Memorandum submitted by International
Alert
KEY POINTS
— All aid has local political impacts,
and local politics affect all forms of external engagement. Recognition
of these interactions has fundamental implications for how the
UK conceives its approaches to international development, including
through multilateral institutions. The challenges are particularly
acute in conflict-affected and fragile states because a failure
to understand power relations and social dynamics in such settings
risks not only ineffective assistance but also that aid itself
becomes a resource worth competing, or even fighting, for.
— For a number of years, specialist
teams in the Bank have been generating knowledge on conflict-related
issues, and have played an important role in international efforts
to improve aid effectiveness in fragile states and situations.
They are also working to better adapt institutional procedures,
allocation systems and project implementation capacity to the
particular challenges faced in these contexts.
— Despite these efforts, the practice
of the Bank, institution-wide, still trails behind. The direction
and country-level decision-making of the Bank is dominated by
economists who have insufficient incentives to take account of
political and social issues. A high premium is placed on quantitative
data (whose collection is often flawed) and technical statistical
"results", while much less attention is paid to power
dynamics, relations between civil society and the state, and the
spatial, gender or identity group distribution of the aid provided.
— Efficiency tends to be conflated
with effectiveness and the absolute quantity of disbursements
too often seems the benchmark by which "success" is
measured. Bank development professionals tend to focus on the
endogenous, Bank system-related factors of a "successful"
project and underplay the exogenous, context-related issues which
determine the quality of outcomes over time for the country's
people, not least in terms of governance relationships.
— In recent years, the UK has manifested
a genuine ambition to improve its approach to the particular challenges
that arise from conflict and "fragility". The recent
Public Service Agreement includes a commitment to achieving "more
effective international institutions, better able to prevent,
manage and resolve violent conflict and build peace". But
the UK does not accord enough attention to the Bank's way of working
in fragile and conflict-affected contexts. This is unacceptable
because the government's accountability for development spending
includes the hundreds of millions of pounds allocated to the Bank.
— The UK's principal message to Senior
Management through the Bank's Board should be: (i) conflict/fragility
is not a "thematic" issue, involving discrete programmes
and units that are "tacked on" to the "standard"
way of working, but is rather fundamental to the context in which
all types of programmes and approaches are taking place; (ii)
raising the quality of assistance is expert labour-intensive,
and requires that staff be sufficiently numerous and skilled,
as well as properly located, to formulate and follow through on
strategies and projects.
— DFID (in London and in-country) must
increase its own human resource capacity and allocation so that
staff can properly engage with Bank staff on their decision-making.
At a minimum, this means strengthening the conflict/fragility
expertise of its IFI unit and the extent to which DFID/CHASE can
track and support multilaterals beyond the UN (and EC) in support
of IFID. Indirectly, this would significantly improve the UK's
contribution to poverty reduction.
INTRODUCTION
1. The global effort to reduce poverty is
often distilled into the Millennium Development Goals. These are
technical, quantifiable targets by which the assistance of international
development institutions, such as DFID and the World Bank, are
measured and by which their performance is most often assessed.
Yet the reality of development is that good intentions come up
against the complexity of politics, identity and culture, stark
inequities between sexes, as well as severely limited local economic
opportunities. In these environments, all aid is political and
politics impacts upon all forms of engagement.
2. In conflict-affected and fragile states
(ie at least 40-50 countries worldwide)[87]
the challenges to development are particularly acute. The often-desperate
needs, fears and insecurity of populations sit alongside prejudice,
discrimination, greed and poor governance. Recognition of these
challenges is changing the way the UK conceives its foreign policy
and its development policy, including how it interacts with multilateral
development institutions like the World Bank.
3. In recent years, the term "conflict
sensitivity" has emerged in the discourse and commitments
of a number of development organisations. The aim has been to
ensure that, institution-wide and in all contexts, these organisations
meaningfully take into account the context in which they are operating,
and continuously adapt programme design and implementation in
a way that maximises positive impacts while mitigating potential
harm.[88]
The concept has gained some currency in DFID and to some extent
in the European Commission, but is not yet articulated as a priority
for the World Bank (or for the UK's expectations of it).
4. Given the influence of the Bank in wider
development policy-making, and the strong possibility of ever-greater
multilateralisation of aid (as articulated, for example, by Secretary
of State Douglas Alexander in the House of Commons in November
2007), there is a growing need to influence the way that the World
Bank works, and how it deals with, and adapts to wider, political
events. Without greater and faster progress in improving the sensitivity
of the World Bank to power relations and social dynamics in its
operating contexts, particularly conflict/fragile ones, millions
of pounds of UK taxpayer money not only risks being ineffective,
but may also itself become a contested resource.
The World Bank and the 40-50 conflict-affected
and fragile states
5. As a financier and provider of influential
policy and technical advice in developing countries, the World
Bank has very substantial direct and inadvertent impacts on local
and national economic systems and governance, as well as cross-regional
dynamics.[89]
These activities are set within a framework defined by the Bank's
original charter: the "Articles of Agreement" which
includes a requirement that "proceeds of any financing are
used only for the purposes for which the financing was provided,
with due attention to considerations of economy, efficiency and
competitive international trade and without regard to political
or other non-economic influences or considerations."[90]
The Bank also plays a fundamental role in influencing the direction
and characteristics of other aid and investment flows and in leveraging
activities by governments who are accessing, or seeking to access,
these external sources of funds.
6. The clause requiring Bank financing to
be used "without regard to political considerations"
has affected the Bank's work. It is often used as a rationale
for seeing and pursing "development" as if it can be
isolated from politics. The clause is, however, quite inconsistently
interpreted in the Bank as certain staff members have sought to
be more pragmatic in their approach. The understanding that the
Bank's operations cannot and should not be isolated from politics,
and where relevant, conflict is one which is taken up on an ad
hoc basis by staff of all levels in different places and different
times.
7. The interpretation that the Bank gives
to the "non-political" nature of its work is particularly
important in fragile and conflict-affected countries. These constitute
around half of the 88 countries that are eligible for International
Development Association (IDA) funding. As DFID research has emphasised,
these countries "cannot or will not deliver what citizens
need to live decent, secure lives. They cannot or will not tackle
poverty." Moreover, many of these countries are affected
by violent conflict which reverses economic growth, causes hunger,
destroys roads, schools and clinics, and forces people to flee
from their homes, often across borders. Women and girls are particularly
vulnerable, suffering sexual violence, exploitation and prejudice
as they seek to run households in the absence of men. Insecurity,
too, can spill over into neighbouring countries with major effects
on their development and economic growth. In these settings, "considerations
of economy" necessarily include highly complex political
economy issues that characterise and determine the operating context.
Furthermore, economic issues (and decision-making) are unavoidably
political.
8. There are a number of initiatives underway
in the Bank which show a welcome recognition of the significance
of these conflict and fragility issues to its work. In pure spending
terms, its budgeted assistance to these "fragile states"
is rising. During 2003-05, the lending and administrative budgets
amounted to $4.1 billion and $161 million, respectively—increases
of 67% and 55% compared with 2000-02. Structurally too, there
have been important initiatives with the existence from 1997-2007
of the Conflict Prevention and Reconstruction unit and, in 2002,
the Low Income Countries under Stress (later called the Fragile
States) unit. There is now a Conflict, Fragility and Social Development
unit embedded in the Bank's Africa division and an enlarged thematic
unit on Fragile and Conflict-affected Countries. These teams have
produced and commissioned ground-breaking knowledge on conflict-related
issues, and are leaders in international efforts to encourage
donors to improve aid effectiveness in fragile states and situations.
Bank staff members have been co-leading a DAC-wide process to
promote "good international engagement" in these settings.
Moreover, like a number of bilateral donors, it is seeking to
better adapt its procedures, allocation systems and project implementation
capacity to these challenges. A new policy was agreed by the Board
in 2007 to help it deal with "crises" in its operations.
9. However, for all the progress that has
been made in some of the corridors of the Bank's headquarters
and field offices, the substance and practice, institution-wide,
still falls short of what is needed. The direction and country-level
decision-making of the Bank continues to be overwhelmingly dominated
by economists, with a major premium placed on quantitative data
(whose collection is often not without flaws) and "results"
that are based on technical statistical measurements that largely
do not articulate issues of spatial, gender or identity group
distribution. While leading bilaterals have invested, for example,
in the analysis of conflict dynamics (and how to integrate them
into programme cycle management) and identifying "drivers
of change", the Bank, in the way that it operationalises
knowledge, does not place the same value on such know-how.
10. Despite the opportunities and constraints
that regional, national and local dynamics can have on development
activities, too many Bank development professionals focus on the
endogenous factors of a "successful" project and can
underplay the exogenous issues which determine the quality of
outcomes over time for the country's societies (for example
over coffee sector reform in Burundi). Efficiency is conflated
with effectiveness and the absolute quantity of disbursements
risks being the benchmark by which "success" is measured.
The preferred avenue for "scaled-up" disbursement is
budget support, even in fragile, conflict-affected countries such
as Burundi.[91]
Funding streams, moreover, are generally tied to individual countries,
which is a significant obstacle to tackling the cross-border factors
that often drive fragility.
11. One of the most striking tensions that
is emerging in the Bank's work in conflict/fragile settings is
the question of balance in respect of, on the one hand, a pure
poverty reduction agenda aimed at a country's poorest groups and,
on the other, one which seeks to integrate a "state-building"
approach in the light of perceived good practice enshrined in
the Paris Declaration on Aid Effectiveness and also the DAC Principles
of Good International Engagement. The Bank's engagement risks
incoherence (and ineffectiveness) when different parts of the
institution are pursuing the two approaches in the same context
(for example in Nepal). This is particularly problematic when
bilateral partners are adhering to a different agenda and there
is no consensus on what is realistic and necessary given the defunct,
corrupt or faction-riven politics of the operating context.
12. With some very notable exceptions (such
as the Multi-country Demobilisation and Reintegration Programme—MDRP—in
central Africa), the bulk of the Bank's staff appear unreceptive
to the notion of putting the factors driving conflict and fragility
at the front and centre of their planning and activities. The
Bank "mainstream" continues to see conflict as some
kind of "market distortion" which can be resolved through
development activities that can afford to leave politics to one
side. At best it is just one of a number of "issues"
that are "tacked on" to the core business (infrastructure,
service delivery, financial management etc). This affects both
the delivery of IDA-funded projects but also the activities funded
out of Bank-managed Multi-donor Trust Funds. The impressive level
of project appraisal and evaluation, and the number of supervisory
and assessment missions are not sufficient (or correctly designed)
to address this problem. Where the problem is redressed, it is
largely ad hoc, on the initiative of individual personalities,
or alliances of individuals, within the Bank. This re-balancing
may also come when it finds itself under pressure from certain
bilateral donor partners who are alert to the issues.
13. The UK works closely with the Bank on
a number of different levels. Not only does it directly finance
the Bank's development activities, but it contributes discrete
funds to specific analytical outputs and to multi-donor trust
funds. DFID also works closely with the Bank in encouraging new
avenues of conceptual thinking and policy commitments for the
donor community, including through the OECD DAC. This is important
and welcome, not least given the Public Service Agreement indicator
to achieve "more effective international institutions, better
able to prevent, manage and resolve violent conflict and build
peace". Its significance lies in the fact that the UK's priorities
can be rendered largely irrelevant in the absence of concerted
efforts to understand and engage with other bilateral, multilateral
and corporate activities. However, the UK's attention to the Bank's
way of working does not yet go far enough, given the commitments
the government has made.
The UK's role in improving the Bank's engagement
14. There is genuine ambition across the
UK political system to improve the government's approach to the
particular challenges that arise from violent conflict, persistent
insecurity and other types of "state fragility". This
has been reflected in the 2006 DFID and FCO White Papers and the
IDC's recent Inquiry on conflict and development, just as it was
in the Commission for Africa report and the Gleneagles G8 summit
communique« in 2005. Important policy publications have included
those on security and development and Fragile States produced
in 2005, and a Conflict Policy paper in 2007.
15. Yet, the UK`s determination for "DFID
to push for the UN—in particular UNDP—to help prevent
conflict by addressing the structural causes of conflict and to
deliver more effective and conflict-sensitive development in fragile
countries, both before and after the conflict" (and for the
EC to pursue "conflict-sensitive programming")[92]
is not yet matched by the same intention vis-a"-vis the World
Bank, although there is a dedicated International Financial Institution
department within DFID and there has been some very useful contact
and collaboration between DFID's conflict staff and their counterparts
in the Bank (over conflict-sensitising PRSPs, the MDRP and IDA
15 negotiations on Fragile States).
16. In the World Bank headquarters, decisions
on strategies and programmes are often waved through without sufficient
expert scrutiny or input from the field. In-country, where DFID
pays close attention to Bank activities, this tends not to be
systematic. It depends on (a) the size of the given Bank project
in proportion to the total donor engagement in that area, and
(b) the size of DFID's programme in that country relative to the
overall level of international assistance. Most frequently DFID
struggles to monitor the Bank's decision-making because of the
lack of staff time in both the relevant headquarters (London and
Washington DC) and country missions.
17. Yet DFID's inter-relationship with the
Bank really matters not only because it allocates significant
sums for spending by the Bank (around £1.4 billion in 2005-07)
but also because it often has substantial bilateral aid programmes
in the same recipient countries. Moreover, the accountability
relationship of the UK government to its electorate for development
spending is distorted by increasing financial contributions to
the Bank. This carries political responsibilities (and risks)
that cannot and should not be ignored. In addition, there is a
fundamental tension emerging between, on the one hand the Bank's
formal commitment under its Articles of Agreement to stay away
from politics and, on the other, the commitments on governance,
"democratic culture" and conflict which the Bank itself
emphasises in its own policy statements.
18. As the former Secretary of State for
International Development, Hilary Benn, stated, security and development
need to be put "into the heart of all DFID thinking and practice".[93]
This includes its relationships and partnerships with other international
development institutions. In the World Bank, obstacles remain
to achieving this goal which relate both to the prevailing way
of "thinking" within the institution and also its procedures
and processes (and these are mutually reinforcing). The UK has
an important role to play in helping to change these and its institutions
have relevant and useful expertise which can be harnessed to help
the Bank improve its effectiveness in fragile and conflict-affected
countries. In so doing, it would be improving the impact of UK
taxpayers' contribution to better development outcomes in these
settings.
Ways forward
19. The crux of the challenge for the UK
is to push for a shift in the "institutional culture"
of the Bank so that there is a greater balance within genuinely
multidisciplinary teams. Through the Board and its influence
on Senior Management, the UK needs the Bank to make clear that,
for the organisation as a whole, conflict and fragility are not
(and cannot be treated as) a "thematic" issue, involving
discrete programmes and units that are "tacked on" to
the "standard" way of working. It is the context in
which all types of programmes and approaches are taking place
and which fundamentally impacts on the assistance provided (positively
or negatively). All Bank activities have implications for longer-term
relationships among competing elites, between citizens and the
state, as well as between diverse (and often fractured) population
groups.
20. DFID needs to encourage the Bank's management
to take the following steps:
— Measure programme and project and
staff performance in terms of progress towards the context-specific
strategic goals, rather than weighting them towards more generic
indicators such as volume of funds expended. The Bank needs to
be more candid (at least with itself) about how it thinks its
budget support, infrastructure, education and other activities
affect power dynamics and social relations. It needs to be more
actively conscious in how it engages with recipient communities
and constituencies.
— Base staffing decisions on years
of experience in fragile contexts, analytical capacity and political
acumen, not technical qualifications alone.
— Ensure that country teams are large
and expert enough to perform the in-country travel, ongoing analysis
and political networking required to implement conflict-sensitive
approaches effectively. Pressure from Finance Ministries to reduce
transaction costs must be resisted, given the complexities of
fragile settings. Effective assistance (which helps drive forward
societies towards fuller participation, greater equity and peaceful
development) is not just labour-intensive, it is expert labour-intensive.
The Bank's administrative budgets and staffing plans should reflect
this (as should the stance taken by bilaterals towards permitting
those costs).
— Provide incentives for staff to spend
more time in-country so that they have a better understanding
of the local political context and will be more capable of dealing
with the power dynamics and psycho-social which determine the
overall as well as day-to-day progress of the relevant strategy
document(s) and the projects which flow from that strategy. The
"mission culture", whereby DC staff travel to the field
every now and again for a few days, is not sufficient.
21. DFID needs to take certain measures
within its own structures and procedures to improve its own way
of working with the Bank. If DFID is to be able to provide greater
assistance to the Bank, and provide some oversight that its own
policy commitments are being accounted for, it needs to:
— Articulate a clear political commitment
to a fundamental re-appraisal of development effectiveness "orthodoxies"
(of alignment and "managing for [MDG] results" in fragile
and conflict-affected states on the basis that:
— All development is political, and
in changing a status quo and challenging vested interests, it
is inherently conflictual.
— The question of "how"
is as important as the "how much" because the
ways that a strategy and a project are formulated, consulted on
and implemented can mean that they themselves become a mechanism
for promoting participation, accountability and social cohesion.
— Ensure sufficient (and sufficiently
conflict-aware) human resources in the IFI division of DFID headquarters,
and the UK's Washington IFI mission, to monitor Bank strategy
and project documents, and improve them, as appropriate, as they
come before the Board of Executive Directors for approval. At
a minimum, these units must be reinforced with sufficient numbers
of staff, who can bring conflict/fragility expertise to DFID's
interaction with the Bank in respect of the 40-50 different "fragile"
country operations. DFID/CHASE's multilaterals team needs also
to be strengthened to assist in this effort.
— Provide the right staffing levels
and staffing incentives for DFID field staff to engage Bank staff
on a more systematic basis, providing expertise (and, if necessary,
pressure) for Bank staff to integrate political and psycho-social
factors into their ways of working and, as appropriate, engage
other bilaterals in efforts to influence these non-economic dynamics.
November 2007
87 "There is no agreed global list of fragile
states . . . One common way to estimate the level of fragility
is derived from the World Bank's Country Policy and Institutional
Assessments (CPIA). CPIA scores divide low-income countries into
five categories of performance, the lowest two of which are useful
proxies for state fragility. There is a separate group of unranked
countries, also deemed fragile. This provides a list of 46 fragile
states. Middle-income countries are not included in this list"-from
Why we need to work more effectively in fragile states,
UK Department for International Development, January 2005 Back
88
See, for example, Conflict-Sensitive Approaches to Development,
Humanitarian Assistance and Peacebuilding: A Resource Pack,
International Alert, Saferworld et al, 2004. Available at: http://www.conflictsensitivity.org/ Back
89
IDA is the largest provider of multilateral ODA to low income
countries with disbursements in the order of US$80 billion during
1994-2005. Back
90
Article V, Section 1, paragraph (g) Back
91
In 2007, the World Bank, France, the Netherlands, Norway and others
have sought to give budget support to Burundi (although disbursement
through the Bank has been delayed). The UK has not so far joined
this approach. Back
92
PSA Delivery Agreement 30: Reduce the impact of conflict through
enhanced UK and international efforts, October 2007, paragraph
3.39 Back
93
See the Secretary of State's introduction to the strategy paper
on security and development "Fighting Poverty to Build
a Safer World", DFID 2005. Back
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