The money pledged by international donors for post-quake rehabilitation and reconstruction seems fine on paper. The devil lies in the fine print
Abid Qaiyum Suleri
suleri@sdpi.org
International donors have pledged some $5.4bn (£3.14bn) in a donors' conference 19 November, 2005 to help Pakistan recover from October's devastating earthquake. The figure exceeds $5.2bn Pakistan had been asking for. The Pakistani demand was based on a Preliminary Damage and Needs Assessment released by the Asian Development Bank (ADB) and World Bank.
More than 70 donor countries, financial institutions, and aid organizations attended the conference. The single biggest donor country was Saudi Arabia, which pledged a total of $573m in grants and soft loans. The US pledged $510m, including $156m already given. Among other top contributing countries were Britain, other European Union nations, Japan, Kuwait, Iran and Turkey. The World Bank and the Asian Development Bank pledged $1bn each, mostly in the form of loans. The Islamic Development Bank said it would increase its assistance from more than $250m to more than $501m. Nearly 30 countries extended offers of help, with China pledging $316m and Iran $200m.
While one is heartened by these pledges for the quake survivors, it should also be kept in mind that historically, following major disasters only about half of the pledges made by donors have ever materialized. Another disturbing fact is that approximately 68% of the pledges are loans--although donors are calling them soft loans. The hard reality is that Pakistan already has $32bn in debt and is paying billions as interest on these loans. The deepened burden of debt may make the future a bit darker for our coming generations.
One would have even agreed to swallow the bitter pill of debts in the name of rehabilitation and reconstruction, provided it had come timely. The problem with the international pledges is that most of them are long-term commitments.
Another significant aspect of the donors’ conference was its failure to involve Pakistani society at large. This is because like many other developing countries, there is no culture of national consultation, building consensus or taking the parliament into confidence before taking decisions of national importance such as agreeing to borrow from lending agencies. However, even more amazing was the working of donors. It seems they were so eager to lend that they totally ignored the need for consulting the stakeholders.
This makes it all the more necessary to analyze all the pledges even if they have already been made. Let us examine the World Bank's commitment first. The Bank announced $470m on October 25, 2005 and raised it to $1bn during the donors' conference. Of the money that the Bank has pledged, only $200m have been transferred to Pakistan November 2005.
The break-up of the World Bank pledge is as follows:
Even if one is mindful that there can never be perfect answers, it does not answer the question whether survivors of the October 8 tragedy have any say in prioritizing what is required for their rehabilitation. None at all, of course. It, therefore, comes as no surprise that the donors and the government are deciding on their own what is beneficial for the quake-hit areas and what is not.
The above-mentioned allocations are based on a quick assessment carried out by ADB and the World Bank mission. Many officials who have visited the disaster-hit areas have commented that they have never seen the destruction and the access complexities of this magnitude. We are talking of helping save almost 1m people who are still homeless or un-served, who are now facing the spread of disease and further illness, even death as the Himalayan winter descends. In return we get the loan enhancement for NWFP government reforms and on-farm water management as if these reforms will solve the chronic problem of governance.
Another disturbing fact is that approximately 68% of the pledges are loans--although donors are calling them soft loans. The hard reality is that Pakistan already has $32bn in debt and is paying billions as interest on these loans.
There is no denying the fact that the NWFP government reforms or on-farm water management are important in themselves. But revising allocation of loans for them in the guise of helping the quake victims is mere eyewash.
The story of ADB's $1bn support is no different. According to ADB's official version, this support will be provided in a number of stages. About $100m of savings from concession loans from eight ongoing projects in Pakistan has been re-allocated to the ongoing ADB-backed Decentralization Support Program. These funds will provide budgetary support for earthquake-related rehabilitation and reconstruction activities.
ADB's Resident Mission in Pakistan is also reviewing seven ongoing loans in the earthquake-affected areas to see whether these can be redesigned to address earthquake damage more effectively. The Multi-sector Rehabilitation and Improvement Project for Azad Jammu & Kashmir is one such project.
ADB has set up a special Pakistan Earthquake Fund with an initial contribution of $80m. In early December, a $300m Earthquake Emergency Assistance project, inclusive of the $80m from the Pakistan Earthquake Fund, will be considered by ADB's Board of Directors. The project will focus on transport, power, health, education, governance, and institution-building.
The remainder of ADB's support is likely to be provided in 2006 in the form of a credit line facility to ensure that it can be flexibly used to address the remaining high priority needs of rehabilitation and reconstruction.
The absence of stakeholders' participation and lack of national consultation on rehabilitation may turn the process into commercial development in the name of the marginalized and the poor, as was the case during post-tsunami reconstruction process. The tsunami experience also proves that coordination, aid utilization, and accountability need to be put on top of the priority list in the reconstruction process--something that seems lacking in our context.
It is also appropriate to review the donors' commitments, especially the loan component to determine its usefulness for quake survivors. There must be transparency and accountability not only at the level of the recipients’ end but also at the donors' end. It is important that the terms and conditions for grant contracts and loans are people-friendly, not simply donor-friendly. This makes the fine prints of grant contracts very crucial, including how much will go back to the donor country in money for providing 'technical expertise' and equipment, and how much actually goes to the people in distress.
This brings into focus who does what when the money finally arrives and is distributed. It means we need to ensure the crucial task of aid utilization in a transparent and unbiased manner. The major challenge is, of course, how the impact of the aid and loans will be realized by the millions of survivors, living either in tent villages and/or still in the open.
Also, over-dependence on external donors will further undermine our national sovereignty. It is ironic that the government has not pledged any donation from its’ part of the pie. No cuts have been made in lavish 'entertainment' and protocol budgets, no reduction has been made in overseas trips and no downsizing has taken place in the flock of advisors and consultants. Mega plans like shifting of the Army Headquarters from Rawalpindi to Islamabad are still on. Let us realize our collective responsibilities and begin a meaningful rehabilitation, which should also include rehabilitation of our attitudes and paradigm of thinking that revolves around dependency on external sources of money.
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