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Source: World Bank
16 May 2003

Alleviating poverty in the midst of conflict

This week Devnews focuses on the World Bank's development work in conflict areas. Eighty percent of the world's 20 poorest countries today have suffered from a major conflict in the recent years. Devnews has talked to Bank staff on the ground, to get a clearer sense as to what this work entails on a daily basis, what progress is being made, what challenges are faced and what lessons they have learnt. "Conflict and Development: a View from the Ground" is a series of five stories, that will run from May 12-16. May 14th will also see the launch of a new World Bank report, "
Breaking the Conflict Trap" by Paul Collier et al, on the causes of civil war.

May 16, 2003—The story of the World Bank's work in West Bank and Gaza is one of development in the face of adversity, where resilience and flexibility are the order of the day. It is a story of maintaining hope, which comes in simple forms in conflict areas: a road that is successfully repaired, a neighborhood that gains a sanitation network, one more child that gets a vaccination. It is a story of creating opportunities, where at first glance, there were none.

The organization's involvement in West Bank and Gaza began in 1993, when the Bank was asked by the co-sponsors of the Middle East Multilateral Peace Talks to lead and support a program of economic assistance for the Palestinian people. The immediate outcome of this was the publication of "Developing the Occupied Territories: An Investment in Peace" report, which presented the most definitive economic survey and analysis of the West Bank and Gaza ever done, and provided the blueprint for subsequent donor involvement in the area. From then on, the Bank's role grew to encompass many of the services the institution has to offer: a provider of technical assistance and development grants, an administrator of trust funds and a primary donor coordinator.

From the outset, all donors recognized the need for a rapid improvement in West Bank and Gaza, if the peace process was to take root. Since 1994, donor pledges have produced approximately $6.5 billion in commitments and $4.4 billion in actual disbursements. At an average of almost $200 per person per year, aid to West bank and Gaza represents one of the highest levels of per capita official development assistance anywhere in the world.

Assistance has been largely efficient and highly coordinated, thanks in great part to the Ad Hoc Liaison Committee (AHLC), a body composed of key donors, Israel, and the Palestinian Authority (PA). The AHLC has played a decisive role on financing assistance, sustaining political coordination, and helping the PA shape its policy agenda.

The West Bank and Gaza is not a sovereign country, therefore it is not member of the World Bank and cannot borrow from the organization. In response to this constraint, the Bank established the Trust Fund for Gaza and West Bank, which has become the cornerstone of the Bank's involvement in the area, and has up until now allocated $350 million.

The Fund disburses money to a number projects, the overall strategy of which is to strike a balance between emergency relief and long-term sector and institutional capacity building. As a result, the portfolio is a diverse one, with projects ranging from strengthening the legal system, to community development, health and education support and repair of water systems.

Sadly, the hopeful beginnings of the development process in West Bank and Gaza have been defied by an escalation of the conflict over the past three years, which has put the program to test. Operations encounter daily challenges and impediments to their implementation.

"From an operational perspective, it is very hard to move around and supervise things in the field,? Nigel Roberts, World Bank Country Director for West Bank and Gaza explains. "Working with the authorities is difficult, due to the high degree of disruptions in the functions of the government. It also introduces complications both in contracting and in pricing. For example, many international companies and contractors are not prepared to send staff over here any longer, because of the danger involved. And the costs of completing contracts are higher, partly because of the uncertainty and the time delays, and also because transaction costs are higher. In turn, that also means reluctance on the part of companies to bid on contracts related to donor projects here."

The difficulties and uncertainties affecting operations trickle down to the day-to-day work of staff at the Bank's office in Al Ram, where no day is like the next. The situation is assessed each morning, with Roberts receiving a call from his security officer, who briefs him on any potential outbreaks of violence. Based on this, trips to project sites are either approved or rescheduled. For those who do go, armored vehicles and UN laissez-passers are called for.

Yet the Bank has stayed put and remains not only active in all three roles it has taken on, but highly performing as well. Overall evaluations of the West Bank and Gaza projects remain exceptionally good and comparable to the most performing non-conflict areas the organization is involved in.

"One of the lessons that we have learnt from this, is that we can operate in very tough conditions. At present, we have 16 ongoing projects, only two of which have been classified unsatisfactory," says Roberts. "The Bank's portfolio for West Bank Gaza is in very good shape by regional standards, and we have a high disbursement ratio, which this fiscal year lies close to 50 percent. It's a clear indication that we are fully capable of operating."

The impact of the projects are assessed in the framework of the ongoing conflict, with realistic targets being set and an understanding that development will only take place once the violence has come to an end.

"I think we have had quite an impact, particularly over the last year," says Roberts. "We help people cope with the crisis. A lot of our money has gone towards keeping schools and hospitals open and that has had quite an impact, because the services are still functioning. Much of the non-salary costs were provided by us as well, which has been critical. However it is not an impact in terms of improvements, it's rather helping arrest the speed of decline. This is a holding operation which posits that there will be a return to negotiations and to a political process. If that doesn?t happen, nothing any of the donors can do is going to stop the destruction of the economy."

In Roberts' view, the Bank's experience in the West Bank and Gaza has shown that there is scope for the institution to successfully operate not only in post-conflict areas, but also in the midst of conflict. Staff has proven itself willing to go on the ground to implement their work in spite of the potential danger involved. This in turn has contributed to the Bank's capacity to play a pivotal role as a catalyst for the donor community. Furthermore, by providing comprehensive yearly reports on the state of the Palestinian economy and the emerging financial needs, strictly limited to the economic realm, the organization has maintained its image of impartiality. This has ensured the continued trust of all parties involved.

"Difficult as the situation is today, we remain as committed as ever to playing a constructive role in support of the Palestinian people and eventual peace in the region," Roberts concludes.

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