A new agenda for the G20: Addressing fragile states

EDITOR’S NOTE: It is no longer “tenable” to treat fragile and conflict-afflicted states as fringe issues in development, especially since half of the world’s poorest people are forecast to live in such nations by 2015, Council on Foreign Relations senior fellow Stewart Patrick writes in his article for The Internationalist blog.

Having recently assumed the rotating chair of the Group of Twenty (G20), the Russian government is now soliciting input on the agenda for its September 2013 meeting in St. Petersburg. Yesterday I contributed to these deliberations as a member of the “Think20” network—a consortium of independent experts from around the world. My own advice to the Russian sherpa, Ksenia Yudaeva, was that Russia should transform the G20’s nascent development agenda to address the pressing challenge of fragile states.

Development has been on the G20 agenda since the Seoul summit of November 2010. Under the South Korean chair, the group endorsed the Seoul Development Consensus, a set of principles for advancing growth in the developing world. This initiative promises unprecedented cooperation between the world’s established donors and dynamic emerging economies. What this approach ignores, however, is the changing landscape of global poverty, which is increasingly concentrated in the world’s fragile states.

The Organization for Economic and Development’s Development Assistance Committee (OECD-DAC) and World Bank currently classify forty-seven countries (out of 193 UN member states) as “fragile.” These countries, which have a collective population of 1.5 billion, are a diverse bunch, ranging from Pakistan to Nigeria, Haiti to Yemen. But they all have critical deficits in institutional capacity and political legitimacy, leaving them susceptible to political instability and violent conflict. They struggle to provide their citizens with physical security, the rule of law, stable markets, and social welfare.

Historically, fragile and conflict-affected states have been treated as a sideshow when it comes to advancing global development. This approach is no longer tenable. By 2015, the OECD-DAC predicts, fully half of the world’s poorest people, subsisting on less than $1.25 per day, will live in fragile states. As former World Bank President Robert Zoellick has noted, fragile states have become the hard core of the global development challenge. As a cohort, these countries are furthest from achieving the Millennium Development Goals (MDGs).

Among other shortcomings, today’s fragile states contain more than three-quarters (77%) of all children not in primary school and account for seventy percent of global infant mortality. They contain 66% of the world’s population without access to safe water, as well as 60% of the world’s undernourished.

A G20 focus on state fragility is compelling not only on development but also on humanitarian and security grounds. Fragile states are frequent settings for the world’s worst atrocities, including gross abuses that may merit invocation of the “responsibility to protect” doctrine. They are also capable of undermining regional stability and generating dangerous spillovers, from terrorism to transnational crime, as I outline in my book Weak Links: Fragile States, Global Threats, and International Security.

Compared to “normal” developing countries, fragile states remain highly dependent on official development assistance (ODA), their leading source of financial flows (followed by remittances, and thirdly by foreign direct investment, or FDI). At the same time, foreign aid remains highly concentrated: in 2010, half of the $50 billion in ODA to fragile states went to just seven recipients (Afghanistan, the Democratic Republic of the Congo, Ethiopia, Haiti, Pakistan, West Bank and Gaza, and Iraq). Such selectivity contributes to the dual phenomena of “donor darlings” and “aid orphans.” Aid to fragile states is also volatile, and a large percentage is simply palliative humanitarian aid.

Like aid, remittances and FDI are also highly concentrated in particular fragile states.  Some 80% of fragile state remittances go to just five countries (Bangladesh, Nigeria, Pakistan, Sri Lanka, and Nepal). Likewise, three-quarters of all fragile state FDI goes to seven resource-rich countries, among them Nigeria, DRC, and Sudan. Finally, the vast majority of fragile states are marginalized from the global trading system, particularly since the onset of the global economic crisis.

Traditionally, the challenge of states addressing fragility has been the purview of Western countries, in collaboration with UN agencies and the World Bank. But this needs to change, because development cooperation with fragile states is no longer a monopoly of the OECD-DAC. Not only are cash-strapped Western donors cutting back their aid budgets, but a new set of donors—including G20 members like China, India, Brazil, Saudi Arabia, South Africa, and Turkey—is emerging. (Among these countries, China is in a class by itself: its aid budget grew 30% annually between 2004 and 2009). Beyond foreign assistance, emerging donors are increasingly sources of FDI and trading partners for fragile states. These trends underscore the G20’s value as a forum for harmonizing approaches to poverty alleviation in fragile states. Over the past decade, the OECD-DAC and World Bank have refined a set of Principles for Good Donor Engagement in Fragile States and Situations. Their successful implementation will depend on buy-in from new donor countries.

The G20 can play a critical role in two policy realms. The first is in putting substance, political muscle, and resources behind the so-called “New Deal for Fragile States.” Agreed at the Fourth High-level Forum on Aid Effectiveness in Busan, South Korea, in November 2011, this initiative recognizes that development cooperation in fragile states differs fundamentally from engagement with “normal” developing countries. Success requires that aid donors and recipients alike “do things differently”—by designing aid interventions that reflect the unique context of fragility in each state—and also “do different things”— by structuring interventions around five agreed “Peacebuilding and Statebuilding goals.” (These include fostering inclusive politics, strengthening human security, bolstering justice systems, generating employment, and ensuring transparent revenue management).

Significantly, the driving force behind the New Deal for Fragile States has been a group of nineteen fragile and conflict-affected states—including Liberia, Burundi, and Timor-Leste. This is an important breakthrough. Too often, Western donors have paid lip service to the principles of “country leadership and ownership” that are critical to successful development interventions. The New Deal for Fragile States also puts fragile state governments on the hook to solicit inputs from civil society actors, in designing “one national vision and one plan out of fragility.”

Some wonder whether fragile state governments can rise to the occasion. The New Deal for Fragile States assumes that the average fragile state government is weak but well intentioned. In reality, such regimes are often dominated by predatory elites indifferent to their citizens, skeptical of participatory politics, and resistant to transparent revenue management. By raising the normative bar, however, the New Deal for Fragile States may gradually change expectations about appropriate behavior by fragile states and their eligibility for ODA. For such implied conditionality to have an impact, however, all major donors—not merely traditional OECD-DAC partners—must be on the same page.

The second area where the G20 can play a useful role is in identifying and ameliorating systemic forces that exacerbate institutional weaknesses within fragile stages. To date, most analysis of state fragility has focused on internal shortcomings. This overlooks that state fragility is often a function of sins of omission or commission by foreign governments, corporations, and individuals. For example, outside actors can exacerbate fragility when they:

  • insist on abrupt economic liberalization that exacerbates social inequality;

  • encourage a precipitous turn to electoral politics in volatile political circumstances;

  • maintain prohibitive tariffs and other barriers that discourage imports from fragile states;

  • cast aside concerns for good governance in resource-rich countries;

  • sustain demand for narcotics or other illicit commodities, undermining the rule of law and licit economic sectors;

  • provide financial safe havens where kleptocrats can stash their ill-gotten gains abroad; and

  • engage in a lucrative trade in arms that subsequently circulate in the world’s conflict zones.

Some of these dysfunctional dynamics are outlined in a useful new OECD-DAC report:Think Global, Act Local: Confronting Global Factors that Influence Conflict and Fragility.

If the G20 is serious about development, it should launch a new working group to illuminate the global taproots of state fragility—and to explore potential policy responses to mitigate them. Among other items, the G20’s fragile states agenda should consider how to:

  • coordinate strategies with UN Office on Drugs and Crime to fight transnational organized crime, which imposes staggering costs on human welfare in fragile states;

  • bolster multilateral efforts to crack down on money laundering in (and from) fragile states, including through an expanded Financial Action Task Force (FATF);

  • bolster the World Bank/UN Stolen Assets Recovery (StAR) Initiative, which aims to track down the wealth that corrupt autocrats stash abroad;

  • gain wider buy-in, including from emerging powers, for the Extractive Industries Transparency Initiative (EITI), as well as the OECD Anti-Bribery Convention;

  • grant duty-free access to a wider range of imports from fragile states;

  • expand risk insurance and other instruments to allow commodity-dependent fragile states to hedge against fluctuating prices;

  • assume leadership from the Group of Eight (G8) for the Global Peace Operations Initiative (GPOI), which trains peacekeepers to deploy in conflict-affected states; and, more controversially,

  • revisit counterproductive source-control approaches to counternarcotics policies.

Republished with permission from the Council on Foreign Relations. Read the original article.

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