Friday, 6 November 2009
Giorgia Giovannetti
The crisis is putting downward pressure on development assistance. This column, which presents the 2009 European Report on Development, says that now is precisely the time that EU support to fragile states is most crucial, so that such countries can respond to the crisis without abandoning necessary long-term reforms and improvements.
The global crisis has hit the budgets of the EU and other developed countries, creating huge debt overhangs as well as unemployment and social problems. But the crisis has been particularly devastating for “fragile” countries – a group of nations located mostly in Sub-Saharan Africa – characterised by dysfunctional institutions and conflict situations (Stewart and Brown 2009). Despite a high growth over the previous five years, these countries were badly affected by the food and oil shocks, which dampened their already-low capacity to cope.
While Sub-Saharan Africa’s dire socioeconomic situation calls for renewed commitments, the EU’s own problems could displace attention and funds away from development aid. That would be a mistake. The costs of EU disengagement would be high for both donors and recipients. For the EU, geographically close to Africa and to its problems of explosive demographics, the result may be more illegal trafficking, smuggling, piracy, and environmental threats. The impact of neglect on fragile countries would be much more direct – persistent development gaps and the risk of another “lost decade”. For both, it is important that the EU lives up to its commitment to scale-up aid to Sub-Saharan Africa – a goal endorsed at the Gleneagles summit in 2005.
Given the budgetary situation of most EU countries and the economic crisis, it is particularly important for the EU to reassess its whole array of policies towards fragile countries and particularly to increase aid efficiency.
The European Report on Development 2009, the first in an annual series, coordinated by a team based at the Robert Schuman Centre of the European University Institute and financed by the European Commission and five Member States1, aims at providing suggestions on how to reshape EU development policies towards fragile Sub-Saharan African countries. It suggests priority areas for intervention based on their characteristics, as well as on the EU comparative advantages with respect to other international players. It points to the importance of reshaping institutions and enhancing human and social capital.
The “fragility trap”
Fragility is a cost in itself. Fragile countries lag behind in achieving most Millennium Development Goals (Harttgen and Klasen, 2009, and Bourguignon et al, 2008), are unable to mobilise domestic resources, and depend heavily on external financial sources. They are exposed to the worst forms of violation of basic human rights, such as food insecurity and conflicts, and are a fertile land to organised crime and illicit trafficking. They are bad neighbours, as negative spillover effects such as instability, lower growth, diseases, refugees, trafficking, and smuggling spread rapidly. For these countries, an emergency situation is the rule, not an exception.
The state of fragility makes the effects of any shock persistent, so standard policies do not seem to work. Fragile countries’ governments often attempt to offset shocks by focusing almost exclusively on immediate needs, thereby neglecting or distorting long-run objectives. Moreover, a sharp drop in per capita income increases the risk of civil conflict (Ciccone, 2008). To escape the “fragility trap”, fragile states governments must respond to crises while solving long-term structural weaknesses – certainly a challenge.
The EU can help fragile countries out of the “fragility trap” if interventions are done right
For most Sub-Saharan African fragile countries, Europe is the main donor, trading partner, source of foreign investments, and relevant migrant destination. The EU is an important political, diplomatic, and economic bloc, even though it cannot forget that fragility often has its roots in colonisation and decolonisation processes, at times magnified by the irresponsible practices of foreign companies and the illicit and criminal trafficking to and from Europe. The large array of potential EU policies extends much beyond financial assistance, encompassing trade, security, environment, and so on. Furthermore, during its own history of enlargement, the EU accumulated experience in coping with problems of transition from military dictatorship to democracy and integrating countries shifting to a market approach. This provides a very useful “toolkit” to deal with fragility.
A fundamental challenge is narrowing the gap between the theoretical policy framework and the implementation of specific interventions.
That requires reassessing priorities, concentrating efforts on a few well-defined and agreed upon goals, simplifying procedures, and, in those situations where the state institutions are particularly incapacitated or unwilling to perform their duties, finding the appropriate organisation or partner to implement the policies. This is an issue not only of implementing policies but also of building trust among recipients and donors and learning from the policy experiences. Implementation, furthermore, has to be properly tailored, as “one-size-fits-all” policies do not suit the needs of fragile states.
Finding the right policy priorities
Five priorities should inform the EU’s long-term engagements in fragile states in Sub-Saharan Africa to boost their resilience and help them escape “the fragility trap”:
Supporting state building and social cohesion. The fundamental objective of external engagement in fragile countries is contributing to the endogenous process of state-building. State building is not only about capacity development of state institutions, but more generally about social cohesion and negotiation process among citizens, social groups, and the state. Therefore, state consolidation has to be complemented by actions that take into account the roles of perceptions and expectations and the degree to which populations feel represented by public institutions. Hence, a bottom-up approach and a deep knowledge of the local context are key.
Overcoming the divide between short-term needs and long-term resilience. The EU could put in place an insurance mechanism to safeguard fragile countries from volatile export revenues, so such countries could shift their attention from covering urgent short-term needs to the longer-term horizon. With (more) stable revenue, fragile countries could base their domestic policies on strengthening their potential long-term comparative advantages.
Enhancing human and social capital. Investing in (higher) education of the citizens of fragile countries and building social capital is the best way to overcome fragility. Fragile and conflict-affected countries often suffer disruptions to the public education system, which reduces enrolment rates and increases adult illiteracy rates. Targeting interventions to young males in post-conflict fragile countries could reduce the attraction of illegal activities such as trafficking or smuggling.
Supporting better regional governance, including regional integration processes. Regional trade agreements allow Sub-Saharan African countries to derive substantial economies of scale with larger regional markets, to enhance domestic competitiveness, raise returns on investments, and subsequently attract foreign direct investment, leading in turn to technology transfer and growth. They could also enable these economies to pool resources for the joint provision of infrastructural projects. And they would allow small African countries to have more effective negotiations on economic policy issues with other trading blocs or big private partners. From an institutional point of view, regional agreements may also provide commitment mechanisms on policymaking and reforms.
Promoting security and development. EU actions should be rooted in better knowledge of the causes of insecurity. The current European engineering approach should become more flexible and strategic, recognising the contested and political character of many donor objectives and policies.
The need for long-term commitments
Summing up, despite the current crisis, the EU and other donors should not reduce their engagement in fragile countries, though fragility tends to limit aid effectiveness and EU countries budget are under scrutiny. On the contrary, they should help fragile countries to lengthen their time horizon and implement long-term policies to overcome structural weaknesses while responding to the crisis. This would contribute to fragile countries’ resilience and capacity to cope with negative shocks. The EU should therefore commit to long-term goals and avoid shifting policy objectives and core area of interest. Uncertainty can be very damaging.
To fully exploit its comparative advantage, the EU should focus on human and social capital development. At the same time, it should take care to prevent its wide range of policies from backfiring because of unintended side effects.2 Furthermore, as the EU is not perceived as a unique actor, it needs to learn to speak with one voice, especially when tailoring its policies to the needs of the different fragile countries to account for their heterogeneity.
Since neither donors nor recipients might be in a position to best implement policies, it might be necessary to delegate some tasks, such as allocation of funds to independent agencies ensuring the adequate commitment and appropriate technical capabilities (Bold et al 2009) . Finally, it is important to understand that state building and social cohesion in fragile countries are long evolutionary processes, taking new, diverse, and unpredictable forms at the country and regional levels. Such processes require constant attention and the right institutional support on the ground.
Footnotes
1 Finland, Luxembourg, Spain, Sweden and the UK.
2 For instance, trade policies could interfere with mobilising domestic resources, security interventions can interfere with countries’ ownership, etc.
References
Bold T., P. Collier, and A. Zeitlin (2009), “The Provision of Social Services in Fragile States: Independent Service Authorities as a New Modality”, Centre for the Study of African Economies University of Oxford, Working Paper, May.
Bourguignon, F., A. Bénassy-Quéré, S. Dercon, A. Estache, J. W. Gunning, R. Kanbur, S., Klasen, S. Maxwell, J.-P. Platteau, and A. Spadaro (2008). Millennium Development Goals at Midpoint: Where Do We Stand and Where Do We Need to Go? Background paper for the European Report on Development 2009.
Ciccone, A (2008). “Transitory Economic Shocks and Civil Conflict.” CEPR Discussion Paper 7083.
Giovannetti, G., et al. (2009), European Report on Development 2009 - Overcoming Fragility in Africa, San Domenico di Fiesole: Robert Schuman Centre for Advanced Studies, EUI.
Harttgen, K. and S. Klasen (2009), Fragility and MDG Progress: How Useful is the Fragility Concept? Background paper for the European Report on Development 2009.
OECD (2009), Resource Flows to Fragile and Conflict-Affected States – Annual Report 2008. Paris: OECD.
Stewart, F. and G. Brown (2009), “Fragile States”, Working Paper No. 51. Oxford: Centre for Research on Inequality, Human Security and Ethnicity.
World Bank (2007) Global Monitoring Report 2007 – Confronting the Challenges of Gender Equality and Fragile States, Washington: World Bank.
