Secret police attending university classes, a new law to stifle the media, and the expulsion of Britain’s top diplomat have caused western donors to suspend financial support of the Malawian government. The United Kingdom and Germany have already frozen aid to the impoverished country. Will the EU be next?

by Michelle Dobrovolny, Lilongwe

“Malawi has been put on a watchlist,” says Alexander Baum, the Head of the EU delegation to Malawi. “There is obviously an issue of credibility on the side of the government.”

The UK and Germany have already suspended aid to Malawi, where 74 per cent of the population live below the international poverty line of 1.25 US dollars a day. The UK was Malawi’s largest donor until now, providing about 85 million euros in aid last year. Whereas the EU gives 100 million euros in aid to Malawi every year, almost half of which goes directly to government coffers.

Questionable measures
The expulsion of British High Commissioner, Fergus Cochrane-Dyet, after a memo was leaked – in which he allegedly describes Malawian president Bingu wa Mutharika as 'ever more autocratic and intolerant of criticism' – was just the latest in a series of questionable moves by the Malawian government.

Malawi's civil society has voiced concerns over a recent amendment to the penal code that effectively provides for censorship of newspapers. The government is also locked in a dispute over academic freedom with Malawi’s main university Chancellor College after a professor was interrogated by secret police following a lecture on civil unrest.

All this has contributed to an increasingly tense political climate that raises doubts about providing budget support to the Malawian government. 

Consequences for Malawi
“We are in a situation where we will have to review if it is defensible to continue budget support,” says Alexander Baum, head of the EU delegation, noting that imposing political conditions on a government is only EU policy in 'extreme cases'.

The US, however, – also one of Malawi’s largest donors – follows a different policy. They support NGOs rather than the government. The EU delegation to Malawi might consider taking the same approach.

But if the EU decides it will suspend aid, it could lead to a humanitarian disaster. Without foreign aid – which contributed 40 per cent to Malawi’s national budget in 2010 – there will be a high probability of food and drug shortages for an extremely vulnerable population. Food security remains tenuous in Malawi – which experienced a famine in 2002 – and life-saving drugs for the 930,000 people living with HIV were often unavailble even before the suspension of aid from the UK.

“We have already started feeling the pinch,” says Martha Kwataine, a policy analyst with the Malawi Health Equity Network. “There are drug shortages in the hospitals already. There will be a regression in the healthcare system.” 

Not a fan of support
But Jonathan Said, a senior economist from Malta working at a top economic consultancy in Malawi, says that cuts to budget support are merited because of the lack of government accountability.

“I’m not a fan of budget support,” he says. “Budget support is fine as long as you are also building the capacity of the government. But that is not happening in Malawi at the moment.”

A final decision on EU support in Malawi will be made next month.