Chair:
Oliver Morrissey, ODI

1. Oliver Morrissey introduced the meeting emphasising that it is a continuation of ODI responses to Gordon Brown’s initiative for increasing aid volumes. He reminded participants of the two main conclusions from the previous week's meeting. First, despite popular perception and donor expressions to the contrary, the aggregate evidence shows that aid is effective, and aid can work even where policies are weak. Second, it is curious that donors subject aid to stringent tests of effectiveness that are not applied to other areas of public spending (such as military or transport). The presentations today address how increased aid could be allocated, and which agencies should be responsible.

2. Simon Maxwell considered the implications for the international aid architecture of increasing aid volumes. He began by observing that most (indeed, at 70%, a surprisingly large share) aid is bilateral whereas UN agencies account for only 7% of the $56.4 billion disbursed in 1999. There is clearly scope to increase the aid allocated by UN agencies.
3. Simon Maxwell outlined four principles for a new aid architecture. Aid should be provided: (i) according to need, with a particular eye on the key international target of reducing poverty by half by 2015; (ii) on a predictable basis; (iii) in a spirit of partnership, involving genuine and two-way accountability, from recipients to donors, but also from donors to recipients (difficult to achieve); and (iv) in the most efficient way possible.
4. A re-balancing between the World Bank and the UN (the Bank's poor relation, undermined by conflict between Kofi Annan and his team, too many budgets and avoidance of long-term reforms), is needed. Simon Maxwell advocated improved budgetary control, with a Minister of Finance for the UN (perhaps with new aid in a trust fund controlled by Kofi Annan to give authority and structure).
5. In conclusion, Simon Maxwell called for (a) the rescue, by some means, of the UN as an important part of aid architecture; and (b) EU reform - continued, simplified and co-ordinated.

6. Dirk Willem te Velde considered the scope for increased aid to finance the provision of International Public Goods (IPGs), defined as public goods whose provision, or associated benefits, spill over national boundaries. These are distinct from National Public Goods (NPGs), for which benefits accrue to residents within a country. Public goods can be classified as environment, health, governance, security and knowledge. For example, eliminating communicable diseases is an IPG, whereas primary healthcare is an NPG (that may be required to ensure provision of the IPG).
7. There are three reasons why global action, including aid, is required to finance the provision of IPGs:

1. If left to the private sector, there would be under-provision of public goods, including IPGs. This is not to deny a role for private sector finance and participation.
2. Decisions regarding how and at what level to provide IPGs require co-ordination at a global level.
3. Developing countries do not have adequate resources of their own to finance their contribution to the provision of IPGs, many of which involve spending in developing countries (e.g. eradication of malaria, conflict prevention).

1. Considering trends on how much aid has been allocated to IPGs in recent decades, Dirk Willem te Velde showed that aid allocated to IPGs (and NPGs) has replaced other uses of aid (e.g. investment in infrastructure). However, the rationale of IPGs calls for additional aid. Perhaps the argument that IPGs confer global benefits could act as a carrot for the US to increase its aid spending. The need for increased funds for IPGs should be accompanied by discussion of how such funds can be used effectively.

2. Joanna Macrae began her presentation, 'Investing in international responses to chronic political emergencies' by arguing that (a) the amount spent on humanitarian aid should be increased, and (b) new instruments in crisis countries need to be developed (especially in conflict-affected areas). Over the past decade there has been a significant increase in the number of people affected by disasters (147 million in 1990 to 210 million people in 2000); 87% of those are affected by natural disasters. However, conflict is much more deadly, causing 4,400 people to die each week. 77% of conflict-related deaths in the past decade were in Africa. Eight out of ten of the world's poorest countries are affected by conflict.
3. Joanna Macrae noted the primacy of achieving sustainable political solutions to conflict. However, she also noted an important role for aid.There are two challenges involved in aiding war-affected countries: (1) increasing the volume and effectiveness of humanitarian assistance; (2) finding ways of developing new forms of aid in these environments.

Humanitarian aid spending has increased rapidly over the past twenty years, though spread more thinly, and with an inequality in its spending. The top three recipients of humanitarian assistance are the Balkans, Iraq and Israel. Rwanda, Sudan, Afghanistan and Indonesia, the next four highest recipients, received less than half the amount received by the top recipient countries. Concentrating assistance in this way violates the principle of impartiality. Aid should be given according to need. However, it remains difficult to obtain independent information that accurately measures humanitarian need and enables easy comparison within countries. Improving measurement of humanitarian need is therefore a priority for the humanitarian community.

1. An aid impasse is emerging. There is a growing consensus among the development assistance community that aid should target the poorest. At the same time, however, selectivity and concentration of aid in those countries which are good performers limits the access by some of the poorest and most vulnerable groups who live in conflict-affected countries from receiving adequate assistance. It is likely to prove very difficult to meet poverty eradication goals without addressing the problem of how to provide assistance in very poor policy environments, including those affected by conflict.
2. In conclusion, Joanna Macrae asked that: (a) the volume of humanitarian assistance increase, along with equity in its distribution; (b) ethical, political and aid instruments be identified; and (c) humanitarian principles be protected. A number of points were raised in the discussion:

1. 1. While Simon Maxwell’s argument called for greater centralisation of aid policy within the UN, a number of people commented that there are strengths in the UN having independent agencies to address specific issues (e.g. WHO and FAO).
   2. Timing is a problem: it would be easier to justify increasing aid if strong agencies were in place, while it is difficult to argue for allocating new aid to an agency that does not yet exist. There are too many examples of failed reforms in aid agencies.
   3. An important source of inefficiency in the delivery of aid is the proliferation of donors with different procedures and objectives. Repeated calls for greater co-ordination seem to fall on deaf ears.
   4. How do we empower recipients, especially in emergency or conflict situations? Aid to Mozambique, for example, comes with strict conditions imposed by donors. While Mozambique typically gets even more aid than it asks for, there is no genuine partnership.
   5. Development targets have been given great emphasis and are clearly linked to IPGs. These are widely accepted as desirable uses of aid, and can form the underlying case for increasing aid. However there is no development target for humanitarian assistance, and no performance indicators that govern DfID's work in this area, for example.
   6. Insecurity in one country leads to a regional, if not global, public bad. In this sense, aid for conflict prevention is an IPG, and closely related to aid for humanitarian assistance. This provides a linking theme – development goals, IPGs and humanitarian should all be seen as part of development aid (as distinct from aid targeted to increase growth). As these are global issues, a global agency is required to co-ordinate provision. The World Bank has tended to be too concerned with economic, growth and policy effects of aid, and may not be suited for this development role. Here is the opportunity for a UN role.