AIDS Donors and Patients Need the World Bank – but Only If It Is Hard to Provoke

May 02, 2014

Earlier this year, Uganda’s President signed into law an Anti-Homosexuality Act  that strengthens penalties against gay people and defines some homosexual acts as crimes punishable by life in prison.  If enforced to its full extent, the law is expected to endanger public health by handicapping HIV prevention and treatment efforts; already, the national police have raided and forced a US-supported HIV/AIDS treatment center to shut down. 

All this leaves the US government in a tough position, as it struggles to balance a desire to influence Uganda in the direction of enlightened public health (and human rights) policy, without cutting support for the 500 thousand Ugandan men, women and children benefiting from US-financed AIDS treatment. 

This situation again raises the question of whether aid to support AIDS treatment could or should be used to influence the policies of a recipient government. The official US response to this question is “no”.  But could more multilateral funding for AIDS offer beneficiaries more protection and bilateral donors more leverage?

I have made the case that US assistance for AIDS treatment in the developing world has unwittingly become the first international entitlement program.  (See the book chapter, the policy brief and blogs from  2007 to  2012).  In a 2010 FP article, Ambassador Princeton Lyman asserted that any aid tied so closely to an individual’s survival cannot be used for policy leverage and thus diminishes Washington's leverage over recipient governments.  He concludes that, by vitiating the potential policy leverage of foreign assistance programs, entitlement aid undermines a major foreign policy objective of foreign assistance – and thus weakens the case for aid spending.  

One solution to this dilemma is for the US and other bilaterals, while retaining a portfolio of discretionary bilateral aid programs, to shift their entitlement funding towards multilateral channels like the Global Fund or the World Bank.  If the US had taken this step earlier, a larger proportion of its current bilateral aid flows might be available to exert leverage, while the flow of funds to AIDS patients could remain relatively safe via a multilateral flow.  Arguably such a policy of “intermediation” of entitlement funding would both increase  US leverage over Ugandan human rights abuses and enhance the security of Ugandan’s AIDS patients. 

But this might not be the case.  For the intermediation of entitlement funding to effectively insulate its beneficiaries from bilateral politics requires that multilateral institutions be less responsive than bilaterals to a variety of provocations.  Issues like whether a recipient government recognizes Israel, or condemns apartheid or, in a current example, condemns the Russian acquisition of the Crimea peninsula, might cause partisan donor governments to reconsider their bilateral aid policies. But the multilaterals by virtue of having board members on all sides of an issue should be slower to react, thus protecting the entitlement beneficiaries.

Unfortunately, the World Bank’s February announcement that it would delay a $90 million health loan to Uganda as a response to the anti-gay legislation suggests that this particular multilateral is even more responsive to provocation than the US government, not less so.  (The other major HIV/AIDS multilateral, the Global Fund for AIDS TB and Malaria, has not publicly reacted to Uganda’s public health endangering new legislation.)  

An article in the Economist notes multiple reasons why this action by the World Bank is the “right cause” but the “wrong battle”, arguing the action is “capricious,” “arbitrary” and “likely to backfire.”   To these I add that the US and other bilaterals will have less reason to channel their AIDS treatment funding through multilaterals like the World Bank if these multilaterals are perceived to be even more reactive than bilaterals and thus unable to honor such entitlements.  One might protest that the Bank is only withholding noncritical general health sector support, not money earmarked for AIDS treatment.  But this distinction is likely to be lost on the AIDS champions within the bilateral donors and the recipient governments, who can’t be sure which of the recipient’s sovereign policies, will next be declared a sufficient condition for a multilateral to renege.  In order to recover its reputation as a dependable source of finance, the World Bank should quietly resume lending operations in Uganda.

This is not to imply that the multilaterals would never withhold entitlement funding in response to the behavior of recipient governments.  Actions by the recipient, if sufficiently offensive to most board members or their constituencies, will always have the potential to disrupt the flow of support from multilateral agencies to beneficiaries.  I am simply arguing that with the right policies multilaterals can better assure the constancy of international entitlement funding.

Looking forward, this situation is likely to repeat itself in other countries.  As Princeton Lyman and I have both argued, bilateral donors hoping to have policy leverage should look to discretionary aid, especially military aid, for that purpose.  Aid that funds entitlements like AIDS treatment should increasingly be channeled through multilateral donors like the Global Fund for AIDS, TB and Malaria and the World Bank on the understanding that multilaterals will only rarely, and with the explicit consent of their boards of directors, curtail entitlement funding to any country for any reason.  


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.