Development & Aid, Economy & Trade, Global, Global Geopolitics, Headlines, Human Rights, Poverty & SDGs

POLITICS: Donors Warned Against “Cheap” Development

Emad Mekay

WASHINGTON, Sep 14 2006 (IPS) - International donors and especially powerful multilateral financial institutions like the World Bank have failed to reduce the number of so-called “fragile states”, leaving more countries vulnerable to chaos, conflict, disease epidemics and even to becoming breeding grounds for terrorism, the World Bank’s own auditing body said Thursday.

On the eve of the joint meetings of the World Bank and the International Monetary Fund (IMF) in Singapore, a gathering that attracts the world’s central bank governors and economy ministers, among others, the Independent Evaluation Group (IEG) warned that the number of fragile states nearly doubled from 17 in 2003 to 26 in 2006.

The regions most affected are in Asia and Africa, and include Afghanistan, Angola, Central African Republic, Haiti, Liberia, Myanmar, Palestine, Solomon Islands, Somalia, Sudan, Yemen and Zimbabwe.

“Neglecting the fragile states – home to almost 500 million people, half of whom are living in extreme poverty – risks a worsening of their misery, in turn feeding regional and global instability,” said Vinod Thomas, IEG’s director general.

“The donor community and the Bank must make better use of resources to work with them in the difficult and lengthy transition from volatility and conflict to stability and peace,” Thomas said.

The grim warning is particularly ironic since U.S. President George W. Bush, leader of the most powerful country on the boards of most international financial institutions, has made it his administration’s mantra to spread freedom and democracy and reduce the number of failed states over the past five years of his term.

Similarly, World Bank President Paul Wolfowitz, who served in the first Bush administration as the number two at the U.S. Pentagon and shares the ideology of exporting Western-friendly ideology abroad, has been pushing an anti-corruption and good governance drive ever since he came to office in 2005.

The term “fragile state” describes nations that are either undergoing chronic internal conflicts or still struggling through shaky post-conflict transitions. Often, their instability provides a safe haven for terrorism, drug production and weapon smuggling, development experts say.

These states suffer from widespread lack of security, significant corruption, breakdown in the rule of law and limited government resources for development. The Bank identified 25 such countries in fiscal year 2005.

The report finds, for example, that in Afghanistan, a focus of U.S. aid and foreign policy since the toppling of the Taliban regime in 2001, the donor community, led by Washington, embarked on a number of reforms simultaneously without prioritising them, leading to a hodgepodge of sometimes conflicting laws and rules.

“Despite many accomplishments, the general perception among the Afghans more than three years into the reconstruction programme is that there has been only minimal improvement in their lives,” said the report, “Engaging with Fragile States: An IEG Review of World Bank Support to Low-Income Countries under Stress (LICUS)”.

“Many in Kabul complain about the persistent unreliability of the power supply, poor condition of the roads, and a lack of jobs.”

The report also raises a red flag over how donors to Afghanistan are actually dispensing their promised funds.

It says that many donors have not delivered on much-publicised aid pledges and have channeled a large part of what they did deliver into high fees and salaries for consultants and non-governmental organisations.

Now, the Taliban appears to be making a comeback, with escalating numbers of attacks on NATO forces and reports that the hard-line group is stretching its influence and control in some parts of the country.

In its 259-page study, the IEG, an autonomous body reporting directly to the executive board of the World Bank, faulted the Bank for not following up on loans worth 4.1 billion dollars to the fragile nations, with a clear and relevant reform agenda.

Specifically, the good results from investments in the Central African Republic and in Haiti are now in danger of being diminished because of inadequate attention to the government’s budget crisis in the former, and a worsening security situation in the latter.

The study urges the World Bank and other international donors not to pull out of those nations before dealing with pressing capacity needs and building the needed skills and institutions.

“In our globalised world, no country can isolate itself any more from what happens elsewhere. As we have seen, instability in one country can easily affect the entire region,” said Ajay Chibber, IEG director.

“Coordinated and sustained multilateral action with a unified vision to reduce the imminent threat coming from fragile countries is more important than ever. Nation-building on the cheap does not work.”