The Report of the House of Commons International Development Select Committee on Prospects for Peace and Development in South Sudan, published on 21 April, was eclipsed in the press by renewed fighting between Sudan and South Sudan. That is a pity. The Report has interesting points to make about South Sudan, but also illuminates two other big, current questions about aid and development: first, what is the right balance between bilateral and multilateral aid; and, secondly, what is the appropriate relationship between development and diplomacy. Declaration of interest: I am a paid adviser to the IDC, though was not involved in this report.

The South Sudan ‘story’

The South Sudan ‘story’ can be told relatively easily. According to the IDC, the social and economic indicators range from the poor to the desperate. The country is less than a year old, recovering from decades of war, and with a (variably) weak and corrupt Government. It is dependent on oil revenues for 98% of revenue, and on donor support for delivery of social services. There are large numbers of returnees from Sudan. And the country is embroiled in conflict, both internal and with Sudan. Currently, the dispute with Sudan has led to the suspension of oil exports, leading to a fiscal crisis. South Sudan presents one of the most complex development challenges anywhere in the world. The great irony is that because of oil, when it flows, South Sudan officially has a GDPGross Domestic Product per capita in excess of $US1500 per capita, which if confirmed would make it a middle income country.

Some key statistics, taken from the Report:

• Eight out of ten people live below $US 1 per day;
• Six out of ten have no access to any form of health care;
• The maternal mortality rate is the highest in the world, at over 2000 per 100,000 live births;
• The average pupil:teacher ratio is 194:1;
• Up to 40% of Government expenditure is defence-related, mainly because of the number of ex-soldiers on the payroll.;
• 360,000 people have returned from the North, with another 300k plus likely to do so shortly, equivalent to about 8% of the total population.

It is not surprising that the international community is heavily engaged in South Sudan, delivering humanitarian and development aid, and also peace-keeping. The numbers are hard to put together for the pre-independence period, but Official Development Assistance is estimated at £735m in 2010. It will have risen since independence in July 2011. This is equivalent to about £90 per head, say $US 140. By contrast, on World Bank figures, Kenya, Ethiopia and DRC all receive roughly in the range $US 40 – 50.   In addition to oda, the peace-keeping mission (UNMISS) has an approved budget for its first year of £456m.

The IDCInternational Development Committee worked hard to estimate DFID’s share of these payments, including both bilateral and multilateral, and covering development, humanitarian and peace-keeping. It would be useful for DFIDDepartment for International Development to report on total actual and imputed expenditure, as I understand Andrew Mitchell has asked.

DFID’s bilateral spending in 2010 is given in the Report as £60m, in third place behind the US and the EU. Spending is expected to rise to £91m in 2012-13 and to £99m by 2014/15. Elsewhere in the report, we learn that DFIDDepartment for International Development will spend a further £25m per year through UN humanitarian and development organisations. It presumably contributed about 15% of the £64m spent by the EUEuropean Union in 2010, or a further £10m, and a share of World Bank spending in the country. There may also be additional funding contributed through international organisations like the International Committee of the Red Cross (ICRC). On these figures, DFIDDepartment for International Development spending is about half as much again as the officially declared bilateral programme. The cost of peace-keeping is on top of these figures and adds a further £60m per annum to the UK budget. I assume some of this (all of it?) is DAC-able. On this basis, the UK is spending about £200m a year in South Sudan.

The IDCInternational Development Committee is complimentary about DFID’s programme. It staffed up quickly, helped set up and disburse substantial amounts through pooled funds with other donors, and in July 2011 published an operational plan to 2015. The Committee ‘commends DFID’s speed and determination to establish and scale up its operation – and to put together a good team – in such a difficult working environment. DFID’ actions . . . have demonstrated that the UK is an enthusiastic and committed ally of the new, independent South Sudan’ (para 57).

There is one major fly in the ointment, which is the decision by the Government of South Sudan to suspend oil shipments along the pipeline through North Sudan until a dispute about the cost of transhipment has been resolved. According to the IDC, South Sudan expects to pay about $US 1 per barrel, whereas Khartoum is proposing $US 32 - 36 per barrel, to include some compensation payments. The British Government fears that the suspension of oil shipments will disrupt development and is beginning to refocus its activities from development to humanitarian priorities. It is critical of South Sudan’s decision, and so is the IDC. The IDCInternational Development Committee concludes that ‘it must be made clear that the UK, and other donors, cannot bankroll South Sudan through this austerity period’ (para 22).

Is this shared view justified? Personally, I have no idea what it costs to transport oil by pipeline the thousand miles or so to Port Sudan, nor what share of the price proposed by Khartoum represents genuine transport costs. The report contains no information (but see an article in the Financial Times for a brief on the compensation payments). If the price is reasonable, then it would be fair to encourage South Sudan to continue exporting. If, on the other hand, the price is extortionate, then it seems wrong to punish South Sudan on the grounds of neutrality, and it would be important to either take sides or take action. For example, loans might be provided to South Sudan, secured against future oil exports. We need to return later to the question of political engagement and mediation.

Although DFIDDepartment for International Development receives a good score, the IDCInternational Development Committee is very critical of multilateral agencies, including all three of the EU, the World Bank and the UN. Thus

• UNDP’s Common Humanitarian Fund (citing evidence from Sara Pantuliano) was a ‘significant hindrance’ to the ability of NGOs to operate effectively (para 64);
• The World Bank’s Multi-Donor Trust Fund was over-bureaucratic and slow (para 67);
• The EUEuropean Union was slow to scale up and disburse efficiently (para 71); and
• UNMISS is ‘hugely expensive’ and ‘does not provide value-for-money’ (para 86).

The balance between bilateral and multilateral funding

This brings us to the first of the issues of more general interest, the balance between bilateral and multilateral funding. The issue is too little discussed, as I argued when DFID’s bilateral and multilateral aid reviews were published, separately, this time last year; and also when the humanitarian review was issued.

It might be thought that decisions about the balance can only be made at global level, for example when the triennial replenishment of the IDAInternational Development Association (of World Bank) comes round, or when the EUEuropean Union Multi-Annual Financial Framework is being decided. In fact, there is also room for manoeuvre at country level, because DFIDDepartment for International Development has the opportunity to scale its own bilateral programme up or down, and to make supplementary contributions to UN appeals, World Bank trust funds or EUEuropean Union programmes.

Quite often, multilateral programmes will compare favourably with bilateral alternatives, in which case it might not be necessary to have a bilateral programme at all; eliminating it would contribute to a simplification of donor architecture and a reduction in transactions costs. In this case, the reverse seems to be the case. The IDCInternational Development Committee is so complimentary about DFID, and so critical of the multilaterals, that is tempting to conclude that the World Bank, the UN and the EUEuropean Union should just withdraw from South Sudan and leave the whole job to DFID. However, that is probably a step too far.

On the other hand, the IDCInternational Development Committee findings can be read as strong endorsement of DFIDDepartment for International Development giving careful consideration to the comparative advantage of different agencies when it responds to appeals and allocates discretionary funding at country level. They also suggest support for modalities like pooled funds: the Basic Services Fund in South Sudan is an example, setup by DFID, but managed by a private contractor. Delegated cooperation is another alternative, where one donor channels its funding through another.

An over-arching framework is to be found in the EU Code of Conduct on Complementarity and Division of Labour, which is intended to prevent EUEuropean Union donors and the Commission tripping over each other in the field. The Code, which was approved by the Council of Ministers in 2007, establishes eleven principles, including the following:

• concentrate the activities on a limited number of national sectors (focal sectors). EUEuropean Union donors should confine their assistance in a partner country to two sectors in which they offer the best comparative advantage, as recognised by the government of the partner country and the other donors. Apart from these two sectors, donors can provide budget support and finance programmes relating to civil society, research and education;
• redeploy into other activities in-country (non-focal sectors). As regards the non-focal sectors, donors should either remain committed through a delegated cooperation/partnership agreement * redeploy the resources becoming available in general budget support or exit from the sector in a responsible manner;
• encourage the establishment, in each priority sector, of a lead donorship arrangement responsible for coordination between all the donors in the sector, with a view to reducing the transaction costs;
• encourage the establishment of delegated cooperation/partnership arrangements through which a donor has the power to act on behalf of other donors concerning the administration of funds and dialogue with the partner government on the policy to be implemented in the sector concerned;

It would have been interesting for the IDCInternational Development Committee to explore the scope for the application of these principles in South Sudan, and for it to do so more generally in its country work. The Independent Commission on Aid Impact could also take the Code of Conduct as an evaluation template in assessing DFID’s country work.

Diplomacy and development

The other question of general interest in the IDCInternational Development Committee report is about the relationship between diplomacy and development. The question has already been raised in connection with the suspension of oil exports from the South, through the pipeline to Port Sudan. More generally, the increasing scale of conflict between North and South jeopardises both development and humanitarian programmes. Sara Pantuliano from ODIOverseas Development Institute (London) was especially eloquent on this in her oral evidence to the IDC. She said (Pg EV12):

‘We have the international community responding in three different spheres. Politically, we still do not see the kind of firm and coherent political action that is required. We have had a profound and strong engagement in the past with Sudan, which has led to the Comprehensive Peace Agreement and has also allowed the referendum to go ahead. That kind of robust political engagement is lacking at the moment. In other words, there are isolated initiatives, but they are not robust and coherent enough, both regionally and internationally, at least in my opinion.

In terms of a humanitarian response, because there has been so much focus on supporting state building in South Sudan and supporting the Government of South Sudan to provide services in its own terms, there has been a focus away from humanitarian response capacity. That is also being ramped up now, but the infrastructure was no longer in place. The UN Office for the Coordination of Humanitarian Affairs, OCHA, does not have a regional presence. It is not present in all the states. . . .

In terms of peacekeeping, again there has been a lot of criticism of the lack of capacity of UNMISS to provide protection for civilians, particularly after the last incident in Jonglei, but I would emphasise that the force-the strength-of the mission allowed by the UN Security Council is very small compared with the size of the country. . . .  While there are definitely inefficiencies in the mission as well that have not been redressed since the last mission, I would also say that, again, you need the political mandate to be able to strengthen the mission to be present in a way that really provides protection to people. It is impossible, given the size of the mission and the kind of assets they have, to provide the effective protection that is required.’

Unfortunately, the IDCInternational Development Committee did not really pick up these points about political engagement, although it covered operational issues to do with security and peace-keeping. Yet, Sara Pantuliano’s comments raise important questions about what might be done and who should do it. Is it for DFIDDepartment for International Development to mediate and influence? For HMG? For other international actors, like the UN and the EU? Or should responsibility lie with regional actors, like the African Union and Sudan’s neighbours, like Ethiopia? Perhaps Arab countries have a special role to play, though most have other things on their mind at present. Or how about China? Independently of who might take the lead, separate questions arise about strategy. What incentives can be offered to Sudan and South Sudan to reduce conflict? What leverage can be brought to bear?

The IDCInternational Development Committee was possibly hesitant to enter into this territory because so many other actors are working on the conflict, and because conflict resolution sounds like an issue for the Foreign Office and the Foreign Affairs Select Committee, rather than DFIDDepartment for International Development and the IDC. That is too tight a demarcation, however, given DFID’s own commitment to active engagement in fragile states, and the Government’s wider, cross-Whitehall strategy for Building Stability Overseas. That strategy was developed jointly by the FCO, the Ministry of Defence and DFID. When it was launched in July 2011, DFID commented on its website that

‘The strategy is based on three strands:

• Early warning: improving our ability to anticipate instability and potential triggers for conflict;
• Rapid crisis prevention and response: improving our ability to take fast, appropriate and effective action to prevent a crisis or stop it spreading or escalating; and
• Investing in upstream prevention: helping to build strong, legitimate institutions and robust societies in fragile countries that are capable of managing tensions and shocks so there is a lower likelihood of instability and conflict.

The Secretary of State for International Development, Andrew Mitchell, said: "The Building Stability Overseas Strategy will help the UK to work more effectively to tackle instability upstream, helping to prevent conflict and the suffering it causes. This goes to the heart of the drive to achieve better targeted, more effective aid.”’

All that sounds to me like a mandate for DFIDDepartment for International Development to be asked about the UK’s joined-up views on the North-South conflict, and for an account of how the UK will use its influence to help resolve conflict. The same questions should be asked of the FCO, of course, and with greater force. Indeed, there would be good grounds for a joint IDCInternational Development Committee and FAC enquiry into the subject. This is also a topic that the Independent Commission on Aid Impact might examine.

South Sudan is not a special case. Fragile states have become more important as the object of development policy, and will grow in importance as more successful countries graduate from aid. DFIDDepartment for International Development has committed to spend 30% of its resources in fragile states and 21 out of its 28 focus countries fall into this category. Not all fragile states face problems of cross-border conflict, but many have domestic conflicts with international dimensions: Somalia, Yemen and Pakistan are all examples from DFID’s list of focus countries.

In these cases, development and diplomacy are inextricably entwined. I wrote about this myself in 2007, in a piece entitled ‘How do development and foreign policy connect?’:

‘For a long time, the development aid community has worked to ring-fence aid and ensure that it is used specifi­cally for ‘poverty reduction’. Historically, this has its roots in the often well-founded fear that ‘they’ would use ‘our’ money to further geo-strategic political or commercial interests that could only loosely be described as devel­opmental – supporting some states, punishing others, using aid money to fund repression, diverting aid money to help rich country com­panies, and so on. . . . But what if ‘we’ and ‘they’ were actually on the same side? What if ‘we’ (development min­istries, say) and ‘they’ (foreign ministries, say, or defence ministries, or trade ministries or environment ministries) were trying to grapple together with intractable and inter-related chal­lenges, in countries and regions with complex collations of political, military and develop­mental problems?’

More recently, the World Bank pointed out in the World Development Report for 2011, on Conflict, Security and Development:

‘The programs described . . . all require linked action by diplomatic, security, and development—and sometimes humanitarian—actors. Yet these actors generally assess priorities and develop their programs separately, with efforts to help national reformers build unified programs the exception rather than the rule. UN “integrated missions” and various bilateral and regional “whole-of government” and “whole-of-systems” initiatives have emerged to address the challenge of merging development, diplomatic, and security strategies and operations. But different disciplines bring with them different goals, planning timeframes, decision-making processes, funding streams and types of risk calculus.’ (Pg 25)

The IDCInternational Development Committee has examined the problem in earlier work, for example in its report on DRC and Rwanda. The topic looks ripe for further investigation.