International organizations and bilateral donors often tie financial assistance to the undertaking of political and economic reforms––a practice known as conditionality. In recent years, the use of good governance conditionality has provoked controversy in the academic and policy worlds. So far, the issue of whether conditionality is effective in achieving compliance with good governance norms has occupied center stage in the debate. However, whether it is morally defensible to attach political conditions to financial assistance has largely been taken for granted.
This article explores the extent to which it is morally defensible to attach good governance conditions to aid and loans in international society. It argues that the use of conditionality should be limited for two reasons. First, there is an unavoidable tension between conditionality and rights to self-determination. Second, focusing on conditionality can obscure the fact that the rules of the international economy are no less contestable than the governance of individual states, and, in turn, are in just as great a need of reform. This leads to two main conclusions. First, the use of conditionality should now be rooted in a conception of basic rights and complemented by more equitable rules in the global economy. Second, the attempt to make good governance within states an issue of global concern must be accompanied by greater democratization of the international financial institutions.
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