A 'New Deal' for fragile states

14 December 2011

‘The quality of the work is outstanding - it is innovative and draws on a breadth of experience from other situations’

Dr Helder Da Costa, Senior Adviser in the National Directorate of Aid Effectiveness, Timor-Leste Ministry of Finance; and Head of the g7+ Secretariat

The g7+ group of fragile and conflict-affected states achieved a major triumph at the Busan High Level Forum on Aid Effectiveness in November 2011 – an agreement on a New Deal for Engagement in Fragile States. This success was due to the vision and commitment of the g7+ group and the support and engagement of the International Dialogue on Peacebuilding and Statebuilding. ODI research and technical support played a catalytic role, building on the strengths of a wide range of ODI programmes and teams.

The challenge

  • 1.5 billion people live in conflict-affected and fragile states
  • About 70% of fragile states have seen conflict since 1989
  • Basic governance transformations may take 20-40 years
  • 30% of aid is spent in fragile states

The global challenges of security and poverty are increasingly concentrated in fragile states, and few will meet a single Millennium Development Goal.  It is vital to tackle these challenges, as more effective aid in these contexts not only benefits the 1.5 billion citizens who live in such environments but also improves global security.

The way in which donors work in fragile states needs serious improvement. Despite the significant investment and the commitments of the Paris Declaration on Aid Effectiveness (2005) and the Accra Agenda for Action (2008), donor results in fragile states have been modest.

Making the transition from fragility is a long political process that requires country leadership and ownership. Political dialogue often founders because of a lack of trust, inclusion and leadership. Donors frequently bypass national interests and actors, providing aid in ways that are overly technical and fail to harmonise with the local context. Too often, they support short-term fixes at the expense of long-term sustainable results brought about by strengthening a country’s own capacity and systems. A New Dealfor engagement in fragile states is needed.

The response

The g7+ group, inaugurated in Dili, Timor-Leste in 2010, now boasts a membership of 19 fragile and conflict-affected states who have joined together to share experiences and promote the voices of fragile states in international debates.

In the lead up to the Fourth High Level Forum on Aid Effectiveness in Busan, South Korea in November 2011, the group became increasingly vocal on the world stage. They called explicitly for a New Deal for fragile states.  In the six months before Busan, the New Deal was developed and refined through an intense process supported by the International Dialogue on Peacebuilding and Statebuilding, which provides a space for the g7+ to meet together with its international partners including the International Network on Conflict and Fragility donors, civil society groups and others working in fragile states.

Through the Budget Strengthening Initiative (BSI), which drew on expertise from across the Institute, ODI provided catalytic research and support to both the g7+ and the International Dialogue.

ODI work has included:

  • BSI calling for a new way of engaging in fragile states in an OECD-funded paper for the International Dialogue Ministerial meeting in June 2011 which flagged many of the key issues that were subsequently brought to the fore by the g7+ in Busan
  • An ODI public event in October, where the g7+ group made their call for a New Deal
  • The drafting of OECD peace and statebuilding guidelines by ODI’s Director and members of the Politics and Governance Programme in 2010 that have underpinned much of the ‘new’ thinking in this area
  • OECD-funded BSI research paper on innovative aid instruments in fragile states and proposals for reform presented  at an International Dialogue meeting in April 2011
  • A BSI-arranged meeting between the g7+, the World Bank Vice Presidents and the co-chairs of the Busan Working Party at the IMF/World Bank Spring Meetings in 2011
  • Ongoing support from BSI to the g7+ Secretariat in Timor-Leste since Spring 2011, including help on a website, research support, direct support for the g7+ Sherpa in pre-Busan negotiations and dedicated support to the secretariat immediately before and during Busan
  • A BSI Briefing Paper on the New Deal in November and a BSI op-ed that appeared in The Guardian’s Poverty Matters blog the day before Busan.

The impact

The emergence of the g7+ group and the endorsing of the New Deal in Busan have been remarkable achievements. UN Secretary-General Ban Ki-moon commended the g7+ and the New Deal in his opening statement at Busan. UK Secretary of State for International Development Andrew Mitchell announced the UK’s commitment to the New Deal, along with Australia, Belgium and the Netherlands. The g7+ and the New Deal are highlighted in the final Busan outcome document and, in a parallel process, the New Deal has been endorsed by over 40 countries and agencies – including the US and the UN Development Group.

The New Deal identifies five Peacebuilding and Statebuilding Goals (PSGs) – legitimate politics; security; justice; economic foundations and revenues and services, describing these as ‘an important foundation to enable progress towards the MDGs’.

The New Deal also identifies ten key areas where international engagement needs to change to focus on new and important ways of engaging and building mutual trust, including a shift to country-led fragility assessments; the re-evaluation of formal compacts; stronger support for political processes; more effective support for capacity development; greater transparency of aid; increased use of country systems and more timely and predictable aid. 

The New Deal will be piloted in Afghanistan, Central African Republic, Democratic Republic of the Congo (DRC), Liberia, Sierra Leone, South Sudan and Timor-Leste with support from Australia, Belgium, the Netherlands, the UK and the US.

ODI will continue to provide support and advice as the New Deal is rolled out. BSI is already engaged in the DRC, Liberia and South Sudan – all of which are piloting the New Deal – and has been asked by the g7+ Secretariat in Timor-Leste to support its implementation more broadly.