Of the many aid effectiveness issues taken up in Busan, the fragile states agenda came away with one of the most promising outcomes and the potential to engender far-reaching change. The New Deal, agreed by a group of fragile states and their key donor partners, sets out a strategy for supporting development that is country-owned, context-specific, focused, practical and urgent.
The success of this New Deal should be judged not just by how closely its details are followed and its commitments are implemented − though these are obviously important − but by whether it can usher in a more fundamental change in the way fragility is perceived by the international development community. An updated narrative can be built around three simple arguments.
First, fragile states matter for development. In the space of a few years, fragile states have moved from the periphery of the international development agenda to a focus of global aid efforts. To understand why, consider the following three facts: the share of the world’s poor living in fragile states has doubled from 20% to 40% since 2005; no fragile country has yet achieved a single Millennium Development Goal (MDG); and two-thirds of the world’s remaining low-income countries are fragile. Helping fragile states has thus become inseparable from commitments to fighting poverty, achieving the MDGs and assisting low-income countries. The combination of these facts and the persistence of their underlying trends will come to have a significant effect on how donors allocate resources. Aid agencies are being forced to recognise the growing tension and competition between the allocation criteria of critical development needs, on the one hand, and on the other, good governance; only a few years ago, these were seen to regularly coincide.
Second, aid to fragile states can achieve results. Donors’ historical preference against aiding fragile states was informed by research indicating that the impact of aid on growth and poverty is diminished in countries with poor policies and institutions. While this research has been enormously influential in shaping donor views, serious doubts have been cast on the reliability of its findings, and there are plenty of reports of aid interventions being successful in even the most complex and unstable environments. For instance, the World Bank’s annual evaluation report for this year noted that its projects in fragile states now have a 70% satisfactory rating, which is not significantly lower than ratings in other countries. Similarly, a recent report on the experience of the Global Fund to Fight AIDS, Tuberculosis and Malaria found that their active grants in fragile states achieved, on average, 83% of their targets and performed well across all measures. Other studies have drawn attention to successful donor interventions in fragile states across a range of different sectors and settings. The World Bank’s 2001 Task Force on Low-Income Countries under Stress − a predecessor to the fragile states epithet − made sweeping conclusions: that aid “does not work well”, that it “may even be counterproductive” and that “donors are impotent against poverty” in these environments. Yet these conclusions can no longer be defended, given the mounting evidence to the contrary.
Third, effective aid in fragile states depends on donors delivering aid differently. The strong results cited above did not come about by following a business-as-usual approach. Rather, they were achieved by experimenting with new ways of working that better conform to fragile states’ characteristics and needs. Some common lessons can be discerned from this experience, many of which are echoed in the New Deal. Donors should narrow their resources on a few specific sectors that correspond to core functions of the state, to help foster its legitimacy based on demonstrable performance and to strengthen citizen-state and citizen-citizen trust. The scope of donor activities within these areas must be sufficiently large to bring about transformative change at the country level. To achieve this degree of scope and scale, donors should place a greater onus on donor co-ordination, risk management and institutional development. Finally, donors must design their engagement and interventions in fragile states around longer timeframes and use their aid programmes to counter the instability inherent in these environments. These lessons can help donors to satisfy the Paris principles, which remain a touchstone for effective donor-recipient relations in any setting.
The past decade has been a period of rapid learning about fragile states both inside the development community and beyond. Now that Busan is over, the challenge is to use this stock of knowledge to establish a consensus on why fragile states matter and what the international community can do to help.