The New Deal has failed. What must be done?

The New Deal for Engagement in Fragile States prescribed a fundamental departure from traditional assistance to conflict-affected and fragile states. In the following impulse article Ann L. Phillips however claims that the New Deal has led to no substantive change in relations between donors and fragile states so far. She proposes a number of steps to be taken in order to change donor institutional and personnel policy and allow host country actors to take the lead in a responsible and inclusive process.

Common practice placed donors squarely in the lead: they conduct fragility and needs assessments and design programmes and projects to address both. Fragile states were relegated to a recipient role. That approach has not worked well, however. The promising reduction in conflicts recorded in the 1990s has been reversed in this century despite unprecedented donor efforts.

Initiated by leaders of fragile states, the New Deal for Engagement in Fragile States was hailed as the answer to past failures. It marked the culmination of a multi-year discussion on aid effectiveness. The New Deal prescribed nothing less than a paradigm shift in donor-fragile state relations. A mutually agreed upon framework of core principles, Peacebuilding and Statebuilding Goals (PSGs), and a series of concrete steps embedded in a broad-based government-society dialogue were to guide the host country’s emergence from fragility. Fragile states were to lead the process while donors played a supporting role.

In 2012, seven countries volunteered to test implementation of New Deal principles and processes. Somalia became the 8th pilot country in 2013. All New Deal pilots concluded at the end of 2015. With the exception of Timor Leste, the record is dismal. The Central African Republic, eastern Democratic Republic of Congo, Somalia, South Sudan and Afghanistan are active conflict zones. Limited progress in Sierra Leone and Liberia was cut short by the Ebola crisis. Failure in seven of the eight pilots, although grounded in specific circumstances, derived from the inability to make progress on the core New Deal principle; that is, to knit government and society together in a relationship of mutual trust and dependence. Let’s examine the specifics.

Interim New Deal assessments had already raised red flags about the substantial gap between principle and practice. Inclusive dialogue between host country governments and civil society that was supposed to produce consensus on sources of fragility and a shared set of priorities to emerge from fragility found no real champion either in the host country government or lead donors. Disappointing progress toward political dialogue led the authors of the “New Deal Monitoring Report 2014” to emphasise that the New Deal is “inherently a political exercise.” They found that inadequate attention had been paid to goal number one, legitimate politics. The authors concluded that, despite many activities, the New Deal implementation process had not produced significant changes in donor or host country behaviour. Donor commitment to use and strengthen host country systems had not been implemented in any serious way. Nor had donors changed their assistance programmes to support the New Deal process.

Instead of a paradigm shift, implementation of the New Deal had become largely a technical check list. Political and governance reforms which were rightly the centerpiece of peacebuilding and statebuilding goals had been side-lined by pre-packaged donor programmes, implemented through donor systems. As such, no substantive change was discernible in relations between donors and fragile states.

Other New Deal principles, such as local ownership, capacity building and donor coordination have been prominent in donor documents for a decade or more without affecting how assistance was actually provided. It was hoped that the clear admonitions in the interim assessments would spur signatories to the New Deal to begin to match rhetorical commitments with actions before the pilots ended.

What happened between the interim assessments and the end of 2015 when the pilot phase closed? A careful reading of the official independent review of the New Deal published in April 2016 shows that not much had changed. The strongest claim for New Deal impact is in shaping a new, normative consensus on peacebuilding and statebuilding. Evidence includes recommendations of the High-level Independent Panel Report on Peace Operations that echo New Deal principles. The New Deal is also credited with the inclusion of Goal 16 in the new UN Sustainable Development Goals. Goal 16 features governance and politics as well as the New Deal partnership principles as essential to progress toward peace and development.

The consensus would be encouraging if not for the ongoing failure to translate these principles into practice. According to the independent review, omissions include: The failure of host countries to use the five PSGs to define priorities or to channel resources. For their part, donors did not shift their assistance to support the New Deal process or alter aid delivery mechanisms to use and strengthen host country systems. Technical responses to what are inherently political problems remain dominant. The list goes on.

The New Deal could have had a substantial and positive impact on international cooperation for peace and development if a representative set of host country actors in the pilot countries had coalesced around a short list of priorities and invested in a plan to achieve them and if providers of international assistance had re-structured their engagement to support an honest partnership. Success in the pilots might have re-shaped donor-host country relations toward one of mutual responsibility. Instead, the impact has been one of widespread disappointment. Flawed implementation of the New Deal has undermined the much needed paradigm shift away from traditional donor-recipient relations.

How can this be when virtually everyone subscribes to New Deal principles? Deeply entrenched institutional arrangements as well as expectations on both sides constitute enormous obstacles to redefining donor-recipient relations. Host country governments and civil society remain focused on donor priorities and the programmes that donors fund. The New Deal brings no new money which guarantees that it will be a low priority for the host country. For all of these reasons, participation in the New Deal processes remains marginal at best. Hence, its primary goal to channel host country government and civil society energy on prioritising and solving problems together has failed.

In order to change this, donors must take a giant step back, both financially and programmatically to create the space and incentives for host country governments and society to work together. As currently practiced, external assistance does quite the opposite. It attenuates the mutual dependency between those who govern and those who are governed which history shows is indispensable for a reasonably well functioning polity.

Why would donors do this? The short answer is that foreign assistance agencies are structured and foreign assistance professionals are incentivised to provide assistance exactly as they have done for decades. That is, agencies prioritise functional expertise that matches funding accounts approved by their parliament or Congress. Professionals provide technical assistance in those functional fields. Time horizons are short. Funding, programmes, reporting requirements and service in the host country are based on annual performance measurements. Deep local knowledge, strategic patience and long term relationships with locals necessary to support host country-led governance and political reforms are absent in most foreign assistance agencies. Moreover, many foreign assistance professionals remain convinced that the government and society in a conflict affected or fragile state are unable to take the lead in establishing priorities and implementing a strategy to emerge from fragility. For all of these reasons, for
eign assistance personnel do not operate according to New Deal principles.

What can donors do to change the dynamic? In addition to stepping back to create the space and incentives for host country governments and society to build mutual dependence, donors need to recruit and promote country and regional experts. Context is everything. Functional expertise is necessary but does not travel well; therefore, functional and country experts must always be paired in any assistance effort. Foreign assistance funding requires more flexibility: one account for fragile and conflict affected states; one account for developing countries and one account for humanitarian assistance with the ability to shift funding within each account in response to changing conditions would be reasonable. Funding accounts should no longer be attached to specific issues. Politics in donor countries are the primary obstacle to funding reforms. Time horizons must be lengthened substantially. Postings to conflict affected and fragile states should be lengthened. Because they are classified as hardship posts, tours are usually only one year – just the opposite of what is needed. The importance of personal relationships (rather than institutional ones), deep local knowledge and the greater challenges in such environments require a minimum tour of five years to make progress. A specific cadre of professionals with regional and functional expertise, willing to deploy for five years minimum, should be created to assist fragile and conflict affected states in ways that comport with New Deal principles.

Despite its disappointing record and before the ink was dry on the independent assessment, efforts were underway to win support for a New Deal 2.0. Both the IDPS and the New Deal have won a new lease on life by linking their efforts to the SDGs, particularly Goal 16. In April, 2016, signatories to the New Deal met in Stockholm to reaffirm their commitment to its principles. Participants agreed that greater “political and financial efforts” expended in accordance with New Deal principles were needed if two-thirds of the world’s poor are to be spared a life of pervasive violence and poverty by 2030. Commitments include increasing aid to fragile and conflict affected states; strengthening host country financial management systems; and improving local revenue generation—all laudable goals. And yet, they remain aspirational. No specific commitments by individual countries to restructure aid, to a specific financial increase, or clear benchmarks to measure progress are recorded. That Somalia and Sierra Leone are cited as pilots noted for considerable success should also give pause. The Ebola crisis in Sierra Leone was a clear failure to knit government and society together; Somalia’s fleeting moment of progress has been overshadowed by clan conflicts and a resurgent Al Shabaab – hardly cases to inspire confidence in donors and host countries’ ability and willingness to operationalise the New Deal.

However welcome, the Stockholm Declaration re-commitment to the New Deal will mean nothing unless and until concrete steps begin to change donor institutional and personnel policy and host country actors take the lead in a responsible and inclusive process. Look for concrete changes and not more declarations of intent to assess the prognosis for the New Deal. Until the impediments on both sides are addressed, the New Deal will remain a worthy but ineffectual effort, added to many others which have aspired to fix foreign assistance.

Dr. Ann L. Phillips is an independent consultant, scholar and practitioner who has worked on system transitions, fragile and conflict affected states for more than 20 years.

Further Informationen

Ann L. Phillips, United States Institute of Peace (USIP)

Links & Literature

Independent Review of the New Deal for Engagement in Fragile States
Sarah Hearn, International Dialogue on Peacebuilding & Statebuilding, NYU Center on International Cooperation | April 2016

Uniting Our Strengths for Peace – Politics, Partnerships, and People
Report of the High-Level Independent Panel on United Nations Peace Operations | June 2015

Major Recent Trends in Violent Conflict
Sebastian von Einsiedel | United Nations University Centre for Policy Research | November 2014

New Deal Monitoring Report 2014. Final Version
Fiona Davies, Yannick Hingorani | International Dialogue on Peacebuilding and Statebuilding | November 2014

Implementing the New Deal for Fragile States
Jacob Hughes, Ted Hooley, Siafa Hage, George Ingram | Brookings Institution | July 2014

Assessing Civil Society Engagement with the New Deal. Opportunities and Challenges
Kristen Wall, Rachel Fairhust | Kroc Institute for International Peace, Global Partnershp for the Prevention of Armed Conflict, Alliance for Peacebuilding | March 2014

Busan and Beyond: Implementing the “New Deal” for Fragile States
International Peace Institute | July 2012

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