Policy of the IMF and WB in Angola. Implementation of the Strategic

56 Pages·2010·0.55 MB·English

Department of International Relations and
European Studies
Faculty of Social Studies
MASARYK UNIVERSITY
Brno, Joštova 10, 602 00, Czech Republic
Policy of the IMF and WB in Angola.
Implementation of the Strategic Poverty Reduction
Plan and the Influence of Foreign Powers on the
Development of the country after the end of civil war
in 2002.
Bachelor thesis
Jan Cihlář
Supervisor: Mgr. Vladan Hodulák
(UČO: 261887)
Domain: International Relations
Bachelor degree study
Year of Imatriculation: 2007
Brno 2010
Bibliographic card
Cihlář, J.: Policy of the IMF and WB in Angola. Implementation of the Strategic Poverty
Reduction Plan and the Influence of Foreign Powers on the Development of the country after
the end of civil war in 2002. Brno: Masaryk University, Faculty of Social Studies, Department
of European Studies and International Relations, 2010.
Abstract
The thesis focuses on descriptive exploration and further analysis of the relations
between International Monetary Fund, World Bank and Angola, starting from the
establishment of new Angola in 2002, after the end of civil war. The first part of the thesis
presents the basic insight of Angola post-war reconstruction and outlines major significant
factors which influence both domestic development policy of the country as well as the
propositions for international cooperation and assistance. Furthermore, I would epitomize the
agency of the IMF and WB in the country in last eight years, searching for specifics and
deviations from the official IMF and WB development policy which have happened in the
case of Angola. Taking into consciousness those proposals, I would than link those with the
actions of other significant entities of international politics, especially powerful states, NGOs
and IGOs, which are involved in current Angola state. To accomplish the aim of the thesis, it
is necessary to evaluate the progress of Angola development and stand out possible scenarios
for future hence this is the cornerstone of the last chapter. Angola itself presents virtually
unique combination of ostensibly incompatible presumptions, devastated by one of the
longest civil wars in history lasting for 27 years it nowadays sharpens its claws like a south-
African tiger, sticking with the fastest growing economies of the world. Very much because
of this reality, many players of international politics are trying to “cut their share of the cake”,
in this particular case, primarily the oil and diamond one.
Key words
Angola, IMF, WB, Development, Case Study, Strategic Poverty Reduction Paper, Civil War,
MPLA, UNITA.
Declaration
1. I declare that I have written this bachelor thesis independently only on the basis of listed
references.
2. I give my permission to use this thesis for study purposes and place it to the Main
Library of Masaryk University.
Brno, November 28, 2010 _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Jan Cihlář
Acknowledgement
I would like to thank to the advisor of my thesis, Mgr. Vladan Hodulák, for his insightful
comments and methodological support throughout my work. I also want to express my
thanks to prof. John F. Wilton, my family and friends for their support and encouragement.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1 Objectives,StructureoftheThesisandMethodologyUsed . . . . . . . . . . . . . 3
2 IMF,WBandAngola–PreconditionsforCooperation . . . . . . . . . . . . . . . . 7
2.1 GeneralDevelopmentPolicyoftheBrettonWoodInstitutions . . . . . . . . . 7
2.2 AngolanCivilWarandthePost-WarReconstruction . . . . . . . . . . . . . . . 10
2.3 Angola:TheProfile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3.1 InternalConditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.3.2 EconomyandNaturalRecourses . . . . . . . . . . . . . . . . . . . . . . 12
2.3.3 GovernmentalSystem . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.4 AngolainDepth–GoodorBadGovernance? . . . . . . . . . . . . . . . . . . . 16
3 BrettonWoodinLuanda–ChallengeforthePolePosition . . . . . . . . . . . . . 20
3.1 FirstYearsaftertheCivilWar . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
3.1.1 TransitionalSupportStrategy . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1.2 AngolaMakingProgress . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.2 RiseofAngola’sConfidenceduring2006-2007 . . . . . . . . . . . . . . . . . . 26
3.3 GlobalDownturnandtheShiftinAngola’s,IMFandWBMutualRelations . 28
4 ChinaandtheUSAinAngola–ExternalInfluence . . . . . . . . . . . . . . . . . . 34
4.1 USA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.2 China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5 CriticalReflectionoftheIMFandWBpolicyinAngola . . . . . . . . . . . . . . . 37
6 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
7 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
A ListofUsedAbbreviations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
B Attachments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
1
Introduction
“Angola Avante!” (Forward Angola) is not only the name of Angolan national anthem, but
also explains the nature of local people and the conviction of country’s political leaders.
Being ruled by Portuguese for almost 500 years1, it has finally achieved independence in
1975.Thecountrywasthrownintoanotherlonglastingwarbetweentwomajormilitaryand
political parties, the Popular Movement for the Liberation of Angola (Movimento Popular
de Libertaça˘o de Angola - Partido do Trabalho, MPLA) and the National Union for Total
Independence of Angola (Unia˘o Nacional para a Independe˛ncia Total de Angola, UNITA),
which finally ended by the death of UNITA´s leader Jonas Savimbi, in 2002.2 From there
on, Angola began its struggle to achieve vastly recognizable international status, focusing
onestablishmentofrelationswithwesterncountriesandglobalorganizations,seekingboth
assistanceandopportunities.
International Monetary Fund (IMF) and World Bank (WB) started their talks with An-
gola in 1999 and the position of those organizations has distinctly changed over the time.
MPLA´s old heritage of communist ideology, which has been the ruling party since 1992
when the first independent elections were held, dispersed and political elites were looking
aroundtheglobeforpossibleallies,supportersandtradepartners.Country’sownpost-war
development presents deeply particular case. Angola has been more or less able to finance
its reconstruction almost exclusively from its own resources, relying primarily on revenues
andadvantagesemergingfromoilanddiamondexports.IMFhasrepeatedlyaskedAngola
toperforminstitutional,structuralandpoliticalreforms,neverthelessallthosepropositions
wererefuseduntilthebreakthroughyearof2009.
Furthermore, its biggest regional competitors, Zimbabwe and South African Republic
(SAR) are from different reasons more and more lacking the trust of international commu-
nity.3, Angola is now being recognized as possible stabilization element in whole Southern
Africa.AsnotonlyIMFandWBareinterestedofdevelopingvaluableconnectionswiththe
countrynumerousstatessteppedin.Topointouttwoforall,namelytheUSAandChina.The
thesis will therefore remind long-lasting US influence over Bretton Wood institutions, and
analyzewhatseemstobethemostprofoundexternalfactorconnectedwithdevelopmentof
Angola.
1. SpeakingaboutthehistoricalareasnowdesignatedasAngola.
2. Another significant civil war military group, known as the National Liberation Front of Angola (Frente
NacionaldeLibertaça˘odeAngola,FNLA)Iwillnottakeintoaccount,thusitsinfluencediminishedafter2002.
3. ZimbabwebecauseofitsautocraticpresidentR.G.Mugabe,SARduetosteadyincreaseofcriminalrate.
2
Chapter1
Objectives, Structure of the Thesis and Methodology Used
Original source of my motivation to conduct this study was the reality of long-lasting de-
velopment assistance between Angola and Czech Republic which is still ongoing from the
old socialistic era of both countries. As I wandered which topic would suite best to present
insightinthechangesaftertheendofcivilwarinAngola,policyoftheIMFandWBseemed
tobethebesttoworkout.Boththoseinstitutionscurrentlymonitorthesystemofpayments
between almost all countries in the world and lend money for policy reforms and projects,
each with slightly different role. Angola than, performed as quite an unique state of those
we call less-developed, insisting on its own paths how to lead the country out of poverty,
sufferingandinstability.Bycombiningthoseproposals,Iwouldliketodescribeandanalyze
the development policy of the IMF and WB, as well as consider all other relevant factors
whichmighthaveanimpactonthepost-warreconstructionofAngola.
In my opinion, the principles of case study can provide me most appropriate analytical
tools for this type of research.I would thus later present my own theoretical approach and
recapitulate all important circumstances in the critical reflection. Case study than, might
serveusperfectlywhenconductinganareaboundedandtime-limitedresearchofrelations
betweeninternationalregimesandcertaincountry.
Iwouldthusliketoprovideanewapproachonanotverydiscussedfieldofinternational
relationsintheCzechRepublic.Hopefullymyconclusionscouldbelaterusedforcompiling
alarge-scalestudyafterwards,whichwouldencompasswiderinsightinthisproblematic.
Duringthe“datacollectionphase”therearosefewlimitationsofthestudiedcaseIwould
like to mention. Firstly, it is not the aim of the thesis to judge the criticism being inflicted
on the IMF and WB from countless politicians, NGOs, governments, etc. It may be a topic
for another research. However, when considering the IMF and WB development policy I
wouldstrictlyrefertoofficialmaterialsofbothinstitutionsaccompaniedbytheconclusions
of Ngaire Woods1 in her brilliant analysis of operational procedures of the IMF and WB.
Secondly, as Angola is still in its early steps towards full stabilization and “normalization”,
there are not many primary sources I could draw from. Even the country’s official govern-
ment internet pages do not work properly, placed materials are mostly only in Portuguese
ornotdownloadable,ormostoftenboth.2 IcameacrosssimilarproblemwithAngola’sown
developmentproposals,asthosepapersareagainavailableonlyinPortuguese.3 Myanaly-
sis therefore faces one major obstacle, to obtain available information only from other offi-
cialinstitutionsandcountrygovernments.However,theAfricanDevelopmentBank(ADB)
1. Ngaire,W.Theglobalizers:theIMF,theWorldBank,andtheirborrowers.Ithaca,NewYork:CornellUni-
versityPress,2006.
2. To prove my words please visit those pages at http://www.governo.gov.ao/; http://www.scm.gov.ao/;
http://www.parlamento.ao/.
3. EstratégiadeCombateaPobreza.Availablefrom
http://www.angolaemb.se/Actualidades/Combate%20a%20pobreza.pdf.
3
1. OBJECTIVES, STRUCTURE OF THE THESIS AND METHODOLOGY USED
released“CountryStrategyPaper”onAngola(or“StrategicPovertyReductionPlan”asre-
ferredinthethesisheadline),writtenincollaborationwithAngolandevelopmentspecialists
andwecanmoreorlesstakeitasthebestavailablecountryreconstructionproposal.
Myworkitselfisdividedintofivechapters.Thefirstonebuildsuptheoreticalapproach,
describes methods used and states the hypothesis. The second is based on insight into pre-
conditions of mutual Angolan, IMF and WB cooperation. The third chapter analyses IMF
and WB policy in last eight years (2002 – 2010) when the fourth briefly outlines other in-
ternationalactorsinvolvedinAngola’sdevelopmentstruggle.InthefifthandthelastoneI
willfinishtheresearchthroughacriticalreflection,whichshouldserveasacomprehensive
summaryofmythesisaswellasasetofrecommendationsforthefutureAngola–IMF–WB
relations.
The thesis will fundamentally focus on explanation of the sharp Angola’s development
aftertheendofthecivilwarreflectingtheroleofIMFandWB.Inthisrelation,Angolahad
torespondtotheglobaleconomicdownturnstartingfromtheyear2008andlastingmoreor
less nowadays (end of 2010). The IMF and WB have played increasingly important role in
theshiftofAngola’spolicywhentheworldoilpricesfelldown.Theybothsteppedingreater
cooperationwiththecountry,providingtechnicalassistanceandcreditreimbursementsfor
financingofAngola´sreconstruction.However,beforetheyear2008whentheIMFandWB
hadonlylimitedopportunitiestointervene,otherelements(predominatelyinterestsofother
states)canbeseenasdominantininfluencingAngola’sforeignanddevelopmentpolicies.
IwillthereforetrytoprovethehypothesisthattheIMFandWBarenotcapabletoensure
effective crisis prevention in countries with the possibility of external financing deriving
fromtheirgeopoliticalposition.
My theoretical approach to the thesis will be thus based on confrontation of the realis-
tic paradigm and the theory of neoliberal institutionalism, especially because each of those
suitesbettertocertainpost-wasAngola’sdevelopmentperiod.
Classicalrealismseesinternationalinstitutions(liketheIMFandWB)notassubstantial
sources of international affairs, instead, their establishment and functions are according to
it shaped by the intentions and interests of the most powerful states.4 I shall analyze thus,
whetherornottheIMFandWB’spolicywasdirectedbyitsdominant(orhegemonic)mem-
bers,inthecaseofAngolapredominatelytheUSA.AswellIwillaccountthefactorofChina
being now Angola’s largest trading partner, lender and presumably main political ally as
well.
Ontheotherhandhowever,majorchangewasobservedinrecenttwoyears(2009-2010)
in Angola’s approach to the Fund and Bank. I would thus interpret the second period of
Angola’s post-war development on the background of neoliberal institutionalism theory
(paradigm) as it explains more precisely what happened when Angola asked Fund for a
Stand-ByArrangementandstartedtoimplementtheconditionsoftheBrettonWoodinstitu-
tions;thereforeenhancedtheinfluenceoftheso-calledinternationalregimesinthecountry.
In the words of Krasner, those international regimes (as IMF and WB) can be defined as
“setsofimplicitorexplicitprinciples,norms,rulesanddecision-makingproceduresaround
which actors expectations converge in a given area of international relations.”5 Basically it
means that the interests of states are independent, when the institutions only regulate their
actions on the international field.6 Keohane mentioned in addition, that the international
4. Karlas,J.:Soucˇasnéteoriemezinárodníchinstitucí,p.69-70.
5. Krasner,S.D.,eds.InternationalRegimes,p.2.
6. Karlas,J.:Soucˇasnéteoriemezinárodníchinstitucí,p.75.
4
1. OBJECTIVES, STRUCTURE OF THE THESIS AND METHODOLOGY USED
regimes assist the states in removing the problems related with collective actions (cooper-
ation) through reduction of actors´ uncertainty, and by decreasing of transactional costs.7
Moreover,aninstitutionexistinginagivendomaincanbethanusedtostartthecooperation
inotherrelatedareas.8
Thisisparticularlyimportantbecauseoflackofpoliticalcreditabilityandfinancialmeans
in majority of poor and war-devastated countries like Angola, where international regimes
canplayvigorousroleastransitionelementswhichwouldattractexternaldonorsontheone
handandguaranteecertainmovementofthecountrytowardstransparency,ontheother.
Moreover, to prove the hypothesis valid, it is necessary to find out the circumstances in
which IMF and WB entered the talks with Angola. Therefore I will stand out the most im-
portantspecificsofthecountry,observethepoliticalpossibilitiesoftheAngolanauthorities
andlinkthosewiththeproposalsoftheFundandBankdevelopmentpolicies.
Inthisregard,lastquestionstands,whytheAngola’sdevelopmentinmacroeconomical
figures, did not lead into real benefits for vast majority of local inhabitants in the terms of
improvingtheirstandardsofliving?ThereIwouldimplythenecessityofso-calledconcept
of good governance. Basically it means a type of governance which will contribute to well-
usage of all available means to ensure sustainable human development.9 Again, I would
analyze whether mutual Angola, IMF and WB intercourses lead to implementation of this
approachornot.
Forconductingsuchtypeofexploration,casestudyseemstoprevailasthemostappro-
priate analytical tool. Using descriptive manners, systematic way of looking at events, col-
lecting and analyzing data and finally reporting the results...roughly said “why and how
have something happened” I will try to establish a chain of evidence which will enable me
to conduct meaningful generalization at the end. Robert K. Yin10 puts it more scientifically,
howeverstatingmoreorlessthesame:“Casestudyisaresearchmethodwithanempirical
inquiry that investigated a contemporary phenomenon within its real-life context...when
the boundaries between phenomenon and context are not clearly evident...and in which
multiplesourcesofevidenceareused.”
Thus the main reason why to conduct this research as a case study is its comparative
potential.Itmeansthatbycomparisonofsimilarstudiesofotheroil-exportingSub-Saharan
countries we should be able to generalize both the potential and obstacles of the IMF and
WBpolicyinsuchstates,thusbyfocusingonthesamephenomenonitcouldserveasaquick
andreliableanalyticaltool.
7. Keohane,R.O.AfterHegenomy:cooperationanddiscordintheworldpoliticaleconomy,p.11
8. Ibid,p.89-92.
9. Or in the words of Sogge, good governance includes accountable, transparent, responsive, effective and
efficient,consensusorientedandrule-followingtypeofcountryadministration.Sogge,D.Angola:Global„Good
Governance“AlsoNeeded,2006.
10. Yin,R.K.Casestudyresearch:designandmethod.LosAngeles,Calif.:SagePublications,2009,p.23.
5
1. OBJECTIVES, STRUCTURE OF THE THESIS AND METHODOLOGY USED
Furthermoreprinciplesofempiric-analyticalapproacharethebasegroundforthestruc-
turingofthework,withitskeycompositionsasimpartiality,neutralattitudeandfinallythe
abilitytoobjectifyachievedresults.ForAngolaninstance,itseemsusingthoseproposalsas
mostappropriatepathbecauseofthevitalneedtorestrictorlimitthestudiedareatogiven
boundaries.
6