U4 Theme:

Addressing corruption in fragile states:
what role for donors?

By Harald Mathisen, CMI

(Photo: Arne Strand, CMI)

Fragile states pose different challenges for addressing corruption than normal development contexts. Development partners therefore struggle to find effective strategies for addressing corruption. A reluctance to deal with the issue has been standard practice as political leaders in fragile states are seen to block reform when faced with an aggressive anti-corruption reform agenda. Development partners have therfore hoped to address the issue at a “later stage”, in order to get deals signed, to “get the job done”, or to retain a good relationship with the government.

Download the U4 Issue: 1:2007 as .pdf [KB 443]

Recent experience shows that neglecting the corruption problem from the outset is a dangerous strategy, as corrupt elites use the interlude to entrench themselves in politics and set up predatory schemes, which makes reform difficult to achieve at a later stage.The need to engage has also been underscored by the international security and anti-terrorism agenda, the need to prevent further conflict, the aim to meet the MDGs, and the recognition that corruption looms in the background as a serious obstacle to positive development outcomes.

It is emphasised that the traditional donors have not managed to develop the anti-corruption agenda with its emphasis on state building, beyond broad principles for donor engagement in fragile states. The report represents an attempt to bridge the divide between the fragile states literature with its broad principles for engagement, and the recent international experience and research on corruption. The target audience is anyone wanting to tailor strategic reform initiatives in fragile states and difficult partnerships. Guidance is provided on a series of categories running from the design and preparation phase, implementation phase and, evaluation phase. In addition, a series of cross-cutting themes such as aid conditionality and the need for rethinking aid modalities are discussed.

Introduction

The scale and complexity of problems related to corruption in poor governance and emergency environments can at times seem insurmountable. At present an estimated 900 million[1] people, live in fragile states, one of several concepts devised to describe states where weak state capacity and/or political will hinders the development and implementation of pro-poor policies.[2]  The concept generally refers to a broad range of failing (Zimbabwe), failed (DRC), and recovering states (Sierra Leone). However, the distinction among them is not always clear in practice, as fragile states rarely travel a predictable path of failure and recovery.

Fragile states pose different challenges for addressing corruption than normal development contexts. Development partners therefore struggle to find effective strategies for addressing corruption. As a consequence corruption is rarely addressed in aid programs, or one hope to do so at a “later stage”, in order to get a deal signed, to “get the job done”, to retain a good relationship with the government. Sometimes the problem is avoided simply because it is so difficult or uncomfortable for all parties[2a].

Evidence from Bosnia, Nicaragua, Mozambique and beyond shows that neglecting the corruption problem from the outset is a dangerous strategy, as corrupt elites use the interlude to entrench themselves in politics and set up predatory schemes, which makes reform difficult to achieve at a later stage. In recent years, the development community has instead increasingly focused attention on “better performers”. The trend is to reward these with more resources, a notion popular with influential aid agencies[3]. The argument is that aid dollars and aid interventions are most effective in relatively strong institutional and policy settings.

However, the corollary of this policy – disengaging from poorly performing countries – is now increasingly acknowledged as not being an option. Reasons for wishing to engage are varied, including the international security and anti-terrorism agenda, the prevention of further conflict, meeting the MDGs and the recognition that corruption looms in the background as a serious obstacle to positive development outcomes.

Possible donor interventions to enhance reform vary considerably in failed states. In some countries donors will have tremendous leverage over government decisions on reform because of huge transfers of [financial] resources, or even through the presence of troops from donor countries[4] . There are also likely to be substantial differences in the types of actor present in fragile states. Post-conflict or post-crisis environments attract a particularly wide variety of actors. Individual donor agencies are sometimes also involved through more than one of their operational arms.

One finds that country authorities are likely to be fragmented, with unclear relationships between different elements of the government or indeed competing authorities (such as ‘warlords’). And there is often an absence of a PRS partnership model. All of these factors mean that the interface between international and national actors has the potential to be very fragmented and extremely complex[5] .

Regardless of the problem being rooted in state fragility (lack of power and capacity, unable to reform) or state predation (abuse of power, unwilling to reform), or in the worst case scenarios of emergency or post-conflict settings, concerted engagement by development agencies is urgently needed. We say this knowing full well that there has been limited research showing a positive relationship between donor practices and aid effectiveness. At present, the agenda on difficult partnerships is still being fashioned and the nature and scope of emerging solutions is unclear.

So far, the traditional donors have not managed to develop the anti-corruption agenda, with its emphasis on state building, beyond broad principles for donor engagement (OECD 2005)[6] . Bringing the corruption problem to the fore only highlights the need to provide the donor community with practical advice for working in difficult, often badly governed and sometimes conflict-prone environments. The latest international thinking points to several things development agencies should avoid in their aid programmes, both for fragile states and more generally. For example, Nancy Birdsall refers to the “seven deadly sins” [7] that some aid agencies commit and should avoid:

• Impatience with institution building
• Pride (failure to exit)
• Ignorance (failure to evaluate)
• Sloth (pretending ‘participation’ insufficient for ‘ownership’)
• Envy (collusion and coordination failure) 
• Greed (stingy, and worse, unreliable transfers)
• Foolishness (underfunding of regional public goods)

This report will try to marry these “don’ts” with the “dos”, without pretending to present a complete solution. Several recent international initiatives have resulted in principles for action. The most important are the 12 Principles for International Engagement in Fragile States, and DAC Principles for Donor Action in Anti-Corruption, agreed to by OECD-DAC in 2005. The aim of this report is to take on board recent international experience and research and present more operational advice to complement it. In addition I will present some new fresh ideas on aid modalities and delivery. The target audience is anyone wanting to tailor strategic reform initiatives in fragile states and difficult partnerships. The bullets listed below represents a hierarchy to what should be the most imitated concerns and what should follow from getting it right at the outset. The points listed as cross cutting themes can be of great relevance to anyone applying an anti-corruption perspective to the work in fragile states. 

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