ECOSOC High-Level Segment Preparatory Meeting

New York, March 17-18, 2004

 

Roundtable D: Enabling Environment and Resources Mobilization for the LDCs Emerging from Conflict: the experiences of Guinea-Bissau and Burundi

 

IMF

 

 

Mr. Chairman, Excellencies,

 

1.             Introduction

a.       Thank you for the invitation to attend this Roundtable discussion.

b.      Although the discussion concerns both the cases of Burundi and Guinea-Bissau (GNB), my experience is with the latter and I will concentrate on that country.

c.       Disclaimer: since this concerns an open discussion, I will present my own views, which are not necessarily those of the IMF.

2.             Background note for this Roundtable discussion listed two main issues:

a.       What are the challenges in creating an enabling environment for stability, recovery and growth in post-conflict LDCs?

b.      How can resources be mobilized from domestic and external sources in support of post-conflict LDCs’ recovery and development?

I would like to approach the two main issues of today’s discussion based on the lessons from GNB’s failure in both areas.

c.       Conflict was in 1998-99. Since then, political tensions remained, economic activity further declined, domestic resources dwindled, and international assistance was suspended or lost.

3.             This discussion is very opportune and urgent for GNB:

a.       The failure of the post-conflict recovery effort culminated in military coup in September 2003—more optimistic outcome of the risks assessed in 2002 and early 2003;

b.      GNB is now back to where it started 5 years ago: economic activity is in decline, the fiscal situation is extremely difficult, and a national transition government is preparing elections 10 days from now. How can the international community help GNB preventing that failure reoccurs?

Why did GNB’s post-conflict recovery effort fail:

4.             First: Lack of a political system that could take ownership of the program;

a.       Several studies point to a non-representative political system, both before and after introduction of multi-party democracy in 1991. In fact, the removed, personalized and corrupt political system is generally viewed as the real cause of the conflict in 1998-99 in stead of infighting within the ruling party;

b.      This system continued through the elections of 1999: the parties engaged in the 1999 elections lacked programs and evolved around the same group of individuals, not ideas and policies (see: Rudebeck, Carlos Lopes); consequently, the elections did not lead to a broad-based domestic discussion on the causes of the war and possible solutions;

c.       Electorate choose against previously ruling party, which was held responsible for the war, not in favor of opposition.

d.      Opposition had no experience in government;

e.       Result: new government had no mandate, no post-conflict policy focus, and no experience. Together with continuing political uncertainties, e.g. role of the army, president focused on consolidation political power and not on recovery. 

5.             Second: Weak institutions and technical capacity.

a.       Low literacy level inherited from colonial period; progress in mid-1990s but also transitions: market-economy and democracy;

b.      However, many senior staff left the country during the fighting and remaining senior staff replaced after elections by new opposition government;

c.       Democracy only established in 1991 with first elections in 1994, which kept status quo to large extent;

d.      Result: no public administration system to check and guide inexperienced politicians; no experience with rules and practices in a democracy and no established mechanisms to promote dialogue within society;

6.             Third: Inappropriate construction of international assistance.

a.       The basis of the international post-conflict assistance effort was an economic program supported under the IMF’s PRGF, to which the two key post-conflict programs—demobilization and reinsertion of combatants and clearance of domestic arrears from the war period—were linked. However, a PRGF-arrangement, which requires strong macroeconomic and reform policies, is not well suited for post-conflict countries; when GNB proved unable to satisfactorily implement the program—mainly because of persistent fiscal expenditure overruns—the whole post-conflict assistance strategy came automatically to a halt;

b.      The post-conflict strategy focused on demobilization/reinsertion and arrears clearance, but there was no comprehensive and coordinate technical assistance plan to improve institutions and technical capacity.

7.             Fourth: Lack of instrument for international community to react decisively and in a coordinated format to emerging problems. The international community played an important role in the peace and reconciliation process in GNB. Following the conflict, international surveillance of political developments was established through the UN Peace Building Office (UNOGBIS), However, despite early signs of reemerging political problems—as early as May 2000, three months after the nomination of the government—there was no coordinated international effort to reengage; instead, donors reacted with their feet. EU Art. 96 procedure after coup—GNB government was, however, already acting outside constitution since May 2000.

8.             What are the lessons from GNB’s failure to create an enabling environment for stability, recovery and growth and the mobilization of resources?

a.       Political stability most important:

                                                               i.      International intermediation needs to remain in place for longer period. Armed conflicts are political problems with often deep-rooted causes and long-lasting effects. Therefore, the key element of a post-conflict strategy needs to be a political program, not an economic one, with long-term involvement of the intermediating political partners. The international partnership agreement proposed by the ECOSOC Ad Hoc Advisory Group for Guinea-Bissau in its report of January 2003 and the further elaboration of that in the government’s EEMP of December 2003 is an example of the form such program could take;

                                                             ii.      Need to ensure broad-based domestic support for post-conflict policies. International community has focused on elections as instrument to give legitimacy to government; however, in countries with underdeveloped political systems, this may not be the right or a sufficient answer to ensure a broad-based government mandate for a post-conflict strategy. It may be useful to consider recommending longer-term technical governments. PRSPs, prepared in a broad-based consultation process with all sectors of society, could give policy direction, consensus and ownership and allow population to set priorities;

b.      Recovery and growth:

                                                               i.      Technical assistance in putting country on its feet and bridge capacity gap. Need for a comprehensive TA plan, involving public administration, but also political institutions and organizations—learn population to find peaceful ways to solve conflicts—and civil society organizations to build structure of bringing people’s concerns to political level;

                                                             ii.      Emergency financial assistance;

9.             Resource mobilization:

a.       In GNB, donors voted with their feet, as they withdrew from the country when the government did not implement the post-conflict strategy. May be donors can be brought back in context of longer-term political intermediation involvement;

b.      Funding mechanism: country has to implement combination of political and economic programs. Assistance in form of UN trust fund may allow monitoring of both in one setting;

10.         Summary:

a.       Long-term international political involvement, Could be ECOSOC, other UN, Regional Organization;

b.      Create depoliticized longer transition period—technical government, representative parliament, PRSP;

c.       Comprehensive TA plan, involving government, political organizations, civil society;

d.      Long-term financial engagement based on political/economic program. Strong donor coordination through UN Trust Fund idea;

11.         Role of the IMF:

a.       Support through advice on macroeconomic policies, technical assistance and capacity building in Fund’s areas of competence: fiscal, monetary, exchange rate policies. When warranted, temporary financial assistance through Emergency Post-Conflict Assistance.

Annex

Background note for this Roundtable discussion lists two main issues:

1.             What are the challenges in creating an enabling environment for stability, recovery and growth in post-conflict LDCs?

a.       What can be done to bridge the capacity gap during the transition and promote national ownership at the national level?

b.      What can be done to assist LDCs emerging from conflict to set priorities that can baring quick results? How should those priorities be set in the first instance?

c.       What is it that would keep the citizens to remain committed to national reconstruction and donors to have long-term commitment to a country?

2.             How can resources be mobilized from domestic and external sources in support of post-conflict LDCs’ recovery and development?

a.       How can a multi-year facility be created and how can it be operated in order to promote the necessary capacity and ownership from the very early stages?  How can the appropriate funding mechanism “be devised for an LDC emerging from conflict?  Which role could ECOSOC play in that respect?

b.      What mechanisms can better promote policy coherence and concerted action among partners supporting LDCs emerging from conflict?  Should ECOSOC Ad Hoc Advisory Groups be expanded to address the needs of other LDCs, including non African ones, emerging from conflict? How can LDCs emerging from conflict be assisted to conserve on its scarce institutional capacity for aid coordination?