Global Policy Forum

Time for a New Deal for “Fragile States”

At the fourth OECD high-level forum on aid effectiveness, the g7+—a group comprised of 19 countries that struggle with poverty, instability, and the threat of violent conflict—will call for a new deal for “fragile states.” Few of these countries are expected to meet a single Millennium Development Goal.  Because the fate of fragile states is closely linked with effective, accountable national institutions, the g7+ seek a development approach geared toward addressing political and security capacities. This article outlines four key steps to help countries establish their own capable, legitimate institutions in order to withdraw international peacekeepers and avoid chronic reliance on foreign aid.

By Alastair McKechnie

November 29, 2011

The OECD's fourth high-level forum on aid effectiveness will hear a collective call for a new deal for "fragile states" from the g7+ – a group of 19 countries that struggle with poverty, instability and the threat of violent conflict. Few of them are expected to meet a single millennium development goal.

The call is timely: recent years have seen a growing understanding of why some fragile states recover, while others remain unstable or slip back into conflict. Research from the Overseas Development Institute and others suggests that the development of national institutions is crucial. Unless citizens believe that problems can be solved through political processes, there is a risk that they'll be solved through violence.

But building effective institutions can take decades, and each country must blend local culture with national identity and traditions to build institutions seen as legitimate by all citizens. In this way, fragile states are not just "a more difficult case of development", but require a fundamentally different approach that also recognises political and security challenges.

It may be tempting to walk away. Why not just quarantine fragile states until their people grow sick of violence?

Fragile states are not in a vacuum – apart from the humanitarian concerns we may have, the challenges they face are directly relevant to global security and economic interests. The experience of Afghanistan, Pakistan and Somalia, as well as the wars in west and central Africa demonstrate that violence tends to spread to surrounding countries and beyond. Weak governance can also allow space for traffickers in guns, children and drugs – as well as pirates and terrorists – to operate with impunity.

Then there are the global financial costs. UN peacekeeping in Liberia and Sierra Leone costs five times more than aid flows to these countries; in Afghanistan, military support costs 20 times more than civilian assistance.

Success is possible. Many former fragile states have made good use of foreign aid and are set to be tomorrow's emerging markets.

Helping countries to establish their own capable, accountable and legitimate institutions, so as to avoid chronic aid dependency and allow the withdrawal of peacekeepers, requires a shift in aid spending that "does no harm" to local institutions.

I see four key steps. First, we need to speed up the delivery of results. The g7+ countries are burdened by the slow pace of aid, complicated procedures and a lack of donor flexibility. Procurement policies may assume competitive markets and efficient logistics that simply might not exist. Bureaucratic rules often lock humanitarian and development funds into separate compartments.

Second, we need a better balance between the risk that money will go astray and the risk that programmes will fail to deliver peace and development by delivering too little, too late. Development assistance to fragile states is usually provided either the same way as in more resilient countries with stronger institutions – with the same procedures and aversion to risk – or by fragmented, unco-ordinated and low-impact aid that bypasses legitimate national governments. Reasonable financial controls are quite feasible in fragile states.

Third, more money must go through the country's own systems, with additional financial safeguards. Evidence from countries as diverse as Afghanistan, Rwanda and Sierra Leone shows that with external verification of expenditures, and contracting out of fiduciary management, we can channel aid through national treasury systems without excessive risk, even in countries suffering pervasive corruption and abuse of power.

Fourth, we need more transparency from donor countries, international agencies, NGOs and the governments of fragile states themselves. Donors should publish information on their aid flows and results; governments of fragile states should publish information on their budgets and communicate this to citizens.

International conferences for the past decade have called for better co-ordination, which remains elusive. Aid that is fragmented into thousands of tiny projects from multiple donors is impossible for a post-conflict government, and probably anyone else, to manage. The budget of the sovereign government can provide the framework to co-ordinate and align aid with national priorities and plans.

Fragile states need support here to consolidate assistance into sector-wide national programmes, and to prepare and execute national budgets. Co-ordination can be improved if transactions costs to government are reduced and if risks are shared among donors by pooling funds. Trust funds, such as those in Afghanistan, Timor-Leste and West Bank/Gaza, and the Liberia health pooled fund, have been successful in doing this.

Helping countries move from fragility to resilience requires not just agreement in Busan, but also country-level compacts that set out monitorable goals for countries and their partners to achieve.

Success is not only important for the 1.5 billion citizens who live with the everyday threat of violence and hunger, but also for the security and consciences of us all.


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