IFF only they’d spent it on the poor

DRC miner
Lifting his bosses and rulers out of poverty

Over the past fifty years or so, Africa has received about a trillion dollars in Official Development Assistance (ODA) from OECD Development Assistance Committee (DAC) donors. If you look at the excellent data sets we’ve produced on ODA over the years, you can work out what percentage or actual sum of that went to different purposes (education sector, health sector…) and who gave it and got it. If that’s too time consuming, here’s a simpler one I’ve prepared for you. Over the same period, Africa gave around a trillion dollars, mainly to developed countries, and almost 100% to the financial sector in the form of illicit financial flows (IFF).

I took the numbers from a report just published by the African Union and UN Economic Commission for Africa called Track it! Stop it! Get it! IFF (pdf). The Commission defines IFF as “Money that is illegally earned, transferred or utilized. These funds typically originate from three sources: commercial tax evasion, trade misinvoicing and abusive transfer pricing; criminal activities, including the drug trade, human trafficking, illegal arms dealing, and smuggling of contraband; and bribery and theft by corrupt government officials.” Nigeria is the worst offender, at $217 billion over 1970-2008, with Egypt coming second at $105 billion over the same period.

Most of the means used to get this money are probably familiar to you, although some of the terminology may not be, “unequal contracts” for instance. The report illustrates this term using iron ore mining in Guinea. As the world economy started to recover from the Great Recession, a commodities boom pushed up the prices of raw materials, and competition among mining companies to buy concessions was fierce. Guinea’s iron ore deposits are estimated to be worth $140 billion over the next 20 years, and multinationals from various countries were bidding to exploit them. In 2008, the government sold a concession for this ore for an astonishingly low $165 million. The lucky buyer promptly resold half the concession to another company for $2.5 billion. A new government terminated the contract and sold the concessions for $20 billion, so they may be right to suspect corruption in the original deal.

That commodities boom is one reason behind optimistic opinions about Africa. In a report called “The New Africa” (pdf) published at the end of last year, the Financial Times said that: “Africa is enjoying an era of economic promise that has survived war and famine, dictatorship and corruption”. The African Economic Outlook 2014 from the OECD, African Development Bank and UN announces “steadily progressing economic and social conditions that bode well for the immediate future.”

But the number of people living on less than $1.25 a day in Africa rose from 290 million in 1990 to 414 million in 2010 according to the UN’s 2013 report (pdf) on progress towards the Millennium Development Goals (MDGs). And as the IFF report points out, poverty isn’t just a question of money, it’s “multidimensional”, meaning that access to health care, education, potable water and housing are unsatisfactory too, or what the OECD calls “inequalities in incomes, health outcomes, education and well-being” in its Initiative on Inclusive Growth.

The $50 billion a year siphoned off through IFF could for example cover the extra $30 to $50 billion the African Development Bank estimates the continent needs to invest in infrastructure each year. That’s looking at the broad picture. Here’s what it means to the people that money was stolen from. If you follow the blog regularly, you may remember that at the end of last year I wrote about a panel discussion on Ebola I chaired here at the OECD.

One of the articles I read to prepare the meeting was an account by Peter Piot of his journey back to the town of Bumba 40 years after identifying Ebola, then an unknown virus. Bumba was in Zaire then and now it’s the Democratic Republic of Congo (DRC). Reading Piot’s account, you get the impression that apart from the country’s name, not much else has changed. Bumba’s population has grown to 150,000 but there still isn’t a single paved road, no running water and no electricity network. There are hardly any patients in the hospital because the government hasn’t sent any drugs for over two years and most sick people can’t afford to pay for treatment. The hospital pharmacist buys drugs at the local market and resells them to help pay for the hospital. Patients who can’t pay cash leave their bicycle or some other valuable in the pharmacy as security.

As its title suggests, an OECD report on Illicit Financial Flows from Developing Countries: Measuring OECD Responses (pdf) looks at what some of the countries receiving the money have done. OECD countries returned $147 million in 2010-2012 and froze almost $1.4 billion of stolen assets. The African Union-UN report calculates how long it would take countries to reach MDG 4 (“Reduce by two thirds, between 1990 and 2015, the under-five mortality rate”) with and without IFF. If the DRC had the tens of millions it loses to IFF each year to spend on services, it could reach Goal 4 by 2054, which is not great, but is 90 years sooner than if illicit flows continue at current rates.

Useful links

OECD work on economic and financial crime

OECD work on tax and development

Better Plays for Better Lives: Hamlet

I've seen corruption boil and bubble
I’ve seen corruption boil and bubble

Today we publish the next article of a summer series in which Kimberley Botwright of the OECD Public Affairs and Communications Directorate looks at OECD work through a Shakespearean lens.

When the ghost of the old King of Denmark appears at the beginning of Hamlet, Horatio, once doubtful of ghosts, decides, “This bodes some strange eruption to our state.” In a second (private) appearance to young Prince Hamlet, the ghost King reveals an unvoiced injustice; he was murdered by his brother, (Hamlet’s uncle), who has now married the Queen and claimed the royal title.

As the play unfolds we realise that adultery, fratricide, fathers spying on sons, friends spying on friends, bribery, trickery, and murder are the hallmarks of this society. The only major character that does not display some corrupt tendency is Ophelia, Hamlet’s one-time beloved girlfriend. A pure soul in an impure world, society necessarily destroys her; she goes mad and commits suicide. The church is still prepared to bury her though, (despite suicide traditionally preventing burial on hallowed ground), because she’s from a rich family.

Fortunately, today we don’t need to the appearance of ghosts to make us aware of “some foul play.” The OECD’s CleanGovBiz initiative, launched in 2011, is designed to help governments, business and civil society build integrity and combat corruption. This is done through knowledge sharing events as well as a multi-pronged Toolkit, which brings together relevant work on 18 policy areas from across different OECD departments. Users are provided with priority checklists, implementation guidance, good practice examples, as well as access to tools elaborated by international and civil society organisations.

The tricky part about corruption is that it is not always obvious or easy to detect. Hamlet is all too aware of the difference between outward appearance and inward reality; “That one may smile and smile and be a villain.” Polonius, Ophelia’s father, notes, “’Tis too much proved – that with devotion’s visage / And pious action we do sugar o’er / The devil himself.” Sharp detection is needed to identify all sorts of double-dealing. The OECD offers tools such as a Money Laundering Awareness Handbook.

It is inferred early on in the play that upon Hamlet’s decisions “depends the safety and health of this whole state.” Tools to set healthy governance standards as well as secure effective prevention are critical. Examples include OECD Guidelines for Multinational Enterprises, lobbying principles or Public Sector Integrity Reviews, the latter helping to identify and review areas in government vulnerable to misconduct fraud and corruption.

Follow-up tools are needed to ensure robust prosecution and recovery; when Hamlet’s uncle meditates on his devious actions he wonders whether he can repent but keep his stolen assets (the Queen and the title); “May one be pardoned and retain th’offence? / In the corrupt currents of this world / Offence’s gilded hand may shove by justice, / And oft ’tis seen the wicked prize itself / Buys out the law.” Asset recovery is an important part of the corruption limitation, as is criminalising bribery.

Hamlet’s uncle eventually bribes the Prince’s friends to assist in an assassination plot; but Hamlet suspects their treachery long-before, describing Rosencrantz as a sponge, “that soaks up the king’s countenance, his rewards, his authorities.” Current estimates show that over $1 trillion in bribes are paid annually. The OECD’s Anti-Bribery Convention has established legally binding standards to criminalise the bribery of foreign public officials in business transactions.

Hamlet didn’t have a CleanGovBiz Toolkit and as the play progresses he becomes increasingly pessimistic about society’s integrity, telling Polonius, “Ay, sir: to be honest, as this world goes, is to be one man picked out of two thousand.” When Rosencrantz jokes that “the world’s grown honest”, Hamlet replies, “Then doomsday is near.” Despairing of the rot in human nature he asks Ophelia, “Are you honest?” and then cries, “Get thee to a nunnery. Why wouldst thou be a breeder of sinners?” Never mind that he had formerly promised her, “Doubt truth to be a liar / But never doubt I love.” Even Hamlet is inconsistent in the morally corrupt world that encircles him: he murders four people.

Just before the final disastrous scene where the remaining characters all kill each other, Hamlet converses with a gravedigger and asks him how long it takes a body to rot. The reply sums up society, “I’faith, if he be not rotten before he die – as we have many pocky corpses now-a-days…” Corruption corrodes society; leading to suspicion, deception, violence, and death, or “carnal, bloody and unnatural acts.”

If Hamlet’s end doesn’t convince you, modern estimates suggest that corruption causes a 5% to 10% waste of US Medicare and Medicaid annual budgets; a 10% average increase in the cost of doing business; and 20% to 40% of official development assistance to be stolen. Child mortality rates in countries with high levels of corruption are about one third higher than in countries with low corruption, whilst student dropout rates are five times as high.

Corruption also leads to the breakdown of that flighty yet vital thing we call trust in society. As the OECD tells us, we fight corruption because it “corrodes public trust, undermines the rule of law and ultimately delegitimises the state.” The cost of mistrust is high. The OECD Secretary General has stated in his 2013 Strategic Orientations, “Without strong, smart and trusted institutions our efforts to implement and deliver better policies for better lives will be undermined.” No wonder OECD Forum 2013 was all about Jobs Equality and Trust, where a different Prince reminded us; “If you think about it, 100 does not always equal 100. There is a considerable difference between a group of 100 people full of self-confidence, with trust in each other and good basic skills, and a group of 100 people with low self-esteem, a lack of trust and poor basic skills.” Can we (re)build trust?

When integrity crumbles, trust disappears, society spirals downward and “The rest is silence.”

Useful links

OECD work on bribery and corruption

OECD Forum: Rebuilding Trust

OECD Anti-Bribery Convention: Time to Take Real Steps

Click to download the report

This post is contributed by Gillian Dell of Transparency International

As world leaders arrive today at the OECD Ministerial meeting in Paris, they’ll be celebrating the 50th anniversary of the OECD. There’s much to be commended in the OECD’s wide programme of work over the last 50 years. For Transparency International, the NGO leading the fight against corruption,  one of the OECD’s greatest accomplishments is the  landmark 1997 OECD Convention on Bribery of Foreign Public Officials in International Business Transactions, the 2009 Recommendation and the laudable peer review follow-up of the OECD Working Group on Bribery. There has been some progress over the years, notably in the way Germany has joined the battle against foreign bribery. But for most parties to the Convention, there’s a long way to go. At the 50th anniversary Ministerial, a renewed commitment is needed and a concrete programme that increases the scrutiny and spotlight on lagging governments.

One of the key causes of stalled enforcement is a lack of political will. Pressure must be exerted at the highest political level. The key recommendations of the report are:

  • Governments with lagging enforcement should promptly prepare plans for strengthening enforcement and a timetable for such action.
  • The Secretary-General and the Chairman of the Working Group on Bribery should meet with top leaders of governments with lagging enforcement to review plans and timetable for strengthening enforcement.
  • A full review of the status of foreign bribery enforcement should take place at the May 2012 Ministerial.
  • The Working Group on Bribery should publish a list of governments with lagging enforcement. This would make clear that a higher level of due diligence is needed to do business with companies based in these countries.

These recommendations can be found in Transparency International’s seventh annual “Progress Report on Enforcement of the OECD Anti-Bribery Convention,”. The report concludes that a majority of OECD Convention governments are still failing to translate their Convention commitments into action. After seven years of TI reporting on the Convention, this is the first year there is improvement in the numbers of states with active – or even moderate – enforcement. More action is needed, not just noble words.

Of the 38 governments party to the OECD Anti-Bribery Convention only seven states are actively enforcing the Convention, meaning that they are actively pursuing companies and individuals for bribing abroad. Another nine have moderate enforcement—meaning they have brought a couple of major prosecutions– and the vast majority – twenty-one – are doing little or nothing to enforce the Convention in their countries. This is not enough to motivate multinational companies implement serious internal measures to stop foreign bribery. The result: the foreign bribes continue to be paid worldwide, distorting governance and development in developing and developed countries alike.

In a panel today at the OECD Forum conference ahead of the Ministerial, Mark Pieth, the Chair of the OECD Working Group on Bribery said that “Law enforcement is quite a good business for governments” noting the billions in fines and disgorgement that have been recovered in the US by the SEC and Department of Justice in recent years in FCPA cases. But more importantly, as he put it “It’s also a matter of self-respect for countries to enforce their own laws.”

The Anti-Bribery Convention is a collective commitment for good reason—no country can single-handedly tackle the foreign bribery problem and all countries are harmed by it. All countries have an interest in putting an end to the distortions created by foreign bribery. But they all may be tempted to be free riders and fail to enforce the rules while others follow them, thereby benefiting their own companies.

The case for enforcement is strong. First and foremost, it stems the damage of foreign bribery to developing countries. By way of example, one noteworthy target country for multinational bribery is Nigeria.  The 2011 TI Progress Report provides information on numerous investigations and settlements relating to such bribery. It reports on investigations are under way in the US and Germany as well as in Nigeria itself. Nigeria has recently reached settlements with Halliburton, Royal Dutch Shell, Siemens and Snamprogetti Netherlands (a unit of the Italian ENI Spa) and in so doing is following a trail blazed by Lesotho and Costa Rica. These countries are demonstrating that developing countries can and should pursue and impose penalties in domestic cases of multinational bribery. This causes multinational companies to take notice. During an OECD Forum panel this morning on the Anti-Bribery Convention, Massimo Mantovani, General Counsel of Legal Affairs of ENI SpA called for more weight to be given to compliance programmes and complained about the problem of multiple proceedings in multiple jurisdictions. He said that as a result “a company might have double disgorgement of profit, once for the parent and once for the subsidiary”. This sounds like it might really act as a deterrent.

But enforcement against foreign bribery doesn’t only benefit developing countries. It also curbs damage caused by developed countries to one another. For example, the 2011 TI Progress Report informs about investigations into alleged bribery in connection with sales of German submarines to Greece and Portugal a few years ago, valued at about US$ 1.5 billion in each of the two countries. In Czech Republic the authorities are looking into possible improprieties in purchases of defence equipment from Austrian and UK companies. In Finland a defence company’s sale of armoured vehicles to Slovenia is under investigation. The cases show how time after time bribes are paid from large slush funds through large networks of middlemen, shell companies and banking centres that don’t have sufficient oversight.

With only seven parties adequately enforcing the Convention, its progress its future is in serious jeopardy. The classification of states parties is as follows:

Active Enforcement: Seven countries: Denmark, Germany, Italy, Norway, Switzerland, United Kingdom and United States

Moderate Enforcement: Nine countries: Argentina, Belgium, Finland, France, Japan, Korea (South), Netherlands, Spain and Sweden

Little or No Enforcement: 21 countries: Australia, Austria, Brazil, Bulgaria, Canada, Chile, Czech Republic, Estonia, Greece, Hungary, Ireland, Israel, Luxembourg, Mexico, New Zealand, Poland, Portugal, Slovak Republic, Slovenia, South Africa and Turkey

With Russia joining the OECD Working Group on Bribery, that body has to step up its efforts to demonstrate that Convention countries mean business. In an OECD Forum session today on the Convention, Elena Panfilova of TI-Russia made an appeal to the OECD: “In accepting Russia in this club of the chosen, the OECD should be ready to ask uncomfortable questions”. She added “The only thing to restore trust is action not words.” That applies to all the laggard countries not enforcing the Convention.

Useful links

OECD work on anti-bribery

OECD Forum 2011: MO-mentum for battling graft

In the fight against corruption, no one can accuse Mo Ibrahim of not putting his money where his mouth is. After creating one of Africa’s biggest businesses, telecoms firm Cellnet, he sold it in the mid-2000s and set up a foundation  to support good governance in Africa. The foundation is probably best known for its innovative Ibrahim Prize, which awards $5 million over 10 years to a democratically elected African leader who leaves office at the end of his or her constitutional term. 

In a lively speech at the OECD 50th Anniversary Forum, Dr. Ibrahim talked about the fight against graft. “We have wasted 50 years of independence in Africa through misrule and misgovernment,” he said; “enough is enough.” He spoke of his low expectations when setting up the foundation: “We thought the word ‘governance’ was untranslatable in Africa. We were wrong, people understood it immediately and instinctively.”

Dr. Ibrahim praised the OECD’s efforts to fight corruption, but he called on OECD and G20 countries to do more. He criticised Europe and some emerging economies, including China, which he said were not doing enough. “Europe talks but we don’t see any action.” By contrast, he said, the United States was much more active, and he pointed to recent cases against a number of European firms in the US: “Why does it take the Americans to prosecute Europeans?” he asked. 

In response, Mark Pieth, chair of the OECD Working Group on Bribery, who spoke on a panel after Dr. Ibrahim’s address, said some European countries had a decent track record: Germany had 60 anti-corruption cases last year, he pointed out, “but you’re right, some other countries are blatantly absent.”

Dr. Ibrahim also attacked the track record of business: “You want to look for corruption, follow the money,” he said. “The private sector is the source of all corruption.” Based on his own business experience, he said firms were only punishing themselves if they started to pay bribes: “We took a position we will not pay bribes. The result, we made much more money. If you start to pay, you’ll never stop. You pay a minister, then the president, then the president’s wife, then the president’s mistress, and so on.” 

From Russia, Elena Panfilova of the Centre for Anti-Corruption Research and Initiative said it could be difficult to avoid paying bribes, especially in countries where there was a lot of crossover between business and government: “How do you address corruption if people in government are also running biz. What do you do when a son is a running a company, and his mother is a judge?” Speaking on the same day that the OECD is inviting the Russian Federation to join the OECD’s Working Group on Bribery and to accede to the OECD’s Anti-Bribery Convention, she said agreements and legal institutions had to be backed by action: “The only thing that can restore trust is action, not words.” 

On related issues, today sees the release of new OECD guidelines to promote more responsible business conduct. They form part of an update to the OECD’s Guidelines for Multinational Enterprises. Also being released are recommendations designed to combat the illicit trade in minerals – such as “blood diamonds” – that finance armed conflict. 

Useful links

OECD work on bribery and corruption and on corporate governance

Corruption … on the rise?

People around the world believe corruption has worsened since the financial crisis struck, according to a survey from graft-watchers Transparency International, which was released today to mark World Anti-Corruption Day.

Developed regions saw the biggest rise in the numbers of people who felt the problem was now more serious than three years ago: 73% in Western Europe and 67% in North America. According to Huguette Labelle, the head of Transparency International, that’s in part a consequence of the recent economic turmoil: “The fall-out of the financial crises continues to affect people’s opinions of corruption,” she said.

 Transparency International surveyed more than 90,000 in 86 places around the world for the 2010 edition of its Global Corruption Barometer, and the report  offers some fascinating insights into how bribery affects people’s daily lives.

In total about one in four people said they had paid a bribe in the past year, a level unchanged since 2006. In regional terms, the proportion ranged from 56% of people in Sub-Saharan Africa to 5% in both North America and the European Union.  

The police were the institution most associated with bribe-taking, with 29% of people who had contact with them saying they paid up. Next were registry and  permit services (20%) and the judiciary (14%).

Half of respondents felt their government’s actions to fight corruption were ineffective, but – more positively – a big majority (almost seven out of ten) felt the general public could make a difference in the fight against graft.

Separately, a BBC survey suggests corruption is the world’s most-discussed problem. Just over one in five respondents to the survey said they had discussed corruption with family and friends in the past month. The survey also suggests that corruption is regarded as the world’s second most serious problem, just behind extreme poverty and ahead of environmental degradation/climate change and terrorism.

Useful links

 OECD work on bribery and corruption

Corruption – a question of perceptions

 A few recent headlines: “Denmark, New Zealand and Singapore top list of least corrupt countries” , “The 10 Most (and 10 Least) Corrupt Countries in the World”, “Israel stalls in rot ranking” . In case you’re wondering, the stories were all about Transparency International, which ranks countries on a scale from zero to ten. Low scores, for example Somalia’s 1.1, indicate severe corruption; high scores, such as Denmark or Singapore’s 9.3, suggest public and commercial life are squeaky clean.

Now 15 years old, the Transparency International (TI) index is probably regarded as the leading tool for measuring corruption worldwide. Which is interesting, because it doesn’t actually measure corruption. Instead, it measures perceptions of corruption. The distinction is crystal clear in the name of the index – it’s the Corruption Perceptions Index, not the Corruption Index – but it’s often blurred in media coverage. Does it matter? In some ways, not really.

Corruption is, by its nature, secretive and can’t be measured directly. (Even detecting it is difficult, not least for tax officials.) So, instead, corruption has to be “measured” through surveys. These usually involves asking businesspeople, international officials and others questions, such as the extent to which they’ve encountered corrupt practices. TI pulls together 13 of the most reputable surveys from around the world, does a lot of number crunching, and produces its index. But, in other ways, the tendency of the media and investors to ignore the “Perceptions” bit of the Corruptions Perceptions Index may matter a great deal.

At the very least, we need to ask whose perceptions are being measured. In many cases, “it’s ‘experts’ or business managers, many of whom live outside the countries they are rating”, argue Charles Oman and Christiane Arndt in a new paper  from the OECD Development Centre . By contrast, it’s rare to hear of the experiences of the man or woman in the street, in part because compiling such data is expensive and time consuming. The paper argues that there are other issues, too, that need to kept in mind when it comes to “governance” indicators, such as the Corruption Perceptions Index and the World Governance Indicators . One is the use of a single “point score”, e.g., Somalia’s corruption rating of 1.1. What does that number actually represent? First, it reflects realities – or at least perceived realities – on the ground. But, of course, reality is complex, and can’t always be represented by a single number.

Nevertheless, says the paper, because of “the well documented tendency of people to believe that numbers are facts” the number can come to be seen as the reality, and may shape important decisions on a country’s future, such as foreign investment. Second, the number represents the output from some tricky statistical calculations. Like most such outputs, it comes with a health warning – in this case a “confidence interval”. In effect, that’s a statistician’s way of indicating that the difference between, say, Somalia’s 1.1 and Myanmar’s 1.4 may – or may not – be significant.

Like any reputable agency, TI clearly indicates the survey’s confidence indicators. However, journalists and investors may be less discriminating: As Oman and Arndt write, “Users tend widely to use countries’ governance scores as if they were accurate to a degree they are not.” So, should we ignore Corruption Perceptions Index? Not at all, but like any survey it has limits. Understanding these can ensure it’s not misused, and so ultimately make it more useful.

Useful links:

Measuring Governance, by Charles P. Oman and Christiane Arndt

Policy Brief No. 39 from the OECD Development Centre

Helping Haiti: Should donors make the decisions?

A US Marine shows a Haitian woman how to use a radio

In a widely-circulated editorial opinion piece that the International Herald Tribune printed under the headline “Don’t let Haitians help themselves“, Pulitzer prize winning journalist Joel Brinkley argues that the Haitian government is so corrupt and ineffective that “If the world wants to help Haiti, aid officials should put aside that Paris Declaration on Aid Effectiveness. The donors should decide what to do with their money”.

In criticizing the OECD-backed Declaration that over 100 ministers, heads of agencies and other senior officials have now adhered to, Brinkley focuses on the principle of “ownership”: “Developing countries set their own strategies for poverty reduction, improve their institutions and tackle corruption.”

Brenda Killen, head of the OECD division working on aid effectiveness, replies to Brinkley.

We agree with Joel Brinkley that corruption can undo the best of efforts and intentions, and it has a strong hold in many of the neediest countries. But we strongly reject his conclusions that Haitians should not be trusted with their own rebuilding and that donors should abandon the principles of the Paris Declaration.

The Paris Declaration sets out five strong principles to make aid work for development. Brinkley zeroes in on one of them: countries must take the reins of their own development. The reasons for this seem obvious to those of us who have had the privilege of growing up and living in countries that do so – at least when we are talking about our own countries and futures.

But the principle of ownership, like the other principles that underpin the Paris Declaration, is not an expression of political correctness. It is based on objective assessments of what works – and what doesn’t – and drawn from experience in the field.

Countries like Vietnam (which has adapted the Paris Declaration to its own priorities and needs) and Ghana (which has set its own programme to achieve middle income country status by 2015) illustrate why local ownership is essential if aid is to be a catalyst for effective development.  And even where systems are weak and there is corruption and inefficiency, ownership is key to uncovering and reversing this. Post-conflict Uganda in the 1990s provides a well-known example in the form of the Public Expenditure Tracking Surveys of education grants that showed a reduction in the diversion of funds from 80 percent to 20 percent over a decade – reflecting strong ownership by the public (through broad public debate and citizen engagement) and government (through reform and strengthening of public financial management systems) of the country’s post-conflict process.

Referring to the origins of the Paris Declaration, Mr Brinkley states that it came out of “decades of unproductive work”. Certainly, if the donors and developing countries that adhered to this Declaration found it worthwhile to work on making aid more effective, it was not because aid had achieved nothing. It was, rather, that the experience gathered over time provided evidence of what could be done to make it work better. The Paris Declaration made harmonisation of donor efforts imperative long before the media reported stories of duplicated and wasted efforts due to turf battles among donors.

One of the major obstacles to aid effectiveness during the decades referred to by Brinkley as “unproductive”, was that a substantial part of aid was tied to conditions and services set by the donors. In other words, donors – not recipients – controlled it and how it was used. The Paris Declaration has helped to reverse this situation, and today almost 90%of aid is untied.

But above and beyond the specifics of aid effectiveness – which are often very complex and process- oriented – there is another, overarching lesson that today seems obvious: aid is not an end – or a solution – in itself. Nor can it take the blame, or the credit for that matter, for what has or has not worked. The problem in Haiti is about much more than aid, and here – as in so many other places – the Paris principles must be applied not in isolation, but rather in the context of much larger, more complex development issues.

Brinkley states that “Haitians were as poor and uneducated as ever” before the earthquake. It could be argued that this is simply not true. The 2009 Human Development Index report states that “Between 1980 and 2007 Haiti’s HDI rose by 0.77% annually from 0.433 to 0.532.” Not great, but still an improvement.

Yet this still leaves the fundamental question raised by Brinkley: earthquake or not, is Haiti in a position to be able to direct all international aid resources through its own government systems? Absolutely not. On this we agree. But does this mean we should not be working with the Haitians? Or does it mean we should be working to help them get to a point where aid can eventually go through Haiti’s national systems? We believe the answer is the latter. Absolutely, we should and we must.  

At the heart of the issue is the question of how to combat corruption. Punishing a crime requires legal institutions. Should foreign charities or donor governments run these too? Rather than standing on the high moral ground and telling Haitians what they must do, shouldn’t we be helping Haiti to build those institutions?

The Principles for Good International Engagement in Fragile States are about just this – how do we move from the chaos of disaster and conflict to a stable development path?  The ultimate aim is to support Haitians in building the ownership (in the form of democratically elected government, strong institutions and a voice for the poor) that will enable them to achieve – and sustain – their own development.  Fragile states realise this and the g7+ group of fragile states is calling on donors to recognise it as well. 

Just as South Korea was able to use aid as a catalyst to move from poverty and conflict to leadership of the G20 in less than two generations – building on strong national ownership and committed international support – other countries can do the same.  Liberia, Timor Leste – and Haiti.

The Paris principles are highly relevant to Haiti’s current situation.  In particular, they highlight the need to coordinate the many aid efforts more effectively so aid gets quickly to those who need it. But they can’t stand alone. Without action on many fronts – and action that takes into account the location-specific realities of each country – neither aid nor development will be effective.

Useful links

The Partnership for Democratic Governance  (PDG) is proposing Service Delivery Guidance in English, French and Creole to assist Haitian authorities and the donor community

Watch the trailer of an OECD-PDG documentary about Haiti made to accompany the forthcoming OECD-PDG Handbook on Contracting Out Government Functions and Services in Post-Conflict and Fragile Situations.

Catalyzing development: A new vision for aid,  a workshop organised by Brookings in July 2010, concluded that: “Donors remain far too eager to lead, despite empirical evidence that aid programs that are truly owned by recipients have the biggest impact.”

The DAC Network on Development Evaluation  works to increase the effectiveness of programmes through evaluation. In Haiti, the Network is supporting a collaborative approach to assessing the international aid response.

The Development Co-operation Report is the key annual reference document for statistics and analysis on trends in international aid.

The Dili International Dialogue sets out a new vision for peacebuilding and statebuilding