards structural adjustment and the consequent reductions in the budget deficit, as well as Lomé IV’s stress on the private sector in development. This was true, for example, in rural development projects such as the Mashonoland East Fruit and Vegetable Project, to develop production for market in Harare from the communal areas, and in the microprojects programme, which became more focussed on income and employment generation (CEC-DG VIII 1993d; Interviews, Brussels, 26 May 1993; Harare, 10 February 1994, 2 March 1994). The second and more important change in Lomé IV is the introduction of support for structural adjustment. The details of the support programmes are given in the next section. The NIP agreement itself only made provision for possible adjustment support because the government had, at the time, only just begun formulating its reform programme. However, this new aspect of Lomé was to have significant repercussions on all Lomé IV aid in Zimbabwe. Lomé IV involved two programmes of support for Zimbabwe’s adjustment programme amounting to a total of Ecu 60m. Of this, Ecu 24m came from the NIP and the rest from the Lomé IV SAF (see Table 6.2. This support for structural adjustment, while not a large proportion of balance of payments support received by Zimbabwe (pledges at the December 1992 Paris donors’ conference amounted to Ecu 1bn (US$1.4bn) for 1993), nevertheless represents a significant amount of the total aid given to Zimbabwe for national purposes under Lomé IV’s first financial protocol (i.e. for 1990–95). Of the NIP, a total of Ecu 24m (27 per cent) was to be dedicated to structural adjustment purposes. Total aid for structural adjustment – which combines SAF funds and those allocated as structural adjustment supplement from the NIP (‘c’ and ‘d’ in Table 6.2) – amounted to Ecu 60m, which represented 50 per cent of Lomé aid given to Zimbabwe 1990–95. On top of this the ZimTrade support programme (funding for Zimbabwe’s export promotion organization worth Ecu 10.2m) is seen by Commission officials as clearly supporting economic reform in Zimbabwe (Laidler 1993) and, if included, raises the total aid supporting adjustment to Ecu 68.2m. This would represent 56.4 per cent of total aid and 38.8 per cent of the NIP dedicated to support of structural adjustment.

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Table 6.2 Zimbabwe: proportion of aid from Lomé IV given to structural adjustment support (in Ecu m) (not including emergency, regional or Stabex aid) Aid a) Total aid (NIP + SAF)

Amount

% of NIP

% of total aid

123

-

100

b) NIP

88

100

73

c) Structural adjustment support from NIP

24

27

20

d) Structural adjustment facility

36

-

28

e) Total structural adjustment funding (c+d)

60*

-

50

* Of this Ecu 29m has not been released due to the programme being ‘off track’ in 1995 (see below). Sources: CEC Delegation – Zimbabwe 1994; Interviews: Harare, 25 February 1994; 4 February 1994; 21 February 1994; and from CEC-DG VIII 1993a; 1993b; 1993c; 1996.

As we have seen, structural adjustment funding was introduced into Lomé IV on the understanding that it would not lessen Lomé’s or the Commission’s commitment to long-term development aims. As part of this commitment the funds for structural adjustment were administered separately from normal aid funds. However, this is seriously compromised by the evidence from Zimbabwe. Not only, as has been shown above, has almost 50 per cent of aid from Lomé IV been dedicated to structural adjustment, but a high percentage of the NIP funds has also been diverted – undermining the claims that the establishment of a separate fund for structural adjustment would safeguard traditional development funds contained in the NIPs. Whereas at the time of the introduction of the SAF it was estimated that only around 10 per cent of NIP funds would be diverted to structural adjustment support, fully 24 per cent of Zimbabwe’s NIP has been directly transferred to the structural adjustment programme. Thus, as far as the first protocol of Lomé IV aid goes, not only are adjustment priorities of trade and income generation ‘encroaching’ on rural development projects and even microprojects, but long-term development funding is increasingly being diverted to support directly the adjustment process. This picture is somewhat modified by the second financial protocol of Lomé IV. Because of the suspension of the adjustment programme, no aid has been allocated to this process. This means that the Ecu 110m NIP signed in November 1996 does focus on ‘traditional’ aid sectors – for example the Ecu 25m for Agricultural and Services Management project – as well as the ‘incomegenerating’ projects mentioned already, including further trade development

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and tourism schemes (CEC DG VIII 1997b). While on the face of it this would seem to support the view that Lomé aid is protected from becoming fully subordinated to adjustment criteria, two things should be noted. First, only 70 per cent of the second financial protocol of aid is allocated at the start of the aid process; the remainder is dependent on the ‘successful’ implementation of the first ‘tranche’. The criteria for what is deemed ‘successful’ are not clear and were subject of some dispute when introduced in the revision of Lomé IV in 1995, but include a ‘broad assessment’ of a country’s development policy (CEC DG VIII, 1996). Second, there is considerable doubt that EU aid will be allocated in this fashion in any ‘post-Lomé’ agreement – a point I will return to later.

The Lomé IV Structural Adjustment Support Programme The second question relating to Lomé adjustment support is that of the relationship between Lomé adjustment support and the role of the Bretton Woods institutions. As we have seen, the Commission’s stated policy on adjustment was that structural adjustment support in Lomé IV should be a more pragmatic and flexible policy than the ‘orthodoxy’ of the other major donors, and one which would take on board the criticisms of previous SAPs. As such, it would take more account of different countries’ differing adjustment needs rather than applying a uniform prescription to all; it would demonstrate a greater concern for long-term development issues in line with Lomé’s principles; and it would ensure a greater consideration for dealing with the negative social effects of adjustment. Furthermore, the Commission stressed the benefits of adjustment being ‘internalized’, with a greater emphasis on countries developing their own adjustment programmes rather than having them imposed from outside. The above outline of Zimbabwe’s economic reform has shown how, with IMF involvement, it adhered in all important respects to the ‘orthodoxy’ of adjustment programmes. While this is implicitly contradictory to the EU’s aims for adjustment lending outlined above, it is arguable that such a ‘differentiated’ and pragmatic EU approach could have had some benefit for Zimbabwe. One example might be the question of liberalization of trade. Zimbabwe’s diversified exports and significant manufacturing sector could have demanded an adjustment programme which ensured their survival was not imperilled by sweeping import liberalization. Zimbabwe also adopted a programme that, at least in its early stages, was intended to differ somewhat from the traditional SAPs. With this position bolstered by the government’s claim to have a ‘homegrown’ adjustment policy, it could be suggested that the country was a good candidate for an EU policy which promoted ‘internalized’ reforms. Finally, given the government’s (at least rhetorical) commitment to social equity and the needs of the poor in Zimbabwe, it might have been expected that there would be a greater awareness of the need to counter the negative impact of adjustment on the poor. In order to assess how this kind of ‘differentiated approach’ was pursued in the EU’s Structural Adjustment Support Programme (SASP) to Zimbabwe, we will first look at the programme as it was implemented

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before measuring it against the EU’s stated aims for adjustment support. This evaluation will also demonstrate how far the stated policy in Lomé has been determined by the wider political relationships and strategies involving the World Bank and the IMF. Even before Zimbabwe’s adjustment programme had been announced, the EU had indicated that it would support liberalization through import programmes once the details were known (The Herald 12 April 1990). With the agreement of the major donors to fund Zimbabwe’s ESAP in the spring of 1991, Zimbabwe qualified for support from the Lomé Structural Adjustment Facility (SAF) under Article 246 of Lomé IV, which states that ‘ACP States undertaking reform programmes that are acknowledged and supported at least by the principal multilateral donors … shall be treated as having automatically satisfied the requirements for adjustment assistance’ (ACP–EEC 1989: Article 246). Even immediately prior to and after the first Paris donors’ conference in March 1991, Commissioner for Development Manuel Marin, in talks with President Mugabe and other ministers, confirmed that funds to support the structural adjustment programme would now be available from the EU (Financial Gazette 8 March 1991; EIU 2/91; Bulletin of the EC 3-1991 1.3.39-40). It is presumed, given this early vote of support from the EU, that indications as to the amount available from Lomé formed part of the Ecu 564m (US$700m) pledged at this first donors’ conference. Remarkably, however, it was not until September 1992 that a financing proposal was presented to the European Development Fund Committee (EDF – the committee which decides on allocations of Lomé aid) for a total of Ecu 19m of support (CEC-DG VIII 1992c). This was to be made up of Ecu 9m from the NIP and Ecu 10m from the Structural Adjustment Facility (SAF). Even then, it was revealed in interviews, representatives of some member states insisted on delaying a decision until a further vote of confidence had been given to Zimbabwe by the IMF and World Bank at the third donors’ conference in December 1992 (EIU 1/93; Interview, Brussels, 15 May 1993). As a result, the Commission did not agree the support programme until December 1992 (Interview, Brussels, 25 May 1993) with the implementation agreement and an additional protocol not signed until 14 January 1993, and the financial agreement finally signed by Manuel Marin and finance minister Bernard Chidzero on 27 January (CEC Delegation – Zimbabwe 1992; CEC-DG VIII 1993b; 1993c). The first part of this money was disbursed in early 1993,despite the indication of EU support in mid-1991 and full Zimbabwe eligibility for support (when it gained IMF approval) in the autumn of that year – a delay of at least 15 months. However, following support from the third donors’ conference the EDF committee did raise the allocation from the SAF to Ecu 19m to add to the Ecu 9m from the NIP (CEC-DG VIII 1993a). The EU finance was to be disbursed in the form of a General Import Programme (GIP) aimed at balance of payments support specifically in support of the liberalization programme through the expansion of the Open General Import License (OGIL) and Export Retention Scheme (ERS). However, broader support for the full adjustment package was evident, the financing proposal stating ‘… a highly regulated economy will have to move to one where market

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forces are allowed to play a more decisive role …’ (CEC-DG VIII 1993a: 4) and that the support would ‘… as far as possible be aligned to that of other donors’ (CEC-DG VIII 1993a). Furthermore, the EU support was conditional upon Zimbabwe maintaining continued adjustment with the support of international donors. A secondary aim of the programme was for the Counterpart Funds (CPFs) (the local currency equivalent of the foreign exchange provided by the EU) to be used in support of the ‘social dimensions of adjustment’ (SDA) programme of the government, which aimed to mitigate some of the worst social effects of the reform programme. This was in line with the stated Commission philosophy of addressing the social side of adjustment and with Article 244 of Lomé IV which committed structural adjustment support to, ‘… deal with the negative social effects that may result from the process of adjustment efforts …’ (ACP–EEC 1989: Article 244 (f)). The support was divided into two tranches – the first of Ecu 13.5m to be released in early 1993 and the second, of Ecu 14m, to be released in early 1994 (CEC-DG VIII 1993a). The balance of Ecu 500,000 was used for technical assistance to plan the use of CPFs generated by the programme. The two tranches had certain conditions attached. For the first tranche this included Zimbabwe putting more than 20 per cent of imports on the OGIL list; opening accounts to administer the aid and the CPFs, and signing an implementation agreement and a protocol on CPF use (CEC-DG VIII 1993a: 3). For the release of the second tranche, Zimbabwe had to have met ESAP targets for OGIL expansion by the end of 1993; ‘justified’ 90 per cent of the first tranche (i.e. proved the use of foreign exchange provided by the programme in line with its rules); consulted the Commission on the review of public expenditure and the draft budget for 1993/94; included provisions for the use of CPFs in the budget and disbursed 50 per cent of CPFs from the first tranche (CEC-DG VIII 1993a). More broadly, Zimbabwe had to show it had maintained its structural adjustment programme and the support of the international donors, demonstrated continuing liberalization of trade and implemented the social dimensions of adjustment programme (CEC-DG VIII 1993a). The use of CPFs was tightly controlled, the EU insisting on a separate protocol covering their use, with sub-sectoral allocation or ‘earmarking’ of the funds. The CPFs were to be transferred immediately by the government, upon the release of the SASP funds to a separate account in Zimbabwe which was to be controlled by a ‘joint signature’ of the Zimbabwean National Authorizing Officer (NAO – responsible for administering Lomé aid in a recipient country) and the Commission’s Head of Delegation in Harare (CEC-DG VIII 1993b). The funds were targeted specifically at the primary education and health sectors, were not to be used for recurrent expenditure, would not require imports and would be aimed at the poorest sections of the population. The programmes to be funded included providing basic materials for primary schools, school sanitation programmes, improved health facilities in drought affected areas and technical assistance. The costs of the projects varied from Ecu 0.1m to Ecu 2.1m and were to be administered under both first and second tranches, the second tranche CPFs to be completed by the end of the 1994/95 budget

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year. To monitor the use of the funds the EU insisted that the NAO would provide the Commission with information on the preparation of the country’s budget, ‘… with the specific purpose of ensuring the correct use of the Counterpart Funds …’ (CEC-DG VIII 1993b). The structural adjustment funding provided by the EU was disbursed from February 1993 and by February 1994 90 per cent of the foreign exchange from the fund had been spent. The EU funding was ‘justified’ (i.e. accounted for) mainly through the import of chemicals from Germany (Interview, Harare, 21 February 1994). The disbursal of the CPFs was somewhat slower, with the target for the release of the second tranche – of 50 per cent disbursal of CPF funds – not reached until in the second quarter of 1994. However, while this left the second outstanding tranche of adjustment support of Ecu 14m still to be disbursed, Zimbabwe applied for further structural adjustment support from Lomé in early 1994. The Commission decided to grant further support and roll the first programme into the second, with the outstanding Ecu 14m effectively becoming the first tranche of a second programme. The second programme consisted of the Ecu 14m left over from the first programme, an additional Ecu 17m from the Lomé SAF and Ecu 15m more from the NIP (Interview, Harare, 25 February 1994; 4 February 1994; CEC DG VIII, 1996). This brought the total Lomé funding for structural adjustment support in Zimbabwe to Ecu 60m, of which Ecu 24m came from NIP funds and Ecu 36m from the SAF. With the suspension of IMF support in June 1995, however, the EU and other donors also suspended support. This left Ecu 29m of this programme not dispersed.1 These figures are contained in Table 6.3 . Table 6.3 Zimbabwe: Lomé funding for structural adjustment support (in Ecu m) Programme

Date

Total

NIP

SAF

Financial decision

Disbursed

28

9

19

Dec. 1992

-

Of which 1st tranche

14

3

11

Dec. 1992

Feb. 1993

2nd tranche

14

6

8

Dec. 1992

-

SECOND PROGRAMME

30a

15

17

Spring 1994

-

TOTAL

60b

24

36

-

-

FIRST PROGRAMME

a

Source

Not including the Ecu 14m second tranche of the first programme which effectively forms the first tranche of the second programme. b Ecu 29m of which remains not dispersed Source: compiled from interviews: Harare, 25 February 1994; 4 February 1994; 21 February 1994; and from CEC-DG VIII 1993a; 1993b; 1993c; 1996.

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Assessment of EU adjustment Support There are several points which need to be made to assess the EU’s structural adjustment support to Zimbabwe. First, it is clear that overall EU support was far from rapid, although once the decision had been made to support Zimbabwe’s reform in December 1992 this led to a quick disbursal of the first tranche of aid three months later in February 1993. However, it took almost two years between the EU pledging to support ESAP in March 1991, along with other donors, and actually disbursing the first funds to do this. The lack of funding – in particular between March and September 1991 when only the Swiss, Swedish, Japanese and part of the Africa Development Bank’s pledges actually began to be disbursed – was a crucial stage in the evolution of ESAP, as we have seen, with a substantial shift taking place in government policy to secure the promised funds. It has been argued by some that this delay enabled donors to press Zimbabwe into an agreement with the IMF (Stoneman 1991). If this was also true of the EU then it would have been a very serious departure from Lomé aid and structural adjustment principles. The slow preparation and decision-making procedure of Lomé aid may have had a role, and there is no hard evidence that a deliberate delay was engineered. However, there is evidence that some member states were keen to ensure at all stages that IMF approval was forthcoming. It was revealed in an interview that the proposal which was put to the EDF committee in September 1992 was delayed at the insistence of some member states, pending IMF approval of the reform programme in the December Paris donors’ conference of that year (Interview, Brussels, 15 May 1993). If this condition has been applied to EU adjustment support as a whole, then it means that the support of ‘principle multilateral donors’ (which under the terms of the Convention guarantees access to Lomé adjustment support) is interpreted very strictly to mean the IMF must be involved. This would make a mockery of any notion that EU support could be applied with any meaningful independence from the Bretton Woods institutions. In addition, a later delay in funding occurred between the first and second tranche of EU support. The second tranche was delayed by at least three months due to the slow disbursal of the CPF funds generated by the programme. One of the conditions of release of the second tranche was that 50 per cent of CPFs would be used up. This was not achieved, partly due to a slow budgetary process in the government, but also because of the very strict criteria that the EU had insisted on in the use of CPFs. This issue led to a certain amount of tension between the EU and Zimbabwe in the planning of the programme, with Zimbabwe critical of having to give the EU a say in domestic social sector policies, and with the World Bank, which viewed the conditions of use of CPFs as unnecessarily restrictive (Interviews, Brussels, 15 May 1993, 25 May 1993; Harare, 17 February 1994). The Commission relaxed this policy for the subsequent CPFs from the second tranche, Commission officials claiming at the time that the government was now ‘much more open’ and prepared to discuss its budget and social policies thus making such stringent conditions

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less necessary (Interviews, Harare, 25 February 1994, 4 February 1994, 21 February 1994). In any case it appears that a fairly rigid and slow response has been in evidence overall in EU adjustment support and one which in no way backs up the Commission’s claim to be independent and flexible in its approach to structural adjustment. A second issue which needs to be addressed is that of the EU’s claim to provide structural adjustment support, which takes account of different countries’ differing needs and priorities. With regard to Zimbabwe, there is very little evidence of any such approach. When the ESAP programme was first announced in October 1990 it received verbal donor support with very little extra conditionality at that stage. As such, it could just about claim to be a ‘home-grown’ programme as the government maintained. Its deviation from a standard adjustment package was small, but certain differences in timing and emphasis were made apparent when the IMF eventually demanded more stringent conditions and other donors refused to release funds in late 1991. One of these areas was that of trade liberalization and tariff protection. In the early stages of reform some import protection was deemed necessary for domestic industry. However, as the World Bank and IMF increasingly dictated the pace of reform, the scope of liberalization, the level of such protection and even its need was questioned. Yet it was precisely liberalization – and the integration into the world market that this represents (whatever its consequences for domestic industry) – that was stipulated as the key purpose and condition for EU structural adjustment support. Indeed, it was keeping to ESAP targets on liberalization through the OGIL system, even though their implementation was damaging, that was one of the conditions for the release of the second tranche. In addition, it appears that EU support also failed to take account of the country’s situation in terms of the effect of the drought. There is no evidence of relaxed conditions or quicker disbursal of funds to meet urgent needs in the wake of the drought and, as with other donors, there was a concern to see that reforms remained ‘on track’ (CEC Delegation – Zimbabwe 1992). It is clear that Lomé structural adjustment funding did not follow the Commission’s own stated policy aims. Indeed, it appears that the EU support was not only virtually indistinguishable from that dictated by the Bretton Woods institutions, but was in fact implemented with open recognition of World Bank and IMF leadership. Despite Commission claims that its adjustment support would be more subtle, more attuned to a country’s needs and less dictated by doctrine and theory than that of the Bretton Woods institutions, its support in Zimbabwe followed on the heels of, rather than added a new dimension to, a World Bank and IMF-driven programme. This is in sharp contrast to the ‘spirit’ of Lomé adjustment support as proclaimed by the Head of the EU Delegation in Harare, Michael Laidler, when he said EU support aimed ‘… neither to open parallel avenues to those of the IBRD [the World Bank] and the IMF nor to subject its actions to decisions taken by them alone’ (Laidler 1993: 10–11, emphasis added). Indeed, indicating a more nuanced approach to adjustment, he claimed that the touchstone of EU policy was to make adjustment ‘… not only economically viable but politically and socially bearable’ (Laidler 1993: 12, emphasis original).

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In fact, contrary to these claims and the Commission’s public statements on adjustment, which have been reviewed above, EU support has been implemented subject to the decisions of the Bretton Woods institutions. Not only was there was no Lomé funding for the ‘home-grown’ policy forthcoming in 1991, when other donors were holding back funds in anticipation of IMF involvement and control, but the Commission’s criticisms of ESAP and its perspectives on the future direction of reform in Zimbabwe are not noticeably different from those of the World Bank (Interviews, Harare, 25 February 1994, 4 February 1994). In addition, EU officials interviewed claimed that while the Commission was happy to go along with changes to the liberalization system because it wanted to let the government decide its own policy, this was conditional on the World Bank and IMF agreeing to any changes (Interviews, Harare, 25 February 1994, 4 February 1994). The implementation agreement itself made provision for as close co-operation as possible with the IMF and World Bank and Commission officials interviewed made it plain that a very close relationship existed day to day as well as in the longer term administration of the programme (Interviews, Harare, 25 February 1994, 4 February 1994, 21 February 1994). However, it was admitted that this ‘close co-operation’ in practice meant that the EU approach to adjustment was almost entirely subordinated to the dictates of the Bretton Woods institutions (Interviews, Harare, 25 February 1994, 4 February 1994, 21 February 1994). This was contrary to earlier EU statements on Lomé adjustment support, which claimed the Commission would be able to suggest modifications to the World Bank/ IMF reforms or ‘mediate’ between the these institutions and an ACP government. Such subordination was graphically illustrated by the suspension of donor support for the whole reform programme, including EU support, in the summer of 1995. This was despite some apparent misgivings on the part of the Commission, one publication citing the Zimbabwe case as showing too much rigidity on the part of donors (CEC DGVIII 1996). But the Commission has so far failed to chart an independent path, or provide and real alternative to, or modification of, the approach of the Bretton Woods institutions. While subscribing in all important respects to the direction of adjustment reforms in its development policies, and importantly in its proposals for a new Lomé agreement, it has yet to show any means of changing the basic features of conditionality. Some of this is not surprising. The level of funding from Lomé is simply not large enough to significantly modify the reforms that were being dictated by the Washington institutions, even if the Commission was serious about doing this. In Zimbabwe, total Lomé structural adjustment support of Ecu 60m compared to a single year’s World Bank support of an estimated Ecu 168m (US$200m) (Interview, Harare, 17 February 1994). The EU therefore could not easily compete with the Bretton Woods institutions for influence over the reform programme. Indeed, the lack of financial weight of Lomé support more generally was highlighted by commentators during the Lomé IV negotiations as a stumbling block for an ‘independent’ Commission line on

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adjustment, and illustrates the wider failure to seriously pursue an alternative approach to adjustment (Stevens and Killick 1989a). However, Commission officials interviewed in Brussels and Harare did not maintain any pretence about even attempting to pursue an ‘independent’ policy, claiming Lomé support formed only one part of the wider, World Bank/IMF-led donor strategy (Interviews, Brussels, 15 May 1993, 25 May 1993; Harare, 25 February 1994, 4 February 1994, 21 February 1994). They were supported in this view by a World Bank official, who spoke rather contemptuously of ‘bells and whistles’ being added to EU policies but making little practical difference (Interview, Harare, 17 February 1994). Indeed, this official indicated that he could not see what role or purpose such an ‘independent’ policy might serve (Interview, Harare, 17 February 1994). Some EU member states supported this analysis, a British aid official claiming that the British government agreed to the Commission’s rhetoric on adjustment as long as it made no practical difference to World Bank and IMF reforms (Interview, Brussels, 27 May 1993). This cohesion between the EU and the Bretton Woods institutions, and indeed between donors more generally, serves only to increase the ability of the Bretton Woods institutions to dictate the direction of Zimbabwe’s economic policy and to determine the future political economy of the country. Given Zimbabwe’s increasing reliance on external funding since the beginning of ESAP, and the likelihood that this will continue due to greatly increased indebtedness, it becomes vital for the country’s ability to bargain with donors over policies, that donors who express a commitment to a more ‘sympathetic’ approach to adjustment conditionality live up to their policy statements. Unfortunately for Zimbabwe the EU has not done this. Indeed, the Commission appears to support much of the ideological and political thrust of World Bank and IMF reforms. Thus, while raising doubts about the suspension of support to Zimbabwe, it has shown little ability or inclination to chart alternatives. Given the serious criticisms of the design of the IMF programme noted earlier, such subordination is particularly damaging.

Conclusion: future prospects The introduction of support for structural adjustment into Lomé represented a significant move away from the basic Lomé Convention principles of the of non-conditionality of aid, of equality and partnership. Contrary to Commission assurances at the time of this innovation, Lomé adjustment support had failed to offer anything different from the conditionality imposed by the World Bank and IMF. It is clear that the EU has failed to offer any prospect of an alternative to, or moderation of, the dominant neoliberal priorities of the World Bank and IMF. The experience of Lomé IV leaves the clear impression that the Commission’s rhetoric on adjustment was designed more to assuage ACP sensibilities and to give the appearance of living up to Lomé principles. So what are the future prospects? Unfortunately for Zimbabwe and other African countries labouring under Bretton Woods programmes, the prospects are not bright. Rather than try to live up to Lomé rhetoric, the EU has adhered to the dominant donor approach

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to economic reform. The mid-term review of Lomé IV in 1995 reaffirmed the emphasis on adjustment-oriented development and indicated that future aid allocations would be increasingly dictated by a countries’ willingness to implement market reforms (see Brown 1995; Parfitt 1996). But the donor strategy in Zimbabwe has clearly failed, both in terms of its own targets and in terms of encouraging or coercing the recipient government to adopt liberal economic principles. The ongoing failure to enforce donor conditions is manifest in the increasingly wayward economic policies of the Mugabe government in the late 1990s. Indeed, the late 1990s saw Zimbabwe move into increasing conflict with this donor strategy on both economic and political fronts. As we have seen, over economic policy, strenuous efforts have been made by Bank and Fund officials to get Zimbabwe back ‘on track’, particularly over the question of the budget deficit. On two occasions this appeared to bring new agreement with donors, only to be derailed by failure to meet targets and by problems associated with the Congo war (Guardian 7 October 1999). Furthermore, on the political front, there has been increasing donor anxiety over Zimbabwe’s human rights and democratic credentials. Increasingly repressive measures by the government, including the jailing of journalists, rising social unrest and the violent intimidation of opposition forces in the run-up to the 2000 elections, prompted renewed complaints from donors, including an EU ‘troika’ mission to Harare in 1998 to discuss issues of human rights (Guardian 31 January 2000). It would seem that the liberal goal of development based on the free market, rule of law and democracy has some way to go. All this poses an uncertain future for Zimbabwe and its relations with donors. While there are few prospects of fundamental changes to the established liberal character of donor policies, achieving the aims of these policies is highly problematic. Indeed, the failure of the adjustment programme to deliver on its targets in Zimbabwe, combined with an increasingly autocratic regime and with significant obstacles to the domestic opposition forces (see Guardian 31 January 2000) make the prospect of economic prosperity through market-friendly development and liberal governance a distant one. For the EU, its failure to offer anything different from this dominant donor agenda means that future EU support to Zimbabwe will most likely continue to follow in the footsteps of the larger Bretton Wood organizations. This further reinforces the extent to which the Lomé relationship reveals the changing character of wider North– South relations. Indeed, the reform of the EU’s co-operation with ACP countries agreed in 2000 appears to strengthen the liberal nature of this element of North–South relations. It is to this issue that we now turn.

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7 The EU and Africa beyond 2000 ‘… the Convention’s machinery is only partially suitable for the type of negotiations with governments which now seem to be necessary …’ CEC-DG VIII 1992a: 73 ‘The colonial and post-colonial period are behind us and a more politically open international environment enables us to lay down the responsibilities of each partner less ambiguously.’ CEC-DG VIII 1997c: vi

The Lomé relationship in North–South context This study has charted the history of the European Union’s formalized relations with Africa through the Lomé Conventions. We have seen how the Convention arose out of the EU’s attempts to establish an institutionalized arrangement governing its relations with the colonies and former colonies of its member states. This arrangement grew from a colonial association of African territories to the then EEC under the Treaty of Rome, to an association of independent states under the Yaoundé Conventions, and finally to the formation of the Lomé agreement in 1975. We have also seen how this larger and more substantial arrangement, which until 2000 remained a, if not the, centrepiece of EU development policy, has itself undergone a transformation. From a development agenda heavily influenced by the concerns of the ACP states, Lomé in practice proved a disappointment to those expecting it to deliver on its aim of constructing a new model of international relations. Instead, ACP demands for further reforms were at first rebuffed, and then reversed, in the revisions of Lomé II and III. But it is with Lomé IV that the purposes and character of the Convention were more fully recast, first in the introduction of structural adjustment conditionality and subsequently in the formalization of political conditionality in Lomé IV/ii in 1995. By this time, ACP demands for control

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over aid use, for an equal partnership and for joint decision making appeared as the paper commitments that some suspected they always were. And any notion that Lomé was providing ‘non-political’ development co-operation had been fully subsumed within the restructuring of the ACP states and economies that was by the 1990s in full swing. But this evolving relationship is not just indicative of the relative influence and ebb and flow of power of one group of states vis-à-vis another. More generally, and more fundamentally, the Lomé relationship represents a case study of North–South relations and must be understood in the context of the evolution of relations between the richest and most powerful states in the international system and those in much more subordinate and marginal positions. Here, as we have argued, the particularities of North–South relations need to be grasped, resting as they do on the distinctive pattern of relations created by the process of state formation which decolonization represented. This distinctiveness was based in particular on the ‘right to independence’ recognized in the post-war era, particularly in the UN system, which brought into being a group of states whose creation, consolidation and survival were at best problematic. This created both obligations and opportunities for North and South. For the North, there was the rapid establishment of programmes of support – development co-operation – for these states. And however far such aid programmes were affected by other, general or specific political interests of donor states – and the Cold War was pre-eminent among these1 – the very existence of international aid in the form that it took, as a new type of interstate relations, rested on the prior process of decolonization. For the South, the relationship created opportunities both to gain access to transfers of wealth in their favour and to push the limits of the ‘right to independence’ towards a ‘right to development’. In this, the developing countries sought ever increasing aid transfers; important and far-reaching derogations from a range of international rules and obligations both in the political and economic fields, as well as challenges to the liberal principles of the international political economy. For the Lomé countries, it is this pattern of international relations that created the very structure of development co-operation that emerged between the EU and the African, and later Caribbean and Pacific, states. It also provided the opportunity for the ACP states to press for the kind of favourable international support that the ‘right to development’ appeared to them to demand. It was this southern challenge that was most noted at the time of Lomé I and that became institutionalized in the principles and rhetoric of the Convention, as we have seen. But these southern claims challenged the prevailing liberal logic of the post-war order and, in response to the widespread economic crisis and restructuring of the 1970s and 1980s, spurred on by the end of the Cold War conflict, a resurgent liberalism has recast North–South relations. Initially, as we have seen, this focussed on the ‘economic’ process of adjustment in the context of the debt crisis. This in itself represented, and was correctly perceived by the South as, a reversal of the South’s demands for fewer conditions on the external support these states were able to gain access to, and a challenge to the pattern of economic development, and indeed patterns of internal

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political rule, that had emerged in the post-colonial era. Within Lomé, the introduction of adjustment support was a notable change in the aid regime between the EU and ACP states, not least because it was in Lomé more than elsewhere that the South’s demands of the 1970s had appeared to be partially met. Yet even here the liberal tide in North–South relations held sway, despite the Commission’s protestations of a different, less strident approach to conditionality than that followed by the leading donor institutions. From economic conditionality, North–South relations have also embraced ‘political’ conditionality – once, and for some, still, anathema to southern states’ claims of independence and sovereignty. But, as we have seen, the end of the Cold War further reinforced liberal forms of rule, ensuring North–South relations centred on issues of human rights, democracy, the rule of law and ‘good governance’ and, of course, ‘market-friendly’ development policies. If southern states were to continue to receive the economic international support that for many was still essential to survival, then it would require a reconstitution of the nature of rule in the South. The scale of this agenda, of rebuilding the polity of southern states ‘from the bottom up’, is enormous, uneven and problematic but has not prevented donors, the EU included, from institutionalizing these aims in their regimes of development co-operation. As the century drew to a close the prospects for an alternative to the liberal trajectory of North–South relations seemed remote – many southern states themselves embracing the new agenda – even if the achievements of development co-operation remained poor. So what of the future for the EU– Africa relationship in this context? The end of the century coincided with the expiry date for the 10-year Lomé IV Convention, and the Commission and member states were keen to follow up on the recasting ofthis relationship that had been indicated, although only partially fulfilled, at the time of the midterm review of Lomé IV in 1995. The ‘post-Lomé negotiations’ were designed to take the EU’s development co-operation into the twenty-first century, fully recognizing the transformations that had reshaped North–South relations. The replacement of Lomé IV came in the form of the ACP–EC Partnership Agreement finalized in 2000. The outlines of the new agreement are summarized below and confirm the trajectory of EU–African relations detailed in this study.

The Post-Lomé era Even before the 1995 mid-term revisions to Lomé IV had been ratified, the Commission embarked on a consultation process designed to define options for EU relations with the ACP countries for 2000 and beyond. In 1997 the Commission published its Green Paper on relations between the European Union and the ACP countries (CEC-DG VIII 1997c). In this, the Commission sought to lay out its view of the state of development co-operation with the ACP countries, the areas most in need of change and the possible options available. The Commission argued that relations with the ACP were in a ‘new phase’, that the Convention belonged to an earlier era and there was a need to re-assess the purpose and content of development co-operation. The Commission claimed that a new global environment existed, and that ‘The colonial and post-colonial

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period are behind us and a more politically open international environment enables us to lay down the responsibilities of each partner less ambiguously’ (CEC-DG VIII 1997c: vi). It noted, in particular, the impact on EU–ACP relations of the further international efforts to liberalize trade, and the creation of the new World Trade Organization (WTO) to this end. It also claimed that past development efforts had produced disappointing results in the ACP countries. It cited the institutions and economic policies of the ACP countries as a major constraint on the effectiveness of aid, while also acknowledging some shortcomings in the EU’s own aid processes. Furthermore, the Green Paper criticized the inflexibility of the Convention’s aid machinery, and noted the absence, in practice, of the Lomé ideal of ‘partnership’. In short, the Green Paper aimed to ensure that future relations were re-ordered to more clearly reflect the liberalizing international scene – the ‘changed political outlook’ created by the rise of democratization and liberalization, the creation of the WTO, and the need to make aid resources more ‘effective’. The Green Paper provoked a wide-ranging debate involving nongovernmental development organizations, member states, the ACP group and other commentators.2 The Commission and the ACP defined their formal negotiating positions in 1998, and negotiations continued until February 2000 (see ACP 1997; CEC-DG VIII 1997d; ACP 1998; ECDPM 1998a; ECDPM 1998b). For much of the duration of the negotiations, basic differences existed between the two sides, including the form that a new agreement would take and the future of trade relations with the ACP countries. Two lengthy ministerial meetings, in December 1999 and February 2000, eventually resolved areas of disagreement and the new ACP–EC Partnership Agreement was eventually signed in Cotonou in Benin, on 23 June 2000. The ‘root and branch reform’ of the Convention, called for by the Commission (CEC-DG VIII 1997d: 7), centred on 4 main areas: a new political agreement over principles of co-operation; a restatement of the aims of development co-operation, changes to the process of use of aid and changes to the trade regime.

A new political agreement The EU was clear, throughout the process leading to the Partnership Agreement, that it wanted an explicit joint agreement on political principles. This was something of a change for the Commission, which had always argued that Lomé was non-ideological and non-political. The EU’s negotiating guidelines stated, ‘Once thought neutral in its impact on the ACP countries’ political environment, EU–ACP co-operation is now seen as having a clear political dimension: the new agreement must reflect this fully’ (CEC-DG VIII 1997d: 11). Indeed, in justifying a new arrangement with the ACP countries the Commission argued that not only did it affirm the value of the EU–ACP relations in a multipolar world (CEC-DG VIII 1997d), but that the relationship would help to enable ‘the kind of world development that is more compatible with European political and social values’ (CEC-DG VIII 1997c: vi). The key focus of the ‘political dimension’ is a reiteration and expansion of the liberal political conditions that had come to the fore in the 1990s. This

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focussed, in part, on the political elements of the relationship already in the revised Lomé IV, which were restated in the new agreement, ‘Respect for human rights, democratic principles and the rule of law, which underpin the ACP–EU Partnership, shall underpin the domestic and international policies of the Parties and constitute essential elements of the this Agreement’ (ACP–EC 2000: Article 9). However, it controversially extended political conditions into the realm of ‘good governance’, paying particular attention to the problems of corruption (Articles 9 and 97). It is worth noting, that while the ACP states accepted much of the liberal political agenda, at least at a rhetorical level, and indeed reiterated some of it in the ACP Heads of State meeting in Libreville in 1997 (ACP 1997), the issue of corruption was notably absent and its inclusion in the Agreement was one of the main sticking points in the negotiations. Also, in line with the revised Lomé IV, such political clauses entailed the potential use of sanctions, which, if a dispute was not settled through consultation between the parties, could be enacted unilaterally by the Commission. The centrality of the political dimension was forcefully highlighted, even before the Agreement was signed. Symbolically, this was made clear when Fiji was chosen as the venue for the signing ceremony ahead of Togo, on the grounds that the country had a better record of governance. However, a rebel seizure of parliament, and military take-over of government, led to a hurried move to Cotonou in Benin. More concretely, when Cuba applied to accede to the Agreement, a move welcomed by the ACP group, the EU immediately rejected Cuba’s admission, on the grounds that human rights, democracy and governance conditions would be breached (Financial Times 4 February 2000).

The aims of development co-operation In addition to a reinforcement of these ‘essential’ and ‘fundamental’ elements, the new Agreement has broken new ground with respect to the aims of ACP– EU development co-operation. Previously, the Lomé Conventions had granted the ACP countries the right to decide development priorities ‘in all sovereignty’. While this statement remains in place, the new Agreement explicitly seeks to align EU aid resources with wider international efforts to define the aims of development co-operation and ‘successful development strategy’ more generally. In particular, this has involved a move towards forming international agreements over a series of development issues that were thrashed out in several UNsponsored conferences in the 1990s. These include, the 1992 Rio summit on environment and development, the 1993 Vienna conference on human rights, and the 1995 Beijing conference on women and development, among others. One result of these initiatives, was the subsequent definition of ‘International Development Targets’ by the World Bank and the OECD, the most publicized of which is the aim to reduce, by half, the numbers of people living in absolute poverty by 2015 (see OECD 1996a). Furthermore, these efforts, directed at ‘poverty reduction’, have been given concrete form in the donor-wide consensus on debt reduction and development strategies that are at the heart of the IMF and World Bank-led Highly Indebted Poor Countries (HIPC) (see chapter three above). In a manner similar to the political concordat identified above, the new

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Partnership Agreement also incorporates these wider international aims as statements of principle (ACP–EC 2000: Preamble, Article 19), as well as more specific EU aims as defined in the Maastricht Treaty (Article 19) and which, as we saw in chapter four, had been incorporated into the revised Lomé IV. The Partnership Agreement thus aims to be fully in line with, and indeed forms part of, what the Commission referred to in the negotiations as ‘The new development model gradually emerging from the major international negotiations’ (CEC-DG VIII 1997d: 3).

Aid process: moving conditionality upstream This move towards joint agreement over the aims of development aid, was reinforced by a radical overhaul of the process by which aid is to be granted to the ACP states. The Commission sought to address two main issues in this reorientation of aid to the ACP states. The first was a long-standing concern at the effectiveness of its aid programme, which had its roots in the scepticism that some member states had of the Commission’s abilities to implement aid policies, and the criticism from a number of independent studies of EU aid (see for example, Price Waterhouse 1992; OECD 1996b; see also Grilli 1993)3 . The second was an attempt to address some of the perceived problems of conditionality as a means of achieving desired outcomes – an issue the World Bank was increasingly focussed on by the late ’90s, and one which has been a central issue in EU adjustment support, as we saw in chapter three. While the end product of market-based reforms and adjustment, and a reformed political and governance system, remained, the Commission was aware that the conventional adjustment conditionality, which it criticized in rhetoric but followed in practice, was often unproductive. The result of these twin concerns was to create a new process of ‘rolling programming’ for aid. As we have noted earlier in this book, all four Lomé Conventions included a contractual system whereby each ACP country was told the amount of aid it would receive at the beginning of the Convention, and then came up with ways that this might be used. Granted, as we have seen, conditionality encroached on this process in various ways. However, under the Partnership Agreement, aid allocations are to be given on the basis of a record of implementation of ‘Country Support Strategies’ which will be defined by the ACP states, and the Commission, at the beginning of the aid process and which will outline how aid might be used, how this will support wider processes of economic and political reform and how this will move towards fulfilment of the international development targets outlined above (ACP–EC 2000:Annex IV). Aid will be granted in a two-yearly cycle, and ‘effective use’ of aid over that period will determine future allocations. As will be obvious, the criteria for determining effective use, the mechanisms of assessment and the scope for the EU to direct aid to where it thinks it should be going, will all be key issues in the operation of the new system. In particular, it enables the EU to ensure that aid is used in accordance with the newly agreed aims and principles of development co-operation, and to switch aid resources to those states that most successfully take on board the new ‘shared values’ of ACP–EU co-operation.

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This change is reinforced with the creation of a single aid budget to replace the various separate instruments which existed under Lomé (CEC-DG VIII 1999). Whereas previously, specific amounts were set aside for adjustment support, project aid, promotion of human rights, Stabex and Sysmin and so on (and indeed, at the time of Lomé IV, the Commission was at pains to point out that adjustment support would not encroach on ‘long-term development support’), now there will be a single budget heading for all aid resources. This not only creates much greater ease for the Commission to switch aid to ACP states that are deemed to be ‘most effective’ in using aid, but also, in theory, allows all aid resources in any one state to be used for adjustment support, or good governance, or whatever is identified as the priority area. Furthermore, the new agreement provides that, where appropriate state capacity exists and where issues of good governance and anti-corruption have been assured, aid may simply be given as direct budget support to the national government. This is designed to increase the ‘ownership’, by the national government, of particular policies and aid use, and allow the integration of external support more fully into national policies. As such, the centrality of economic and political reform, in the use of aid, is reinforced and the distinction between these processes of liberal reform and ‘long-term development support’ more generally (a distinction that was forcefully deployed by the Commission at the time of Lomé IV) effectively ceases to exist. As importantly, the new aid procedure, combined with the prior definition of the principles of co-operation, pushes conditionality upstream of aid project implementation and makes future aid allocations as much dependent on past, rather than promised future, performance. Finally, and much against the ACP states’ wishes, the new agreement has also ended the Stabex and Sysmin schemes (CEC-DG VIII 1999b). The Commission had long thought that the kind of compensation for market fluctuations these funds provided was an inappropriate, and far too costly, use of aid resources and something of an anachronism left over from the New International Economic Order debates of the 1970s. In the context of a renewed commitment to integration into the world economy, and market-friendly development strategies, and where the EU was no longer as concerned about raw material supplies from the ACP countries (see Grynberg 1997), this is not surprising. The Agreement does allow for some financial support to be used to deal with the financial impact of drops in export earnings, but such aid will be included in the two-yearly country allocations of aid funds by the Commission (see ACP–EC 2000: Article 68 and Annex II). Despite the significant changes, the amount of aid offered for the new Convention is only a marginal increase over that provided for in Lomé IV/ii. The 9th European Development Fund (EDF) will be EURO 13.5bn, a below inflation increase over the EURO 13.132bn in Lomé IV/ii and short of the EURO 14.330bn sought by the Commission (CEC-DG VIII 1999b; Financial Times 3 February 2000). The Commission also embarked on internal reforms, including aid processes, although this was as much to persuade member states that it could use aid effectively as to respond to any ACP concerns. The 9th EDF includes EURO 10 bn for the main aid allocation and EURO 1.3 bn for

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regional development. It also includes EURO 2.2 bn for a new ‘investment facility’ which will promote private sector development and will include concessionary finance for infrastructure projects, post-conflict countries and privatizations, as well as non-concessionary loans. In addition to this figure, there will be funding for the European Investment Bank of EURO 1.7 bn. The EU also agreed to disburse existing and new aid funds more quickly, aiming for EURO 3.5bn per year – twice the existing rate (CEC-DG VIII 1999b). Together with unspent aid from the previous Conventions, this allocation of aid is to cover the period up to 2007. Finally, the EU has agreed to allocate EURO 1 bn of existing EDF funds to the HIPC initiative (CEC-DG VIII 1999b).

The trade regime The future of trade relations between the EU and ACP was in some ways the most important and difficult of all areas of the new agreement. Two main factors influenced EU thinking on trade issues. The more important was the creation of the WTO. For Lomé this was problematic. The Lomé trade arrangements had existed by virtue of a waiver from GATT regulations, which was required because the market access provided was not reciprocal (and hence did not qualify as a ‘regional free trade arrangement’), nor was it based purely on ‘development criteria’ (i.e., on the level of development of the states gaining preferential access, as the ACP states cover a range of levels of development). Thus, Lomé had hitherto been an example of the extent to which multilateral rules had been qualified by the previously existing patterns of development co-operation. In the wake of the creation of the WTO, it was highly uncertain that a simple renewal of Lomé regulations would receive a waiver from the new organization and its member states. This was particularly apparent, given the long-running dispute between the EU and the US over the Lomé Banana arrangements, which forced the EU to change its rules. The other key factor was the Commission’s assertion that trade preferences were not effective in any case, and that internal economic reforms of ACP economies to improve competitiveness were far more important in increasing ACP exports. As one commentator noted, the WTO issue was fortuitous for some member states critical of preferential arrangements and of the focus on the ‘colonial’ ACP group, which sought to recast EU market access in more ‘global’ and liberal terms (Grynberg 1997). The key problem for the Lomé trade regulations, was the different levels of development of ACP states – the ACP Group includes 39 ‘Least-Less Developed Countries (LLDCs), and 32 richer, middle income countries (nonLLDCs). The negotiations, as far as the EU was concerned, therefore had to produce a trade regime that would meet WTO rules over preferential market access. This could either be given to developing countries, on the basis of their level of development, (as happened in the GSP schemes) or on a reciprocal basis as part of a regional free trade area. The existing Lomé regulations fitted into neither category. Thus, the new Agreement could only keep the ACP group intact by differentiating the two groups of ACP states in respect of trade (see

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ACP–EC 2000: Annex V for details of the trade regime). The least developed countries were given the promise of ‘enhanced’ Lomé style access, but this has been extended on a non-contractual basis to non-ACP countries of a similar level of development4 . The more developed ACP countries are to negotiate regional trade agreements with the EU. Importantly, these will be based on reciprocal trade preferences, thus removing one of the remaining distinctive features of the Lomé regime and reinforcing the extent to which it has been modified to accommodate multilateral norms. The timetable for the trade agreements was for negotiations to start by 2002, be implemented from 2008, and complete within 12 years. Where appropriate, LLDC ACP states may be involved in these negotiations (for example, where a sub-region, such as southern Africa, includes LLDC and non-LLDC ACP states). If, by 2004, some non-LLDCs decide not to negotiate regional partnership agreements, the EU committed itself to try to find a WTOcompliant trade framework that protects their present access (i.e., does not simply ‘relegate’ them to the GSP) (CEC-DG VIII 1999b). It is difficult to see what this could entail without extending such access to all developing countries, and thus eroding any remaining preferences enjoyed by the more developed ACP countries. For the interim period up to 2008, all signatories agreed to seek a waiver from the WTO to allow existing Lomé access to remain in place. Because of potential obstacles from other WTO members, the EU rejected ACP requests for existing access to be improved, arguing that it would further extend the WTO-incompatibility of the existing trade arrangements (Business Day 2 February 2000). The new Partnership Agreement has a lifetime of 20 years, allowing eight years for the initiation of the new trade agreements and 12 years for their full implementation.

Conclusion The original Lomé Convention has been interpreted in this study as an institutionalization of the post-colonial relations between the EU and the ACP states. The context for this relationship was the pattern of relations between the developed world and the new ‘Third World’ states which saw the provision of external support of various kinds to these weak states and the attempt by these states to push for more preferential treatment in the international arena, new sources of external support for themselves and changes to the predominantly liberal principles of the world economy. The first Convention was notable partly because of the relative success of the ACP states in achieving, at least in principle, some of these aims – confirmation of their sovereign equality with the EU states, the ability to determine aid use and development priorities, a contractual arrangement over aid provision, specific and nonreciprocal preferential access arrangements to the EU market and compensatory finance for market fluctuations affecting export earnings. As we have seen, not only was the position rather different in practice (something the Commission was increasingly at pains to point out), but these principles themselves had been eroded through subsequent revisions of the Convention. This involved a

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general trend in which the EU sought to have a greater say in how its aid was being used in ACP countries, particularly from Lomé III onwards. However, it also involved the modification of the Convention to include conditionality over economic and political reforms. As has been argued, this was in line with the transformation of North–South relations more generally, in which liberal principles of international economic relations, domestic economic policy and development strategy and the nature of domestic rule became a central concern of the major donors and states. In significant ways the new agreement confirms and extends these changes in the context of a liberalization of North–South relations. A series of principles claimed by the ACP countries (and the South more generally), have been sidelined or removed in the new Agreement. The principle by which development co-operation is practised, with little or no regard to the internal nature of rule in the South, has been substantially eroded by the increasing conditionality of development co-operation: membership of the new Partnership is itself now predicated on respect for liberal principles of internal rule. The claim of ‘sovereignty’ over the development process has been in question for some time through the practice of adjustment conditionality, but has been further sidelined by the explicit recognition of the ‘new vision’ for development co-operation, defined by international UNsponsored agreements and by EU development aims and which itself further erodes the claimed uniqueness of EU–ACP relations. The rolling programme for aid use ensures that these principles will remain central in allocating future aid resources. For those countries engaged in the HIPC initiative, the provision of EU aid, particularly if it is provided as direct budget support, cannot but ensure that EU aid is ever more integrated with the priorities of the Bretton Woods organizations. The aim of enacting authoritative control over international economic resources through the Stabex and Sysmin mechanisms has been removed. And the special, non-reciprocal treatment in trade arena has been adapted for compliance with the renewed multilateralism and committed liberal agenda of the WTO. Although, in this context, the final agreement does not simply replace ACP-specific access with a ‘global’ arrangement for all developing countries, as some member states wished, it does ensure that ACP trade access will be made to fit global trade norms. This has necessitated the division of the ACP in the trade arena, with the least developed having to share their privileged access with other non-ACP countries, and the more developed having to relinquish the non-reciprocal principle, itself a notable feature of the original Convention and a key aim of the South in international trade negotiations. The road from the first Lomé Convention to the ACP–EC Partnership Agreement has charted the transformation of North–South relations. The first Lomé agreement, more than any other, incorporated some of the South’s demands for increased claims on development assistance and for special and particular treatment in the international system. As has been argued, these aims not only represented a significant challenge to the liberal nature of the international political economy, but also stemmed from the particularities of

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the South’s emergence as a group of sovereign states. Their position in the international system, their relations with the North and, indeed, the character of their sovereign statehood, have all been restructured in the intervening years. In the negotiations for the Partnership Agreement, the Commission was at pains to emphasize the ‘new era’ which had emerged, and the character of the new agreement reflects the liberal norms which now dominate North–South relations. Unfortunately for the populace of the ACP countries, and as a challenge to the rhetoric of the donors and those in power in the developing countries, the problems of underdevelopment, oppression, poverty and want remain as much present in the new era as the old.

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Endnotes Chapter 1 1 For the sake of simplicity and consistency (and despite resulting historical inaccuracy), the term European Union or EU is used throughout this book in preference to European Community (EC) or European Economic Community (EEC), except where it is explicitly necessary to do otherwise (for example, negotiations for the Treaty of Rome to form the EEC) and where references demand alternatives be used. The European Union came into being in 1993 on ratification of the Treaty on European Union, or Maastricht Treaty and incorporated the former institutions – EEC, EC etc. In addition, given the normal practice of the Union, all monetary values are in ECU (European Currency Unit, now replaced by the Euro) unless otherwise stated and a currency conversion table (ECU into US Dollars and Pounds Sterling) is provided in Appendix 2. 2 Although this re-evaluation has also enabled the Commission to be more candid about its own interests in the relationship. 3 The literature on Lomé is extensive. It is evaluated in the following discussion but some of the more frequently cited works, among many, include: Boardman, Shaw et al. 1985a; Cosgrove-Twitchett 1976; Galtung 1976; Grilli 1993; Gruhn 1976; Gruhn 1985; Hewitt and Stevens 1981a; 1981b; Jones 1973; Lister 1988; 1998; Long 1980a; Nabudere 1979; Ravenhill 1985; Stevens 1981; 1984a; 1984b; 1985; Vaitsos 1982; Zartman 1976. 4 For example see Anon 1981; Hewitt and Stevens 1981a; Stevens 1984b; Overseas Development Institute 1989. Other examples which could be seen as following this approach possibly include Helleiner 1980; Jones 1973; Long 1980b; Nötzold and van der Ropp 1990. 5 For example see the publications of EUROCIDSE, the European Research Office and European Centre for Development Policy Management. 6

This summary draws particularly on Herbst’s analysis (1987: 641–7).

7 This is a broad characterization only, as there are considerable differences between dependency writers. See Frank 1966; Frank 1969; Emmanuel 1972; Amin 1974; Cardoso and Falletto 1979. For surveys see Hoogvelt 1982; Blomström and Hettne 1984; Brewer 1987. One dependency writer to investigate European colonial relations with Africa is Rodney 1989. 8 The following all follow this line of argument, at least in part: Nabudere 1979; Green 1980; Vaitsos 1982; Asante 1986: 193–5; Parfitt 1987; Lister 1988. 9 Detailed studies of EU–ACP trade can be found in McQueen and Stevens 1989; Davenport and Hewitt 1995; CEC-DG VIII 1997c. 10 Of course, it is beyond the scope of this introduction to undertake a detailed theoretical investigation of these perspectives. However, see Leys 1977; Hoogvelt

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1982; Harris 1986; Brewer 1987; Little and Smith 1991; Leys 1995, among many others. See also Sklair 1988; Schuurman 1993, for some attempts to solve the theoretical problems left by the dependency/modernization theories. 11 Although Krasner’s important analysis (1995) is a major exception to this (see below). See also Neuman 1998. 12 ‘State-centred analysis’ and ‘selfish state interests’ are not, of course, the preserve of realism – few analyses ignore the state and all recognize some kind of state interest. 13 Krasner argues that the North–South dialogue of the 1970s was based around a challenge to the dominant liberal regime governing international economic relations by the developing countries. This was based on the fact that not only were the richer countries not primarily interested in development (or welfare), but neither were the developing countries. Instead, ‘They are behaving the way states always behave, they are trying to maximize their power …’ (Krasner 1985: 12). The developing countries sought to do this by using political advantages (such as their role in the United Nations) in order to extend the authoritative (rather than market) regulation of economic resources. Arguing by extension to Lomé, some elements clearly fit this pattern – an attempt to alter the rules of competition (exert meta, rather than relative, power) and increase political regulation of economic relations. 14 It should be noted at the outset that in discussing co-operation it is not implied that such relations are in some sense ‘altruistic’ or conflict-free. Indeed, Ruggie argues that much international co-operation is both in states’ self-interest and ‘positive-sum’ (Ruggie 1998). 15 As has been explored elsewhere, these represent the two spheres of capitalist social relations: the economic and the political (see Holloway and Picciotto 1977; Holloway and Picciotto 1978; Clarke 1988a; Burnham 1994). 16 Williams (1994) provides a useful assessment of some factors affecting regime change in respect of international financial institutions. 17 We need not rehearse here the arguments about how important US leadership was (see Keohane 1984; Webb and Krasner 1989; Nye 1991). But see also Ruggie (1993) for a useful corrective to an over-simplified focus on hegemony as a causal factor – as he notes, it was not so much the fact of US hegemony as that it was US hegemony: the constraints on the US state were important in determining that this reconstruction took place along liberal multilateral lines. 18 Although the causes of the post-war boom are disputed, see Armstrong, Glyn et al. (1984); Brett (1985); Clarke (1988a); Marglin and Schor (1991). 19 In respect of the latter, the British Foreign Secretary George Canning boasted in 1826, ‘I have called the New World into existence, to redress the balance of the Old.’ 20 Even these interventions were overwhelmingly justified in terms of international

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norms, action to prevent a threat to international peace and security. (see Jackson 1993). 21 On this process in relation to the British state, see for example, Bulpitt 1986; Gamble 1988; Bonefeld, Brown et al. 1996. 22 Among exceptions to this see the call for a reimposition of empire in Stone, N., ‘Why the Empire Must Strike Back’ Observer 18 August p.22.

Chapter 2 1

Appendix 1 details the chronology of these agreements and the signatories.

2 It is worth noting that this shift in international norms also reflected a renewed anti-racism, which codified in the UN Charter, meant that it was no longer possible to define non-whites as ‘inferior’ and that universal rights (such as independence) could therefore not be denied on the basis of backwardness. Undoubtedly this (and the wider human rights regime) were heavily determined by the reaction to the Holocaust and the rejection of the notion of inferior races. This built on the longer established trends of questioning white European superiority occasioned by the anti-slavery campaigns, the defeat of Russia by Japan in 1905 and the participation of ‘colonial peoples’ in the First and Second World Wars (Vincent 1984). However, this too can be seen as a key element of the forward march of liberalism – it was precisely because the liberal order prevailed over Fascism (Communism aside) that such norms could be elevated to the status of international law. The importance for the future of the empire of the anti-racism contained in the UN Charter was thus great, although it may not have been recognized as such at the time (Wilson 1994: 84). In a way, the defeat of Fascism by liberal powers also paved the way for the dismantling of empire. 3 See among many others, Keohane 1984; Russett 1985; Webb and Krasner 1989; Bromley 1991; Nye 1991. 4 The growth of world trade declined from a decadal average of 34 per cent per capita between 1881–1913 to just 3 per cent in 1913-37 and was lower than the increase in world output, indicating a declining proportion of traded goods to world output (Kenwood and Lougheed 1992: 223–4). 5

For summaries of these organizations, see Williams 1994.

6 For France, the Franc Zone is important both as an element of the French colonial system before independence and as an indication of the persistence of these links after independence, although under the impact of the debt crisis in the 1980s this too has come under considerable strain (see Overseas Development Institute 1990a). 7 mua = million units of account. 1 unit of account equaled $1 (Lister 1988: 19). The European unit of account is equivalent to the Ecu (European Currency Unit), which replaced the unit of account as the European monetary measure and is used in the rest of this book. See Appendix 2 for Ecu exchange rates.

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8 The eighteen were Burundi, Cameroon, Central African Republic, Chad, Congo (Leopoldville), Congo (Brazzaville), Dahomey, Gabon, Upper Volta, Ivory Coast, Madagascar, Mali, Mauritania, Niger, Rwanda, Senegal, Somalia, Togo (Lister 1988: 35). 9 Indeed, by 1971 the EU was taking a greater share of Britain’s exports than the Commonwealth despite the Common External Tariffs, and was supplying virtually the same level of imports. The Commonwealth took 50.5 per cent of British exports in 1951 compared to the EU’s 9 per cent whereas by 1971 the figures were 18 per cent and 21 per cent respectively (Cohen 1991: 177, Table 6.3). 10 A third, more specific, issue was also raised – that of sugar, which required specific provision to be made for Britain’s traditional sugar importers given the promotion of beet sugar in the Common Agricultural Policy (for a survey of this issue see Ravenhill, 1985: 89–94). 11 This was not to last, as we see later in this book, and the EU has actively broadened its regionalist links (see Edwards and Regelsberger 1990). 12 A detailed account of this crisis cannot be given in the space available. However, see for example Armstrong, et al. 1984: chapter 11; Brett 1985; Marglin and Schor 1991; also Clarke 1988b; Clarke 1992; Holloway 1995. 13 In the event, the threatened crisis really only hit home in the Third World in the 1980s, with Third World economies and states surviving on credit due to excess liquidity in the advanced countries in the 1970s, and their fragility re-emerging later in the debt crisis. 14 The EU instituted its Generalized System of Preferences (GSP) in 1971. 15 It should be noted that the process of dilution of imperial ties was in no way complete. French economic interests in Africa were by no means eliminated, and for some sectors of French industry Africa has remained important for markets even into the 1980s (Hayter 1966; Low 1983). Indeed, even the new aid contracts from the EU’s association policy provided export opportunities from which France was the main beneficiary (Jones 1973: 14). In addition, France maintained political and military co-operation pacts with various regimes which testified to the remaining French influence over, and interests in, Africa (Adisa and Adigun 1986: 142). Thus, by the time of the Lomé Convention, it was still France out of the European countries which had the major interest in terms of trade and investment in the associated countries (Mytelka and Dolan 1980). 16 The memorandum also called for greater political and economic co-operation internally to allow a broader and more extensive development policy externally. The difficulties of achieving this, exacerbated by problems of enlargement and economic dislocation in the 1970s and beyond, have meant that over 20 years later the same arguments are being made by the Commission. 17 That the whole Commonwealth was not to be included owed more to the

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problems this would pose in accommodating their wide developmental and geographical differences than a desire for a non-colonially defined framework for global development policy. 18 The ACP Group of States was not formally constituted, with Secretariat, Council of Ministers and Committee of Ambassadors, mimicking the Lomé Institutions, until the signatories of Lomé signed the Georgetown Agreement (Guyana) of 6 June 1975 (Lister 1988). 19 In fact, 41 associable states attended at this stage: the 19 associated under the Yaoundé II Convention; the three East African states of the Arusha Convention; three other ‘similar’ African states (Ethiopia, Liberia and Sudan); and 16 Commonwealth associable states (nine African, four Caribbean and three Pacific). 20 For an overall assessment of the implementation of the Conventions, see CECDG VIII 1986; CEC-DG VIII 1992b; CEC-DG VIII 1993e; Cosgrove-Twitchett 1981; Hewitt and Stevens 1981a. 21 This issue became an important issue in the mid-term review of Lomé IV – see chapter four. 22 The first EDF was formed by the Treaty of Rome and the second and third by the Yaoundé Conventions. Each Lomé Convention followed on from this pattern. 23 The EU’s desire to maintain the Lomé relationship also owed something to the re-emergence of the Cold War towards the end of the 1970s. This particularly affected relations with Africa, where Cold War rivalries had become focussed in the 1970s. A key part of this was the situation in the southern states of Mozambique and Angola. Here, Marxist-led revolutions had replaced Portuguese colonialism and the West (including the EU) became embroiled in preventing perceived Soviet influence from spreading. Although it was denied at the time, the Convention certainly owed something to this context. In the post-Cold War situation of the 1990s, when the whole Lomé structure was coming under scrutiny, several senior Commission officials, when interviewed, talked of Lomé as belonging to an age of ‘Cold War’ and ‘spheres of influence’ (Interviews: Brussels, 25 May 1993; 26 May 1993; 26 May 1993). Indeed, it was claimed that Lomé was seen as ‘useful’ in this context for member states who had no bilateral relations with various African countries because of the Cold War, in that it allowed some contact and influence to be maintained through the Commission and the Convention (Interviews: Brussels, 25 May 1993; 26 May 1993; 26 May 1993). This is illustrated by the considerable efforts made by the EU (and by Commissioner Pisani in particular), during the lifetime of Lomé II, to get Angola and Mozambique to join the Convention. The other newly independent African state of Zimbabwe was also encouraged to join, as we see in chapter five. 24 As Clapham notes, this phrase is often quoted (for example, see Stevens 1985) although it is not actually in the English version of this document (Clapham 1996: 102).

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Chapter 3 1 On the more class-based interpretations of the end of the boom, see Clarke 1988a; 1988b; 1992; Holloway 1995; Bonefeld and Holloway 1995b. 2 On the politics of money and credit in this era, see the contributions to Bonefeld and Holloway 1995a; and particularly Bonefeld and Holloway 1995b and Clarke 1988a. 3 The acronym ‘BWI’ is used as the EU’s preferred means of referring to the IMF and World Bank and is more specific than some alternatives, such as the more general ‘IFIs’ (International Financial Institutions). 4 There is not space here to detail some more specific examples of SAPs. However, there have been numerous case studies. Among others, see the studies in Harrod 1992; Körner et al. 1987; Mosley et al. 1991b; Onimode 1989a and 1989b. 5 The ECA’s own proposal – the African Alternative Framework to Adjustment amounted to little more than a restatement of the type of policies which had been pursued up until the 1980s. Like others which dismissed SAPs, it did little to recognize the (sometimes literal) bankruptcy of the previous pattern of development. 6

For conversion of US$ to Ecu, see Appendix 2.

7 Indeed, Africa’s crisis has become ever more severe. For surveys of Africa’s crisis see also, for example, Barratt-Brown 1992: 1–10; Davidson 1992: chapters 7 and 8; Onimode 1988: chapter 1; Szeftel 1987; Allen 1995; Clapham 1996; Jackson 1990; Zartman 1995. 8 Some have gone so far as to claim these moves represent an identity crisis for the World Bank (Bresser Pereira 1995). While overstating this somewhat, such changes do illustrate some of the tensions created by the neoliberal approach to adjustment (see also Kiely 1998). 9 Financial crises and issues of debt were by no means eradicated for Latin American and Asian countries by this strategy, as the Peso crisis of 1995 and the Asian crisis of 1997–8 showed, although the dynamics of these crises were rather different (see Strange 1998). 10 Still others have argued that adjustment has had a negative effect on the environment (see Reed 1992 for a survey) 11 Witness the aims of development policy in the Maastricht Treaty (see chapter 4) and the British Government’s Development White Paper (British Government, Department for International Development 1997). 12 Ratification of Lomé IV proved a drawn-out process. Following the agreement, the EU approved transitional measures to cover the period from the expiry of Lomé III (end of February 1990) to the coming into force of Lomé IV. The required two thirds of the ACP had ratified the Convention by May 1991 (Bulletin of the EC

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5-1991 1.3.61) but the (12) EU members did not complete the process until August 1991 (Bulletin of the EC 9-199 11.3.38). The delay necessitated extensions to the transitional measures and delays in Stabex payments for the years 1990 and 1991, and meant that Lomé market access was denied to the new states (Haiti, Dominican Republic and later Namibia) until the end of 1991 (Bulletin of the EC 7/8-1991 1.3.50). The delays prompted the European Parliament to pass a resolution criticizing the member states (Bulletin of the EC 7/8-1991 1.3.50). The ACP were also very critical of the delay, which further slowed the already troublesome disbursal of Lomé aid funds (Interview, Brussels, 28 May 1993). 13 Namibia was undergoing its independence process during the negotiation of Lomé; it became independent (of South Africa) following elections in 1990 and duly acceded to Lomé to become the 69th ACP state. 14 The acceptance of this approach was not to last. As chapter 7 shows, soon after Lomé IV was signed a more radical reappraisal of the overall structure was begun. 15 In this respect, the Convention’s Articles on adjustment reflect a wider problem of lack of clarity in Lomé, through which the Commission has considerable scope to interpret the guidelines in the ‘best’ way they can (Interview, Brussels, 26 May 1993). 16 The Lomé III programmes were the subject of a report by the European Court of Auditors in 1994, which criticized various technical aspects of the programmes (European Court of Auditors 1994). 17 Parfitt has these figures as 65 per cent and 57 per cent (1996: 57). 18 In addition to these changes it is also worth noting that despite a commitment in a joint declaration on debt in Lomé IV, the EU has failed to cancel ACP debt owed to it. Although only a small proportion of ACP debt is owed to the EU itself (about 1.2 per cent of total ACP debt) it would have sent a message to the much more important creditor member states. Although Commissioner Marin did come out in favour of cancellation, in the event only the debts relating to Stabex under Lomés I–III, amounting to Ecu 899m, were cancelled (Bulletin of the EC 11-1991 1.3.54). This received considerable criticism from the European Parliament and the ACP countries, as it left an estimated Ecu 2m still owing to the Commission (The Courier no. 132 1992) (see also Mailafia, 1996 for a discussion. 19 It has also been argued that, although not improving ACP trade, preferences under Lomé have established a minimum floor level for ACP exports (Cosgrove 1993). 20 Eight product groups where these trends are evident and which are important for the ACP are identified: canned tuna; leather and leather products; fresh flowers; vegetables; processed tropical agricultural products; wood products; yarns and fabrics; and clothing and linen (McQueen and Stevens 1989; Stevens and Weston 1984).

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21 On the EU’s CAP see also Raikes 1988: chapter 5; Watkins 1991. 22 See among others, Gunasekera et al. 1989; Oyejide 1990; Raghvan 1990; Watkins 1991.

Chapter 4 1 This was a point often repeated by the Commission and was reiterated in interviews (CEC-DG VIII 1992a; CEC-DG VIII 1993g; Interviews, Brussels, 27 May 1993; 26 May 1993). 2 The distinction of economic and political conditionality is something of a bogus one, as even the most ‘technical’ economic adjustment measures embody clear political aims, implications and strategies. 3 These issues have been interpreted by some as the need to move from state ‘autonomy’ to ‘embeddedness’ (Evans 1992) and by others as the complementary needs of capitalist restructuring to achieve relative autonomy and elite hegemony over society (Cammack 1997). 4 This was starkly revealed by the debate over the Bank’s interpretation of the East Asian industrialization in its report, The East Asian Miracle where evidence of extensive state involvement in regulating and directing economic activities was subsumed beneath the need to maintain the Bank’s neoliberal paradigm (World Bank 1993; Wade 1996). 5 There is a large literature on the so-called ‘second liberation’ of Africa – see for example, Chazan 1992; Decalo 1992; Clapham 1993; Jeffries 1993; Villalon 1994. 6

For this process see also Crawford 1995: 10–15 and Crawford 1996.

7 The issue of trade was particularly problematic in Lomé because suspension of the trade regulations (as was sought by Britain in relation to Haiti in the early 1990s (Interview, Brussels, 27 May 1993) would mean treating the ACP countries more harshly than those with whom the EU had more important commercial relations (ACP–EEC Joint Assembly Working Party 1994; Euro-Cidse December 1994, pp.3–4). This is not to mention the wider ‘practical’ problems to do with definition of terms, scope of action and effectiveness of ‘political conditionality’ in general (see, for example, Crawford 1995). 8

For the application of this new policy, see Crawford 1998.

Chapter 5 1 This chapter will include some aspects of Lomé IV in relation to the trade system, but not the aid from Lomé IV. 2 For further information on the pre-independence history of Zimbabwe, see for example, Mandaza 1986c; Stoneman and Cliffe 1988; also Mandaza 1986a. 3 On land policy, see among others, Loewenson 1992, chapter 4; Moyo 1986, pp. 167–171; Mumbengegwi 1986: 204–10.

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See Brown 1995 for a detailed analysis of Zimbabwe’s trade under Lomé.

5 This has declined somewhat since independence and manufactured exports make up just over 20 per cent of all exports in the post-independence period Riddell 1990: 11–12). 6 This was despite the mixed nature of nationalist support and the limitations of socialist and Communist influence on the liberation movements (see for example, Davies 1988; Phimister 1988). 7 This policy, and particularly the EU’s role in it, has been investigated by Goodison (1988a) and does not need to be repeated here. 8 Pressure from states friendly to the PF, such as Mozambique and Zambia to end the war, internal differences in the PF, and the fact that it had not destroyed the Rhodesian state and army all led it to compromise in the negotiations (Mandaza 1986b; Mandaza 1986c; Stoneman and Cliffe 1988). 9 Of the target of resettling 160,000 families from the overcrowded Communal Areas (CAs), only 50,000 had been resettled by the late 1980s. 10 For more on the general politics and development of the country see Mandaza 1986a; Stoneman 1988a; Stoneman and Cliffe 1988. 11 On South African policy towards Zimbabwe, see Evans 1988; Hanlon 1986. 12 The 1990s have, however, also seen increasing questions posed over Zimbabwe’s democratic credentials with extra-judicial killings and press censorship as ZANU’s popularity waned – an issue I return to in chapter 6. 13 The original figures are in Zimbabwe dollars and are Z$1.2bn and Z$287.5m respectively. However, there are different claims as to how much was actually pledged at Zimcord – Nyawata claims pledges of aid exceeded what was asked for (Nyawata 1988: 101); Chimombe claims funds supplied were smaller than expected (Chimombe 1986: 124); and Stoneman and Cliffe claim what was asked for was received (Stoneman and Cliffe 1988: 122). Of those who quote figures, it seems to be generally accepted that the latter is the correct position, i.e. that around Z$1.2 billion was pledged. 14 Without a significant debt problem, the conditionality was implicit at this stage, although this was not to last. 15 Technically this was because Zimbabwe briefly reverted to being a British colony in order to annul the 1965 UDI before formal independence, although the arrangements continued until it signed the Lomé Convention. 16 The only other specific area in which Zimbabwe gained special treatment was as a land-locked state. Annex 4 of the Agreement on Zimbabwe’s Accession adds Zimbabwe to the list of land-locked states in Article 155 (3) (b) of Lomé II. As such it gets special treatment in a whole range of regulations of the Convention

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such as more lenient rules governing the use of Stabex, Sysmin, industrial cooperation and regional co-operation as well as in determining the amount of aid the EU allocates to each ACP state (ACP–EEC 1979: Article 155). Of these, perhaps most relevant for Zimbabwe given the proximity of South Africa, was the priority accorded to projects which helped the transport and communications of landlocked states in the section on regional co-operation (ACP–EEC 1979: Article 133 (1) (h)). 17 The original figure is cited in Marks at DM112m. 18 Even the balance of payments benefit is now more limited due to the absence of increases in the quota and the relatively static price granted (The Courier no. 97 1986c). 19 There was little change to the quota under Lomé IV, although exports to the EU were severely affected by the drought of 1992 (see EIU 2/92-4/93).

Chapter 6 1 The ‘Willowgate’ scandal uncovered the illegal involvement of government ministers in the automobile industry, centred on the Willowvale car dealers. 2 Indeed, in a penetrating critique Stoneman has outlined how two World Bank studies of Zimbabwe’s industry in the 1980s attempted to show the inefficiency that the country’s policies were causing (Stoneman 1989). In fact, the studies were justifications of a policy which even the Bank’s own methodology did not fully support. That the Bank was prepared to go to such lengths to justify policies which were increasingly seen to be at best failing, and at worst damaging, merely emphasizes the ultimately political nature of the BWI strategy. 3 At the time of Lomé II the EU did give a commitment to look at inclusion of tobacco in Stabex but its own study concluded that this was not possible. The EU’s argument was that this was because compensating ACP producers for losses as a result of price falls and production falls would give ACP producers a better deal than EU ones (OTDA 1983: 54–5). 4 In early 1998 a further Ecu 6m was disbursed, as IMF agreement was reached (CEC-DG VIII 1999a).

Chapter 7 1 As argued in the introduction, the Cold War was more than simply an ‘external’ factor in North-South relations, and indeed played a significant part in the creation of the ‘negative sovereignty’ regime itself. 2 The Commission had invited comment from all interested parties before the EU decided its own position. There is not space here to detail this debate, but see for example, ACP 1997; Bossuyt, 1996; British Government: Department for International Development, 1997; ECDPM, 1996a; ECDPM, 1996b; Eurostep, 1996; 1997; 1998; French Government, 1997; Frisch, 1996; Germany – Federal Government, 1997; Grynberg 1997; House of Commons Select Committee on International Development, 1998.

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3 Indeed, hard on the heels of the new agreement, the European Commission embarked on a massive internal overhaul of aid administration and the whole of its external assistance programmes. 4 There are nine non-ACP least developed countries, although Burma will be excluded because of its human rights record. The Commission appears to have lived up to this commitment by agreeing in 2001 an extension of market access for the least developed known as the Everything But Arms (EBA) initiative.

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Appendices Appendix 1 Chronology and signatories of the Lomé Conventions Basic chronology 25 March 1957 Treaty of Rome association July 1963 Yaoundé I signed 29 July 1969 Yaoundé II signed 25 July 1973 negotiations for Lomé I start 28 February 1975 Lomé I signed 28 July 1978 Lomé II negotiations start 31 October 1979 Lomé II signed 6 October 1983 negotiations start for Lomé III 8 December 1984 Lomé III signed 12 October 1988 negotiations start for Lomé IV 15 December 1989 Lomé IV signed 20 May 1994 Lomé IV Mid-Term Review started 4 November 1995 Lomé IV/ii signed 30 September 1998 post-Lomé negotiations start 23 June 2000 ACP-EC Partnership Agreement signed Cotonou, Benin Signatories Treaty of Rome Association (and implementing convention) (1957) Overseas Countries and Territories (OCT) French West Africa – Dahomey, Guinea, Côte d’Ivoire, Mauritania, Niger, Senegal, Sudan, Upper Volta. French Equatorial Africa – Cameroon, Chad, Middle Congo, Gabon, Ubangi-Chari. Other French Territories – Autonomous Republic of Togo, Madagascar, Comoros, French Polynesia, French Southern and Antarctic Territories, Algeria, Réunion, Guyanne, Martinique, Guadeloupe, St Pierre and Miquelon, French Somaliland, New Caledonia and Dependencies. Belgium – Congo, Ruanda-Urundi. Italy - Somaliland. Netherlands - New Guinea. European Economic Community (six states). Belgium, France, Germany, Italy, Luxembourg, Netherlands. Yaoundé I (1963): Associated African and Malagasy States (AAMS) (18 states) Burundi, Cameroon, Central African Republic, Chad, Congo (Leopoldville), Congo (Brazzaville), Dahomey, Gabon, Ivory Coast, Madagascar, Mali, Mauritania, Niger, Rwanda, Senegal, Somalia, Togo, Upper Volta. European Economic Community (six states) - as above.

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Yaoundé II (1969): Associated African and Malagasy States (AAMS) (18 states) Burundi, United Republic of Cameroon, Central African Republic, Chad, People’s Republic of Congo (formerly Brazzaville), Dahomey, Gabon, Cote d’Ivoire, Madagascar, Mali, Mauritania, Mauritius (1972), Niger, Rwanda, Senegal, Somalia, Togo, Upper Volta, Zaire (formerly Congo-Kinshasa, Congo Leopoldville). European Economic Community (six states) - as above. Lomé I (1975): African Caribbean and Pacific States (ACP) (46 states) Africa: Botswana, Burundi, Cameroon, Chad, Congo, Central African Republic, Dahomey, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guinea-Bissau, Ivory Coast, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Somalia, Sudan, Swaziland, Tanzania, Togo, Uganda, Upper Volta, Zaire, Zambia. Caribbean: Bahamas, Barbados, Grenada, Guyana, Jamaica, Trinidad and Tobago. Pacific: Fiji, Tonga, Western Samoa. European Community (nine states): As above plus: Britain, Denmark and Ireland (joined 1973). Lomé II (1980): African Caribbean and Pacific States (ACP) (58 states) As above plus: Cape Verde, Comoros, Djibouti, Dominica, Kiribati, Papua New Guinea, St Lucia, Sao Tomé and Principe, Seychelles, Solomon Islands, Suriname, Tuvalu. Zimbabwe (joined Lomé II in 1980 after ACP had already signed). European Community (ten states) - as above plus Greece (joined 1981). Lomé III (1985): African Caribbean and Pacific States (ACP) (66 states) As above plus Antigua and Barbuda, Belize, Mozambique, St Christopher and Nevis, St Vincent and the Grenadines, Vanuatu. Angola (also joined Lomé III in 1985 after the Convention had been signed). European Community (12 states): As before plus Spain and Portugal (joined 1986). Lomé IV (1990): African Caribbean and Pacific States (ACP) (69 states) As above plus Dominican Republic, Haiti, and Namibia (joined after independence, 1990). European Community (12 states) - as above. Lomé IV/ii (1995): African Caribbean and Pacific States (ACP) (70 states) As before plus Eritrea (joined after independence from Ethiopia). With South Africa (became an associate member of the Convention) ACP became 71 states. European Union (15 member states): As above plus Austria, Finland, Sweden (joined in 1993).

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ACP-EC Partnership Agreement (2000): African Caribbean and Pacific States (ACP) (71 states) As above. European Union (15 member states) - as above.

Appendix 2 Ecu (European Currency Unit) Exchange rates for US$ and UK£ 1980–1998 Year

1 Ecu = US$

1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

1.3910 1.1176 0.9812 0.8913 0.7890 0.7622 0.9812 1.1543 1.1839 1.1024 1.2730 1.2405 1.2968 1.1723 1.1886 1.3081 1.2680 1.1341 1.1200

1 Ecu= £ 0.5536 0.5513 0.5603 0.5857 0.5906 0.5886 0.6690 0.7073 0.6641 0.6724 0.7137 0.7010 0.7349 0.7799 0.7754 0.8285 0.8127 0.6919 0.6759

(Nominal annual average exchange rates.) Source: IMF (1999) International Financial Statistics Yearbook Washington, IMF

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Appendix 3 Basic programmable aid procedure of the Lomé Convention Programmable aid makes up the largest part of aid in the Lomé Conventions and is implemented through each ACP’s National Indicative Programme (NIP). Once the overall aid package in the European Development Fund (EDF) has been agreed in a new Convention, the procedure for utilization is broadly as follows:

• •

• • • • • • • • • •

The Commission allocates programmable aid between ACP countries (see Anyadike-Danes and Anyadike-Danes 1992 on the criteria used). Each ACP agrees a programme of use called the National Indicative Programme (NIP) which allocates the ACP’s portion of aid to sectors and some project aims. Until the Lomé IV Mid-Term Review, the overall amount of aid was legally binding, although its use for specific purposes was ‘indicative’ and could be amended. Funds are earmarked for particular projects (in theory) proposed by the ACP. Specific projects are drawn up between the ACP state and the Commission Delegation in that state. A project proposal is submitted in a Financing Proposal to the Commission. The EDF Committee, containing representatives of the EU member states, agrees or rejects the proposal. Providing the EDF agrees, a financing agreement is signed between the Commission and ACP state (referred to in Commission figures as ‘decisions’). A tendering procedure is started for employment, services, supplies and works contracts. Tendering contracts are agreed (referred to in Commission figures as ‘Commitments’). Project is implemented and money spent (referred in Commission figures as ‘disbursals’). From 1995 (Lomé IV/ii) the allocation of aid at the start of this process only covered 70 per cent of each countries’ NIP, the remaining 30 per cent to be allocated on the basis of ‘satisfactory performance’ in utilization of the first tranche (see chapter four). From 2000, in the ACP-EC Partnership Agreement, aid will be allocated in a two-yearly ‘rolling programme’ with commitments of aid dependent on each ACP state’s satisfactory utilization of previous allocations (see chapter seven).

214

Tables and Figures Tables Table 3.1

Economic growth and developing countries: real GDP growth and per capita GDP growth

Table 3.2

Debt and developing countries (total debt and source) (US$bn) Debt burden and developing countries (total debt as percentage of GDP and debt service payments as percentage of export earnings) Lomé IV financial protocol Adjustment funding from 7th EDF (Lomé IV part 1) (situation at the end of 1996) (Ecum) Adjustment support and Lomé aid situation at the end of 1996 Lomé IV 2nd financial protocol Origins of GDP by sector per cent – ACP average compared to Zimbabwe, 1985 Zimbabwe: Origins of GDP, 1981–93 (per cent) Zimbabwe: Lomé II (EDF V) in Ecu Zimbabwe: Lomé III (EDF VI) in Ecu Zimbabwe: Lomé IV (EDF VII) in Ecu Zimbabwe: proportion of aid from Lomé IV given to structural adjustment support (in Ecu m) (not including emergency, regional or Stabex aid) Zimbabwe: Lomé funding for structural adjustment support (in Ecu m)

Table 3.3

Table 3.4 Table 3.5 Table 3.6 Table 4.1 Table 5.1 Table 5.2 Table 5.3 Table 5.4 Table 6.1 Table 6.2

Table 6.3

Figures Fig 2.1 Fig. 5.3.1 Fig. 5.3.2 Fig. 5.4 Fig. 6.1

Composite Commodity price index 1948–82 Zimbabwe: Lomé II aid by sector (a) Zimbabwe: Lomé II aid by sector (b) Zimbabwe: Lomé III aid by sector Zimbabwe: Lomé IV aid by sector

215

Acronyms AAMS ACP ADB AFC ARDA Bulletin EC BWI CA

Association of African and Malagasy States African, Caribbean and Pacific States African Development Bank Agricultural Finance Corporation (Zimbabwe) Agricultural Rural Development Agency (Zimbabwe) Bulletin of the European Community Bretton Woods Institutions Communal Area (in Zimbabwe, formerly Tribal Trust Lands or Native Reserves) CAP Common Agricultural Policy (of the EC) CBI Cross Border Initiative CDC Commonwealth Development Corporation CEC Commission of the European Community CEC-DG VIII Directorate General Eight of the Commission of the European Community (for Development) CEC-DG X Directorate General Eight of the Commission of the European Community (for Communication, Information and Culture) CET Common External Tariff (of the EC) CFA Communauté Francaise Africaine/Communauté Financière Africaine CNG Central Negotiating Group (in Lomé Conventions negotiations) COMEXT External trade database of the EC CPF Counterpart Fund CSA Commonwealth Sugar Agreement CZI Confederation of Zimbabwe Industry EC European Community ECA Economic Commission for Africa (UN) ECHO European Community Humanitarian Office ECDPM European Centre for Development Policy Management (Maastricht, Holland) ECOWAS Economic Community of West Africa States Ecu European Currency Unit EDF European Development Fund EEC European Economic Community EIB European Investment Bank EIS Export Incentive Scheme EIU Economist Intelligence Unit EPC European Political Co-operation (on the foreign policy of the EC) ERF Export Revolving Fund ERS Export Retention Scheme (Zimbabwe) ESAF Enhanced Structural Adjustment Facility (of IMF) ESAP Economic Structural Adjustment Programme (Zimbabwe) EU European Union Eurocidse European Coopération Internationale pour le Dévelopment et la Solidarité (Brussels)

216

Eurostat Frelimo GATT GDP GIP GMB GSP HIPC IBRD IOC LDLIS LLDCs IMF MEP MFN Minex MPLA NAO NGO NIC NIEO NIP OAU OCT ODA ODI OECD OGIL OPEC OTDA PAMSCAD PF PTA RBZ RIP SADC SADCC SAF SAL SAP SASP SDA SDF SEM

The European Union and Africa

Statistical Office of the EC Front for the Liberation of Mozambique General Agreement on Tariffs and Trade Gross Domestic Product General Import Programme Grain Marketing Board (Zimbabwe) Generalized System of Preferences Highly Indebted Poor Countries Initiative International Bank for Reconstruction and Development (the World Bank) Indian Ocean Community Least Developed, Landlocked and Island States (defined by the Lomé Convention for special treatment) Least Less Developed Countries International Monetary Fund Member of the European Parliament Most Favoured Nation System for the Stabilization of Mining Exports (also known as ‘Sysmin’) People’s Movement for the Liberation of Angola National Authorizing Officer Non-Governmental Organizations Newly Industrializing Country New International Economic Order National Indicative Programme Organization of African Unity Overseas Countries and Territories (of the EC) Official Development Assistance; also Overseas Development Administration (of the British Government) Overseas Development Institute (London) Organisation for Economic Co-operation and Development Open General Import Licence (Zimbabwe) Organization of Petroleum Exporting Countries Overseas Trade and Development Agency (UK) Programme to Mitigate the Social Costs of Adjustment (Ghana) Popular Front (of Zimbabwe) Preferential Trade Area Reserve Bank of Zimbabwe Regional Indicative Programme Southern African Development Community (successor of SADCC) Southern African Development Co-ordination Conference Structural Adjustment Facility (of which there are both Lomé (EC) and IMF versions) Structural Adjustment Loan Structural Adjustment Programme Structural Adjustment Support Programme (of the Lomé Convention) Social Dimensions of Adjustment Social Development Fund Single European Market

Acronyms

Stabex SIP Sysmin TNC ua UDI UN UNCTAD UNDP UNGA UNICEF WTO ZAPU ZANU ZANU PF ZCTU ZEPP ZimTrade ZISCO ZUM

217

System for the Stabilization of Export Earnings Sectoral Import Programme System for the Stabilization of Mining Exports (also known as ‘Minex’) Transnational Company units of account (in EEC, forerunner of the Ecu) Unilateral Declaration of Independence United Nations United Nations Conference on Trade and Development United Nations Development Programme United Nations General Assembly United Nations Children’s Fund World Trade Organization Zimbabwe African People’s Union Zimbabwe African National Union Zimbabwe African National Union Popular Front Zimbabwe Congress of Trade Unions Zimbabwe Export Promotion Programme Zimbabwe Trade Promotion Organization Zimbabwe Steel Company Zimbabwe Unity Movement

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Also consulted ACTSA News Bulletin (Actions for Southern Africa, UK) referenced in text, e.g. ACTSA Summer 1995). Bulletin of the European Communities referenced in text e.g. (Bulletin of the European Communities 5–1989 3.4.1) for Bulletin of the EC, issue, year, point number. Economist Intelligence Unit (EIU) ‘Zimbabwe Quarterly Country Reports’ referenced in text by quarter and year, e.g. 4/94 for fourth quarter 1994, etc. Eurocidse News Bulletin (Brussels NGO) referenced in text, e.g. (Eurocidse April 1995). Magazines: referenced in text by magazine name, date and included in bibliography. Authored articles by author’s name, date and referenced in bibliography. Newspapers: The Business Herald, Harare, Zimbabwe. The Herald, Harare, Zimbabwe. The Financial Gazette, Harare, Zimbabwe. The Chronicle, Bulawayo, Zimbabwe. Business Day, South Africa. The Times, London. The Financial Times, London. The Guardian, London.

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Index Please note that acronyms are listed separately. ACP demands 54-56 trade performance 110-11 ACP-EC Partnership Agreement (2000) 1-2, 190, 212 aims of development co-operation 192-93, 197 Country Support Strategies 193 political dimension 191-92 process of use of aid 193-95 single aid budget 194 trade agreements 195-96 adjustment see structural adjustment; Structural Adjustment Programmes (SAPs); also Economic Structural Adjustment Programme, Zimbabwe Agricultural Policy, Common (CAP) 61, 66 Agricultural and Rural Development, Technical Centre for 66 Agricultural and Services Management project (Zimbabwe) 178 aid ACP-EC Partnership Agreement (2000), process of use of aid 193-95 basic programmable aid procedure, under Lomé 212-213 Britain and aid issue 134-36 donor interests 11-12 and Lomé 58-60, 68, 69-71, 96, 107-109, 132-133, 134-136 for regional co-operation 160-61 single aid budget 194 and Zimbabwe 151, 148-149, 160-161, 154-160, 174-179 aid conditionality, and Lomé III 68, 69-71, 96 Allen, C. 21 Amin, Idi 65 Amin, Samir 9 Angola 145, 151, 152 Arusha Conventions (1968 & 1969) 43, 45 assimilationism 39-40 Associated African and Malagasy States (AAMS) 42, 45 association and the Commonwealth 44-46 EU agreements in Africa 40-43 French policy 39-40 and Treaty of Rome 40-41, 42-43 Atlantic Charter (1941) 34-35 banana protocols (Lomé) 61-62, 195 Bandung conference (1955) 24, 38

Index

Barry, Peter 70 Beira 160, 161 Berg Report (1981) 77 Boidin, Jean Claude 97 Brazzaville conference (1944) 37 Bretton Woods Institutions (BWIs) 71, 75, 77 and Lomé IV 103-07, 100-103 Special Programme for Africa (SPA) 96-97 and Structural Adjustment Programmes 100-103 and Zimbabwe 168, 170, 186-87, 183 see also, IMF and World Bank Bretton Woods system (1944) 18, 36, 44, 46, 197 Britain and aid issue 134-36 EU entry (1973) 44-46 Bromley, S. 14 Camdessus, Michael 171 Cardoso, F. 10 Central African Federation 140-41 Charter of Economic Rights and Duties of States (Group of 77) 48 Cheysson, Commission President 54, 56, 150 Chidzero, Bernard 180 Clapham, C. 20 Club of Rome, The Limits to Growth 50 Cold War effect 24-26 on human rights 120 on political conditionality 123-24 on Zimbabwe’s independence 144-45 Commission (EU) negotiating position on Lomé IV 86-88 policy on adjustment and Lomé IV 97-100 commodities crisis 49-50, 55-56, 57 Common Agricultural Policy (CAP) 61, 66 Common External Tariff (CET) 41 Commonwealth, and association 44-46 Conable, Baber 119 conditionality and Lomé IV 85-86, 193-194 and Structural Adjustment Programmes 83-84 see also aid conditionality; political conditionality Cotonou, Benin 192 Counterpart Funds (CPFs) 99-100 Cuba 192 debt crisis 25, 28, 75-76, 80

239

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debt reduction programmes 81-82, 192 Special Programme for Highly Indebted sub-Saharan African Countries 96 see also Structural Adjustment Programmes (SAPs) decolonization 32 democratization 120-22 and Lomé IV 129-130 and World Bank 121-122 Deniau, Jean François, Deniau Memorandum 53-54, 55, 56, 57 dependency theory 8-9 Development Rio summit on Environment and (1992) 192 Technical Centre for Agricultural and Rural 66 United Nations Conference on Trade and (UNCTAD) 48, 49, 62 see also World Bank development cooperation and ACP-EC Partnership Agreement (2000) 192-93, 195-96 EU policies 52-54 key features 13-19 and Lomé Conventions 3-5 reformulation of EU policies 127-28 development funds see European Development Funds development levels 195-96 development targets see International Development Targets; poverty reduction targets Economic Community of West African States (ECOWAS) 9 economic liberalization see liberalization Economic Structural Adjustment Programme (ESAP), Zimbabwe 168-69, 17072 Emmanuel, A. 9 environmental considerations, and Lomé IV 91 European Development Funds (EDFs) 41, 42, 59-60, 90, 134, 158, 194-95 EDF Committee 59, 63 European Investment Bank (EIB) 42, 158 European power, decline 37-38 European Single Market see Single European Market (SEP) export receipts, stabilization 53 exports see Stabex system; Sysmin; Zimbabwe, export performance; Zimbabwe, Export Retention Scheme Falleto, E. 10 Fiji 192 Franc Zone 39 France association policy 39-40 and Lomé Convention (1975-1995) 11

Index

241

French Union (1944) 37, 39-40 Frisch, Dieter 94, 97-98, 107 Frôbel, F. 10 Galtung, J. 9 de Gaulle, President 40, 44 General Agreement on Tariffs and Trade (GATT) 18, 22, 27, 36, 62, 82, 195 Uruguay Round 112-13, 133, 162 General Import Programmes (GIPs) 97 Generalised System of Preferences (GSP: 1971) 43, 195-96 Ghana, Programme to Mitigate the Social Costs of Adjustment (PAMSCAD) 83 Goodison, P. 150 governance 83-84, 117-19, 129-30, 192 see also human rights, sovereignty Green Paper on relations between the European Union and ACP, (1997) 190 Group of 77, Charter of Economic Rights and Duties of States 24, 48 Hart, Judith 54 Heinrichs, J. 10 Herbst, J. 10 Highly Indebted Poor Country (HIPC) initiative 82, 192, 197 Horizon 2000 127-28 human rights 120 and ACP-EC Partnership Agreement (2000) 192 Cold War effect 120 and Lomé II 65, 66 and Lomé IV 91, 129-30 North-South relations 66 UN World Conference (Vienna Conference) on (1993) 120, 192 see also governance; Group of 77, Charter of Economic Rights and Duties of States Hwange power station 158 import substitution industrialization 47-48 imports General Import Programmes 97 import substitution industrialization 47-48 Open General Import Licenses, Zimbabwe 173, 180-81, 184 sectoral import programmes, and Lome III 95-96 see also exports independence by right 38, 189 industrialization import substitution 47-48 Newly Industrialized Countries (NICs) 10, 47 and Zimbabwe 141-43, 173 inter-state cooperation see international co-operation

242

The European Union and Africa

international co-operation, key features 13-19 economic liberalization 15-17 institutionalization 17-19 multilateralism 13-15 International Development Targets 192 International Monetary Fund (IMF) 36 and adjustment support 77, 82 Highly Indebted Poor Country (HIPC) initiative 82 and Zimbabwe 146-47, 148, 168 Jackson, R.H. 20 Kahler, M. 10 Keynesian intervention 75 Kingston conference 56-57 Kissinger, Henry 145 Krasner, S. 12 Kreye, O. 10 Lagos Convention (1966) 43, 45 Lagos Plan of Action 9 Laidler, Michael 184 Lancaster House agreement 145-46, 148-49, 169 least developed, land-locked and island states (LDLIS) 60, 66 Least-Less Developed Countries (LLDCs) 195 levels of development 195-96 liberalization of international economy 15-17 and United States economy 35-37 Libreville, ACP Heads of State meeting (1997) 192 Lister, M. 9 Lomé Conventions (1975-1995) 2-3, 31, 62-63, 93-94, 210-212 ACP demands 54-56, 93 basic programmable aid procedure 212-213 dependency 8-11 development cooperation 3-5 domination 8-11 donor interests 11-12 equality 5-8 French interests 11 interdependence 5-8 negotiation 51-52, 56-58 and North-South relations 26-29, 71-72 past interpretations 3-12 post-Lomé consultations 190-91 state interests 11-12

Index

Lomé I Convention (1975) 58-63 aid procedures 58-60 banana protocols 61-62, 195 institutions 62 rules of origin 61 Stabex system 60-66 sugar, bananas, and rum protocols 61-62, 195 trade provisions 61-62 Lomé II Convention (1979) 63-67 demands for changes 64-65 human rights demands 65, 66 and North-South dialogue 67 Stabex system 66 Sysmin 65-67 Lomé III Convention (1984) 67-72 ACP-EEC Council of Ministers and Joint Assembly 70 adjustment funds 96-97 aid conditionality 68, 69-71, 96 Pisani Memorandum 67, 68-69 Stabex system 70 Sysmin 70 Lomé IV Convention (1989) 73-74, 86-94, 113-14 ACP negotiating position 86-88 aid and impact of adjustment 107-09 aid instruments and procedures 132-33 aid levels 134-36 CAP preferences 91-92 Commission’s adjustment policy 97-100 Commission’s negotiating position 86-88 conditionality 85-86, 193 democratization 129-30 environmental considerations 91 Financial Protocol, First 89, 129 Financial Protocol, Second 134-36 and Zimbabwe 178 grant element increased 90 and human rights 91 mid-term review 129-30 implementation influence of Bretton Woods Institutions (BWIs) 103-07 mid-term review 128-29, 136-37 negotiations 88, 98 policy dialogue enlarged 133 policy influence of Bretton Woods Institutions (BWIs) 100-103 programming 131-32 Stabex system 92, 133 and structural adjustment 109-10

243

244

The European Union and Africa

trade issues 110-13, 133-34 Maastricht Treaty 127, 193 McQueen, M. 161 Malawi 141 Manicaland Coffee and Fruit Project 155 Manley, Michael 57 Marin, Manuel 90, 124, 125, 180 Marshall Plan (1948) 36 Mashonaland East Fruit and Vegetable project 174 Matabeleland South RWS 174 Mayall, J. 24 Minex see Sysmin monetarism 75 Mozambique 82, 145, 151, 152, 160, 177 Mugabe, Robert 144, 145, 152, 169, 180 multilateralism 13-15 Muzorewa, Bishop 145 Nabudere, D.W. 9 Namibia 90, 92 independence (1990) 144 Natali, Lorenzo 111 National Indicative Programmes (NIP) 59 nationalist movements 37-38 Africa 38 New International Economic Order (NIEO) 24-25, 27 and Lomé negotiations 55, 62 Programme of Action (UN resolution: 1974) 48-49 and the Third World 46-49 Newly Industrialized Countries (NICs) 10, 47 Ngorima Tea project 174 Nkomo, Joshua 144 Non-Aligned Movement 24 Nørgaard, Ivar 56 North-South relations 5, 19-26, 197-98 Cold War effect 24-26 debt crisis 25 dialogue (1970s) 49 human rights demands 66 impact of Structural Adjustment Programmes 84-86 international support structure 22-23 and Lomé Convention 26-29, 66-67, 188-90 and political conditionality 123-24, 190 post-colonial situation 21-22, 24, 46 Nye, J. 33

Index

245

OECD, International Development Targets 192 Olofin, S. 9 Olsen, G.R. 12 OPEC embargo 50 Organisation of African States (OAU) 55 origin, rules of 61, 162 Oxfam 82 Paris Club Consultative Group 117 Partnership Agreements 196 Patriotic Front 144, 146 Perham, Margery 37 phased programming 131-32 Pisani, Edgard, Pisani Memorandum 67, 68-69 Plonk, Jans 54 political conditionality 25-26, 116-17, 119 Cold War effect 123-24 EU resolution (1991) 125-26 and North-South relations 123-24, 190 see also aid conditionality; conditionality poverty reduction targets 192 Poynton-Robinson project (1945) 37 Prebisch, Raoul 48 programming, phased 131-32 Ramphal, Sonny 49, 55, 57 Ravenhill, J. 93 reverse preferences 42, 53-54 Rhodes, Cecil 140 Riddell, R. 161 Rio summit on environment and development (1992) 192 Roosevelt, President 34 Ruggie, J. 13-14 rules of origin 61, 162 sectoral import programmes (SIPs), and Lome III 95-96 Shaw, W.H. 9 Single European Market (SEP) 112, 162 Smith, Ian 141, 145, 148 social dimensions of adjustment (SDA) and Structural Adjustment Support Programme (SASP) , Zimbabwe 181 and World Bank 82-83 South Africa 144 South African Development Community (SADC) 176 South African Development Co-ordination Conference (SADCC) 150, 160-61 sovereignty 14-15, 28, 38

246

The European Union and Africa

conforming to liberal principles 124 and Rhodesia 144 see also governance; human rights Soviet Union, and US hegemony 33, 44 Special Programme for Africa (SPA) 96 Special Programme for Highly Indebted sub-Saharan African Countries 96 Stabex system (System for the Stabilization of Export Earnings) 9, 27, 57, 59, 60-62, 66, 70, 90, 197 and Lomé I 60-62 and Lomé II 66 and Lomé III 70 and Lomé IV 92, 133 and Zimbabwe 176 state sovereignty see sovereignty state-creation, activism 32-33 sterling area 44 Stevens, C. 161 Stoneman, C. 171 structural adjustment funds, and Lomé Conventions 96-97 funds, and IMF 77, 82 impact on aid and Lomé IV 107-109 impact on Lomé IV aid, Zimbabwe 174-179 social dimensions of (SDA), and World Bank 82-83 support for Zimbabwe 177-79, 183-86 Structural Adjustment Programmes (SAPs) 73-74, 77-78, 84-86 and Bretton Woods Institutions (BWIs) 100-103 Commission policy 97-100 conditionality 83-84 economic growth impact 78-81 and governance 83-84 humanitarian critique 82-83 and Lomé IV 109-10 North-South impact 84-86 and trade 113 and Zimbabwe 167-68, 179 see also Economic Structural Adjustment Programme (ESAP), Zimbabwe Structural Adjustment Support Programme (SASP), Zimbabwe see Zimbabwe, Structural Adjustment Support Programme (SASP) Suez crisis 37 sugar and Lomé I Convention (1975) 61-62, 195 Zimbabwe, sugar protocol 165-66 surprix system 39 Sysmin (System for the Stabilization of Mining exports) 65-67, 70, 90, 197 see also exports

Index

247

targets see International Development Targets; poverty reduction targets Technical Centre for Agricultural and Rural Development 66 Thatcher, Margaret 145 Toye, J. 117 trade General Agreement on Tariffs and Trade (GATT) 18, 22, 27, 36, 62, 82, 195 General Agreement on Tariffs and Trade (GATT), Uruguay Round 112-13, 133, 162 and Lomé Conventions 61-62, 110-113, 133-134 surprix system 39 World Trade Organization (WTO) 82, 191, 195-96, 197 Zimbabwe’s, trade 143 Zimbabwe’s trade and Lomé 161-62 Treaty of Accession of Britain, Ireland and Denmark to the EU 45 Treaty of Rome (1957) 26-27 association agreements 40-41, 42-43, 210 Trinidad terms , for debt reduction 81-82 Truman doctrine 34 Trypamosamiasis control programme 160 Tsetse control programme 160 UN Economic Commission for Africa (ECA) 78 UN World Conference on human rights (1993) 120, 120 unequal exchange, theories 9 UNICEF 82 United Nations 17, 20 Charter (1945) 34-35 Declaration (Resolution 1514;1960) 21, 35 United Nations Conference on Trade and Development (UNCTAD) 48, 49, 62 United States anti-colonialism 34-35 economic liberalization 35-37 post-war hegemony 33 Veterinary Faculty, Zimbabwe University 160, 174 Vienna conference on human rights (1993) 192 Washington consensus 77-78 Weston, A. 161 Wolfenson, President, of World Bank 83, 106 World Bank (International Bank for Reconstruction and Development) 36, 78, 158 Berg Report 77 and democratization 121-22 governance concerns 117-19 International Development Targets 192

248

The European Union and Africa

and social dimensions of adjustment (SDA) 82-83 World Trade Organization (WTO) 82, 191, 195-96, 197 Yaoundé Conventions (1963 & 1969) 2, 27, 31, 42, 43, 45 signatories 210-211 Zambia 92, 141 Zimbabwe 138-39 access to EU market 161-62 ACP context 139-40 Agricultural and Services Management project 178 aid from EU 151 pledges 148-49 for regional co-operation 160-61 under Lomé II and III 154-60 under Lomé IV 174-79 beef protocol 162-65 and Bretton Woods institutions (BWI) 168, 170, 183, 184-86 class comromise 146-47, 148, 159-60 colonial background 140-43 Communal Areas (CA) 141, 154-55, 158-60 Congo War 172 donor conflict 187 support 171 drought 173, 184 economic change 168-74 Economic Structural Adjustment Programme (ESAP) 168-69, 170-72 export performance 147 Export Retention Scheme 180 and IMF 146-47, 148, 168, 171, 172-73, 183-86 independence politics 143-49 industrialization 141-43, 173 Lancaster House agreement 145-46, 148-49, 169 Land Apportionment Act (1930) 141 Land Husbandry Act (1951) 141 land reform 146, 149 Lomé accession 150-53, 166 Microprojects Programme 176 Open General Import Licenses (OGILs) 173, 180-81, 184 Paris donors’ conference 171, 177, 180, 183 political and economic change 168-74 Stabex payments 176 state-centred political economy 148 structural adjustment

Index

249

impact on Lomé IV aid 174-79 support 177-79, 183-86 Structural Adjustment Support Programme (SASP) 179-82 Counterpart Funds (CPFs) 181-82, 183 differentiated approach 179-80, 184 EU finance proposals 180-82, 183 funds disbursment 181-82 policy subordination 184-86, 187 social dimensions of adjustment (SDA) programme 181 sugar protocol 165-66 tobacco competition 153 trade economy 143 trade and Lomé 161-62 Tribal Trust Lands 141 Trypamosamiasis control programme 160 Tsetse control programme 160 Unilateral Declaration of Independence (UDI) 141 and World Bank 170-71, 173, 184-86 Zimbabwe Government, Zimbabwe: a Framework for Economic Reform 1991-1995 (1991) 168, 172 Zimbabwe University, Veterinary Faculty 160, 174 Zimcord conference 148-49, 158, 169 Zimprest (Zimbabwe Programme for Economic and Social Transformation) 172 ZimTrade support 177