What has been learned from financing post-conflict reconstruction? How should aid moneys be channelled and allocated? What is the architecture of the aid management entity of the recipient government? What is the proper interaction among donors and between donors and the government in post-conflict settings? How can the dilemma between short-term urgencies and longer-term institutional development be managed?
With the ongoing issues in Iraq, and encouraging prospects for conflict settlement in Sudan, Mindanao, Liberia and elsewhere, this paper from the World Bank is a synthesis of both the positive and negative lessons learned through donor interventions in post-conflict situations. It is based on a survey of a variety of cases, but contains a detailed description of the experience of four major post-conflict cases: Palestine, Bosnia, East Timor, and Afghanistan.
In each post-conflict case, decisions must be largely tailored to the characteristics of the specific situation, but general lessons do emerge from the international experience:
- Security on the ground is essential for the effectiveness of assistance. This obvious prerequisite is often forgotten in the rush to formulate projects and transfer moneys.
- A properly sanctioned and clear mandate must be achieved before organised economic and reconstruction assistance can flow.
- While there is a consensus that the World Bank is best equipped to coordinate post-conflict assistance, genuine partnership between international institutions is especially necessary in post-conflict settings.
- Economic policy issues must not be neglected, even though the priority is urgent short-term relief and reconstruction.
- The importance of a reasonably comprehensive recipient government budget, with which external assistance must be consistent, cannot be overemphasized. Budgetary procedures, however, should be kept simple and suited to the very limited initial capacity.
- Although a central aid management entity is essential, care must be taken lest the centralizing tendencies inherent in post-conflict reconstruction stifle worthwhile NGO and other activities at local level.
- A pro-active communication strategy from donors, and from the government vis-à-vis their own people, is important to build realistic expectations and pre-empt the criticism that inevitably follows initial euphoria in post-conflict circumstances.
Much post-conflict financing can take place through a trust fund administered by the World Bank with contributions from other donors:
- Experience with such multi-donor trust funds (MDTF) has been generally good. MDTFs can be used as an umbrella to finance most activities, except for large “flagship” projects, security and humanitarianism. In particular, MDTFs can even provide support for the ‘start-up’ and recurrent costs of the fledgling recipient government.
- The paper provides a detailed description of the functioning of such trust funds, the administrative and fiduciary requirements – including the key issue of monitoring and financial management – the various issues that need to be addressed to assure their effectiveness and suggests a sequence of necessary steps.
- The paper concludes as it started, with an warning not to let the immediate reconstruction priorities drown out the need for longer-term institutional development, capacity building, and reviving the social capital destroyed by the conflict.
