Key Talking Points for Helder da Costa, PhD General Secretary. 9 February 2015 Dili, Timor Plaza Hotel

Transcription

1 Key Talking Points for Helder da Costa, PhD General Secretary 9 February 2015 Dili, Timor Plaza Hotel

2 Ms. Susan Marx, Country Director of Asia Foundation in Timor-Leste Development Partners Civil Society/Academics Distinguished Guests Ladies and Gentleman First, I would like to thank the Asia Foundation for organizing this Seminar. I am honored to have been invited here to provide opening remarks from a perspective of a post conflict situation, in particular, on the aid landscape in Timor-Leste, as one of the founding members of the g7+. The g7+ is an association of inter-governmental organization of 20 fragile and post conflict member states ranging from the Pacific, Asia, middle East, Africa and the Caribbean, based on the spirit of volunteerism, solidarity and cooperation. It is now chaired by Sierra Leone with the support of the Secretariat based here in Dili. In my opening remarks today I will focus on three key areas: First, I will address the need for increased policy coherence between donors and recipient countries. Second, I will focus on the aid landscape briefly and mention some of the initiatives that Timor-Leste has been involved with recently that aim to improve the voice of fragile states in advocating for coherent policy responses. Third, I will conclude with my own views and challenges and lessons learned as to what constitutes good practice in fostering policy coherence in Timor-Leste. 2/11

3 Ladies and Gentlemen, Since the much heralded Paris Declaration in 2005, much attention has been focused on the way in which countries receive and give aid. At the heart of the Paris Declaration lie the 5 principles of ownership, alignment, harmonisation, managing for results and mutual accountability - principles essential to ensuring the effectiveness of international development assistance and essential to achieving the MDGs. The Paris Declaration reinforces the notion that partner countries should own the aid they receive by exercising effective leadership through the use of strategic approaches and good planning - and on the side of the donors - donor countries then have a responsibility to harmonise the array of projects, programs and assistance on offer to the stated policies and development priorities of partner governments. Now this is all well and good, however for countries such as Timor-Leste and others coming out of contexts of conflict, the ability of governments to assert themselves and take the lead when determining how aid is allocated and accounted for within their borders often proves impossible. The OECD 10 Principles for Good International Engagement in Fragile States and Situations (2007) has recognized that the special and individual needs of fragile states must be taken into account in fragile states, and that the Paris Declaration must be adapted to environments of weak ownership and capacity. In this context, it has been argued that statebuilding and peacebuilding should be at the forefront of efforts assist fragile states to assert their leading role in how aid 3/11

4 is used in their countries and in situations of fragility, rather than maintaining such a narrow focus on aid effectiveness. It has also been acknowledged that the transition strategy from humanitarian relief to development needs to be managed carefully in order not to undermine government legitimacy, and that a clear strategy is also needed for how to deal with the transition towards national systems and capacities in situations of fragility or conflict. All of these issues remain highly relevant to the Timor-Leste context, as a country which is moving from fragility to agility. When we talk about the aid landscape in Timor-Leste, let us remember the notion of what is aid? Broadly speaking there are three types of aid: Humanitarian or emergency aid - which is mobilized and dispensed in response to catasthropes and calamities. eg. Asian tsunami Charity-based aid - which is disbursed by charitable organizations to institutions or people on the ground. Systematic aid - aid payments made directly to government either through G to G transfers (in which it is termed bilateral aid) or transferred via institutions such as WB (known as multilateral aid). While there are obvious fundamental merits to emergency aid, criticisms can be labelled against it as well against charitable giving. They are often criticized, with some justification, for poor implementation, high administrative costs and the fact that they are coerced to do with their donor government s bidding. 4/11

5 Aid creates dependency while Trade Creates independence. From the g7+ perspective, aid is simply playing a catalytical role in fragile states while attention is now driven towards investing in domestic resource mobilization to generate revenues from natural resources, etc. The g7+ is asking for no more money, but rather the level of assistance so far to make it more effectively. The culture of check diplomacy is no longer viable. Donors need to be on listening mode! In a provocative and compelling book, Dead Aid (2009) by Dambisa Moyo, A Zambian scholar, argues that the most important challenge we face today is to destroy the myth that Aid actually works. She said and I quote in the modern globalized economy, simply handing out more money, however well intentioned, will not help the poorest nations achieve sustainable long-term growth.. with improved access to capital and markets and with the right policies, even the poorest nations can prosper. But the big question is : Has Aid Been Effective? The answer is that aid has been volatile in fragile states in the past decade. Successive High Level Fora on Aid Effectiveness have been held, the first one was in Rome (2003), 2 nd HLF in Paris (Paris Declaration, 2005) and third HLF on Aid Effectiveness in Accra, Ghana (2008), which generated Accra Agenda for Action and thr 4 th HLF in Busan (2011) which produced Busan Outcomes Documents. I am humbled to be the negotiator (Sherpa) on behalf of the g7+ of the Busan Outcome document which gave birth to the Global Partnership for Effective Development Cooperation, which is now co-chaired by the Netherlands, Mexico and Malawi. 5/11

6 Sadly, the monitoring survey of two rounds of the OECD 10 principles of Good International Engagement in Fragile States in 2009 and 2011, revealed that donors are not up to the task, out of 10 principles, only two the donors did well, the others failed. The same goes to the Independent Evaluation of the Paris Declaration, the results were disappointing. Out of 12 indicators, only two that the donors were doing well, the rest was in disarray. Turning to Timor-Leste, how and why did Timor-Leste succeed in overcoming aid (i.e. no longer relying on aid/grant in just less than a decade?) There are four compelling reasons, in my view: 1. Blessed with Natural resources Moving From Many Donors (more than 40 +) in the past to one Single Donor now (Natural Resources). As a late comer, with no resources extracted, Timor-Leste had NO CHOICE but to rely on foreign hand-outs in the early years of independence until the flow of revenues starts to flow-in from the Timor Sea. Petroleum Fund Law was established in TL is now an oil dependent country, petro-dollarized economy (second highest in the world after South Sudan). TL State budget, 90 % is relying on petroleum fund, the rest is driven from domestic revenues. The domestic revenues must be brutally enhanced and diversified. 2. Aid has not been Effective 8 billion USD were spent on TL but not in TL. 1 in 2 every Timorese was poor in 2007 and in 2009 poverty rate has decreased to 41 % in The ODA share of GNI in TL is declining. The TL economy was initially heavily aid dependent in 2002, but the contribution of ODA flows 6/11

7 to government budget in the economy around USD 200 M, as percentage iof GDP and /or the coungtry s state budget ratios have been falling rapidly. In 2012 grants were 86% of the budget, but in 2012 they contributed only 16% due to the influx of oil revenues in Fragmentation of Donors. Donors are fragmented in their assistance in various sectors. Ladies and gentlemen, As a country which was effectively run by its development partners in the early years of independence, Timor-Leste s now has embraced Paris Declaration and has taken great strides in establishing mechanisms to coordinate the efforts of development partners within its national planning architecture. So, to achieve this alignment Timor-Leste began by launching the Strategic Development Plan for In order to operationalize the SDP, the DPCM (Development Policy Coordination Mechanism, to coordinate four strategic pillars: social, infrastructure, economic and governance/institutional) has been set up and discussed through the QDPM and TLDPM, the venues where the Government and Development Partners (DPs) discuss and exchange information on progress and challenges by each Working Strategic Working Groups. An Aid Policy is set to be developed in 2015 by the DPMU, housed within the Ministry of Finance in response to this need. To date, the DPCM process is yet to be proved to be a good mechanism for effective and efficient policy dialogue between the government and development 7/11

8 partners. In terms of coordination and ownership, the government has made substantial investments in improving centralised budgeting functions and the Ministry of Finance has started to reflect aid donor funding in its annual budget (budget book # 6). Ladies and Gentleman, But unfortunately the successes that Timor-Leste has enjoyed in terms of regaining control over own development agenda are not enjoyed by other fragile states around the world. And so, in April 2010, Dili was chosen to be the host of the first International Dialogue on Peacebuilding and Statebuilding and the first summit of the little g7+ nations which led the Fourth HLF on Aid Effectiveness in Busan in The Dili Declaration and g7+ Statement was produced in April Allow me to quote you one of the most profound and telling statements: We believe fragile states are characterised and classified through the lens of the developed rather than through the eyes of the developing; and that in order to make long-lasting change and implement the principles of good engagement; the national context must guide each distinctive path to sustainable development, and donors must first harmonise to this concept and then implement without undue process. End quote. The message was clear; urgent action was required by international donors and the g7+ countries to harmonize efforts to ease the suffering and rebuild communities which in some cases have endured decades of neglect. 8/11

9 The g7+ spoke with one voice and was instrumental in the agreement of the New Deal for Engagement in Fragile States at 4th High Level Forum in Seoul, South Korea toward the end of About 47 countries and international organisations have endorsed the New Deal. Now the New Deal (comprised of PSGs, FOCUS and TRUST principles) is being implemented in Timor-Leste. These steps all represent important building blocks upon which development partners can better align and harmonise their aid. They also demonstrate that the Government of Timor-Leste has been successful in taking on ownership of the development agenda. Ladies and gentlemen, Allow me to share some key challenges faced by Timor-Leste: 1. Unrealistic expectations Early on there was a belief that if the Government of Timor-Leste did everything that development partners required of it, development partners would then deliver on commitments made. Previous governments produced the requested plans and went along with the international community s suggestions thinking that this was how they should best serve their people. However, what they found was that the priorities set within those plans were not always respected by development partners. The Government also found that many donor programs were inflexible and slow to respond despite the Government bending over backwards to be flexible to the needs of the donors. 9/11

10 2. Instability and political change have impeded alignment efforts The security crisis in Timor-Leste in 2006 created a new set of challenges and necessitated a major rethink of development priorities. The elections of the new Governments in 2007 and 2012 were also a catalyst for a review of priorities and were an important opportunity to re-shape the national development agenda. Government departments were restructured and many of the existing plans, policies and systems were updated or superseded. Development partners were also encouraged to use this time to reassess their programs taking into account Timor- Leste s changing circumstances. Ladies and Gentlemen, Let me now share with you 5 good practices and lessons learned: First, local context is important. As Timor-Leste has shown, the need for all actors to embrace a deep understanding of context is paramount to doing no harm. International actors must continually evaluate and recognize the importance of historical context, cultural significance, regional diversities, linguistic complexities, social differences and the national mentality; all crucial elements to understanding state and nation building in fragile nations. There is no one size fits all model. Aid must be adaptable, flexible and accommodating to fragile environments which can shift dramatically. Second: Trust. The recipient country knows and understands its own challenges, can navigate its 10/11

11 own path, and with the support and expertise of the international community, can succeed at state building. Third: The country must own their development agenda. For fragile countries like Timor-Leste and for those still mired in conflict, the ability of governments to take ownership - that is - determine how aid will be most effective, how aid is allocated and how aid is accounted for, can often times prove to be challenging! And so donor countries must aid and assist in this process of ownership despite the fact it can be an arduous, difficult and often frustrating task. Fourth, fewer, deeper and longer donor engagement is required. Donor competition is directly at odds with the objectives of harmonisation. Development partners must work harder to identify areas of comparative advantage and avoid duplication. Fifth, better sequencing and phasing of reforms is needed. Implementation of the New Deal also requires sequencing so it requires a more staged approach in line with government capacity. For example, where government systems are weak or absent, policy alignment should be pursued in the first instance, followed by increasing use of government systems as they develop. In situations of fragility, development partners should also re-double their harmonisation efforts to ensure that government systems are not overloaded. 11/11

12 In closing, Timor-Leste, within the first 12 eight years of its nationhood has faced many challenges yet the government has, with assistance from development partners, international actors, the institutions of the State, the civil service, local and international NGOs like the Asia Foundation, and most importantly, the support of the Timorese people, risen to meet these challenges and move into the next stage of development. As an important player, the Asia Foundation has taken this journey with us. Our relationship, despite the bumps and bruises along the way, is both strong, mature and will be marked with a strong sense of solidarity. Thank you and Enjoy your Deliberations today. *** 12/11

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