There is a growing recognition among donors that their core business is development effectiveness, not just aid effectiveness. The impact of non-aid policies on development outcomes is gaining ever-higher priority, with an emphasis on securing coherence across government departments. The concern is not only that a lack of coherence between aid, trade, finance, security, immigration and drugs policies can result in contradictory outcomes, but also that it is impossible to achieve certain policy goals without mobilising a range of complementary policies. At the same time, there is growing consensus that in the medium term building the effectiveness of the ‘beneficiary’ state is central to widerange of goals including security, political and economic.

Policy coherence is even more important in relation to fragile states. While poverty reduction remains an important goal in these contexts, the goal of strengthening the institutions of the beneficiary country is also a high priority. This task will encompass a range of functions including the security, political and economic. To reach this goal, it is now acknowledged that donor governments have at their disposal a range of tools and resources across the security, diplomatic, development, humanitarian, legal, trade and investment and migration spheres that can be employed. There is also increasing awareness that if interventions across these domains are costed over time, trade-offs between efficiency of intervention become startlingly clear. Using aid to unleash private sector energies can save significant amounts in future years, while conflict prevention activities can save significant military budgets. However, there is not yet consensus either on the means of setting precise objectives and on designing policies and implementationmechanisms to reach those objectives that ensure coherence across these different domains.

This note seeks to set out the key issues relating to the challenge of policy coherence in fragile states; to summarize some mechanisms emerging from broader donor government practice to address this challenge; and to identify some of the questions and challenges that remain unaddressed. It draws heavily on and summarizes some recent work relating to policy coherence in fragile states, particularly the work commissioned by the Learning and Advisory Process of the DAC on donor policy coherence and development cooperation in difficult environments.

Clare Lockhart