Dr. Ashraf Ghani - Former Finance Minister of Afghanistan, Chairman of Institute for State Effectiveness
Dr. Clare Lockhart - Former Adviser to Bonn Process in Afghanistan, Director of Institute for State Effectiveness
Timothy Othieno - Research Fellow, Poverty and Public Policy Group (PPPG), ODI
Simon Maxwell - Director, ODI
1. Simon Maxwell opened the discussion by introducing the speakers. He observed that the book was topical and of interest to the global community, as reflected in recent speeches by the Prime Minister, Gordon Brown, and a report by Minister of State for International Development, Alexander Douglas. Simon also mentioned that the 2007 Human Security Brief declared that there had been a decline of conflict in Africa due to increases in international initiatives. However, Mr. Maxwell pointed out that there are many places where this is untrue, and that fixing failed states is still of great importance.
2. Clare Lockhart outlined the four questions that she and Ashraf Ghani would address during the discussion:
• Why is the aid system (or “aid complex”) not working?
• Do we despair or are there grounds for hope?
• What is the framework that the book, “Fixing Failed States”, proposes?
• If implemented, which tools should the international community use to put the framework into practice?
3. Why is the aid system not working?
Clare Lockhart stated that the book was addressing a double failure. These were:
• the “sovereignty gap” (the failure of many national governments to serve their citizens); and
• the failure of the aid system to address this problem.
Clare Lockhart borrowed examples from a recent report on the failure of foreign aid in Haiti to highlight systemic problems with the current donor approach. She noted that billions had been spent to adverse effects and she summarised the key problems as:
• the tendency towards donor-management, bypassing recipient governments due to the lack of institutional capacity to carry out project demands;
• the practice of setting up parallel institutions that shadow developing country structures;
• the short term focus of donor projects, each of which imports new laws and structures in accounting and procurement.
Clare Lockhart explained that donor-led management was more expensive, which left little money for use at project level. Because of these expenses, projects tended to be short term with a narrow focus. Recipient government officials were excluded from projects and therefore did not develop the skills and knowledge to run the programmes once donor involvement waned. Donors prefered to invest in parallel health and education structures that run the risk of undermining state-run institutions.
4. Are there grounds for hope?
Clare Lockhart observed that hope lies in successful historical experiences. She cited the US approach in the Marshall Plan for Europe, and in Japan and South Korea. Lockhart and Ghani’s book presents evidence from the more recent examples, Singapore since the 1950s and 60s, post-Franco Spain, Ireland since the 1980s, and the Southern US states since the 1960s civil rights movement. Clare Lockhart noted the critical factors for success that emerged as:
• A context-specific design, formed and managed locally
• Leadership and management
• Public finance institutions and regulation, which showed creativity the importance of developing opportunities for partnerships
5. What is the framework proposed by the book?
Ashraf Ghani underlined that the premise of the book is that the state exists to serve citizens. The current aid system has no map of state functions. The book provides a framework based on 10 state functions and how to manage them.
Ashraf Ghani gave detailed information on the concepts on three of these functions:
• Investments in human capital: the state should provide the opportunities that enable its citizens to change their own circumstances. For example, one problem is that the current aid system focuses on primary education but completely neglects higher and vocational education, restricting society’s development;
• Sound management of public finances: a taxation system is vital. The aid system has no obligation to give to developing countries. Aid generates dependency and cannot be used as a long term revenue strategy. Government accountability to its population in the distribution of budget is vital to legitimacy of the state.
• Rule of law: this concept encompasses the legality of the use of force by state agents (subject to public processes) and the power of administrative officials (to ensure they are not predatory).
6. If the proposed framework is implemented, which tools are necessary to put the concepts into practice?
Ashraf Ghani stated that in order to facilitate transformation, an internal legal system is crucial. States fail when they do not have a flexible system that can map what citizens want and design the mechanisms for change. He cited the fall of the Soviet Union as a case in point. Equally, Ashraf Ghani stressed, the aid system is a human device and a set of processes, and they too can be reinvented.
Ashraf Ghani identified important considerations for change:
• Timing is key: the importance of not missing an “open moment” when society is ready for change and the situation is under scrutiny by the international community;
• Multiple accountabilities: the use of aid must be justifiable and accountable to the governments and the governments must be accountable to the public. The Minister of Finance must design a national programme detailing how public finances will be spent and the government capacity for spending.
• Partnership: donors must trust decisions to other actors, and central governments have to share power with other stakeholders.
• Objectives: “capacity-building” is an abstract discussion, because it does not address the objectives (i.e. the capacity to do what?). The objectives and the design to achieve these objectives are more important.
• Transparency: the accountability and justification of aid and technical assistance is key to the success of the international community’s investments.
7. Timothy Othieno noted the significant contribution Ghani and Lockhart’s new book makes to the discussion on failed states. Othieno identified the book’s point of departure as the international failure of imagination to use resources to resolves the crises in fragile and failed states. It provides a strategic framework for thinking about the state. Othieno agrees that one of the problems with the aid system today is that there is no international agreement on state functions and how they can be advocated and implemented effectively.
Othieno gave an overview of Ghani and Lockhart’s key suggestions. The book suggests that state legitimacy rests on performance in the proposed 10 functions, and that improved performance would provide a “sovereignty dividend”, gaining citizens’ trust. In contrast, if the state does not perform, there will be a “sovereignty gap” and a loss of legitimacy in the eyes of citizens and the international community. This performance would be measured using an index compiled and managed on an annual basis by the World Bank, the UN, and other multilateral actors. This would allow donors to adequately assess and address crises.
Othieno concluded with questions for the authors:
• Can the functions be used to re-build failed states and what is the priority in a failed state, where everything is a priority?
• What are the lessons from their work in Afghanistan and how would the framework apply there?
• Is there a tension between internal and external state-building processes?
• Can a balance be achieved between efficient service delivery and capacity-building?
8. For the benefit of discussion, the Chair, ODI Director Simon Maxwell, outlined the 10 state functions proposed by Ghani and Lockhart:
• Rule of law
• Monopoly on the legitimate means of violence
• Administrative control
• Sound management of public finances
• Investments in human capital
• Creation of citizens rights through social policy
• Formation of a market
• Management of public assets
• Effective public borrowing
• The sovereignty dividend and the sovereignty gap
Mr. Maxwell asked the authors whether the framework represents a complete and adequate list and if they are sure it is the best route to statehood. He asked, where is the politics in this framework?
9. Points raised by the audience:
• The main preoccupation of audience participants was whether Ghani and Lockhart’s approach was too technocratic, failing to take into account the political economy of states;
• The state is based on elite power structures, and often does not exist to benefit citizens. How could this framework move a state along from this position?
• Donors currently ignore deeper political factors (such as patronage and lineage), but state-building depends on engaging with local rules or it risks being superficial. Sierra Leone and Liberia were given as examples;
• What is the role of civil society and can it work can in tandem with the state?
10. Ashraf Ghani responded by highlighting that the politics of the donors and donor resource allocation are highly problematic. He argued that it is necessary to create a space for consensus and technical governance using management and imagination. He stressed that the political system and environment are important and the debate on politics becomes abstract unless concepts are operationalised.
Clare Lockhart responded to audience concerns by saying that the book highlights the need for an initial reading of the context. She concluded by saying that the proposed 10 functions of the state are meant to provide a starting point for further debate on state building.
In the wake of the defeat of the Taliban in Afghanistan in 2001, Ashraf Ghani and Clare Lockhart were responsible (with Lakhdar Brahimi) for the creation of the Bonn Agreement and the country’s successful Interim and Transitional Administrations. They are now applying their state-building Framework to numerous situations including Kosovo, Liberia, Southern Sudan, Nepal, Lebanon, and Haiti. Their Institute for State Effectiveness is based in Washington DC.
‘Failed States’ – the home of the world’s so-called Bottom Billion – are largely beyond the help of traditional aid and development. Leadership is corrupt, social institutions are virtually non-existent; aid money disappears before it can be used; ethnic conflict, absolute poverty, terrorism, and trafficking hold sway. International approaches to date - whether humanitarian, aid or military, have rarely proven successful.
Ghani and Lockhart’s Framework rebuilds from the ground up, putting finances, democratic accountability, and know-how into the hands of those who are most motivated to make it work – ordinary citizens. Instead of relying on the aid bureaucracies that were designed for a bygone era, their Framework links countries to different networks of knowledge, information and financing in the global system. The grass-roots approach proves to be a catalyst for rebuilding national governments.
This event will launch the first full account of the new framework for reconstruction which is proving powerfully effective in the world’s most fragile and damaged states.
Ashraf Ghani served as Afghanistan’s Finance Minister, and Clare Lockhart as Chief Adviser to the Afghan Government. Ghani has also received nominations for the posts of Secretary General of the United Nations, and head of the World Bank.