The Vexed Question of Aid

The Vexed Question of Effective Aid

Effective development assistance is a complex issue. There are various approaches. Direct financial contributions (as Australia did for post independent Papua New Guinea), selective targeting or the grouping of areas together in a regional package (as the EU does), village level contributions providing aid directly to the poorest members of society (various advocates), civil society contributions at a range of levels etc.

New Zealand Aid

Currently the New Zealand Aid Programme (NZAP) seems to favour the selective targt approach. It sees  

“sustainable economic development” as “a central focus [of its activities] which looks to reduce poverty and contribute to a more secure, equitable and prosperous world”.

The statement adds

“economic growth has the potential to improve the material wellbeing of the people in a developing country, with increased employment and income-generating opportunities. To be sustainable economic development, it must provide ongoing improvements to a country's economy. It requires support through policies that encourage and allow the private sector to grow and invest, programmes and institutions that develop expertise and capability, and infrastructure that supports economic activity. Support focuses on fisheries, agriculture and tourism sectors, and on activities that contribute to trade”.

Related priorities can be picked up on the NZAP section within the MFA website.  They include education, environment, gender equality, health, human rights, humanitarian and emergency response, leadership and governance, peace building and conflict prevention. As Dr Pangloss said, all is for the best in the best of all possible worlds.  But as noted, development assistance is a complex issue.

A Different Approach Sound Government

David Abbott and Steve Pollard see things a little differently. In December 2004, they produced a useful study for the Asian Development Bank (Pacific Department) entitled “Strategies and Priorities for Poverty Reduction”. To them the three pillars of poverty reduction are -

I - Good governance

II - Inclusive Social Development

III - Sustainable, Pro-Poor Economic Growth.

Abbott and Pollard state that

Three Pillars

“Of the three pillars, good governance is considered to be the single most important, for without good governance it is unlikely that the other two pillars can successfully be established”.

They add that -

“Sound, honest government is the best way to help people out of poverty. Each government has a responsibility to create a balanced regulatory environment that encourages economic growth and the wider provision of goods and services, both in the public and private sectors.

“The private sector and markets must work efficiently to allocate resources to commercially viable, employment-generating investments. Good governance includes sound, responsive institutions and processes built on strong, visionary leadership and a commitment at the highest levels to give priority to the implementation and achievement of equitable growth strategies.

The second pillar supports investment in social services “to increase human capital, improve social protection, upgrade social infrastructure, and build social capital in ways that focus on the poor”. In particular, “initiatives [must be undertaken] to improve technical skill levels, especially among rural people, to meet the demands of private enterprise must be supported”.

The third pillar requires growth oriented, employment-creating strategies

to broaden and deepen both the domestic and export sectors.

The Abbott/Pollard paper is important. Of course responsible states look to economic development. The point is, however, economic development cannot be undertaken in isolation – sort of as a neatly packaged entity sufficient unto itself. Economic development – the market indeed – can only exist within the community. Without the community there can be little “economic development” as such. This is particularly so among the very different cultures of the Pacific.

The “Market” and the Community

We are emerging, I hope, from the era in which the efficient market theory dominated economic thinking and deeply influenced governments.  Clearly the market as such is important, but so are other factors which contribute to the life of a successful community.  Abbott and Pollard say, each government has a responsibility to create a balanced regulatory environment.  Absolutely. But It is here that we rub up against the complex, historically based and interconnected issues of "culture" on the one hand and the aforementioned concept of governance on the other.

Almost by definition those areas where outside assistance is needed are characterized by weak often rudimentary infrastructural support.  But trying to graft a highly developed Western derived infrastructure onto societies with no tradition of the similar structures and, even more importantly, the essential concepts that drive them will not work.  There has to be a sense of genuine enquiry and understanding from donors about what suits the individual community best (culture) as well as a clear commitment to intelligent engagement from all parties involved (particularly donors but also recipients).

Governance: What Does it Mean?

The managerialised, consultant infused, box ticking approach characterized by the  “Washington Consensus” doesn’t work in the Pacific – and much else besides. What is required is cross disciplinary action where the recipient country is given a full opportunity to contribute.

The World Governance Indicators (WGI) initiated by Kaufmann and Kraay in the 1990s provided six broad dimensions of governance including

• voice and accountability (particularly participation in the selection of government)
• political stability  (absence of violence but outside agencies must be careful to ensure that any action on their part does not work against the reasonable activities of at times robust opposition)
• government effectiveness (the quality of policy formulation)
• regulatory quality (the conditions that allow private sector development)
• the rule of law (this category is quite critical and requires separate discussion -- the question in the Pacific is "which law”?)
• control of corruption (in the Pacific this applies at every level – but particularly to the question of elite "capture" of the State.)

In its list of priorities New Zealand Aid does include leadership and governance but it is well down the list. Perhaps given the dominance of economic development and the inherent difficulties in implementing the package of WGI indicators, policy makers do not wish to become involved in an issue which is shaped by - and itself shapes - local attitudes, expectations and motivations. Getting to grips with governance also means getting involved in “state building”. As far as I can see the New Zealand Aid website does not mention such a concept. 

But to me there can be little sustained economic growth unless the proper state machinery is in place staffed by people who have an understanding of and in the commitment to ensuring the implementation of Government policies. RAMSI (the assistance mission to the Solomon Islands) focuses on three areas (called pillars) – including improvements to the machinery of government, law and justice, economic governance and growth. That is a start. But that is pretty much it – a start.

Ramsi’s true test will not come till the elapse of a decent period of time - say two years - from its eventual departure from the Solomon Islands. By that time millions if not billions of dollars will have been spent and we will have had ample evidence that resurrecting a seriously flawed (if not failed) state is indeed, to paraphrase Fukuyama costly, difficult, risky and time consuming.

Goodwill

One real positive in the New Zealand aid program is a sense of goodwill.  That again is a start but only that.  If a governance programme is to work all parties must have the genuine will to succeed, get the right priorities in place and be prepared to back their judgment (calibrating where necessary) over a period of time.

A brief comment cannot provide a complete prescription but if proper governance programmes are put in place economic progress will emerge. Certainly, the evidence is clear that if soundly based Governance programmes are not in place there will be no sustained economic progress.

What is required is wisdom, demonstrated experience and courage to get to grips with the real elements of governance.

Gerald McGhie

External40.blogspot.com

The US Speaks with Its Own Voice

FIJI

The United States speaks with its own voice.

I guess that while the present government remains in power Fiji will continue to be the subject of controversy. 

So far the media presentation presents a very mixed bag.  It is beyond my resources to provide  comprehensive coverage but clearly there are interesting developments. Most of these are either not reported or underreported in the New Zealand media.

The first and the most significant is the statement made by

Kurt M. Campbell
Assistant Secretary, Bureau of East Asian and Pacific Affairs in his Testimony Before the House Committee on Foreign Affairs Subcommittee on Asia, the Pacific, and the Global Environment

on September 29, 2010

He commented as follows

Fiji

Inextricably linked with regional economic development is the vital issue of good governance. In this arena, the current state of affairs in Fiji is a matter of on-going concern. Traditionally, Fiji has been a close and valued friend and partner in the region, as well as a leading voice for Pacific Island democracy. Fiji also has a long history of contributing troops to multilateral peacekeeping missions, was quick to condemn the September 11 terrorist attacks on the United States, and has been a staunch supporter of our efforts to build an international coalition against global terrorism.

However, since the 2006 coup in Fiji, and the ascendance of the military regime led by Prime Minister Bainimarama, there has been an unfortunate reversal of Fiji’s leadership role. Fiji’s exclusion from the Pacific Island Forum since 2009 has detracted from progress on important regional issues.

Fiji’s coup leaders have not taken any credible steps to restore democratic institutions. After breaking a promise to hold elections in 2009, they now promise to begin work in 2012 to craft a new constitution and hold elections in 2014. They also promised to lift public emergency regulations, but the regulations remain in place, the press remains heavily censored, and the right to assembly is severely restricted. Fiji has failed to restore democracy or institute structural reforms. The entrenchment of authoritarian rule indifferent to criticism has become a dangerous model for the region and the global community.

The United States maintains sanctions pursuant to Section 7008 of the Foreign Operations Appropriations Act and other policy restrictions, including limitations on military and other assistance to the Government of Fiji. This includes visa bans against coup leaders, suspension of certain military sales, and restrictions on certain bilateral engagement. The United States calls for an open, inclusive, and transparent process for free and fair elections, the re-establishment of an independent judiciary, and an end to media crackdowns and other limits on civil liberties.

To date, we have focused our efforts on areas where our engagement is yielding positive results and serves to illustrate the advantages of a more positive bilateral partnership. We continue to provide assistance in ways that support the Fijian people and promote our interests, for example, for disaster preparedness and combating transnational crime. Despite the difficult political environment, the State Department’s Bureau of Democracy, Human Rights and Labor, through the Human Rights and Democracy Fund, is now supporting multi-year programs in Fiji on media training and on ethnic dialogue and tolerance.

We now hope, in close coordination with regional players, to seek more direct engagement with Prime Minister Bainimarama to encourage his government to take steps to restore democracy and freedom that would allow movement toward normalization of Fiji’s relations with other countries in the region. This engagement would spotlight the potential benefits of positive political steps, while reinforcing the message that any easing of U.S. sanctions is tied to the restoral of democratic processes.

Our objective is to put Fiji back on track for reintegration into international institutions and for holding free and fair elections no later than 2014. By taking credible steps towards an increased civilian role in government and other democratic reforms, the regime could build confidence, in accordance with agreed upon benchmarks and timelines, that would lead towards the restoration of Fiji’s former international role and stature.

There are other contributions

Radio New Zealand commented on 29 October 2010

U.S.DEVELOPMENT AGENCY TO OPEN OFFICE IN FIJI

Clinton announces $12 million climate mitigation

WELLINGTON, New Zealand (Radio New Zealand International, Oct. 29, 2010) – The United States Agency for International Development will return to the Pacific next year by setting up a new office in Fiji. This was announced by the US Secretary of State, Hillary Clinton, in Honolulu at the start of a two-week tour. Mrs Clinton says the US will be working through the Pacific Island Forum to support the Pacific island nations as they strive to really confront and solve the challenges they face. Those challenges, she says, range from climate change to freedom of navigation. She says 21 million US dollars will be spent to support climate change mitigation. Last month, the assistant secretary of state for East Asia, Kurt Campbell, said the US objective was to put Fiji on track for reintegration into international institutions and for the holding free and fair elections no later than 2014.   (scource: Pacific Islands Report).

There is more. The ABC which also offers an excellent daily coverage of Pacific affairs (though I am concerned that the transcript service is rather less available than earlier) provided the following -

Former Australian official speaks with his voice

AUSTRALIA CONSIDERS RE-ENGAGEMENT WITH FIJI
Economic and trade talks possible

MELBOURNE, Australia (Radio Australia, Nov. 8, 2010) - Australia's former Parliamentary Secretary for Pacific Island Affairs, Duncan Kerr, says Australia should move towards a strategic re-engagement with Fiji.Mr. Kerr says the re-engagement of other countries with Fiji, including the US, suggests it is time for Australia to follow suit. The United States has stepped up contact with Fiji in recent times in a bid to counter China's rising influence in the region, and will open a new embassy in Suva soon. He says such re-engagement could include poverty alleviation, and allowing Fiji back into the Pacific Agreement on Closer Economic Relations - PACER-plus regional trade talks.

"What I want to do is distinguish between Australia maintaining its opposition to the form of governance in Fiji, that is expressing diplomatically that we must continue to press for a democratically-elected regime, but on the other hand, getting involved in the practical things that will prevent whoever gains governance in Fiji inheriting a wasteland," he said. (Scource: Radio Australia).

It has been pointed out to me by an experienced Fiji analyst that there was an article on page A11 of the NZ Herald 9 November 2010  titled 'US ready to take bigger Pacific role' written by Greg Ansley from Canberra. He finishes off with:

Most analysts see Washington's renewed focus on Asia-Pacific, in large part at least, as a response to the growing economic and military might of China.

COMMENT

The above comments could almost be left to speak themselves.  But my question is what is really being done in a positive way to open up communication with the Fiji government with a view to long-term relations.

Pacific Forum statements refer to a return to democracy in Fiji.  Many analysts question whether there ever has been "democracy" in Fiji.  My own question stated in a number of articles is quite simply that democracy is a good deal more than the simple holding of elections.

Elections are part of democracy - obviously an important part -- but to isolate a complex issue to one factor is quite simplistic.  After almost 4 years of the Bainimarama government  I would look to New Zealand showing

• a genuine understanding of the complex issues involved in Fiji
• a genuine sense of engagement with those issues
• a desire to inject a New Zealand sense of fair play into that engagement.

Without in any way condoning the 2006 coup New Zealand must seek to build a climate of confidence on the part of Fiji where they can look to New Zealand as an objective friend and one who seeks good relations with them.

While our relations with Canberra are important, it is in the Pacific that we must speak with our own distinctive voice.  New Zealand has a long history of involvement in the Pacific.  By now we should be able to draw on a deep understanding of the various cultures involved and build relations based on their and our understanding of each other.

The "market" has a language of its own and can only provide answers to market based situations.  Countries are quite different.  They are based on a sense of community and their own culture.

  The comments by United States representatives seem to me that Washington will now look at the Fiji through its own eyes.  Perhaps that's what has prompted the Australian comments noted above.

I have given a fuller outline of my views in the first blog.

External40

Fiji: Let's Talk

This is a new Blog.

I will comment from time to time on issues relevant to New Zealand's external relations.

I have started with an Op Ed article I wrote for the Dominion Post on 4 October 2010. It has been picked up by various Blogs so it is not a completely new postings. I hope to take up some of the comments contained therein in a future Blog. What appears below is a starting point.

For comprehensive coverage of Fiji affairs I strongly endorse Croz Walsh's Blog. Click here

Gerald McGhie

___________________________________________________________________________ 

Resolving the Fiji Impasse: Let the Pacific Lead

By Gerald McGhie*

Former NZ diplomat, former Director of the NZ Institute of International Affairs,
former Chairman Transparency International NZ

 

Interim Prime Minister Bainimarama’s track record does little to encourage those who look to an early negotiated settlement to the current coup/crisis. But the coup is now in its fourth year and Bainimarama remains well entrenched. Action to date has not brought him to the negotiating table.

Given the unproductive rhetoric and exhortation from both sides the stand-off seems likely to continue. Should New Zealand be looking for alternative approaches? The short answer is "yes" but power struggles, ethnic and land disputes have a habit of locking themselves into the DNA of Pacific communities. Given the essential complexity of the problem there can be no quick fix or short term solutions to the issues surrounding Fiji. 

 

It is hard to believe that the Pacific, an area noted for its complex procedures of conflict resolution, has not yet produced a formula that all sides can accept. Overtures have been made. Sir Michael Somare has recalled that at its inception in 1971 the Forum was determined to have an inclusive membership. That principle has underlined his approach to the region ever since. He has also said that "the Pacific way is not about burning bridges" it is about "going the extra distance, compassion and participatory democracy". If there are any lessons to be learned from previous coups, he said, "hurriedly prepared elections and token changes to rules do not ensure real democracy."

In spite of Somare’s experience and insight, momentum has been lost. Bainimarama’s sharply worded criticisms continue. The Forum meets and disperses.

But have negotiations to date been a genuine reflection of the fa’a Pasifika?  Regrettably Pacific Forum countries have an excellent record of producing documents. Most are quickly ignored particularly the Eight Points of Accountability on Good Governance and the less useful Pacific Plan. But the 2000 Biketawa Declaration has proved more durable. Somare drew on this document at a Forum meeting in January 2009 when he exhorted members to "constructively address difficult and sensitive issues including underlying causes of tension and conflict". Biketawa refers specifically to ethnicity, socio-economic disparities, lack of good governance, land disputes and the erosion of cultural values as continuing areas of concern. These factors are all in play in Fiji: Somare's plea was to engage the interim government fully to help political dialogue succeed.

But for governments to say that they are ready for talks is not enough. Personal animosities have reached a point where approaches have to be carefully tested. All sides must address three issues before proceeding. When to talk, what to say and how to say it. But most of all Australia and New Zealand must take a step back and allow the Pacific countries to initiate and carry out the discussions themselves. Realistically Bainimarama is in control and he will not compromise on the Roadmap, the constitutional reforms and the elections in 2014. Negotiations with him will not be easy but if understandings can be agreed and adhered to at least there will be some structure on which to base discussions.

Early contact between the parties would be modest and low key. A Pacific based Negotiating Group (PNG) would send an unambiguous message to the interim government that they will address all items on Fiji's agenda. For their part New Zealand and Australia would offer a simple statement agreeing that they would be prepared to enter into serious negotiations at an appropriate time but until then Forum contact would be in the hands of Bainimarama's Pacific colleagues. 

 

These actions are limited in scope and would not at first substantively alter the character of the Fiji Government’s relations with the Forum (and New Zealand and Australia) but they would communicate to the interim Prime Minister that all Forum members intend to pursue a different strategy. That new policy would require a new tone. Fiji is a proud nation. Continued denunciations and comments dismissive of the regime would only produce greater intransigence. Thus Australia and New Zealand must be clear. Endorsing their own agenda, engaging in tough talk while indicating a readiness to seek negotiations is unlikely to succeed. More important, relations with Fiji must not be played out in terms of domestic constituency politics in New Zealand. The Fijian diaspora will know that they stand to gain from realistic negotiations.

The Pacific Negotiating Group will require a leader. To date Sir Michael Somare has spent considerable time and much reputation coaxing Bainimarama back into the fold. He should at least have the right of first refusal. Appropriate support for his activities is vital. He must have a new and well-qualified team. The UN has experience of dealing with similar knotty problems. As an expression of goodwill the Pacific Forum nations could make a joint approach to the Secretary General to seek his involvement. New Zealand and Australia would underpin the negotiations by ensuring the provision of adequate finance and support for the Pacific Negotiating Team.

Neither side involved in the negotiations is likely to achieve all their aims. They seldom do when the primary challenge is political. But Fiji's internal disputes, unresolved since independence and before, have to be dealt with by Fijians and the decisions reached accepted by the Pacific and wider community. The involvement of the United Nations would provide a measure of legitimacy. Certainly no country in the region will benefit in the long term from a banished and ailing Fiji. Fiji's neighbours must be aware of this.

It would be naive to assume that there are no risks or obstacles associated with this approach. But suspicion now dominates a relationship that has a long history of cooperation. Australia and New Zealand can impose costs on Fiji but they cannot impose their will. If the US can seek talks with the Taliban it's time to demonstrate continuing diplomatic skill in dealing with a festering and unacceptable Pacific problem.

* First published in Wellington's Dominion Post on 4 October 2010.